ProPhase Labs Provides Update on Convertible Debt Conversions, Capital Structure, and Underlying Asset Value

Rhea-AI Summary

ProPhase Labs (OTC: PRPH) provided an update on recent capital‑structure activity, stock volatility, and underlying asset value on January 5, 2026. Management said >$3.3 million of convertible debt principal has converted (from $3.8 million issued), leaving less than $500,000 unconverted. Conversions occurred at a floor price of ~$0.76 per share, which the company says is above current trading levels, reducing near‑term conversion selling risk. The company completed a 1‑for‑10 reverse split and moved from Nasdaq to the OTC market; management said these technical events, plus accelerated conversions, drove temporary selling pressure but did not change the intrinsic value of operating assets.

Management emphasized debt reduction, a stronger balance sheet, and ongoing work on Crown Medical receivables, the BE‑Smart esophageal cancer diagnostic, and Nebula Genomics / DNA Complete.

Positive

• Convertible debt converted: $3.3M of $3.8M principal
• Remaining unconverted balance: <$500,000
• Conversions reduced debt and increased shareholders’ equity
• Conversion floor price ~$0.76 per share (above trading price)

Negative

• Completed 1‑for‑10 reverse stock split
• Transitioned from Nasdaq to the OTC market
• Large share issuance from conversions created temporary selling pressure

Key Figures

Converted principal $3.3 million+ Principal amount of convertible debt already converted

Convertible notes at issuance $3.8 million Total principal of secured convertible notes at issuance

Remaining unconverted balance <$500,000 Convertible debt principal still outstanding

Floor conversion price $0.76 per share Stated floor price for recent conversions, above current trading price

Reverse stock split ratio 1-for-10 Recently completed reverse stock split of common shares

Market Reality Check

$0.2799 Last Close

Volume Volume 3,492,077 is 1.26x the 20-day average of 2,781,763, indicating elevated trading activity ahead of this update. normal

Technical Shares trade below the 200-day MA of 3.37 at a price of 0.3626, sitting 96.12% under the 52-week high.

Peers on Argus

PRPH fell 18.97% while peers were mixed: PRPO +3.16%, ADVB +0.5%, ISPC +5.93%, BIAF +1.67%, and NOTV -7.41%, suggesting stock-specific pressure tied to its capital structure changes.

Historical Context

Date	Event	Sentiment	Move	Catalyst
Dec 19	Reverse merger LOI	Positive	-14.7%	Non-binding LOI for reverse merger implying up to $30M legacy value.
Dec 19	Merger LOI disclosure	Positive	-14.7%	Counterparty detailed same reverse merger LOI and expected process steps.
Nov 26	Investor webinar	Positive	+0.7%	Announcement of webinar covering BE‑Smart test, Crown collections, genomics.
Nov 19	Q3 2025 earnings	Negative	-9.5%	Reported lower revenue, sizeable net loss, limited cash, large deficits.
Nov 17	Proxy vote reminder	Neutral	-5.4%	Reminder to vote on proposals tied to listing compliance and strategy.

Pattern Detected

Recent strategic and financing announcements, including the reverse merger LOI and governance actions, often coincided with negative price reactions, even when news appeared operationally or strategically constructive.

Recent Company History

Over the last few months, ProPhase Labs advanced several strategic and capital structure initiatives. On Nov 19, 2025, Q3 results highlighted declining revenue and a $6.8M net loss alongside tight liquidity and $3.8M in secured convertible notes. A Nov 24 Special Meeting approved multiple proposals, later followed by 8‑K filings implementing a 1-for-10 reverse stock split to address Nasdaq listing requirements. The Dec 19, 2025 non‑binding reverse merger LOI suggested a legacy ProPhase enterprise value up to $30M plus potential dividends and Crown Medical receivable recoveries. Today’s update focuses on how recent convertible note conversions and the reverse split reshaped that capital structure.

Market Pulse Summary

This announcement concentrates on recent capital structure changes, highlighting conversion of over $3.3 million from an initial $3.8 million in convertible notes, leaving less than $500,000 outstanding. Management frames these steps, along with a 1-for-10 reverse split and OTC transition, as technical rather than operational. In context of earlier disclosures about tight liquidity and significant liabilities, investors may watch progress on Crown Medical receivables, the BE‑Smart diagnostic, and Nebula Genomics to assess underlying asset value.

Key Terms

convertible debt financial

"accelerated conversion and resale of a significant portion of its outstanding convertible debt"

A convertible debt is a loan a company takes that gives the lender the option to swap the owed money for a set number of the company’s shares instead of getting cash back. It matters to investors because it can change who owns the company and how much their shares are worth: if lenders convert, existing shareholders can be diluted, but conversion can also signal confidence and reduce a company’s cash pressure — like getting a coupon that can be redeemed for store ownership rather than a refund.

reverse stock split financial

"the completion of a 1-for-10 reverse stock split, and the Company’s transition"

A reverse stock split is when a company reduces the number of its shares outstanding, making each share more valuable. For example, if you own 100 shares worth $1 each, a 1-for-10 reverse split would turn your 100 shares into 10 shares worth $10 each. Companies often do this to boost their stock price and appear more stable to investors.

otc market financial

"and the Company’s transition from Nasdaq to the OTC market."

A marketplace where securities are bought and sold directly between dealers or brokers rather than on a formal stock exchange; think of it as a flea market for stocks and bonds instead of a supermarket. It matters to investors because these trades often involve smaller or less-regulated companies, so prices can swing more, information can be scarcer, and it may be harder to quickly buy or sell — offering both higher risk and potential opportunity.

AI-generated analysis. Not financial advice.

