Prophase Labs Inc (PRPH) 2025 Q3 法說會逐字稿

Hello, and good afternoon, everyone. Welcome to today's presentation. My name is Noella Alexander-Young, virtual event moderator here at Renmark Financial Communications. On behalf of our team, we want to thank everyone for joining us today for ProPhase Labs' third-quarter 2025 results. ProPhase is trading on the NASDAQ under the ticker symbol PRPH.

Presenting today is Ted Karkus, Chairman and CEO. That being said, I will now hand the floor over to Ted.

Greetings, all. Thank you, shareholders and others for joining the call. This is our Q3 ProPhase Labs presentation to review results and what we're going to be doing going forward. We do a call like this about once a month so [we] can keep investors up to date.

Let's just hop to the forward-looking statement very quickly. I'm going to assume that you have all read this. Bottom line, everything I'm going to say today is accurate as of today. It doesn't mean that things can't change in the future. And if they do, there's no guarantee that you'll be updated in the future. right?

But I'll assume that everybody has read the forward-looking statement. By the way, this entire presentation is available on our corporate website, so you can review it at any time. As most of you know, these are the verticals of ProPhase Labs. I'm going to go into each one of them.

Before I do that, it is critically important we have a proxy out there. It is critically important that you vote. If you do not vote for our proxy, you are putting our company in harm's way. It makes no sense if you're an investor and you do not vote your proxy.

It's really that simple. So I can understand why shorts don't want you to vote the proxy, but there's a number of reasons for this that I'm going to go into. I'm going to go into the various subsidiaries of the company. But why don't I just tell you at the outset, we are working on some strategic initiatives.

The strategic initiatives may be impacted if you do not vote the proxy. The strategic initiatives could recognize significant underlying value in our company. This would be good for all of us as investors. So please vote your proxy.

We do have a lot of positive voting going on, but we do need a quorum, and we need everybody to vote. All right. I'll remind everybody at the end of this call, too, just because it's so important.

We can talk about it a little bit about the reverse stock split and all that other stuff or the potential reverse stock split. But why don't I just clarify a couple of things upfront. We talked about a crypto treasury strategy previously that is not off the table. But to be clear, I will not do anything that does not significantly recognize the underlying value and assets of our company and is accretive for our shareholders. So that we have a stock price potentially or theoretically based on the deal, we'll go up significantly.

That's the goal. Otherwise, what's the point of doing it? With regards to a reverse crypto treasury strategy or any crypto treasury strategy, we do have a potential massive cash influx coming in over the next year. As that happens, we could certainly develop a crypto treasury strategy around it. By the same token at the moment, crypto treasury stocks are not in favor, crypto is not in favor. I believe it's somewhat cyclical.

The long-term trend is clearly up if you look at the macro trends over the next several years. But timing on a short-term basis may affect the strategy. So in any event, it's still on the table. It's not my number one objective though. Separate from this and just recently, we are working on another strategy that will recognize significant underlying value in our company.

I don't want to talk more about it today. But again, it's critically important that you vote your shares. If you don't vote your shares and we don't get the votes, it could impact a very bullish strategy. I hope to update you very soon on the strategy. And let's just leave it at that.

I don't want to talk out of line, and I don't want to get too far ahead of myself. I want to go through the various subsidiaries of the company and we're at right now. By the end of this call, I think that you will all realize that there is a disconnect between the market cap and the underlying assets of the company. My job is to recognize some of that underlying value and build the company for the long run so that the stock price goes up in the long run.

And so we all make money in the long run. That's what I did before. I turned around the company once before when I first took over. We had a $0.65 stock, company potentially going bankrupt. I paid out $2.40 in cash, special dividends to the shareholders and our stock flew and we went into all these great businesses.

It's like a déjà vu because right now, I'm working on exactly the same thing. The only difference is back then, all I had was a Cold-EEZE brand with declining sales looked like it was going out of business. Now we have several assets, each one of which by itself individually has significantly more upside and potential than what Cold-EEZE had at the time.

So with that, let's get into the various businesses. So the very first asset I want to talk about is the Crown Medical collections. Now everybody knows I was talking about that earlier in the year. And everyone is like, okay, Ted, are you getting tired of talking about it. We're beginning not to believe.

But we went through a critically important process that took longer than anyone would have liked, and it was bankrupting the COVID lab subs that aren't really doing anything now anyway. So it made sense to bankrupt them. It turned out to be a significantly more complicated and cumbersome procedure than I certainly expected.

A critical component of that was hiring the right bankruptcy attorney who is independent of Crown Medical to actually be the bankruptcy attorney of record. We found the perfect person to do that. He's done a phenomenal job. I can't believe the amount of work he did. And finally, just like the last week, the judge gave the green light. We bankrupted the lab subs. I reported that.

And then critically important, Crown Medical has now been appointed special counsel. The reason that's so important, Crown Medical was already reaching out to the roughly 1,000 insurance companies that owe us money. We're talking about like $150 million of uncollected COVID testing that at one point in time, the prior government guaranteed we would get reimbursed for.

