Q4 2024 ProPhase Labs Inc Earnings Call

Noella Alexander Young: My name is Noella Alexander Young, Virtual Event Moderator here at Renmark Financial Communications. On behalf of our team, we want to thank everyone for joining us today for Prophase Labs fourth quarter and year end 2024 results. Prophase is trading on the NASDAQ under the ticker symbol PRPA.

My name is no Ela Alexander young virtual that moderated here around Mark financial Communications.

Speaker Change: On behalf of our team we want to thank everyone for joining us today for Prophase labs fourth quarter and year end 2024 results pro fees are trading on the NASDAQ under the ticker symbol PRP each presenting today is Ted carcass, chairman and CEO.

Noella Alexander Young: presenting today is Ted Karkus, Chairman and CEO. Following the presentation is a Q&A session for which you can participate using the chat box in the top right hand corner of your screen.

Speaker Change: Following the presentation is the Q&A session, which you can participate using the chat box in the top right hand corner of your screen.

Ted Karkus: That being said, I will now hand over over to Ted. Thank you so much, Noella, and thank you to everyone that's joining the call today. I am Ted Karkus, CEO of Prophase Labs. I'm actually excited for this call. I got, I have a lot to cover. I think that there are some misconceptions out there, and hopefully I can clarify some of them.

Speaker Change: That being said I will now handle her over to Ted.

Ted Carcass: Thank you so much novella and thank you to everyone joining the call today I am at Charcas, CEO Prophase labs actually exciting for this call I got I have a lot to cover.

Ted Carcass: I think that there are some misconceptions out there and hopefully I can clarify some of them so for beginners to the forward looking statements.

Ted Karkus: So, for beginners, the forward looking statement, normally, I just say, I'll assume you read it. But for the year end and reporting, I think I should actually read it forward looking statement. Except for the historical information contained here, and 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 Estophageal Cancer Test, our expectations regarding future liquidity events, the success of our efforts to collect accounts receivable, and anticipated timeline for any payments relating thereto, and our ability to successfully transition into a consumer product company.

Ted Carcass: Normally I would just say I'll assume you read it but for the year end.

Ted Carcass: Reporting I think I should actually read the forward looking statements except for the historical information contained herein. This document today's forward looking statements within the meaning of the private Securities Litigation Reform Act, making 95, 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 <unk>.

Ted Carcass: <unk>, our beef smartest epigeal cancer death or expectations regarding future liquidity events. The success of our efforts to collect accounts receivable and anticipated timeline for any payments relating thereto and our ability to successfully transition into a consumer product company management believes that these forward looking statements are reasonable.

Ted Karkus: Management believes that these forward looking statements are reasonable as and when made, including today. 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. The company undertakes no obligation to update forward looking statements except as required by applicable securities laws. Readers are questioned that forward looking statements are not guarantees of future performance and are questioned not to place undue reliance on any forward looking statements. I'm sorry that was a mouthful, but it's obviously important that I read that.

Ted Carcass: And when made including today, 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.

Ted Carcass: 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. The company undertakes no obligation to update forward looking statements, except as required by applicable secure.

Ted Carcass: These 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 I'm, sorry that was a mouthful, but its obviously important that I read that let's get to the matters at hand.

Ted Karkus: Let's get to the matters at hand. given the what has transpired over the last six months. I think we have two sets of shareholders on this call and two sets of shareholders in our company. We have the shareholders that have been with me for literally 10, 20, 30 years. There are people that I've known that I've worked with, and by way of quick background, I've been an investor in small cap development stage companies for 40 years. So there are people that were investing with me literally 30, 40 years ago, that became big investors in Prophase Labs when I did long before I became CEO.

Ted Carcass: Interestingly.

Ted Carcass: Given the.

Ted Carcass: What has transpired over the last six months I think we have two sets of shareholders on this call and two sets of shareholders in our company. We have the shareholders that have been with me for literally 10 2030 years. There. There are people that I've known that I've worked with and by way of quick background I've been investors smoke.

Ted Carcass: Development stage company for 40 years. So there are people that were investing with me literally 30 40 years ago that became big investors in Prophase labs, when I did long before I became CEO I only became CEO as an activist shareholder so in any event on the other hand, given what's transpired over the last six to nine months, we have a new way.

