Q3 2023 ProPhase Labs Inc Earnings Call

Speaker 1: Good day and welcome the pro phase labs incorporated third quarter 2023 financial results in corporate

Good day and welcome the Prophase Labs incorporated third quarter 2023 financial results and corporate.

All participants will be in listen only mode.

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Speaker 1: After they are patient, they're way not opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the conference over to Mr. Ted Farkas. CEO , please go in.

After a day, so that's a patient and there will be an opportunity to ask questions.

Note that this event is being recorded.

I'd like to turn the conference over to Mr.

Partners CEO. Please go ahead.

Speaker 2: Thank you, Nick, and thank you everybody for joining. I'm actually really excited to have this call today.

Thank you Nick and thank you everybody for joining I'm actually really excited to have this call today.

Speaker 2: because we are at an inflection point in the company. In fact, we're going through an inflection point in our company over the last couple of quarters and over the next couple of quarters, but I am tickled pink with how well things are going in our development state subsidiary.

We are at an inflection point in the company, where we're going through an inflection point in our company over the last couple of quarters and over the next couple of quarter, but I'm tickled pink with how well things are going and our development stage subsidiaries.

Speaker 2: With that said, I want to start with the Ford looking statement. Before we get started, I would like to remind you of the company's safe harbor language during this presentation. We will make Ford looking statements, including statements regarding our strategies, plans, objectives, initiatives, and underlying assumptions.

With that said I want to start with the forward looking statement before we get started I would like to remind you of the company's safe Harbor language. During this presentation, we will make forward looking statements, including statements regarding our strategies plans objectives and initiatives and underlying assumptions. While we believe that these forward looking statements are reasonable as and when made forward looking statements are based on expectations.

Speaker 2: Well, we believe that these forward-looking segments are reasonable as and when made, forward-looking segments are based on expectations that involve risk, and uncertainties that could cause actual results at different materially. These risks and uncertainties include that are not limited to our ability to obtain and maintain necessary regulatory approval, general economic conditions, consumer demand for our product 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 filings to the FCC.

Risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include but are not limited to our ability to obtain and maintain necessary regulatory approval general economic conditions consumer demand for our products and services challenges relating to entering into and growing new business like the competitive environment and the risk factors listed from time to.

Time in our filings with the SEC filings.

This call will present non-GAAP financial measures such as adjusted EBITDA reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC prior to this call and available on our website alright, a couple of I always like to start with a couple of shout.

Speaker 2: This call will present non-GAAP financial measures, such as adjusted EBIDA, reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release, furnish the SEC prior to this call, and available on our website. All right, a couple of, I always like to start with a couple of shout outs.

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Number one think equity done a phenomenal job.

Speaker 2: Number one, think equity, done a phenomenal job.

Speaker 2: working with our investment bankers over the last three years. Not only did they do a large race for us, but they were instrumental in finding us some great assets that we acquired over the last 30 years

Working with our investment bankers over the last three years not only did they do a large race was but they were instrumental in find it has some great assets that we acquired over the last three years.

Speaker 2: And some of those assets are the assets that are going to bear very significant fruit, I believe, on behalf of our company going forward. We also have excellent coverage by H.C. Wainwright, by Joshua Levine at Third-Screen Research.

And some of those assets or the assets that are going to bear.

They are very significant fruit I believe on behalf of our company going forward. We also have excellent.

Excellent coverage by H C Wainwright.

Joshua Levine third Scream research and of course Love Diamond equity Research Hunter Diamond I sat out the Hunter.

Speaker 2: And of course, love, diamond equity, research, hunter diamond, shout out to Hunter. So thank you all so much. And finally, red mark, I do virtual non-deal road shows, presentation.

Thank you all so much and finally red Mark I do virtual non deal Roadshows presentation right now about once a month, we actually have one coming up next Thursday, the 16th I like to keep our shareholders up to date on what's going on so I like to do it B N V. Our oh at the virtual.

Speaker 2: right now about once a month we actually have one coming up next Thursday to 16th. I like to keep our shareholders up to date on what's going on. So I like to do a VN or VR.

Speaker 2: You know, it's a virtual presentation. We go through the company presentation, which is on our website. I update that presentation regularly. I believe we just updated very, very recently. So feel free to go to our website if you want to get into more details about our company.

<unk> presentation, we go through the company presentation, which is on our App on our web site I update that presentation regularly I believe we just updated it very very recently so feel free to go to our website. If you want to get into more details about our company.

Speaker 2: Okay, so with that said, I don't like to prepare a lot of remarks with these calls and everybody knows I love to talk, but I love to get into the Q&A. So I'm going to give everybody...

Okay, so with that said I.

I don't like to prepare a lot of remarks for these calls and everybody knows I love to talk but I love to get into the Q&A, So I'm going to give everybody.

Speaker 2: Sort of stream of consciousness just off the top of my head because I live and breathe our company every day And I live and breathe everything that we're doing and I just like to explain to everyone what we're doing Because I think that you will feel very good at the end of this call If I speak that way as opposed to reading two pages You know that I so in any event

Sort of stream of consciousness, just off the top of my head because I live and breathe Our company every day and I live and breathe everything that we're doing and I'd just like to explain to everyone. What we're doing because I think that you will feel very good at the end of this call.

If I speak that way as opposed to reading two pages.

You know that I so in any event.

Where do I start.

Speaker 2: When I start with our accounts receivable, actually, because people ask questions about that every quarter, I'm sure I'm going to get some questions as quarter about it. People are going to ask about our finances. We're in a bear market for micro-cap development stage companies.

Why don't I start with our accounts receivable actually because people ask questions about that every quarter I'm sure I'm going to get some questions. This quarter about it people are going to ask about our finances.

We're in a bear market or Microcap development stage companies, we came out of it for a little while late last year and at some point this year with interest rates just really took off.

Speaker 2: We came out of it for a little while, late last year, and at some point this year with interest rates just really took off. It really just...

It really just killed.

Speaker 2: the ability to raise capital and that kills microcaps development space companies that are burning cash that need more cash. And I believe in the biotech industry, the valuations relative to liquidating value, relative to cash on hand, the valuations had never been lower. So it's an incredibly difficult

The ability to raise capital and that kills Microcap development stage companies that are burning cash that need more cash.

And I believe in the biotech industry, the valuations relative to liquidating value relative to cash on hand, the valuations have never been lower so it's an incredibly difficult time.

Speaker 2: for micro-cathed development states companies. So, and then people ask, well, what about our accounts receivable? Because then they worry, do we have the capital that we need to develop the assets? And I make it very clear in our press releases.

Microcap development stage companies, so when people ask well what about our accounts receivable. Because then they worried do we have the capital that we need to develop the assets and I make it very clear in our press releases on.

Speaker 2: I'm the largest shareholder in our company. I care about our shareholders more than anything. I even tell the employees that I'm very loyal to our employees. We have a great set of employees that have really evolved over the last year. But number one, shareholders come first. I don't.

I'm the largest shareholder in our company I care about our shareholders more than anything I, even called the employees.