So part of what got us in this message in the first place, we built out businesses thinking that money was going to continue to flow and all of a sudden, it just stopped. And all of a sudden, we had overhead, which seemed like a rounding error at the time, but became significant when we got cut off from this funding. So in any event, Crown is now going after that.

To be clear, a big part of what we're going after are underpaid claims. These are COVID tests where we submitted to the insurance companies, they paid us, but they underpaid us. Let's suppose legally, there was pay us $125 insurance companies for the balance. We're talking about many tens of millions of dollars, a significant portion of this $150 million for not paying what they were supposed to pay.

They already reimbursed the claim. They already acknowledge that the patient was a real patient of theirs. They acknowledge that the doctor's requisition order was proper that we turned around the COVID test properly, et cetera, et cetera.

So now if they have no defense and in some cases, Crown Medical may be representing four or five laboratories in four or five states going after the same insurance company. And if this insurance company happened to underpay all five of these labs in five different states, it shows a pattern of fraudulent behavior. No insurance company wants to defend a lawsuit that or more even $1 million just defending a lawsuit they're going to lose.

So now Crown comes to them and says, hey, we'll give you and I don't know what the exact percentage discount is. We'll give you a 25% discount to settle right now. So they have a choice of taking a 25% discount and paying now or they can spend money on a lawsuit that they're going to lose, spend an enormous amount of money on litigation and then lose the full amount, and potentially trouble damages if we can prove fraudulent behavior.

So we're in a situation where certainly, out of the 1,000 labs -- 1,000 insurance companies, half of them, let's call them the low-hanging fruit, we think that they're going to settle quickly. So the key point of all this was appointing Crown Medical as special counsel, that just happened. So while Crown has been preparing to go after these 1,000 insurance companies and in fact, scrubbed our data clean, they said we had one of the best, if not the best data set of any lab that they're representing.

And they said that we had world-class IT that collected our data the right way. So we are pristine and Crown Medical means business. So the bottom line is Crown was approaching the insurance companies before, but their attitude is when you actually get court approval and you're ready to serve litigation, that's when we'll talk.

So now the last part of this in bankruptcy court, what's interesting, because in theory, the idea is to get the bankrupt company out of bankruptcy and operating again. They have what's called expedited litigation. You skip over months of pleadings. You go right to meet and confirm meetings. And if they're not successful, you go right to delivering discovery.

So Crown Medical has, I don't know, a stack this thick of discovery items to serve the insurance companies. And we believe the insurance companies are going to start settling right away now that Crown has been appointed special counsel. So that's where we're at today. Yes, has it been frustrating.

Did I think it could have happened months ago? Absolutely. This was the hurdle we had to get over, and now things should move quickly. And in fact, we have one small settlement.

I'm not going to go into details. It doesn't matter it's a small amount of money, but the point is now that Crown has been appointed special counsel, we believe settlements are going to start happening. It's going to change our financial structure pretty quickly.

Now I'm talking about it in a few months. I'm not talking about it in a few days. So we're still going to have to get through the next few months. But after that, once that money starts coming in, if our market cap is anywhere near where it is right now, you can -- and I don't know if I'm allowed to say this or not. So I'll just say, I have a history when we have significant cash and undervalued stock of buying back stock.

That's what I did the last time around, the last cycle around. I bought back a ton of stock. I did two Dutch auctions where we took out everybody that wanted to sell, and we paid dividends. We could be in a very similar déjà vu type situation again once the Crown Medical cash flow starts to flow in. We'll pay off debt first, then maybe we'll buy back stock hypothetically, and then we'll be in a very sweet position.

So now we have to put that all into perspective of the fact that I don't know what we have, a $12 million market cap, we're estimating -- Crown is estimating, and they're actually telling me they're somewhat conservative. They absolutely believe we're going to collect at least $50 million net. That's net of the $150 million we're going after, giving discounts.

They're not going to go after all the claims. Some of them probably aren't clean or whatever. They're going to give big discounts to the insurance companies. They're taking their contingency fees.

The last piece of this, Crown is not getting paid a penny. They have dozens of attorneys working on this. None of them get to paid a $0.01, except out of the collections. So they've been working on this all year for free for us. They wouldn't be doing it if we weren't going to collect a lot of money.

So that's Crown. So when you look at it from the perspective of -- I'm trying to figure out strategically what to do with our company, I see all this cash coming in. So I am funding the company principally with debt right now. Doesn't mean we won't issue some shares, but the goal right now, we have an ATM.

I've never used -- I haven't used the ATM. We have a new ATM. We canceled the ELOC months ago, which we announced. And then we signed up for an ATM.

We have not used the ATM yet. I can't guarantee I'm not going to, but it's based on stock price based on our cash needs, it's based on debt availability, et cetera. But we have several companies willing to fund us as needed, especially because the ones that do their due diligence into Crown are very confident that cash will be flowing into the company.