Ted Karkus: I only became CEO as an activist shareholder. So in any event, on the other hand, given what's transpired over the last six to nine months, we have a new wave of investors who have become very large investors given the low price of the stock. So there's two different groups here. We have the group from the past. And I'll get into that a little bit.

Ted Carcass: <unk>.

Ted Carcass: Of.

Ted Carcass: Investors, who have become very large investors given the low price of the stock. So there's two different groups here, we have the group in the past and I'll get into that a little bit in fact, maybe I should go to the timeline a little bit so just to be clear our stock when I turned around the company was <unk> 65.

Ted Karkus: In fact, maybe I should go to the timeline a little bit. So just to be clear, our stock when I turned around the company was 65 cents. The company was virtually bankrupt. It had one business, Coldiz, Cold Remedy, with declining sales, looked like it was going out of business. I had to learn how to be a CEO, turn around the Coldiz brand, ultimately sold it for $50 million. Paid out $2.40 in cash, special dividends, and bought back a bunch of stock. Did two duck talks and bought it back. It's like a deja vu right now.

Ted Carcass: The company was virtually bankrupt it had one business cold these cold remedy with declining sales looked like it was going out of business I had to learn how to be a CEO turnaround. The cold. These brand ultimately sold for $50 million paid out $2 40, and cash special dividends and bought back a bunch of stock did to Dutch auctions buying back stock.

Ted Carcass: It's like a deja vu right now we're back to being a penny stock the difference between when I turned around the company last time and this time is that the assets underlying our company I feel like we have three or four assets each one of which.

Ted Karkus: We're back to being a penny stock. The difference between when I turned around the company last time and this time is that the assets underlying our company, I feel like we have three or four assets, each one of which has the potential to be worth dramatically more than Kaldi's was ever worth. And yet I turned around the company, I was able to pay out $2.40 in special dividends. I hope the long term shareholders appreciate that I did that. That would be my goal and expectation to have those kinds of activities again. And literally, I'm not talking about three to five years, potentially within the next year, that do the same kind of activity.

Ted Carcass: Has the potential to be worth dramatically more than call dis was ever work.

Ted Carcass: And then I turned around the company was able to pay out $2 40, and special dividend I hope the lung.

Ted Carcass: Term shareholders appreciate that I did that that would be my goal and expectation to have those kinds of activities again and.

Ted Carcass: And literally I'm not talking about a three to five years potentially within the next year that do the same kind of activities.

Ted Karkus: And I have to be careful what I say from an SEC point of view. I don't know if I can say some of the things. All I can say is, look at what I've done in the past, and you can assume if we have the liquidity events that I believe are coming, you can assume that I will do the same kinds of things in the future.

Ted Carcass: And I have to be careful what I say from an FCC point of view I don't know.

Ted Carcass: I can say some of the things. So all I can say is look at what I've done in the past and you can assume if we have the liquidity events that I believe are coming you can assume that I will do the same kinds of things in the future alright. So with that said I can go more into the timeline I think I'd, rather more get into the businesses I'll just I.

Ted Karkus: All right. So, with that said, I could go more into the timeline.

Ted Karkus: I think I'd rather more get into the businesses. I'll just, I will just tell you quickly, so we're all on the same page. After we sold the Koldiz brand, we got into COVID testing. So, I had to learn to be a CEO, I had to learn the Koldiz business while turning around the brand, learning the consumer products industry. I did all that. Then we got into COVID testing, did the same thing, learned a new business I'd never been in. And we built it up and did hundreds of millions of dollars of revenues, outperformed probably 95% of the labs in the country.

Ted Carcass: We'll just tell you quickly. So we're all on the same page after we sold the cold. These brands, we got into Covid testing. So I had to learn of this be a CEO had to learn the cold These business, while turning around the brand learning the consumer products industry. I did all of that then we got into Covid testing did the same thing learned a new business I've never been in and we built.

Ted Carcass: Built it up into the hundreds of millions of dollars of revenues outperformed probably 95% of the labs in the country.

Ted Karkus: I have a history of execution for 40 years. The only time it looks like I haven't executed is past year, and there are very specific reasons for that. I will get into that. But by the same token, I feel like I'm at a point in time where myself and our management team, our management team has evolved. Our company has evolved. And I believe we're going to do it again right now, going forward from where we are today. Okay, so we got into the COVID testing. The business blew up big, made a lot of money, generated a lot of revenue, generated a lot of accounts receivables.

Ted Carcass: I have a history of execution for 40 years.