I'm very loyal to our employees, we have a great set of employees.

It really evolved over the last here, but number one shareholders come first I don't.

Dilute shareholders, if I don't absolutely have to I never have I'm I I'm not aware of ever diluting shareholders with any of the raises that we've ever done and I have no current intention nor are there any prospects of having to dilute shareholders now or anytime soon.

Speaker 2: Dulute shareholders if I don't absolutely have to I never have I'm not aware of ever deluding shareholders with any of the raises that we've ever done and I have no current intentions nor are there any prospects of having to dilute shareholders now or anytime soon.

Speaker 2: which also means that those that are still short out out there have no idea how you're going to cover because it's not because we're going to do a raise at some point because there's absolutely nothing planned to do a raise for our parent company, ProFaceLabs. Specifically as far as the accounts are concerned, our accounts are achievable as I've explained in the past.

Which also means for those that are still short out out there have no idea, how youre going to cover because it's not because we're going to do a raise at some point because there was absolutely nothing planned to do a raise for our parent company Prophase labs.

Specifically as far as the accounts receivable is concerned.

Counts receivable as I've explained in the past.

Is based on.

Combination of collecting on those receivables, but also operating in a business that generates new accounts receivable. So at year end. For example, we had about $37 million at year end 2022 we're at about $37 million in accounts receivable, we in the first half of the here I believe we.

That on a.

A little less than half of that amount, but we had new accounts receivable, but because we were still doing COVID-19 testing business in the first half of the year, that's what we're collecting on that.

Given that we're no longer.

It's no longer a public health emergency and a significant percentage of our accounts receivables from Covid testing. The insurance companies are now paying more slowly than they used to but they are paying but they're dragging it out and there's nothing that we can do about it so.

We do have dollars coming in from accounts receivable in fact from and I'd also point out that from the second quarter to the third quarter. Our accounts receivable dropped from 39 million to 33.4 million. So they dropped more than $5 million. While we were still doing business and understand we're also doing business now with nebula genomics.

For which we have accounts receivable in fact, we have some significant accounts receivable at nebula genomics.

And and also with formalized so the accounts receivable we are collecting and then it just becomes a question of time in the accounts receivable with the dollars flowing in to the dollars flowing out and developing our company to build our nebula genomics lab.

Acquired are acquiring a lot of our state of the art equipment hiring a lot of people building a lot of infrastructure.

And we believe it's going to pay off in a huge way in the current year and I'm I'm going to get and going into next year and I'm going to get into that in a moment, but I just wanted to give you sort of the big picture.

And honestly. This is the one frustration I have is that the accounts receivable comes and slowly I'll be honest with you. It puts pressure on me as the CEO, but we have plenty of Avenue. So we're watching the accounts receivable flow in on a weekly basis, and if we need more capital I don't know that we do we have access to a mortgage it formalized we own a.

Cancel building, we own on 12 acres across the World Walmart is valuable land and property. We have the significant accounts receivable that we could set up a credit line again, so to the extent.

But we need to raise additional capital we can do so without doing an equity raise and without doing anything that would harm our shareholders. Alright. So I just wanted to put that to rest because that seems to be a major concern at virtually every development stage company at the current time alright.

Having said that let's talk about some really positive things and what I'm also gonna stay as the pipeline. So all this is I'm going to talk about formula That's what I'm going to talk about our that's our a lot of things manufacturing facility I'm going to talk about nebula genomics both of these subsidiaries.

Our growing dramatically in value as we speak and I believe that sometime early next year.

It is possible that.

We could create liquidity events, where some of these subsidiaries.

And there is a number of.

Different possibilities for what we could do but it would represent values that collectively I believe would be significantly greater than the entire market cap of the company.

No.

I only mention this now.

Because my point is why would we raised capital for Prophase labs, the public company and dilute shareholders. When we have underlying assets that are so valuable that we potentially could raise capital to work.

Without diluting, our shareholders and because I am shareholder friendly. This is the way I stake my background is on Wall Street. So rest assured I believe you know if you're worried about the stock price.

I believe the future is very bright from a capital markets point of view.

Let's get into the business is a little bit and then I'll go to the Q&A I'm happy to start.

Formalized we did a press release not that long ago I reviewed everything I don't want to go too much into it today radar our last press release on formalized and and of course, our press release today.

Item line is.

We're in a sweet spot in an industry, where we've owned a state of the art manufacturing facility for 30 years and it just so happens we're at a point in time, where capacity around the country and around I believe globally has diminished.

Significantly and demand has virtually never been greater and so we have large some of the largest licensed brands in the world.

Wants to give us as much business as we can handle I believe theoretically that if we had the capacity right now we could be doing $100 million of revenues right now.

And earning pretax $20 million to $25 million on that business.

Yeah.

We're not doing $100 million revenues right now you know where to upgrading at like eight to 10 million, we have equipment come in.

Yeah.

Short term this month, that's going to increase our capacity to $15 million.

In the month of December so going into the first quarter.

Our revenues are going to be up dramatically because we already have the man for that $15 million of business.

And we also instituted price increases so on our base business or.

Our margins are going to improve significantly and on our new business.

Our margins are even better so all of a sudden formalized is going to start generating nice profits that will contribute to the bottom line.

And then taking it one step further in the second quarter, we have a new laws. His line and all the ancillary automated equipment that should take us to 30 or even $35 million of capacity run rate by the end of the second quarter, which means starting in the third quarter.

Our goal is to be generating at least $30 million of revenues and generating pretax profit.

At least.

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Two seven or even $8 million of pretax profit.

So those are serious numbers.

So think about the swing in our earnings and in our cash flow and in our EBITDA just in the next quarter or two different formulas and understand when I talk about $30 million to $35 million.

Of capacity.

We already have the demand for that as well right now and that's without.

The two big lessons bread don't want to give us all their business. So it gives you an idea of the dynamics.

Oh, formalize and what's going on there and I had been told don't quote me on this but the private equity will pay 10 to 15 times pre tax.

So you can start to see what the numbers could look like and feel like very quickly in the coming quarters.

And again, if you read the press releases and we're doing this we already have the plans for it we have two more license lines already ordered that are coming in late next year.

That are going to take us up to and depending on which press release in which presentation and you know the numbers, it's not an exact science.

We're talking $60 million to $80 million revenues, but understand that's based on a three and a half day work week now you have to have downtime.

For maintenance and things like that but you don't need three and a half days of downtime then it's a matter of making sure we have enough employees and it's one of the reasons why we're bringing a lot more automated equipment, but in addition to that we have to find the supply of employees to build it out. So we don't know sitting here today, what the numbers are going to be but there's a potential.

That potential that our capacity could be $80 million to $100 million by the end of next year.

And could you imagine if we were generating 20 $25 million of pretax.

And multiplied 10 to 15 times that I mean, we're talking about a facility that could be worth $300 million now I don't want to get carried away I'm not suggesting that's going to be worth that I'm not saying, that's even our objective.

But the point is without kind of potential and a market cap of our company trades around $70 million to $80 million.

We have a manufacturing facility that could.