The other aspect of this is we have two or three other subsidiaries that are very valuable. So let's get into that a little bit. I think we're going to jump to our BE-Smart esophageal cancer test. That's in our ProPhase Biopharma subsidiary. I'm going to go just straight to this page.

I'm not going to do a long detailed presentation of this. I'm sure most of you have heard this before. The bottom line is esophageal cancer is one of the deadliest cancers. We have what we believe is the best diagnostic test in the world for one of the deadliest cancers. It's that simple.

The reason it's one of the deadliest cancers is because it's not diagnosed accurately. We take an inaccurate diagnosis and make it accurate. It's that simple. That's the beauty of it. We are basically enhancing the endoscopy.

The standard of care when you're at risk of cancer of esophageal cancer is an endoscopy, and endoscopy is where they stick a tube down your throat and remove tissue specimens and study them under a microscope. Two pathologists study the same specimen in the same microscope. One will tell you have esophageal cancer, one will tell you don't.

All we're doing is we're taking that specimen, ran into our mass spec machine with the associated AI, et cetera, we have patented the key proteins that are virtually always expressed when you're developing esophageal cancer. So it's a no-brainer. Take one of those specimens.

So the interesting, this is such a convenient test and it's critically important to physicians and broad-scale commercialization is the convenience of it. There's nothing more convenient than our test because this is for patients already getting the endoscopy. So the are roughly 67 million endoscopies just in the United States alone, and this is a global problem. This is a growing problem around the world.

And so there's 7 million of those endoscopies are just for people at high risk of esophageal cancer. We believe every one of those 7 million endoscopies should add our test on to it. If they did, they will get a significantly more accurate diagnosis.

It would make no sense not to. If we get reimbursed hypothetically $1,000 to $2,000, that would make our test a $7 billion to $14 billion target market test. It's that simple.

And the last piece of this is we're partnered, ventured with Mayo Clinic. We own the test. We have Dr. Chris Hartley, and he indicated he wants to get more involved. He's at Mayo Clinic.

We have Dr. Joe Abdo, one of the scientists who invented the test. We have James McAuley. He's the CEO of another biotech company with significant experience with commercialization. These are all people working with us now. We have others.

And as the cash flow comes in from our Crown Medical initiative, we'll be able to fund this no problem. And we're not talking about a big budget. I'm looking at a small budget just to develop the test for the next year, get it to a point where a multibillion-dollar cancer testing company wants to take us over or joint venture partner with us. Why build out a huge sales force if someone else already has one and just sort of a plug-and-play plugs in our test. And all of a sudden, it's doing hundreds of millions of dollars a year, and we got a 7% royalty. We get, I don't know, we got a block of money upfront.

We can get a block of money upfront 12 months from now that's 5 times the current market cap of our company. So that gives you a little bit about our BE-Smart esophageal cancer test. The key point is we just highlighted a press release in the last week or so.

We got into a major journal. The reason the major journal is important is that's where the key opinion leaders in the industry study our clinical study and gave it a thumbs up and said, hey, we're all in. This is a great test that should be commercialized. Now that we got their good seal of approval, so to speak, we can now work on commercialization is what's called the laboratory developed test or LDT.

FDA decided that they were not going to oversee laboratory developed tests. So we've cleared the FDA hurdle. We're good to go. So I'm really excited about this test.

And so let's move on. Our next opportunity would be our Nebula Genomics DNA Complete. We completely turned the business around. George Church founded it.

I'm not going to do a lot on this, except to say that we completely cleaned up the business, led by Jason Karkus. He we shut down the laboratory. We cut out such a large percentage of our expenses in overhead. As I said, we shut down the lab. We have a highly -- Jason had a highly efficient lab to do our testing now, which makes our business -- it's primarily a direct-to-consumer business now.

We went from a lifetime subscription to buy a one year and then you renew it the next year. We found that the conversion rates were virtually identical to the lifetime. And so by selling a one year, it means next year, most people renew. That's a subscription. That's a revenue for us that we don't have to pay anything for.

We already have the data. We're already doing the reporting. We already have the IT. So the profit margin on the subscriptions that come in in year two, the subscription renewals is probably like 95%.

So we're roughly a breakeven business now that on a pro forma basis, will be profitable. And now as we clean up our finances, we will be able to grow this business dramatically because we have one of the best reporting systems in the world. We have one of the biggest database in the world to leverage.

We tested in over 130 countries, over 60,000 or 70,000 whole genome sequencing. It's the equivalent of 150 million ancestry tests. Our database alone is worth more than the market cap of our company, although we could not sell it by itself for political reasons because you can't sell somebody's data.

But of course, somebody could buy the company. But what I want to do right now is build this business. So it gives you a little bit about our businesses. We have a dietary supplement business that we could potentially develop. We'll see.

I'm trying to keep our company as clean and mean as possible, as lean as possible, not going too many different directions. I am not looking to go in more directions. Crown Medical, collect a lot of money, pay off our debt, develop our esophageal cancer test, grow our Nebula business. Our company could be worth 10 or 20 times where it's trading right now. That's the opportunity.