Ted Carcass: The only time it looks like I have an executed this past year and Theyre very specific reasons for that I will get into that but by the same token I feel like I'm at a point in time, where myself and our management team are.

Ted Carcass: Our management team has evolved our company has evolved and I believe we're going to do it again right now going forward from where we are today. Okay. So we got into Covid testing business.

Ted Carcass: The business Blue a big made a lot of money generating a lot of revenue generating a lot of accounts receivable. We then with that business doing so well we made a few acquisitions, which we thought at the time were very smart acquisitions, one was nebula genomics.

Ted Karkus: We then, with that business doing so well, we made a few acquisitions, which we thought at the time were very smart acquisitions. One was Nebula Genomics. one was acquiring our esophageal cancer test, which are, and I'm going to talk about both of those. And, and we also acquired a Equivir a I have to be careful how we talk about it as we get closer to commercializing it, but let's just say, it's an immune support product that works really well, particularly in the cold flu COVID season. All right. And so I have all these things that I'm going to be talking about today.

Ted Carcass: One was acquiring our softgel cancer tests, which are and I'm going to talk about both of those and and we also acquired <unk>.

Ted Carcass: I have to be careful how we talk about it as we get closer to commercializing it but let's just say, it's an immune support product that works really well, particularly in the cough cold flu COVID-19 season alright.

Ted Carcass: And so I have all these things that I'm going to be talking about today.

Ted Karkus: And what, and let's, I'll just mention one more thing.

Ted Carcass: And what and let's see.

Ted Carcass: I'll just mention one more thing we built out formalized I noticed there was some disappointed over what we sold it for but we did sell for $23 million. If you go back a couple of years earlier.

Ted Karkus: We built out PharmaLive. I know that there was some disappointment over what we sold it for, but we did sell it for $23 million. If you go back a couple of years earlier, it might have only been worth $5 million or $8 million. Did we sell it for less than what I expected we were going to sell it for? If you would ask me a year ago? Absolutely. We built out the customer base, we added customers, we increased prices. I'm being honest with you. Our management team at FarmLabs didn't execute from a profitability standpoint. So we sold it for less than our expectations.

Ted Carcass: It might have only been worth $5 million or $8 million that we sell it for less than what I expected, we were going to sell it for if you'd asked me a year ago, absolutely. We built out the customer base, we added customers we increased prices.

Ted Carcass: And being honest with you our management team at formalized didn't execute from a profitability standpoint, so we sold it for less than our expectations. However, we did build out that business and we did sell it for $23 million now if we've taken all of that in cash.

Ted Karkus: However, we did build out that business, and we did sell it for $23 million. Now if we've taken all that in cash, Our stock price would be a lot higher, but with that cash, what happened was we retired most of the debt of the company. So we really cleaned up the balance sheet of the company, didn't leave us with a lot of cash. Of course, we did the Think Equity raise at a discount, which hurt our stock price, and it's left us, you know, tight on capital ever since.

Ted Carcass: Our stock price would be a lot higher but.

Ted Carcass: With that cast what happened was we retired most of the debt of the company. So we really cleaned up the balance sheet of the company didn't leave us with a lot of cash of course, we did the think equity raise.

Ted Carcass: At a at a discount which hurt our stock price and its left us tight on capital ever six alright.

Ted Karkus: All right. That's a little bit about the past.

Ted Carcass: That's a little bit about the past, let's talk about where we are now and going forward. So again to be honest with you at the end of the day, we still sold Formula that we sold Colby for $50 million, we sold formula as a manufacturing facility for $23 million and to be clear when I sold the cold. These brand if the buyer had said will only pay you $50 million for cold.

Ted Karkus: Let's talk about where we are now and going forward. So again, to be honest with you, at the end of the day, we still sold Farmalaza. We sold Koldi for $50 million. We sold Farmalaza manufacturing facility for $23 million. And to be clear, when I sold the Koldi's brand, if the buyer had said, we'll only pay you $50 million for Koldi's, if you include the manufacturing facility, I would have included it. So it gives you an idea for us to now, several years later, to sell it for $23 million. It's still a nice win for the company.

Ted Carcass: These if you include the manufacturing facility I would have included it.

Ted Carcass: So it gives you an idea for us to now several years later to sell them for $23 million is still a nice win for the company.

Ted Karkus: All right.

Ted Carcass: Alright.