Be worth significantly more than the whole market cap of our company next year by itself.

And again my background is in investment banking.

On Wall Street, and so I'd be silly not to pursue all avenues in that regard.

I can talk more in the Q&A, but it just gives you a little bit of background and I'm not suggesting we're actually doing a raise on one of our subsidiaries are that we're we're doing anything at present I'm just explaining that we do have options available to us. So that our shareholders are rest assured that I'm not going to do what so many other.

Microcap development stage companies doing that blindsided with a an equity raise it's simply not happening at prophase labs the power company.

And you know I can't guarantee you know at.

At some point in the future something will change, but I can tell you for the foreseeable future don't have the slightest interest in such an activity okay.

Nebula Genomics Nah Forum allows to me don't want and sell to anybody to me, it's sort of a boring Ho Hum business.

Well one of our senior employees here, who has who is working on this there's no doubt. This is very exciting and yes. It is very exciting from a numbers point of view, it's not exciting from our point of view, it's not like biotech.

Alright, I felt like development stage cancer tests in cancer therapeutics and things of that nature.

But formula you know obviously its exciting from a numbers point of view the demand is there or just how quickly we can execute on.

On building the capacity and the one thing I can tell you look at my history for.

For 40 years, I've done nothing but execute and.

Executing four formalized to me, it's a no brainer, probably one of the easiest things I've ever had to deal alright, and I'm not hands on personally, but it's easiest thing as a company.

That I've ever seen it that it's not a guarantee it's going to happen, but I can't see why we're not going to execute on our significant.

Clearly in a significant way now.

Nebula genomics, what's interesting about that completely different set of dynamics and yet.

The future potential is even greater than formalize so.

What's interesting about nebula genomics.

Is that whole genome sequencing this was truly.

The vision of Georgia Church, 20 years ago, and it's just coming together now and what's interesting is whole genome sequence.

Dean.

Didn't explode in a big way.

Previously.

For no reason other than price.

And now the prices coming down.

Medical doctors physicians academic researchers medical research.

It's all starting to look much more seriously at whole genome sequencing and that's not to say that the academicians and the researchers werent already.

Doing whole genome sequence research.

But.

I'm talking about levels of research, where this business is now literally exploding before our eyes because the price.

And you got to understand there was one company that had a monopoly on whole genome sequencing.

For a very long period of time, they kept pricing very high because they kept their pricing so high.

It D motivated consumers.

And D motivated medical researchers from doing more research.

No.

New company, not a new company, but new to this country.

Just settled litigation at the beginning of the year, where they can bring in equipment into this country, where the first laboratory.

In the.

Our country to have their high throughput extremely efficient equipment for whole genome sequencing.

Where we can provide pricing at a lower price than any laboratory in the country.

It is such an incredible statement I can't believe our Microcap company is making this statement that's it yes, it's an accurate statement.

And so what was interesting when we were just.

Selling direct to consumer online.

I didn't really feel.

The business taking off.

The way it should and more it was growing very nicely don't get me wrong.

But from a small base and so if we say its growing 50 or 100% from a small base like big deal, it's not meaningful to the numbers.

And we had to advertise to generate that business, but now.

We have a business that doesn't require any advertising no cost advertising it just getting the word out.

We're the low cost provider of whole genome sequencing in the country.

And the business is coming to US we were just at a dinner.

Genomics conference.

And the responses were tremendous.

And.

I have a team here that is doing a phenomenal job now of building that business.

So yes. He is my son, he doesn't have the same last name's, Jason carcass built the Covid testing business, which he was doing $100 million of your revenues is now building our genomics business.

Along with.

Jud lacking and who is becoming a senior employee of our company and.

I believe that theyre going to kill it the same way they did with the Covid testing and so what's interesting about this Jason and I had the approach where years ago with the Covid testing business, where we took the approach of Kevin Costner in field of dreams if.

If you build it they will come and we built an enormous COVID-19 testing lab and then we did an enormous amount of business the issue with that business.

Whereas the Covid testing lasted two years originally everybody thought it was gonna be one year. It ended up being two years now at this point the only people getting COVID-19 test it or they're going into a hospital and they get tested in the hospital. So we absolutely not even in the Covid testing business, but now it's interesting Jason I had the same reaction, which is if you build it they will come.

With the genomic with the whole genome sequencing testing in our lab and sure enough. We built a state of the art lab.

In Garden City, New York.

And they are starting to come and the difference between the Covid testing business in the genomics business as Covid testing business wasn't going to last long term and it didn't.

The genomics business is and that's.

Where it's.

In its infancy for what's going to happen to this business is going to explode.

Going forward and we.

Our right now perfectly situated as the leaders.

And whole genome sequencing and word is spreading quickly we have major opportunities who did an enormous amount of research. These are companies that scoured the country looking for labs to do whole genome sequencing and they said to US there wasn't anybody that even came close to our pricing and our pricing.

<unk> still has healthy profit margins for us and what's nice about the b to B business, It's repeatable business month after month year after year.

You can rely on it we have very healthy profit margins, we don't have to spend on advertising you can plan it out and so we're going from a direct to consumer business, where we have to spend money on advertising.

They'll make a nice nice money nice profit to a b to b business that can blow away the direct to consumer business. It's repeatable has higher profit margins.

And we'll be doing is an incredibly valuable business.

Outsiders.

What's also interesting is some of the largest labs in the country, they're dabbling, we're getting their feet wet in the business of whole genome sequencing.

But they aren't doing it in a big way and one of them.

I mean, it's kind of humorous to see what one of the largest labs in the country.

Offers for pricing for whole genome sequencing in two and three times the price that we offer and they have no ability to compete with us, but they're not even really in the business.

During the business on very expensive.

Equipment with expensive consumables, they can't even if they wanted to compete with us they couldn't and so if somebody wants to build out a lab like ours. They first have to develop a relationship with the company that we have a relationship with they didnt have to develop.

It would have to build out the lab acquire the equipment, bringing the genomics professionals. They would have to negotiate for pricing that would have to do all these things that's going to take time.

And so I don't know what our lead time is but our lead time might be a year might be year, and a half and if somebody else gets into the business.

There's going to be so much business to go around that it's not like they will be taking business from us.

This will finally be in a year or year and a half there might be another lab that can do what we do but short term there isn't a lab in the country that we do what we do.

So that gives you a little bit about nebula genomics I can clarify further in our Q&A.

I would just like to mention I don't know often spend a lot of time.

On the pure biotech players that sort of esophageal cancer tests, a linebacker cancer therapeutics.

<unk> I'm not quite I mentioned on this call the stock market doesn't care I just want you to know that we have ongoing studies, where we're getting really really great results I don't think the market's going to care anytime soon so I don't even bother to mention that we're not spending a lot of money on it but it's a hidden asset that could be very valuable one.

And as and our esophageal cancer test.

We have so many avenues of excitement with our esophageal cancer tests, and I'm again, I'm not going to complain too much on this call or exploit whatever esophageal cancer tests on prior calls, but we have multiple avenues.

For this task.