UNIONDALE, NY, Jan. 05, 2026 (GLOBE NEWSWIRE) -- ProPhase Labs, Inc. (OTC: PRPH) today provided an update to shareholders regarding recent trading activity, its capital structure, and the Company’s underlying asset base.

The Company believes that recent volatility in its stock price has been driven by a combination of short-term technical factors, including the accelerated conversion and resale of a significant portion of its outstanding convertible debt, the completion of a 1-for-10 reverse stock split, and the Company’s transition from Nasdaq to the OTC market.

In aggregate, more than $3.3 million of principal has been converted (out of a total of $3.8 million principal at issuance), resulting in a corresponding reduction in Company debt and an increase in shareholders’ equity. Over a relatively short period of time, this conversion activity introduced a substantial number of shares into the public market, creating temporary selling pressure unrelated to the Company’s underlying operations or asset value.

Management notes that the vast majority of this conversion activity has now been completed. The remaining unconverted balance is less than $500,000. Based on the contractual terms of the applicable note, recent conversions have occurred at a stated floor conversion price of approximately $0.76 per share, which is substantially above the Company’s current trading price. As a result, management believes that the potential for additional conversion-related selling pressure at current price levels is significantly reduced.

While these events increased the Company’s outstanding share count, they also reduced outstanding debt on a dollar-for-dollar basis and strengthened the Company’s balance sheet. The underlying value of ProPhase Labs’ operating subsidiaries and assets has not changed as a result of these capital structure mechanics.

Ted Karkus, Chief Executive Officer of ProPhase Labs, commented:

“Recent market activity has understandably focused on changes in share count, but it’s important to separate share price mechanics from underlying enterprise value. While capital structure actions can affect the number of shares outstanding and the per-share price, they do not, by themselves, change the intrinsic value of the Company’s assets. In fact, the recent conversion of debt reduced liabilities and strengthened the balance sheet. We believe the current market capitalization reflects short-term technical dislocation rather than the value of ProPhase Labs’ core assets — including the Crown Medical receivables recovery initiative, the BE-Smart Esophageal Cancer diagnostic test, and Nebula Genomics / DNA Complete — which we believe represent significant underlying value relative to today’s market levels. We look forward to providing shareholders with additional updates on these assets and their progress in the near future.”

The Company continues to focus on stabilizing its capital structure, completing near-term financing initiatives, and advancing its core business operations. Management believes that recent trading volatility reflects temporary technical factors, rather than changes in the Company’s long-term strategy, assets, or growth prospects.

ProPhase Labs remains committed to transparent communication with shareholders and will provide updates as appropriate.

About ProPhase Labs Inc.

ProPhase Labs Inc. (OTC: PRPH) (“ProPhase”) is a next-generation biotech, genomics and consumer products company. Our mission is to build a healthier world through bold innovation and actionable insight. We’re revolutionizing healthcare with industry-leading Whole Genome Sequencing solutions, groundbreaking diagnostic development, such as our potentially life-saving test for the early detection of esophageal cancer, and a world-class direct-to-consumer marketing platform for cutting-edge OTC dietary supplements. We develop, manufacture, and commercialize health and wellness solutions to enable people to live their best lives. We are committed to executional excellence, smart diversification, and a synergistic, omni-channel approach. ProPhase Labs’ valuable subsidiaries, their synergies, and significant growth underscore our potential for long-term value.
www.ProPhaseLabs.com

Forward-Looking Statements

Except for the historical information contained herein, this document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our strategy, plans, objectives and initiatives, including our expectations regarding the future revenue growth potential of each of our subsidiaries, our expected timeline for commercializing our BE-Smart Esophageal Cancer Test, our expectations regarding future liquidity events, the success of our efforts to collect accounts receivables and anticipated timeline for any payments relating thereto, and our ability to successfully transition into a consumer products company. Management believes that these forward-looking statements are reasonable as and when made. However, such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties include but are not limited to our ability to obtain and maintain necessary regulatory approvals, general economic conditions, consumer demand for our products and services, challenges relating to entering into and growing new business lines, the competitive environment, and the risk factors listed from time to time in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and any other SEC filings. These forward-looking statements are subject to risks and uncertainties and actual results may differ materially. Details about these risks and uncertainties can be found in our filings with the SEC. The Company undertakes no obligation to update forward-looking statements except as required by applicable securities laws. Readers are cautioned that forward-looking statements are not guarantees of future performance and are cautioned not to place undue reliance on any forward-looking statements.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Media Relations Contact:

Investor Relations Contact:

Dave Gentry, CEO
RedChip Companies, Inc.
1-800-REDCHIP (733-2447)
1-407-644-4256
PRPH@redchip.com

Retail Investor Relations Contact:

Renmark Financial Communications
John Boidman: jboidman@renmarkfinancial.com
Tel.: (416) 644-2020 or (212) 812-7680
www.renmarkfinancial.com

FAQ

How much convertible debt has ProPhase Labs (PRPH) converted as of Jan 5, 2026?

More than $3.3 million of principal has converted out of $3.8 million issued.

What is the remaining unconverted debt balance for PRPH after recent conversions?

The remaining unconverted balance is reported as less than $500,000.

At what conversion price did ProPhase Labs recent note conversions occur (PRPH)?

Recent conversions occurred at a stated floor conversion price of approximately $0.76 per share.

Did ProPhase Labs (PRPH) complete a reverse stock split and market move?

Yes — the company completed a 1‑for‑10 reverse split and transitioned from Nasdaq to the OTC market.

Why does ProPhase Labs (PRPH) say its stock price was volatile recently?

Management attributes volatility to accelerated convertible debt conversions, the reverse split, and the move to the OTC market creating temporary selling pressure.

Do these capital‑structure actions change ProPhase Labs’ underlying asset value (PRPH)?

Management stated these mechanics did not change the intrinsic value of operating subsidiaries and core assets.