So with that said, I'll go to the investment highlights. Again, earlier this year, we completely restructured the company. We sold our Pharmaloz manufacturing facility, shut down our Nebula Genomics Laboratory. We dramatically reduced headcount. We significantly reduced IT and related overhead.

And we are now working on, not just the reverse crypto treasury strategy, but we have another initiative that could be very exciting that recognizes the underlying value of our company. I promise you, if I do a deal like this, I'm going to do this because it's going to make all of us as shareholders a lot of money. Otherwise, there would be no reason to do it.

So that's where we're at. I reviewed the Crown Medical collections initiative. I am looking forward to when that cash flow starts. Once that cash flow starts, we're a different company.

So if you're worried about the stock price now, we have shorts in there. I think we have a lot of shorts in our stock right now. It's really short and silly. And -- but all that changes as soon as the Crown Medical starts to flow.

As I mentioned, we did already get one small check. It's how we're talking about. The point though is we've turned the corner. We've gotten over the last hurdle with the bankruptcy courts. We went through BE-smart DNA complete Nebula Genomics is well positioned.

We do have potential with our dietary supplements, but I want the cash flow if we're going to develop that business. And -- so now let's go to -- I have some other things that I want to mention. In fact, we'll get to the questions.

But before we get to the questions, I want to mention somebody talked about our working capital deficit. To be clear, that is an accounting item. When we bankrupted the lab subs, the accounting for those lab subs changed, the assets and liabilities, the timing change between what's current and what's noncurrent. It created this ridiculous amount of negative working capital, obviously, it's ridiculous. We're not losing tens of millions of dollars.

So obviously, that was an accounting. It's a balance sheet item. It's not affecting us in real terms. It's just accounting terms for bankrupting some.

The other thing I'll mention to you is that the -- a lot of the negatives in the quarter, that's related to amortization and depreciation, stock-based compensation. And for those of you question whether I get stock options and that kind of thing, to be clear, for most of the year, I voluntarily and Jason did too, deferred most of our salary just to help the company.

I didn't collect an interest rate on it, all right? I didn't make one loan to the company earlier in the year that somebody questioned me about. To be clear, I borrowed that money to make the loan to the company just so I could get others to invest in the company and make them senior secured to my loan so that they would feel good. I did that to help the company.

So people question, oh, you've got a high interest rate on a loan. Number one, I borrowed the money. Number two, I put myself at risk. Number two -- three, I did that for the company. And number four, I deferred a significant amount of my salary this year.

Nobody is paying me to do that, okay? So I'm doing this all for the company. I'm all in. I hope those that are listening are all in too. So I hope that addresses that.

I do want to get back one more time about the voting. We may do a reverse stock split. We may have to. But understand our stock price just went from trading at $0.50, $0.60 to $0.25.

We have a market cap. I don't even know what the market cap is. It's around -- it's just over like $12 million or something like that. Yes, it's some kind of number around $12 million. Where is the stock going if we do a reverse stock split? What you have to understand is sometimes with reverse stock splits, the stock price actually go up afterwards because the only reason when it's fully discounted before you do the reverse stock split and then all the shorts have to start to cover because there's no reason to be short anymore because the reverse stock split happened. Also, you have to put it in the context of the value of the company.

So with companies -- most companies, the reason why the stock prices may go down after the reverse stock split is because they were going down anyway. If a company is going bankrupt and they're going out of business, then sure their stock price is going to go down, they're going to do a reverse. The stock is going to continue down. It going to happen all the time. But real companies like ours that have enormous underlying asset value, they don't have to go down after the reverse stock split.

In fact, if we do -- and there's not a guarantee, but if we do a reverse stock split, it's quite possible our stock goes up. I was talking to one large shareholder who's involved in a company in stock symbol OESX. They did a reverse stock split, the stock has done nothing but go up afterwards, even during this correction in the bull market over the last couple of months. Stock has been doing nothing but going up after the reverse stock split. So in our case, we have a market cap of $12 million.

Our stock has just been cut in half after filing the proxy. And we now have crossed the hurdle with Crown Medical with the collections. It's now visible. We can now see that the collections are actually going to start to happen. And so after the reverse, understand whatever the number the reverse is, we're going to have the same market value.

Your shares are still going to own the same percentage of the company. And if the Crown Medical starts to kick in, if the stock is anywhere near these prices, I'll buy back stock and take it up dramatically higher than where it is now.

So after the reverse stock split, whatever the equivalent is, I'll take the stock up from there with buybacks as enough -- once enough cash comes in and we're paying off our debt, and we have excess cash. And I shouldn't say definitively, I will do that, but it would be a no-brainer to do that if the stock is undervalued. And as I said, I have a history last time around when I did this, I sold the Cold-EEZE brand. I did exactly the same thing.

Our stock was $0.65. We sold the Cold-EEZE brand, and I did two Dutch auctions, exact same thing. So I don't -- this is days every, I don't mind doing that again. So don't be so scared of a reverse. Now if you want to be scared of a reverse stock split when our stock is $0.75 maybe or $0.80 or $1, is he going to do a reverse or not? Our stock is trading up to $0.30 a share.