Including.

Testing not only for whether or not you have esophageal cancer today.

Whether you are at high risk or low risk and that's what the insurance companies tell us. They are really interested in that as a really big deal. We also have the ability with our technology to potentially provide this test without an endoscopy, if we do that forget about it it's game over we're developing that now.

And finally, we made with our technology and our knowhow be able to develop a esophageal cancer therapeutic so we're going to have a lot of directions with it we are absolutely.

Our timeframes are totally in line with what I've guided our shareholders all year, we're looking to commercialize it early next year get CPT codes early next year and quite frankly, we're continuing to get really great results.

And I'm really looking forward to developing or stopping to kill cancer test.

And finally I mentioned in the press release equity or is getting close at hand, we have this great clinical study going on it was oversubscribed with patients and the results. So far have been really really good and so I can't wait to get some of the preliminary results that we can use to finalize the claims that will.

On the packaging, so we can actually commercialize the product.

And so with that.

I just wanted to check a couple of quick notes, if there's anything I want to mention.

I will I'll just mention one more thing on our nebula genomics with our GAAP versus non-GAAP, we have subscriptions where we.

We have to recognize the revenue over three years, even though we got the revenue upfront and there was minimal cost to to provide the services of the subscription. It's a little frustrating we are correcting that now, but the beauty of the B to B is bill that's a different business model there may not even be subscriptions involved.

So there will be we won't have these GAAP versus non-GAAP delays you will see I believe very strong numbers from Nabila next year and understand once that happens we go from a company, losing money quarterly too.

Company, making money quarterly I can't tell you, which quarter, we're going to have that change, but when we do the numbers are going to start growing I believe they're going to start growing dramatically every quarter sequentially thereafter, both businesses are going to explode and revenues.

And profitability and therefore earnings next year, I can't tell you, which quarter exactly right now and I don't want you to hold me to it but the point is the amount of money, we're losing when you look at our adjusted EBITDA, it's minimal compared to the opportunity and what we're building.

Managing the cash flow so it's not an issue.

So we have exciting times ahead, and it's just a matter of patience.

Or when we get out of the bear market, but.

Last last point that I'll hand, it over the Q&A it doesn't matter if we're in a bull market or a bear market. We're building the underlying value of the company both markets in bear markets are have no effect on our ability to build the capacity and generate revenues and earnings for formalized and the same is true for nebula genomics.

If you look at it from that perspective, the underlying value of our company I believe is growing every single day.

At some point the stock market will recognize it next year if not later this year, but whether it does or it doesn't I will bring out the value in other ways, regardless of whether we're in a bull market a bear market.

Just wanted to give you all that that perspective, and without Nick I'd love to hand, it over I hit the 30 minute, Mark and I'd love to hand, it over for Q&A.

Thank you Sir well now begin the question and answer session to ask a question Press Star then one on your Touchtone phone.

We are using a speakerphone please pick up your handset before pressing the keys.

Your question. Please press Star then two this time, we'll pause momentarily to assemble the roster.

First question will be from Adam Waldo Lismore partners LLC. Please go ahead.

Good day, Ted I Hope you can hear me okay. Thanks for taking my questions Yeah sure.

So when we met last quarter are in the second week in August you outlined for the market a couple of different ways that you could access near term bridge liquidity from your existing balance sheet capacity to bridge the modest.

Free cash flow of negative performance that you expect over the next couple of quarters until formal lows and the other businesses really start to generate significant free cash flow, which based on your commentary this quarter looks like it's going to be in the second half of 'twenty. Four so right now we're kind of run rate, a $3 million to $4 million, a quarter and negative free cash flow.

Forget adjusted EBITDA.

You have $38 million in accounts receivable on your balance sheet that you indicated last quarter were very high quality and it could be secure cloud you have the ability to take a more mortgage on the farm Lowe's business and you have various public market and private equity opportunities to raise capital on any of the different subsidiaries.

We're in a bear market, where in a bear market. We're typically the only way you get your your stock to kind of move in the right direction relative to the underlying fundamental value that you're creating as you know as a private and public market Sky is by deploying liquidity to change the trajectory of your stock price.

So what steps should we expect you to take over the next quarter or so are on the accounts receivable securitization front to free up liquidity there both for funding operations operational cash flow needs as well as deploying for share repurchase and what kind of capital do you think you could raise from a mortgage.

On the formulary as a fixed asset base separate from any capital markets activities.

Wow that was a mouthful that wasn't right.

Yeah, sorry, no that's right I don't know I love it and the truth of the matter I May have said this on the last call I don't remember, but if you ever want to come work for Prophase Labs I think.

Alright, I didn't have a day job. Thank you.

Okay. The answer to your question.

Is you really to some extent answered your own question.

I would just say that in terms of profitability of the company I think that the profitability.

I don't want to speak out of line the profitability of the company is going to start improving it just a question of how much it improves in which quarter for which subsidiary, but any subsidiary that improves and profitability will improve the bottom line as well. So for example, formalized we add.

We have the automation equipment coming in this month.

And we have price increases that will start to kick in in December and January the automation equipment should be up and running by the end of the month. So in the month of December all.

All of a sudden the profitability the revenues and profitability are formulas are going to improve.

Actually significantly and so you look at the first quarter, we're going to have we're going to be at a run rate.

Probably 50% higher.

Then what we're doing right now and <unk>.

Improved gross profit margins not only on the existing business from increasing pricing to everyone, but the new business, which has even higher gross profit margin. So our formalized business is going to improve in profitability short term.

And then once we get that second line it improves dramatically.

Alright, because then we're going to double so where our business can be a footnote that says look I in December January.

Hum.

Question, well you asked a long question I'm going to give you the fully after I heard every word.

Fair enough fair enough. Okay. So we so you're going to see those numbers improve every quarter, which means that the drag from the negative cash flow is going to be less and less each quarter. The same is true of nebula I, just don't know the timing, but we have the monster business opportunities.

Jason and.

Nebula team are developing right now I can't tell you which month.

Actually maybe I can't tell you, which months I can't tell you what's week theyre going to kick in but it's short term.

Once these businesses start to kick in our revenues are going to improve for nebula and our profitability. It doesn't mean, we will be profitable, but our losses will be left with I don't know is that turning point, where we actually have bottom line profits in both subsidiaries.

Actually in Formula It should be in December we should be profitable and then those profit start to expand and that would be it looks a little more complicated because we have a lot of overhead to build the business, but once the once the business starts to take off the overhead becomes much less significant and all of a sudden you see a lot of profit flow to the bottom line and that's.

Can it happen could happen very very quickly to be honest with you and that's why we're trying we have we're the only laboratory in the country with high capacity.

Whole genome sequencing equipment.

As at the price at the low price points that we have.

And so and we're the first labs in the country to get the next <unk>.

Piece of this equipment were next in line for the next piece of equipment. So our capacity is going to go up significantly and we have businesses that want to bring us an enormous amount of high margin business to us. So those numbers are going to start to improve so whatever the negative cash flow is now it's going to be I believe it's going to be less and less each quarter.