Ted Karkus: Before we get into the specific subsidiaries, I wanted to talk about several potential liquidity events, which would be game changing for our company and presumably game changing for our stock. All right, first and foremost. from our COVID testing. We built up an enormous amount of accounts receivable. The way this all developed, it all started. with the fact that we were one of the leading laboratories. testing for residents of the city of New York. So just imagine, I don't know how many people, you know, what the population is these days. I don't remember, you know, eight, nine million people.

Ted Carcass: Before I get into the specific subsidiaries I wanted to talk about several potential liquidity events, which would be game changing for our company and presumably game changing for our stock price.

Ted Carcass: Alright, first and foremost.

Ted Carcass: From our Covid testing days.

Ted Carcass: We built up an enormous amount of accounts receivable the way this all develop it all started.

Ted Carcass: With the fact that we were one of the leading laboratories.

Ted Carcass: Testing for residents.

Ted Carcass: The city of New York, So just imagine I don't know how many people what the populations.

Ted Carcass: These days I don't remember eight 9 million people, but the bottom line is if you walk down the streets of New York City. During the height of Covid there were tents popped up all over the place.

Ted Karkus: But the bottom line is, if you walk down the streets of New York City during the height of COVID, there were tents popped up all over the place. A significant percentage of those tents were sending their specimens to our labs. We started off doing 100, 200, 500. COVID test per week specimens coming into our lab. We got to 1000 a week. Then it built up to 1000 a day. Imagine how many people we had to hire in order to handle 1000 specimens coming into our lab every day. So, imagine the 1st time you go to a doctor's office.

Ted Carcass: A significant percentage of those temps, we're sending their specimens to our lab.

Ted Carcass: We started off doing 100 200 500.

Ted Carcass: Covid test per week specimens coming into our lab that got to 1000 a week.

Ted Carcass: And then it built up to 1000, a day imagine how many people we had to hire in order to handle 1000 specimens coming into our lab every day. So imagine the first time you go to a doctor's office.

Ted Karkus: you know, for the first time at a new doctor, you're supposed to get there 15 to 30 minutes early, fill out a bunch of paperwork, they're taking a photo of your driver's license, a photo of your insurance, they're looking up your insurance to see if your insurance is accurate. They're doing all these things takes 1530 minutes, there's a physician's assistant or somebody at the front desk that's doing all of that in advance before you ever even see the doctor. So now imagine, instead, you're on the streets of New York, you're walking up to a tent to get tested, and there's a line of 10 or 15 people.

Ted Carcass: For the first time at a new Doctor.

Ted Carcass: You're supposed to get there 15 to 30 minutes early fill out a bunch of paperwork, they're taking a photo of your driver's license or photo of your Insureds are looking up your insurance to see if your insurance was accurate theyre doing all these things. It takes 15 30 minutes, there's a physician's assistant or somebody at the front desk, that's doing all of that in advance before you wherever you can see the doctor.

Ted Carcass: So now imagine instead you are on the streets of New York, you're walking up to attempt to get tested and there is a line of 10 or 15 people guess, what the people that were collecting your specimen they were doing a quick swab packaging up extending it out here.

Ted Karkus: Guess what? The people that were collecting your specimen, they were doing a quick swab, packaging it up, sending it out here. They were collecting the patient information very quickly. They didn't have 15 to 30 minutes. So what was happening is they're collecting all these specimens are getting a minimal amount of patient information, sending it to our lab. And at the same time. We had to turn around the results in 24 to 48 hours. So we had 1,000 specimens a day we're doing. We hired a couple hundred people. Now, just imagine it's the height of Army.

Ted Carcass: We're collecting the patient information very quickly they didn't have 15 to 30 minutes. So what was happening is it collecting all these specimens are getting a minimal amount of patient information, sending it to a lab and at the same time.

Ted Carcass: We had the turnaround the results in 24 to 48 hours.

Ted Carcass: So we had 1000 specimens they were doing we had we hired a couple of hundred people now just imagine it's the height of Army Kwan.

Ted Karkus: We had 10,000 specimens coming into our lab per day for a period of time. It was impossible to collect the information and process it. But we had the former Government Administration guaranteeing that they would reimburse us. So we did all the specimens with the understanding we would collect the information and get organized after the fact. But we were actually doing a service to the public. We're turning around the specimen. We're providing the results. We were one of the best performing labs in the entire country. but we built up a big accounts receivable. So now fast forward to where we are today.