It's got $12 million market cap. It's silly. So I just want to put it in that perspective. The other thing, critically important, I'm working on strategic deals. Besides the crypto treasury strategy. I'm working on another deal.

We have to maintain NASDAQ compliance or the likelihood of doing a deal that's going to attract and increase the value of our company and make our shareholders money. It's going to be difficult to get a deal done if we are NASDAQ compliant. So it'd be silly not to be NASDAQ compliant. I need every person listening to this call to please vote for the proxy.

Otherwise, don't own the stock. What's the point of owning the stock and then not voting to help the company do well. That's the point of voting. So please, please, please vote, okay? And I'm sorry, I have to do this, but the voting ends at the end of the week.

We're close, but we're not there yet. So every last year makes a difference. I feel like I'm a politician now. All right. That's it on the voting.

That's it on talking about the reverse stock split. Noella, please, I hand it off to you.

Thank you very much, Ted, for the presentation. We'll now begin the Q&A. Your first question is, based on your press release, it sounds like you're potentially working on two or more different major deals that could increase shareholder value. Can you clarify this?

Yeah. So -- and by the way, it's potentially more than two. We have a reverse crypto strategy. Understand crypto are so volatile right now in crypto treasury stocks that did reverse mergers are somewhat out of favor. There's no hurry to do something like that.

As I mentioned, though, if significant cash comes in -- when significant cash comes in from the Crown Medical initiative, we could use that cash. That would be nondilutive if we developed a crypto treasury strategy around that, where we generate income off of the crypto. And I'm telling you there's no question, Bitcoin is going up in the long run. It's not even a question. But I'm not -- I don't need to be a gambler with the company either.

And I don't need to do a reverse crypto strategy right now. So we'll see. That was on the table. But with crypto market where it is right now, we'll see. There's potentially a very attractive deal that we can do when crypto was higher. So -- but we'll see. In the meantime, another -- and this is relatively recent, has developed.

I just don't want to talk more about it today, but I will be updating shareholders. If I do that deal, it will be very positive for the shareholders, all right? And so we'll see where it goes.

I don't want to get out of line and say too much too soon. There's no guarantee I'm going to do the deal, but it's certainly interesting. It's something we're pursuing.

Number three, now that we were published in the journal for our BE-Smart esophageal cancer test, our scientists are being approached by a variety of companies, cancer testing companies and others that want to either get involved, joint venture, acquire, whatever, right? So we have that going on.

So we have that going on with the subsidiary, and then I have the deals I just described going on with the whole company. So there's a lot of potential there. I'm going to do what's best for the shareholders. Even though I got diluted with everybody else, I'm still a large shareholder, I care about the value of our shares ultimately.

It looks like you may do a reverse stock split. If you do it, is it possible that the stock price will go up or down?

Exactly. So if the stock price was a lot higher right now, could it have a little risk? I guess it would still be undervalued, even it was double, right? But with where the stock price is, what's the downside? What is it going to do?

It's going to go from a $12 million cap to $11 million market cap. And then the Crown Medical $20 million is going to come in, and I'm going to buy back half the shares outstanding in the company and my stock will be twice or 3 times where it's trading on a split-adjusted basis.

This is all silly. A reverse stock split in and of itself is not something to be scared of. What's more to be scared of is if we weren't NASDAQ compliant. We have a lot of value in the fact that we're a NASDAQ company. I want to stay a NASDAQ company, and we'll see what happens.

Earlier in the year, if Crown Medical had kicked in earlier in the year, my guess is we might not have had to do the reverse. We might be trading around $1 an hour more. It's quite possible or probable. That didn't play out that way.

But having said that, even at $1, we might have done a reverse. When we're talking about the reverse -- I'm sorry, the crypto treasury strategy, they were thinking that they wanted a higher stock price and they might want us to do a reverse anyway even if we didn't need to. So I don't want to go more into it than that, but stock prices sometimes go up after the reverses. I gave you one example of that. I like to think ours would be one of them.

If nothing else, all the shorts out there, they would probably be running for the hills afterwards when they see there's nobody left to sell or the market cap is so low. Again, that's not a guarantee. I don't know what's going to happen. I can just tell you the reverse stock split in and of itself.

Your percentage of share ownership doesn't change. The market value of the company at that moment doesn't change and the upside from here for our market value is incredible.

From the recently released financial earnings reports and statements, I see that M&A discussions unrelated to the crypto treasury strategy are being explored. Does this mean the crypto treasury strategy remains part of the company's strategic vision going forward?

Again, everything is possible. I only want to do something that's accretive for the shareholders. That's the goal. And I happen to have another deal that could be very accretive for the current shareholders.

I think everybody would very -- I just don't like talking too much about it because it's premature. So -- but I just want you to know, though, we have to be NASDAQ compliant. That's why everybody has to vote.

$400,000 in the TIL unable to use shares for cash, how do you plan to pay employees and Board going forward?

