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  4. [8-K/A] ProPhase Labs, Inc. Amends Material Event Report

ProPhase CEO Shows Confidence with Personal Loan Deal and Major Warrant Package

Filing Impact
(Neutral)
Filing Sentiment
(Neutral)
Form Type
8-K/A

Rhea-AI Filing Summary

ProPhase Labs filed an amended 8-K to disclose material loan agreements executed on June 22, 2025. The company entered into two identical loan arrangements:

  • Two $500,000 non-convertible loans with: - CEO/Chairman Ted Karkus (related party transaction) - An unaffiliated investor
  • Key loan terms: - 20% original issue discount - 10% annual interest rate - 12-month maturity - Secured but subordinate to other potential lenders up to $6M - Prepayment allowed without penalty
  • Each loan includes 500,000 unvested warrants to purchase common stock at $0.60 exercise price, subject to shareholder approval of authorized share increase

The Audit Committee approved the related-party transaction with Karkus, who receives a $10,000 non-accountable expense reimbursement. The warrant issuance was made under Securities Act Section 4(a)(2) exemption and Rule 506 of Regulation D.

Positive

  • None.

Negative

  • Company secured high-cost emergency financing with 20% original issue discount and 10% interest rate, indicating potential liquidity concerns
  • CEO Ted Karkus provided insider loan of $500,000, suggesting possible difficulties in obtaining traditional financing
  • Issuance of 500,000 warrants at $0.60 represents potential future dilution for shareholders
Item 1.01 Entry into a Material Definitive Agreement Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 3.02 Unregistered Sales of Equity Securities Securities
The company sold equity securities in a private placement or other unregistered transaction.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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FAQ

What loan agreements did PRPH enter into on June 22, 2025?
PRPH entered into two identical loan agreements: one with CEO Ted Karkus (a related party transaction) and another with an unaffiliated investor. Each loan is for $500,000 with a 20% original issue discount, bearing 10% annual interest and maturing in 12 months.

What are the terms of PRPH's warrants issued in connection with the June 2025 loans?
PRPH issued 500,000 unvested warrants to purchase common stock with an exercise price of $0.60. These warrants will not vest until shareholders approve an increase in the company's authorized shares of common stock.

How is PRPH's $500,000 loan from CEO Ted Karkus secured?
The loan is secured by the company but is subordinate to other potential lenders up to $6,000,000. The company can prepay the loan at any time without penalty. Additionally, PRPH will pay Karkus a $10,000 non-accountable expense and legal reimbursement.
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 26, 2025

 

PROPHASE LABS, INC.

(Exact name of Company as specified in its charter)

 

Delaware   000-21617   23-2577138

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification No.)

 

626 RXR Plaza, 6th Floor

Uniondale, New York

   11556
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (215) 345-0919

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions (see General Instruction A.2. below):

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities Registered Pursuant to Section 12(b) of the Exchange Act:

 

Title of Each Class   Trading Symbol   Name of Each Exchange on Which Registered
Common Stock, par value $0.0005   PRPH   Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

This is Amendment No. 1 to the Current Report on Form 8-K filed by ProPhase Labs, Inc. on June 26, 2025 (“Original Form 8-K”). The Amendment No. 1 is being filed solely to include the material definitive agreements referenced in Item 1.01 of the Original Form 8-K. No other changes have been made to the Original Form 8-K.

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On June 22, 2025, ProPhase Labs, Inc. (the “Company”) entered into two identical loan agreements (the “Loan Agreements”) with Ted Karkus, the Company’s Chief Executive Officer and the Chairman of the Board of Directors, and a second unaffiliated investor. For Mr. Karkus, the Loan Agreement constitutes a related party transaction under Item 404(a) of Regulation S-K.

 

The material terms of the loan are a non-convertible loan in the amount of $500,000, with a 20% original issue discount. The loan bears interest at an annual rate of 10% and matures twelve (12) months from the execution date. The Company will pay Mr. Karkus a $10,000 non-accountable expense and legal reimbursement. The loan is secured by the Company but subordinate to other potential lenders up to $6,000,000 and may be prepaid by the Company at any time without penalty. In connection with the Loan Agreement, the Company also issued 500,000 unvested warrants to purchase shares of the Company’s common stock. Such warrants do not vest until a future shareholders’ approval of an increase in the Company’s authorized shares of common stock (the “Unvested Warrants”). The Unvested Warrants have an exercise price of $0.60.

 

The terms of the loan were reviewed and approved by the Audit Committee of the Board of Directors in accordance with the Company’s related-party transaction policy.

 

The foregoing summary of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, a copy of which is attached as Exhibit 10.1 hereto and incorporated herein by reference.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The disclosure under Item 1.01 is incorporated herein by reference. The issuance of the Unvested Warrant was made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder. The Lender represented to the Company that it is an accredited investor within the meaning of Rule 501 under the Securities Act.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

No.   Description
     

99.1

  

Loan Agreement, dated June 22, 2025, by and between ProPhase Labs, Inc. and Ted Karkus

     
99.2   Loan Agreement, dated June 22, 2025, by and between ProPhase Labs, Inc. and unaffiliated investor
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

ProPhase Labs, Inc.  
     
By: /s/ Ted Karkus  
  Ted Karkus  
  Chairman of the Board and Chief Executive Officer  

 

Date: June 27, 2025

 

 

 

Source: View Original Filing on SEC EDGAR