At the same time and don't quote me on that on a short term basis, the negative cash flow with a weak acquire some more equipment that we depreciate a little bit more things.

Things of that nature.

But in general all those numbers are going to be improving.

And at the same time as I mentioned, yes, we do have access to a mortgage for them a lot of the interest rates are higher but the way I look at it even though the interest rates are higher than they would've been six months ago whatever the interest expense is on any money that we raise.

And the debt markets right now even if it's at a higher interest rate the cost of that for one year of pales in comparison, it's a rounding error compared to the opportunity and the revenues and earnings that I think that we're gonna be generate so we do have access to capital both mortgage at formalized as well as on our accounts receivable or accounts receivable is improving.

Actually even as I mentioned, just from the second quarter to the third quarter. Our accounts receivable went down from 39 million to $33 4 million. It will continue to improve we continue to receive dollars are flowing in for Matt I. Just don't know if that's going to accelerate that's the frustrating part, but they are flowing in from that so.

So I think that between.

Our credit facility on accounts receivable not to mention we have a very strong asset base as well as the mortgage debt that will more than bridge us that don't quote me, it's not a guaranteed forward looking statements, but as of today that will more than bridge us.

When the company is profitable and well more than bridge us.

Two.

The options that we may have if we want to explore other ways to bring out value.

At our subsidiaries when you have.

Subsidiaries like ours that are exploding.

<unk> revenues and earnings and dynamics next year, it will create opportunities for liquidity events. If we choose to go down that path and I would certainly go down a path like that before I would ever do anything to raise capital for prophase labs and powered company. So I hope I answered. Your question, we took up a lot of time, just with you I would like to.

Move toward next question, but thank you Adam for your questions and your support much appreciate it.

Nick if you could go to the next question. Please.

That'll be from Yung Chen H C Wainwright and company. Please go ahead.

Hi, Thank you for taking my questions could you give us some color within the total revenues for the third quarter, how much of that was based on testing and whether you expect those testing relative to.

Pretty much disappeared in the fourth quarter.

Yes, So post Covid testing has disappear in fact, the shipyard in the third quarter.

I noticed there was a very little bit of testing at the beginning of the quarter I apologize I don't if we didn't break it out and I can get those numbers for you afterwards or CFO cats.

I don't know what the revenues were at it obviously had to be minimal. It was a very small number of tests, we did put that into the press release so the the.

The rest of the revenues are obviously nebula genomics and formalized manufacturing.

And as I mentioned as you now go into the fourth quarter those numbers start to pick up and then where they really start to pickup is in the first quarter.

I would expect a significant increase in revenues.

Actual profitability for pharma and I would also ex.

I expect.

A significant pick up in revenues and profitability for nebula, not counting I don't I don't know what the number is gonna be relative door overhead. So whether we're gonna be profitable I don't want to be quoted on which quarter, we're going to be profitable, but the revenues are going to improve significantly in the first quarter I believe these are.

My estimate to get forward looking statements, but I believe based on the indicated demand and I'm talking about it as you know first.

First of all the demand that formula as I said, we we have demand already for when we build our capacity in the second quarter. When we get up to 30 million, we already have that 30 million of demand and contract Alright, and then we have these two large license brands, who are about to go into contract with us.

And it's just a matter of how much we business, we could even do with them. So we're basically locked in on farm lives with nebula.

This is such a dynamic situation is evolving on a daily basis as I said.

Jason and Jan and the rest of our team and I don't want to call them at all all by name. We're just at this once a year major genomics conference and honestly, we were the head of the conference everybody wanted to meet with us.

And everybody knows the word's getting up very quickly that we're the low cost provider of whole genome sequencing. So how quickly can we get build the capacity how quickly can we hire more people how quickly can we get more organized and more efficient and all of that's going to happen in the next few months, we're going to have growing pains. Similarly to the experience we had with <unk>.

Testing the first few months, we had growing pains and then the revenues and already has just exploded I expect the same thing to happen with that deal I can't tell you how many growing pains I can't tell you what's months. So I hope that that was a long winded way of answering your question I can't give you more more.

Specifics on a breakdown of revenues and then what's reported but if you did do need more information I'm happy to connect you with our CFO after the call.

Thank you well the company feel comfortable to provide some.

What kind of revenue guidance.

2020 full year results earnings call.

Well I'm certainly not going to do it on this call and I'm not going to make up a number and to be honest with you. We have never given specific revenue guidance in fact, even stating I state the capacity numbers that I say, we have demand for the capacity.

I've never actually given the numbers.

So let me look into it but you should have an idea that the as I said in the third quarter there was very minimal.

Contribution from our Covid testing, so and you can assume that both formalized and liability genomics revenues will grow in the fourth quarter, but where they will really take off is in the first quarter. So you can expect a little improvement in the fourth quarter and the revenues of those two subsidiaries and then in the first quarter it.

Takes off at a really nicely.

Okay got it thank you.

Yeah. Thanks, so much I always appreciate your support and following our company.

Nick if we go to the next question. Please.

That'll be from hard Diamond Diamond equity. Please go ahead.

Hi, Great update today and thank you for the shout out.

So I wanted to maybe get some information on the supply demand imbalance for nebula genomics and our whole genome sequencing, because you've kind of broken it out for the other business and I wanted to see where you're seeing the demand from insurers is it from just big corporations and what are your thoughts on insurers potentially covering whole genome sequencing in the future.

Yeah, Great question, so none of our business the beauty of our genomics business.

Is that none of it is reliant on insurance right now and so this is an industry that literally is in its infancy. When I talk about us being in the first inning, we literally where were in the first inning here.

Talk about whole genome sequencing, you know I've been talking about for three years in.

George Church been talking about it for 20 years and Nebula genomics our company that we acquired was actually founded six years ago, but it's in its infancy.

And the gating factor was the price and that's why for instance.

The ancestry companies. They all none of them did a whole genome sequencing. They didn't they built their model. They completed built a completely different model around what are called snips. It's a type of genomic testing that study is less than 1% of your genome, which is all you really need for ancestry anyway.

You don't get a lot of great data for health and so we're just going we're in the first inning of going into health direction with learning about your genetic makeup how your genetic makeup plays well.

Diseases that you're predisposed to and which drugs or therapies to take based on your genetic makeup and I always love to say too I mean, I hate that people get cancer, but two people get cancer. They get the exact same cancer. They take the exact same drug and it works on one it doesn't work on the other or it works on both.

But it works better on one of them and worse on the other end one needs more one named plus how do you figure that out what's drug what therapy to take and what the dosing should be dosing is critically important with cancer drugs, because they're deadly they're not only killing cancer cells, killing healthy cells. These are critically important questions.

The doctors don't know the answers too and so that's why all the research is going in this direction and it's huge and so what's happening is when you say the supply demand.

The demand really is based on the pricing and so its opening up doors. The companies that didn't even think about this before so what's interesting is we're seeing demand from telemedicine companies. These are companies that have networks not only hundreds if not thousands of physicians but of millions.

Ah patients.

Just imagine.