The amount of cash we have on hand right now is about the same amount of cash we've had on hand every month and every quarter all year long. I have multiple investors, large investors that want to support us with various types of funding options. We did a $3.8 million debt deal once before. We can always take on more debt.

There -- we definitely have a number of options out there, people that want -- there are definitely large investors out there that see the underlying value. And I will use all potential financing strategies to support our company, whether it's debt or equity or combination or what have you. But we're in really good shape from the point of view that we have such a strong underlying asset value. So financing until the Crown Medical comes in, that's not the issue. The issue is what form we take debt or equity, what the terms are, et cetera, et cetera, et cetera.

Whatever we do right now, once the Crown Medical comes in, even if we hypothetically issued shares, my goal would be to buy back all the shares. The stock price anywhere near stock price, I'll buy back. I wouldn't be afraid to buy back 10% or 20% or 30% or 50% of the shares outstanding in the entire company. And I really do think that way.

If our stock is undervalued and the cash is coming in, so that all gets fixed as the cash comes in. And that's separate from the fact that, as I said, our BE-Smart esophageal cancer test could be worth 10 times our market cap 12 months from now, literally or less, nine months. 9, 12 months from now, just our esophageal cancer test alone could be worth 10 times the current market cap of our company.

Think of that as a concept. You got Lucid as $125 million, $150 million market cap. They're tested. If you test positive on their test, you then have to -- the next step is to go get an endoscopy.

So they're not even competition. It's kind of like I compare to COVID testing where you get the rapid antigen test. If you test positive on the rapid antigen test, the next step is to go get the higher, more accurate reading from the PCR test. Well, this is the same kind of thing. On their test, the next step is get an endoscopy, we make the endoscopy diagnosis significantly more accurate.

So -- and they have a market cap. We should be -- once we commercialize, we should have a significantly greater market cap than they do. And again, just if we achieved their market cap, it would be more than 10 times the current value of our company.

How are you going to prevent delisting from stock exchange without a reverse stock split? What needs to happen to get the price above $1 for a month?

Sure. So first of all, it doesn't have to be above for a month. It's for 10 trading days; number two, this deal I'm working on, quite frankly, I could take the stock over $1 very, very quickly; and number three, but I'd like to have my back pocket if we need it doing the reverse stock split, which is why you have to vote; and number four, we need to vote because I need to give the other companies and bankers that I'm working with confidence that we will remain on NASDAQ can be NASDAQ compliant.

So we need to vote for that. Even if we don't do a reverse stock split, we need to show that we have the votes to do a reverse stock split if necessary. Otherwise, that could derail some of these potential deals that could be great. So again, I don't know how to emphasize this strongly enough because I don't know the random people out there that own stock.

But because if it's in a brokerage name, we don't get those lists or if we get the list, we don't get the contact information or you have to vote your shares. And so please do it through the brokerage firms. They typically will send you an e-mail or you just go online and you can vote very easily, all right? Thank you.

When will pro fees go up -- stay up? And what might be the ceiling?

I think the ceiling is the company could be worth 10 times where it's trading today in 18 months, okay? And that's not the ceiling. That's -- I was thinking about this because I was thinking about it for myself with all the shares that were issued in the last year and how I got diluted. And I was just thinking our esophageal cancer test in three or four years should be -- it should be worth $1 billion.

So easily, that means that this could be like a $20 even with a little more dilution, even if we have 50 million shares outstanding. $1 billion means we have a $20 stock price. We currently have a $0.26 stock price, $0.27. I don't know where the stock is trading today. All right?

Could you imagine that we're trading under $0.30, and we could be at $20. And understand if we do a reverse stock split, the ratio of where we are, that potential percentage, it would still be the same. We do a reverse stock split, it doesn't change. The market cap, the value of it will still go up by a multiple of 20 if we go to $1 billion market cap one day.

Now that may sound like a pipe dream today. But by the same token, once before, when I took over, I turned around a company that was $0.65 and went over $10 a share. It actually went over $13 a share. So actually, that went up 20 times. So don't think that I can't do the same thing with the company that we have now, especially since the underlying assets of our company are much more valuable now than they were before.

What is the accurate share count/market cap of the company presently?

Sure. So you have to go by the reported numbers. I believe there are 46.1 million shares outstanding that's reported. I don't know what the stock price is today. So at $0.25 to $0.30, we're talking about around a $12 million market cap.

The share price keeps slipping despite shareholders' patience. When will management take decisive action to protect and grow shareholder value? And how do you plan to address the ongoing decline?

And look, at the end of the day, I don't control the stock price. I think shorts are having fun with it right now. I think it's selling any portfolio manager out there that likes to invest in penny stocks. I don't see how they don't buy the stock right now.

And having said that, the bottom line is you just have to be patient until cash flow starts coming in from Crown Medical initiative or we partner on our BE-Smart esophageal cancer test or we do a strategic initiative and M&A type transaction, whether that's a reverse merger or similar, that brings out the value in our company. Any of those things would drive our stock price significantly higher, in my opinion.

When will the company stop mentioning the possibility of collecting $25 million in accounts receivables?