Ted Carcass: We had 10000 specimens coming into our lab per day for a period of time.

Ted Carcass: It was impossible to collect the information of process it but we had the former.

Ted Carcass: Government administration guaranteeing that they would reimburse us so we did all the specimens with the understanding we would collect the information and get organized after the fact, we were actually doing a service to the public we're turning around the specimen we're providing the results. We were one of the best performing labs in the entire country.

Ted Carcass: But we built up a big accounts receivable.

Ted Carcass: So now fast forward to where we are today.

Ted Karkus: we have on our book. Right now approximately 20 million dollars in accounts receivable We have We hired Crown Medical Collections. and they've gone through all of our testing. And if you go back over the several years, there's about $150 million worth of testing. that we never collected on. Now part of that is what we build the insurance company and what was the appropriate amount or what they had to pay versus what we built. But at the end of the day, Crown Medical went through all of our tests. highly sophisticated software that they have. This is all they do.

Ted Carcass: We have on our books.

Ted Carcass: Right now approximately $20 million in accounts receivable.

Ted Carcass: We have.

Ted Carcass: We hired Crown medical collections.

Ted Carcass: And they've gone through all of our testing and if you go back over the several years theres about $150 million worth of testing.

Ted Carcass: So we never collected are now part of that is what we build the insurance company and.

Ted Carcass:

Ted Carcass: What was the appropriate amount of what they had to pay versus what we built but at the end of the day Crown medical went through all of our testing.

Speaker Change: Billy sophisticated software that bad this is all they do they have like a couple of dozen attorneys is all theyre doing is collecting COVID-19 testing.

Ted Karkus: They have like a couple of dozen attorneys. This is all they are doing is collecting COVID tests. and they took our test. And they said, Okay, based on this data with the insurance companies, we believe and are confident we're going to collect about $73 million. They take their contingency fees, their percentage, they believe they're going to net us $50 million. Compare that to our market cap. There's a dramatic difference between them. And the interesting thing is the $50 million, that's what a coincidence. We sold coldies for $50 million. And that was the beginning of our stock going from 65 cents.

Ted Carcass: And they took our tests.

Ted Carcass: And they said okay based on this data with the insurance companies, we believe and.

Ted Carcass: And are confident we're going to collect about $73 million. They take their contingency fees, they're presented they believe theyre going to net us $50 million compare that to our market cap. There's a dramatic difference between the two alright and the interesting thing is the $50 million, it's what a coincidence, we sold <unk> for 50 million.

Ted Carcass: And that was the beginning of restock going from 65 at one point, it's $16 here I'm not saying, it's going there again, but there are some interesting similarities.

Ted Karkus: At one point, it's $16 a share. I'm not saying it's going there again, but there are some interesting similarities. So we anticipate, I can't guarantee how much we're going to collect, but I feel comfortable that it's going to be the more than roughly 20 million that's on our books and records. I actually talked to the auditors about it. They said it's not appropriate to increase that number. That's where we are as of today. So interestingly, if we collect more than $20 million, there'll be some nice quarterly gains in the coming quarters.

Ted Carcass: We anticipate I can't guarantee how much we're going to collect but I feel comfortable that it's going to be the more than roughly 20 million. That's on our books and records I actually talked to the auditors about it. They said, it's not appropriate to increase that number that that's where we are as of today.

Ted Carcass: So.

Ted Carcass: Interestingly, if we collect more than $20 million there wont be some nice quarterly gains in the coming quarters. So the goal.

Ted Karkus: So the goal or procedure or prospect for that is the lab subsidiaries, only the lab subsidiaries doing the COVID testing, our goal is to bankrupt those subsidiaries, and then go into bankruptcy court, where Crown Medical that can say can serve litigation on roughly 1100 insurance companies, incredibly efficiency, all through one court with one judge. That's the goal you do in a bankruptcy through bankruptcy court. Otherwise, you'd have to file you know, litigation, you know, 1100 times 1100 different courts. And, you know, that would be a nightmare. So they're incredibly efficient, and successful at doing this over and over and over again.

Ted Carcass: Or procedure prospects for that is.

Ted Carcass: The labs subsidiaries only the lab subsidiaries doing the Covid testing our goal is to bankrupt those subsidiaries and then go into bankruptcy court, where crown medical that can conserve litigation.