If we did a deal with a telemedicine company that has access to millions of patients and says hey.

And goes through their physician to their physician sensitive patient Hey, we got this whole genome sequencing test you should get it it's actually at a very reasonable price right. Now we can do this with no advertising on our part.

And so just imagine the unlimited demand that can come in from that and well we have to do all we have to do is continue to build out our state of the art lab that nobody in the country can compete with it. It's it's such an incredible statement I can't believe I'm, making it but I am making it and everybody remember this a year from now that I told you.

Today, and I told you three months and six months ago, we were in the right place at the right time, and we are a leading we are the leading lab in the country in my opinion and whole genome sequencing.

Based on price, Yes, you can go to other labs to get whole genome sequencing and of course the fortunate.

But for the masses.

If you want whole genome sequencing it was always too expensive so nobody even considered it so it's like a whole new industry. It's a whole new business that is just starting up.

So it's interesting where the demand is coming from it's not just coming from academic institutions doing research.

We're having other types of interest and it's all coming out of the woodwork now that we have this great pricing there, saying Oh my God, we already have the platform to rollout your whole genome sequencing tests potentially millions of patients.

So we're in the first inning of figuring this all out there going to be some growing pains for a couple of quarters.

But I'm, telling you if I know anything I know there're nebula genomics business is going to be incredibly valuable.

Over the next six months to 12 months to 18 months.

And if people really are long term investors is exactly what you want to invest in.

But it's just amazing people love to buy high and sell low. So here. We are we have a low priced stock I don't even want to talk about the stock Oh I don't even think I should talk about the stock and yet the stock's not trading and people don't understand the potential we have here and as long as they don't have to dilute the shareholders. The risk reward is phenomenal.

So I hope Hunter I hope I answered your question, but I really love your support and I really love your work and so thanks for being on the call and asking those questions.

One more began go to the next one.

Absolutely, yes that was my only question I guess it sounds like from what I heard from you that you're seeing which I always felt made sense. The enterprise model is kind of the most efficient way, meaning going to the bigger enterprises versus the DTC direct to consumer with ads that one has worked but it seems like the easier.

Lay up is sort of reaching all these telemedicine companies that already have the patients.

Hunter you said it better than I could have that's spot on so I inherited when we acquired nebula genomics I hire I inherited a direct to consumer model, where you have to advertise alright.

Alright, and then we built out a lab so when we first bought the business.

I don't know the exact number is probably around a breakeven business.

First of all when we built the lab.

We took an enormous amount of overhead and building the genomics lab, we also converted a COVID-19 testing lab.

Some of the people transferred over but I understand now all of a sudden we're not doing COVID-19 testing and we have all the overhead and expenses of the genomics lab and we're not doing the business to support it and so all of a sudden we're losing money.

And and that's the situation we're in now but what's interesting is we're coming to a point in time, where now that we built it it's only a matter of months not quarters before that business starts to really take off and you're exactly right. It's going after these bigger enterprises that.

They don't require advertising that have the platforms that have access to.

Thousands of physicians in millions of patients and so that's one of the main avenues that I'm excited about is not the only one and I've got an academic institution and others also countries. There are countries that want to do whole genome sequencing on their population or percentage of their population.

So there's some monster opportunities out there now that the pricing has come down significantly people are starting to take notice.

Hunter. Thank you so much when they go to the next question, where you were going to run out of time and Theres still a couple of more questions. Here really appreciate your support Hunter have a great day, Nick If you go to the next question. Please.

Thank you next question will be from Venezuela.

Parents Productions LLC. Please go ahead.

Hi, Ted Thank you for a great presentation, I am inevitable user and I, sometimes think that people don't understand the capabilities and what is affordable to us as a user. The information. We received it's just amazing I think about the fact that these these million dollar researches on genetics going on and.

I'll be able to see how do I fit into that but.

But I didn't Wanna comment to reinforce what Youre, saying is that my friends in the business and the research business are telling me because of the drop in price that finally, the genetic researchers of the amount that's going on it's just exploding does this reconfirms was going on and the fact that it's being done domestically. It makes it so much attractive to too nebulous.

So the question I have for you is you talked about where we're gonna be a year from now so I'm going to be more specific we're gonna be on this conference call a year from now what are you gonna be telling me about and that would be and how profitable we are.

[laughter] so it's interesting.

Your your commentary is spot on.

And you just sort of proves my point.

This business is in its infancy, where we're just getting started here and the demand is about to explode and we quickly we're just going to spread around the country, where we're the low cost provider.

What a what a great business to be in.

But while you were speaking it reminded me. This is critically important we are about to get into genetic counseling and so the beauty of that is people that don't really know anything about whole genome sequencing would get their reports it's like okay. What's the next step what do you do with these reports they will have a genetic counselor we view their report.

With them, so we're going to build a business model around that and a partnership around that that's only going to make our offerings even more attractive.

Primarily on the consumer side.

But also understand when I start talking about.

<unk>.

These physician networks and telemedicine platforms.

The our genetic counseling could also play an important role there as well I mean after all physicians.

Typically are not experts in genetics, and so genetic counselors could play a nice role.

Complementing the physician so we're going to be developing that business as well I'm really excited about that when you say a year from now what am I going to be saying about nabila.

Well that is honestly I could be same point wasn't like a great business that we acquired for so little and sold for so much.

Alright.

You know that literally could be the conversation we indicated that we could have a year from now another conversation we could be having is well I can't believe.

How significant the revenues or where do we go from here.

We'll only be up because at that point, that's when the big labs are gonna say Wow now, we really have to get into this business, how do we get into it.

And the largest labs in the country I think will be knocking on our doors, saying, we want to buy your business.

And.

As far as the revenues are concerned I think they are going to be dramatic I don't want to put a number on it makes no sense. We're in we're in the infancy of building. This business we're at the starting point.

I'm, telling you it's like when we built out the Covid business three years ago, I didn't know where you're going to 100 million of your revenues.

No idea I would've been happy with $10 million a year in revenues and we did $100 million well, it's the same dynamics.

With our whole genome sequencing business. So I have no idea I truly don't what I'm doing is I'm building the capacity the infrastructure the efficiency the pricing putting all of that in place we have a great team in place to execute we have a team that has executed on the COVID-19 testing that they're going to execute on the nebula genomics business.

Alright, we have great people in place took three years to get the right people in place.

And now we're gonna do same thing we did with Covid testing, we can do with nebula genomics. So it's not like we're new to this business, but whereas experienced in genomic testing at this point, there's anybody in the country.

So not only do we have the best equipment and the lowest pricing, but there isn't anybody that's more of an expert that we were in in the lab and actually doing.

The whole genome sequencing and in fact, we're at the forefront in India in the state of New York, which is the most highly regulated the strictest.

We're basically setting.

We're setting precedents, where the state of New York.

Everybody else is going to follow that's how big this isn't how serious we are about it I just can't believe that the person sitting here in our Microcap company talking about alright, I hope I hope that answers. Your question I'm, certainly not giving you specifics given those dynamics, what our revenues are going to be 12 months from now.