We did not anticipate it would take that long to bankrupt the lab sub and get going. But now we've done it. We crossed that hurdle. So however long it took, it took. But now we're in expedited litigation going forward.

Crown is skipping cleanings. They're going right to meet and confers. They already have hundreds of insurance companies lined up. They're going right into meeting confers right now.

And now all of a sudden, it's like a hockey stick. We're going to start seeing some settlements.

In a couple of months, I don't know the exact time frame, and then it's going to go like a hockey stick, I believe. It's just going to ramp up. We're going to have significant cash flow. We're going to be a different company once that happens.

You want to wait for that to happen, you can wait for that to happen, but maybe the stock is double or triple where it is now once you see the visibility of that happening. I mean where we don't have downside here, it's kind of silly.

Given the need for capital to fund BE-Smart, is it realistic to use a go-it-alone strategy with regards to BE-Smart? Does it make sense to consider partnering the asset?

So my thought is as some cash flow comes in from Crown, I don't ever want to be in this financial position again. It's not fun. Honestly, it's been the worst year of my life in terms of managing a company with the financial pressure I've been under, with the pressure the stock price has been under. So I have no intention of ever being in that type of situation.

Again, I'm not going to spend a lot of money developing our esophageal cancer test. The idea is to kick it off the ground to sort of a grassroots. I told you we have some world-class scientists and commercialization experts that we're working with. We're going to get more key opinion leaders involved. We're going to get physician networks to sign up like if we find one decent-sized physician network, we'll get them taking -- using our test with the great results they're going to get.

It then will spread like a hockey stick as it spreads like a hockey stick, then the goal would be the joint venture. Look, I might be able to joint venture now. I don't know what they pay us. They might give us $25 million or $50 million of cash plus a royalty. It wouldn't be so bad.

By the same token, they might give us a couple of hundred million dollars and a bigger royalty if I wait 12 months. So we'll see. But there is interest now. I think that the interest is going to -- as we start penetrating the market even a little bit, all these other cancer testing companies that have an esophageal cancer test or are developing one are going to be very nervous.

In fact, to be honest with you, I already know they're getting nervous because the day we published in the journal, that very day, one of them contacted us and said, hey, let's talk. So we'll see where it all goes. No guarantees that I'm going to do anything short term. I don't think it's necessary. But by the same token, I'm not going to break the bank and spend a lot of money to develop this right now. It's just not necessary.

Do you anticipate that the recent weakness in virtual currencies provides an opportunity to the company's strategic initiatives, given you have not yet purchased a significant amount of virtual currencies?

Yes. So obviously, you're talking about the crypto currencies. But if we're not going to do a deal, so we were talking -- we've been talking to crypto asset managers where we would do sort of -- well, I don't want to go into details on it. If we don't do a deal like that, but instead, we were just going to invest long term with the crypto treasury strategy, we have to wait until the Crown Medical collections come in, and I would want to pay off debt first, get the company financially sound and then with excess capital, maybe put together a long-term strategy. But there's a lot to go before we would -- there's a lot to be done before we would go it alone with that type of strategy.

But for now, is it possible? Yes, it's always possible. But right now, also the markets aren't excited. If you're not the number one leader in a particular crypto, then you're struggling.

So for instance -- and even the ones that are the leaders are struggling from the point of view that when the crypto goes down in price, the stock price is going down. But in terms of a multiple to net asset value, if you go back at the beginning of the year, they were trading at two or 3 times net asset value.

Now they're trading at net asset value. And if you're not one of the leaders, you're often trading at a discount to net asset value. So again, I pay attention to that. I'm not going to do a deal just for the sake of doing a deal. There's no reason.

We have so much underlying value in our company, and we have so much potential that we can also go it alone. So -- or we can do a different type of deal that's not a crypto-related deal. That's what I was trying to explain in my press release. It's not that we might not do a crypto-related deal, but that's not our number one focus right now.

We have better opportunities out there, we believe. It doesn't mean that, that can't change in the future, but we believe we have better opportunities right now.

Any update with respect to Linebacker? Is there any potential value or future updates with regards to Linebacker expected?

Well, that's an interesting question. That we have not been doing much with Linebacker. Again, I'm not looking to break the bank on something that is so early stage that in very early studies has potential that was exciting to me, but that's very different from something that's a late stage ready to be commercialized.

So I don't want to say more about that. I'm surprised somebody even asked that question. But let's just leave it at that on that topic for now.

Has there been any insider stock purchases this year?

That would probably have to be filed, obviously. And by insiders, the one person that's really an insider is me and the directors and quite frankly, I deferred a lot of my compensation. It didn't put me in a great financial position to also be buying stock. And in fact, I loan money to the company.

So that was my way of supporting the company. And as far as the directors are concerned, sort of the same thing. They're actually rather than taking cash compensation, they primarily -- and I don't want to speak on a turn know the exact numbers, but they took a lot of stock compensation -- or stock option compensation in lieu of some of their cash compensation. I think that's putting their best foot forward and also showing support to the company and belief in the company.

