ProPhase Labs (OTC: PRPH) explains stock volatility, debt conversions and OTC move

Rhea-AI Filing Summary

ProPhase Labs, Inc. reported on recent volatility in its common stock and explained several technical factors affecting its capital structure. The company highlighted accelerated conversion and resale of its convertible debt, a 1-for-10 reverse stock split effective December 5, 2025, and its transition from the Nasdaq Capital Market to trading on the OTC market effective January 5, 2026, following a Nasdaq delisting that may reduce liquidity and institutional interest.

More than $3,300,000 of convertible debt principal has been converted out of approximately $3,800,000 originally outstanding, reducing debt and increasing stockholders’ equity, but adding a substantial number of shares to the public market. Management stated that most conversion activity is complete, with less than $500,000 principal remaining, and noted that recent conversions were at a floor conversion price of $0.76 per share. The company emphasized that these mechanics have not changed the intrinsic value of its operating subsidiaries and that it remains focused on stabilizing its capital structure, completing near-term financing initiatives, and advancing its core businesses.

Positive

• None.

Negative

• Nasdaq delisting and move to OTC Markets may reduce liquidity and institutional investor interest, and follows a period of significant trading volatility and capital structure changes.

Insights

Equity & capital structure analyst

Convertible debt conversions cut leverage but coincide with delisting and volatility.

ProPhase Labs describes a major cleanup of its balance sheet, with more than $3,300,000 of convertible debt principal converted out of about $3,800,000. This reduces indebtedness and increases stockholders’ equity, but also added a substantial number of shares to the market over a short period, which management links to selling pressure and recent stock volatility.

The update also notes a 1-for-10 reverse stock split effective December 5, 2025 and a transition from the Nasdaq Capital Market to the OTC market effective January 5, 2026. The company acknowledges that Nasdaq delisting may reduce liquidity and institutional investor interest. Recent conversions occurred at a contractual floor conversion price of $0.76 per share, which it states is above the recent trading price, and management believes most conversion-driven selling has now run its course.

Management emphasizes that these capital structure mechanics have not changed what it views as the intrinsic value of its underlying subsidiaries and assets, and reiterates a focus on stabilizing the capital structure, completing near-term financing initiatives, and advancing core operations. Actual outcomes will depend on future business execution and market conditions, as underscored by the extensive forward-looking statements and risk factor references.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 9, 2026

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: (516) 989-0763

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 communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14(d)-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 of Which Registered
Common Stock, par value $0.0005		PRPH		OTC Markets

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. ☐

Item 8.01 Other Events

On January 5, 2026, Prophase Labs, Inc. (the “Company”) issued a press release providing an update to shareholders regarding recent trading activity in its common stock, its capital structure, and the status of its underlying assets.

The Company noted that recent volatility in its stock price was driven primarily by short-term technical factors, including (i) the accelerated conversion and resale of a significant portion of its outstanding convertible debt, (ii) the completion of a 1-for-10 reverse stock split effective December 5, 2025, (iii) the Company’s transition from the Nasdaq Capital Market to the OTC market effective January 5, 2026, and (iv) the delisting from Nasdaq, which may reduce liquidity and institutional investor interest in the Company’s common stock.

The Company disclosed that, in aggregate, more than Three Million Three Hundred Thousand ($3,300,000) of principal amount of convertible debt has been converted out of approximately Three Million Eight Hundred Thousand ($3,800,000) of principal outstanding at issuance, resulting in a corresponding reduction in indebtedness and an increase in stockholders’ equity. The Company stated that these conversions introduced a substantial number of shares into the public market over a relatively short period of time, which management believes contributed to temporary selling pressure that management believes is unrelated to the Company’s underlying operations or asset value.

Management indicated that the vast majority of the conversion activity has now been completed and that the remaining unconverted principal balance is less than Five Hundred Thousand ($500,000). Recent conversions occurred at a stated contractual floor conversion price of $0.76 per share (subject to adjustment for the reverse stock split), which is substantially above the Company’s recent trading price. As a result, the Company believes that the potential for additional conversion-related selling pressure at current price levels is significantly reduced.

While the conversion activity increased the Company’s outstanding share count, management emphasized that it reduced outstanding debt on a dollar-for-dollar basis and strengthened the Company’s balance sheet. The Company further stated that management believes the intrinsic value of its operating subsidiaries and assets has not changed as a result of these capital structure mechanics.

The Company reiterated its focus on stabilizing its capital structure, completing near-term financing initiatives, and advancing its core business operations. Management stated that it believes recent trading volatility reflects temporary technical factors rather than fundamental changes in the Company’s long-term strategy, asset base, or growth prospects, although the market price of the Company’s common stock may continue to be volatile and there can be no assurance regarding future stock price performance.

A copy of the press release is furnished as Exhibit 1.1 to this Current Report on Form 8-K.

The information furnished under this Item 8.01, including Exhibit 1.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically so incorporated by reference.

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.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

No.		Description
1.1.		Press Release dated January 5, 2026
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant 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: Friday, January 9, 2026

FAQ

What did ProPhase Labs (PRPH) disclose about recent stock trading activity?

ProPhase Labs explained that recent volatility in its common stock was driven mainly by short-term technical factors, including accelerated conversion and resale of convertible debt, a 1-for-10 reverse stock split, and its transition from the Nasdaq Capital Market to the OTC market.

How much of ProPhase Labs’ convertible debt has been converted?

The company reported that, in aggregate, more than $3,300,000 of principal amount of convertible debt has been converted out of approximately $3,800,000 of principal outstanding at issuance, reducing indebtedness and increasing stockholders’ equity.

What is the remaining balance of ProPhase Labs’ convertible debt?

Management indicated that the vast majority of conversion activity has been completed and that the remaining unconverted principal balance of the convertible debt is less than $500,000.

At what price were recent ProPhase Labs debt conversions completed?

Recent conversions occurred at a stated contractual floor conversion price of $0.76 per share, subject to adjustment for the 1-for-10 reverse stock split, which the company states is substantially above its recent trading price.

What stock exchange does ProPhase Labs common stock trade on now?

ProPhase Labs stated that its common stock transitioned from the Nasdaq Capital Market to trading on the OTC market effective January 5, 2026, following a Nasdaq delisting that may reduce liquidity and institutional investor interest.

How does ProPhase Labs view the impact of these capital structure changes on its business?

The company emphasized that while conversions increased outstanding shares, they reduced debt on a dollar-for-dollar basis and strengthened the balance sheet, and management believes the intrinsic value of its operating subsidiaries and assets has not changed as a result.