It could be I believe it's gonna be a hell of a lot greater than what it is right now thank.

Well I mean, we're almost out of time, if we can get to the next question Hey, Dennis I'll always appreciate your support that was a great question and great commentary. Thank you very much next back to you. Thank.

Thank you next question will be from Brett Downhole retail Investor. Please go ahead.

Good How're you doing.

Can you comment it numerous times about the Coface hubs pharma larger Biopharma nebula.

Both in subsea as separate worth is greater than the current value of the prophase.

Now you say, you're not going to be doing going to do an equity raise at these prices would you consider doing an IPO or spinoff.

All of these divisions to raise their value.

Yeah. So that's a great question I don't know the exact SEC rules, but in general SEC frowns upon talking about Ipos and things of that nature are ahead of when you file.

And so I can't comment other than to say you hit the nail on the head that we will have potentially all of these opportunities and options at our fingertips and you can bet give my wall Street background and given our relationships.

With some great investment banks and as I've said I've I've worked.

Daily with think equity for more than three years now and they are experts and Microcap development stage biotech and life science companies. So we're in great hands, we have a great working relationship.

And I'm.

I'm sure based on everything that I described there going to be lots of opportunities next year, and we'll just have to wait and see what they are and we'll weigh our options at the time, but the beauty is that's why I am very confident that we're never going to have to do anything dilutive for our shareholders.

And the reason is because we're building all this underlying value in our company and what's nice the under unlike.

Sure biotech company that spending a fortune developing a cancer drug that knows they're going to have to raise more money. If they don't do a deal with major pharma people are gonna be scared to invest in their company knowing that theres a raise comment.

In our situation we're building underlying yes, we do have the cancer drug that we're developing but that's it at minimal cost to them. It's a rounding error in the scheme of things of everything else, we're doing but we have these two subsidiaries where the revenues are about to take off.

And therefore, and then the earnings will follow right behind and when you have subsidiaries, where the revenues and earnings are taking off and there is a perspective that the future is bright and when you start seeing the demand I mean, our license, but we have demand for when we built our capacity out a year from now.

And when you have that type of visibility.

Investors will pay big for that because you're not risking something like a biotech drugs that will fail, you're talking about a business model, where you can visibly see the revenues and earnings growing and you're getting a nice return on your investment. So my point is simply beat I can't tell you. If we're going to do ipos or spinouts or I shouldn't even comment on that kind of stuff, but what.

I can tell you is that.

Those will be options that will be available to us whether we're in a bull market or bear market. Because we will have businesses that are generating revenues and earnings and have visibility for significantly greater demand.

So I hope that answers your question spot on a spot on question, it's absolutely the way investors should be thinking about our company and we'll see and I believe we have time, Nick. Thank you. So much for the question and as always really appreciate your support.

Nick I think we have time for one more question.

Thank you that'll be from Paul Barker P. L. A associates. Please go ahead.

Hey, Chad thanks for taking the call.

I'm still a little unclear on the accounts receivable issue.

And Okay. I mean, you certainly sounds like you have a lot of potential with a lot of things and I hope that works out, but we also have to look them on how execution happened.

And one I don't know where you got the number $33 million for your accounts receivable.

True.

Financials, that's $38 million.

September 30th.

Oh, then I apologize I misquoted, if it's 38 million at the end of the quarter.

Okay.

And I don't know.

Well you know what Paul let me cut to the chase and that's really funny because I thought we were out of time I said, let me squeeze in one more question I hope is going to be a good question I've spent an enormous amount of time on our accounts receivable already I'm sorry. If this is the last question I have given you. The answer is these are high quality insurance companies I can't guarantee we're going to collect on.

All the accounts receivable will make that decision at year end, but we have money coming in every week from our accounts receivable. So it's not like it's not a real accounts receivable in the amount of money coming in is greater than our negative cash flow.

What are you what are they not necessarily your question Paul Let me, let me put it this way I'm sorry. This is the last question I don't want to cut you off but what is your question that Youre looking for an answer that I didn't already go over AD nauseum.

Well to me it looks like you've got at least half the accounts receivables that are over a year old.

Nine months.

So we did okay. So let me explain I have explained in some prior calls we did a significant amount of COVID-19 testing in the first half of the year.

So we collected on a significant amount of accounts receivable from last year and it was replaced by new accounts receivable from this year. So it's not the same accounts receivable. So do we still have some accounts receivable from last year, yes are we collecting on it yes in fact I'm not going to go into the details. We have one major insurance company that always has a big block of money.

From last year, and we've been negotiating with them and they agree that they owe us the money, but they want to go specimen by specimen now and drag it out instead of come to a settlement, but theyre going to pay us off substantially all of what they owe us, but it's coming in drips and drabs I'm frustrated by it obviously it sounds like you are so but I don't know what else do you want me to tell you.

Okay.

I mean, I, just don't require accounts receivable and it's flowing them at whatever rate of flows in our flows and I'm building. What I believe are multi hundred million dollar businesses I believe that we're going to collect substantially on our accounts receivable I don't know what the exact number but money is coming in every week. That's what is paying the bills every week.

Alright, well wait to see what the accounts at year end.

Alright, thank you.

Alright, I think that was my boy did I tell my Thunder.

Nick.

If you want to ask if there are any more questions or I'm happy to wrap up.

One moment. Please if you do want to ask a question. Please press Star then one.

Okay.

It looks like we're done with questions and we've come up on the hour anyway. So let me just wrap it up.

Oh, it looks like we have one more question.

Why don't you bring in.

One last question Nick.

That'll be from Mr. Patrick Patterson on publishers LLC. Please go ahead.

Ted I love, what you're doing with every one of those subsidiaries intrinsic values phenomenal I know youre going to realize all of that money for us one day.

And everybody is so excited about Nashville, and me too, but I wanted to ask you about your shop at Yale cancer test.

Such a lifesaving thing we already know it works and I know, you're having to wait for these last samples.

So my question is when.

We did 20 million it asked copies last year, I mean, I know that was one of them.

Just how do you manage to tell all the GI doctors in America. The distress is going to be there and that there is a CPT code and this thing ought to do it in other words, how do you pull it out can you talk to them, but yes. So that's yeah.

Yeah, Great Great question.

Great question.

Okay here we go.

First of all we.

One of our senior executives at our company just attended a CEO conference.

Or a health care companies and insurance health insurance companies.

And.

Universally what all the insurance company, who said to US was if you have a test.

We're happy that the test will tell you whether or not you have cancer definitively and understand right now if you get an endoscopy and.

That's a tissue specimen studied under a microscope to pathologists can study that specimen and tell you different outcomes you have false positives and false negatives, it's really back.

Our test is brooks virtually 100% accurate for telling you whether or not you have cancer now which is critically important but what the insurance companies say as well if you'd tell us that the person has cancer now that's great, but they already have cancer.

And once you get diagnosed with esophageal cancer, you die $80 to 90% of the time. So there isn't much that the insurance companies can do with that other than say you know it's it's you know disappointed it's too bad that the person has it has esophageal cancer, it's too bad it wasn't quite soon.