How many DNA test kits have been -- have you processed so far in 2025?

I don't know that number off the top of my head. I'm not going to look that up now. But what I will tell you is since we've been on a tight budget, without us virtually doing any advertising at all. We have such a strong SEO presence that's called search engine optimization.

It's -- we've been in the business eight years. We did this the right way. We did a lot of great marketing. But we're -- frankly, right now, we're on a very tight budget, and I don't want to dilute shareholders unnecessarily to grow a business. So I'm sort of laying low until we get more capital in, but with virtually no advertising, we're still selling the product.

We're selling the product. And the beauty is it's on a pro forma basis, actually profitable now. We've restructured it that much, and we made it that clean. It's a great business. for us to grow as soon as we get a little excess cap.

I want excess capital to really grow that business. So like in a few months, I think we're really going to start growing that business in a nice way.

What do you think is the disconnect between the market's valuation of the company and the underlying assets? You referenced the value of the underlying assets and the disconnect. But what do you think specifically is the main cause of this disconnect?

I believe the disconnect is because we're tight on cash. And so every time I go to potential investors, quite frankly, there are a lot of sleezy people in the investment world, and it's really disappointing. But if I talk to three potential investors, one of them is going to short the stock and then make me an offer a week later.

Everybody knows that we're tight on cash. We've been tight on cash all year. That all changes, and we're frankly -- so we're a development stage company tight on cash. It makes us an easy short target, especially if we go to investors and some of them want to full around the stock price.

That will change as soon as the Crown Medical starts flowing. That plus our stock price has been under $1. So the stock has just been under pressure. But you've got to understand, are you a trader or are you investor?

If you're an investor, look at the underlying value, even if there was a little more dilution. So what our market cap is so low that once the Crown Medical starts to flow in -- or even without the Crown Medical, if I do a deal for our BE-Smart esophageal cancer dose, we'll get a block of cash upfront, I'll probably start buying back stock immediately. Our stock would explode on that if I do a deal like that.

And separately, I'm working on a potential deal right now. But again, it's preliminary. I don't want to talk about it more. But that disconnect will start to go away. The fact that there's a disconnect creates an opportunity for potential M&A strategists and bankers who recognize that underlying value and that disconnect.

So it actually creates an opportunity. And because it creates an opportunity, that's why we're getting inquiries, both not only to me, but the scientists at BE-Smart esophageal cancer tests, et cetera.

Thank you very much, Ted, for all of your responses today. That concludes the Q&A session. Before we go, I will turn back the floor to Ted for final remarks.

I know we said it six times today, I feel like a politician today. If you're a shareholder in the company, if you're an investor in the company and you don't vote the shares, then don't complain to me if we have an issue because you didn't vote your shares. So vote your shares, all right? So that we have the flexibility to do what we need to do if we need to do it.

It's not just the flexibility for a reverse stock split. It's also based on potential deals we're working on. The bankers are going to want to see that there isn't a risk that we're always going to be NASDAQ compliant. It's possible we do a big deal and the stock price will go over $1 anyway.

But whatever I'm working on, we need you to vote the proxy in order to pass. We wouldn't have put the proxy out there if we didn't need to. There's no guarantee we're going to -- we're not going to do a reverse stock split. But even if we do, there quite frankly -- I think there's a good probability that our stock price goes up after we do the reverse. It doesn't necessarily have to go down.

And it's not a bad thing -- guarantees, knock on wood, they remain NASDAQ compliant, being NASDAQ compliant is a value to the company. Look, we got delisted, it's not going to change the value of the company. It's not going to change the value of what we're doing. And then when we go back above $1, we do a deal, we'll go back on NASDAQ again.

But why go through all that and at the same time, I'm working on some deals that -- some things that could be very, very exciting for the company where all the shareholders make a lot of money. So it's silly not to vote. I can't stress that strongly enough. Beyond that, I appreciate everybody joining the call and listening to me today.

Everything I say is from the heart. It's from living and breathing our company 24/7. I am a fighter. I did this once before, a dozen years ago, with the very same company when I inherited it. When I say inherited, I did this -- I won a proxy contest, two years of litigation.

So it was a serious fight just [to] control of the company and find out I was control of a company that was virtually going bankrupt. Turned it around. It took a number of years. So I've done it before. I can do it again.

I'm going to do it again. And we're in a similar position, but again, the assets in the company are multiples of what they were the last time I did it. So I'm going to do this.

And if you guys are patient with me, I think that I can -- I and our company, and not just me, it's Jason, he built the COVID testing business into a multi-hundred million dollar business. He's now cleaned up the Nebula Genomics business. And we have these great businesses.

And so I'm just looking forward to the future. I don't have more to say than that. Everybody, have a great day. Thanks for all your questions. Thanks for listening to the hour.

Thank you, everyone, for joining us today for the Prophase Labs third-quarter 2025 results. ProPhase is trading on the NASDAQ under the ticker symbol PRPH. Stay tuned for the next quarterly call and see you next time.