Yeah.

But that's what our test does it can catch it sooner alright.

Alright, so with the insurance company said was it's nice if you can recognize as whether or not you have cancer now, but the Holy Grail would be if you could tell us whether you are at high risk or low risk.

Your task can do that we will tell we will mandate to the physicians that they have to what are your tests when somebody comes in for an endoscopy.

That's where we're going with this so what's interesting is while we're already we're already talking to.

A potential very large company, where this test would fit right in their wheelhouse, if we wanted to sell at lock stock and barrel for block of money upfront.

And a royalty and its possible we go that route and the shareholders would be very happy if we go that route and what we're doing right now we hired an independent.

Highly regarded statistics company to go through all the numbers to give a potential acquirer exactly what they would need.

Okay, and that's actually why we mentioned in our press release that we hired the statistics company.

Now what.

What's interesting, though is and Ive touched on this in the past, but this was just confirmed by the Ceos of some of the largest insurance companies in the country.

Who said.

If our tests can tell you a higher low risk that's the Holy Grail and guess what that's the other part of the study that we're doing right now.

Is to figure out since our tests already and we have the IP on this we isolated the proteins.

That caused that shift that give you the indication.

That youre developing esophageal cancer.

We're working on right now are the statistics involved in figuring out.

How big a shift in those proteins tells you whether or not youre going to get a shot for Jill cancer, where they are at high risk or low risk because one thing that I realized a while ago, which I discussed with our team.

Was the fact that what people two people are at high risk of esophageal cancer.

And one changes their lifestyle and their eating habits.

And the risk goes down and the other person instead is nervous but whatever the reason is its more.

And accelerates the growth of the cancer of the cancer cells and gets esophageal cancer. That's out of the control of the test to read the mind of the person taking the test. So I was thinking there's gotta be a gray area here, what we call the yellow or Orange area, which is the warning zone, where a test will tell you if you're in the warning zone, but we can't tell you what the.

Persons going to do so what we can do though is we view the studies that have already been done and do more studies and again. These are studies on people where in some cases, we can go back to three five years.

These are people that may have been biopsied years ago, and we can actually see the outcomes and we can see based on the shifts in the proteins, where they had high risk and low risk. So that's what we're developing right now with the statistics. So that this was more than just a test to tell you whether or not you have cancer now, but whether you are at high risk or low risk once we perfect that.

It's quite possible as the insurance companies are so.

Excited about this but we don't need to sell this to a major company for big amount of money, we will be able to because I don't know that I want to build a sales force with 100 people.

Yeah.

<unk> go call on physicians around the country, who say hey, we have this great test you should really use it and blah blah blah blah blah I don't know that it's so that that just wouldn't be efficient and that that would be a reason to partner with them with a major cancer testing company alright, but on the other hand, if the insurance company says, they're going to mandate the Gis in the physicians that's a hull.

Ballgame now in addition to that with the work that we're doing and because we isolated the proteins and now we've also developed I mean I could go on and on about this but very quickly.

We're developing a brush technique, where you don't even have to get in endoscopy.

So that we're developing right now if that happens you can go into a G. I swap is not going to adopt to be yeah. Yeah. Rumbling. Your stomach you have symptoms, where you've had in endoscopy in the past yeah, Barrett esophagus, which is the precursor to esophageal cancer and you will have a brush it goes down your throat.

And with the specimens that we pick up from that brush will be able to run that on our tests.

Without an adult me, which would be incredible because then you're talking about.

The market for this.

I mean, the numbers would be so big it's ridiculous.

That's game changing and then the last piece of this I don't want to get into this but the last piece of it is with the research we're doing and with the IP that we have and with the proteins that we've isolated it's possible that we could actually develop a therapeutic out of it. So that that's much further down the road, but my point was simply to say that our stoppage youll cancer tests has enormous.

Potential ever.

Everything is going really really well with it the only reason I don't spend more time talking about it is because of the market environment that doesn't really care about development stage biotech.

And we have two operating subsidiaries between Nebula genomics.

And formalized that are going to generate significant revenues.

And generate significant profits next year and that's all we need for our shareholders to be very happy with me and our management team next year the.

The fasteners, we have these other wildcards that could be absolutely huge.

So I hope that.

That was a great question I appreciate you coming on at the end of the call past that Pat and without we ran I think we ran over time, if we wanted to set this to an hour. So I think we'll conclude the call.

Nick.

Do you see any other questions or should we go on thank you Pat.

That was the last question there is nobody else in that case, if you wanted to give the closing remarks would be perfect right now Sir.

Perfect. Okay. Thank you so much that look thank you all for joining.

Look obviously I'm really excited about the future of the company.

The accounts receivable question honestly. His question wasn't a bad question that was asked three times on the call, but it really wasn't a bad question and yes. There are questions around the accounts receivable I cant guarantee we're going to collect on all the accounts receivable we may not.

Our differences make.

If we have to write off some of it will write off some of it. The point is we are collecting on a significant portion of our accounts receivable. It is for a major insurance companies and they are paying us and the money comes in every week and now that we're not doing COVID-19 testing anymore, new accounts receivable will be even more.

More reliable than old accounts receivable I would also tell you that one of our accounts receivable actually it doesn't need them anything to do with Covid testing.

But I'm confident that we're going to collect it but we but I'm not even going to go into it except to tell you that the issue with the accounts receivable pales in comparison to the businesses that we're developing I would also put it into perspective that we did over $200 million of Covid testing and we're down to less than what I would say $30 million of it.

It is from Covid testing in accounts receivable and in the last 30 million or if we struggle with it a little bit more so be it it doesn't change. The fact that it was a hugely successful business, we made an awful lot of money.

And right now that cash flow is paying for our businesses that are developing and the transition to the businesses that we're developing.

Who are being significant revenue generator generators and ultimately significant profit generators is very close at hand.

That I appreciate everybody's time today.

As you can tell a passionate so I can get aggressive from time to time, but I think that's what you wanted the CEO. If you want a CEO that actually execute and that's what I do.

People, probably don't like that style, but if you don't then don't invested prophase labs, but if.

You want a management team that executes its developing.

<unk> with enormous potential and its enormous potential it's close at hand, and that's something that we have to spend tens of millions of dollars over the next one to three years developing this is business, where we were spending millions of dollars not tens of millions of dollars and we're developing businesses that I believe are going to be worth hundreds or hundreds of millions of dollars and it's going to have those kinds of evaluate.

In the short term and intermediate term not in the long term.

So I can't think of a more attractive investment in the marketplace.

If you have the perspective for investing long term in Microcap development stage company and with that I bet everybody. The best of luck Theres nothing more difficult.

In my mind that investing well, maybe being CEO of a public company, while it's losing money but.

But I wish you all the best of luck and I really appreciate everybody's support and for listening to me talk for the last hour and 10 minutes. Thank you Nick.

Great job setting up the conference call today, and thank you so much.

Thank you for that Sir Conference is now concluded. Thank you for attending today's presentation you may now disconnect.