Ted Carcass: Roughly 1100 insurance company incredibly efficiency all through one court with one judge that's the goal you do it in bankruptcy through bankruptcy court otherwise you would have to file litigation 1100 times 1100 different courts and that would be a nightmare. So they are incredibly efficient.

Ted Carcass: Successful of doing this over and over and over again I am. So excited there was a lab 110th of our size that collected $10 million literally they were like one tenths oversight. That's how I first heard about them, we hired them right away, we've been working with them with for the last several months, we're almost ready to go to go through the actual.

Ted Karkus: I am so excited. There was a lab one tenth our size that collected $10 million. Literally, they were like one tenth of our size. That's how I first heard about them. We hired them right away. We've been working for them with for the last several months, we're almost ready to go to go through the actual bankruptcy of the subsidiary. This is has nothing to do with Prophase Labs company. We're just bankrupting dormant COVID testing lab subsidiaries. Okay, nothing to be worried about. And I'm looking forward to in the next couple of weeks filing. Crown Medical believes there may be some low hanging fruit, meaning there may be some insurance companies that if they contact them before we even start this process, they may want to settle and at a time, we may get a surprise and get some money and actually before we actually file for litigation.

Ted Carcass: Bankruptcy is a subsidiary this is has nothing to do with Prophase labs. The company, we're just bankrupting dormant.

Ted Carcass: Covid testing lab subsidiaries, okay, nothing to be worried about and.

Ted Carcass: Im looking forward to in the next couple of weeks filing.

Ted Carcass: Crown Medical believes there may be some low hanging fruit, meaning there may be some insurance companies that if they contact them before we even start this process. They may want to settle ahead of time, we may get a surprise and get some money and actually before we.

Ted Carcass: Actually.

Ted Karkus: Once we file, I have been told that some insurance companies want to settle very, very quickly. They don't want to bring in lawyers, they don't want to take on the expense. You know, if they owe three, four or $500,000, they don't want to spend 100 or $200,000 litigating, especially when they know that they owe the money.

Ted Carcass: File for litigation once we file I have been told that some insurance companies want to settle very very quickly. They don't want to bring in lawyers. They don't want to take on the expense.

Ted Carcass: 034, or $500000, they don't want to spend 100 or $200000 litigating, especially when they know that they owe the money.

Ted Karkus: So anyway, that's that's a little bit about Crown Medical.

Ted Carcass: So anyway, that's a little bit about crowd medical.

Ted Karkus: Another potential liquidity event, and I'm going to get into our subsidiaries, is the potential sale of Nebula Genomics and DNA Complete. We are exploring that, as I said in the press release. We're in the early stages, but just because we're in the early stages, if we decide to sell it, it's something we could sell very quickly. We paid $14 million for it, approximately. Don't quote me on the exact number. We put a lot of money into it. We've now completely overhauled the business. I'm going to get into that a little bit.

Ted Carcass: Another potential liquidity events, and I'm going to get into our subsidiaries as the potential sale of Nebula genomics and DNA complete we are exploring that as I said in the press release, we're in the early stages, but just because we're in the early stages. If we decide to sell its something we could sell very quickly we paid $14 million.

Ted Carcass: We're at approximately don't quote me on the exact number we put a lot of money into it we've now completely overhauled the business I'm going to get into that a little bit I just want to first focus on these liquidity events, but it's another liquidity event that could be significant for the company. It will take all the pressure off of the stock. It it will give us the working capital we need.

Ted Karkus: I just want to first focus on these liquidity events. But it's another liquidity event that could be significant for the company. It will take all the pressure off of the stock. It will give us the working capital we need, et cetera, et cetera, et cetera. And finally, I am working on a multimillion dollar loan. The goal would be for it to be non-dilutive. It is in the works right now. I can't guarantee how it's going to come out. But the idea of all these things, even if I just do a multimillion dollar loan, that should bridge us to some of these other potential liquidity events.

Ted Carcass: Et cetera, et cetera, et cetera, and finally I am working on them multimillion dollar alone the goal would be for it to be non dilutive.

Ted Carcass: It is in the works right now I can't guarantee how it's going to come out but the idea of all these things even if I just do a multi million dollar alone that should bridge us to some of these other potential liquidity events and then finally.

Ted Karkus: And then finally, On top of all that, and this is one of the things we highlighted in the press release, we're a different company today. that we were in 2024. That's why I'm not even going to focus on the financials of 2024. That's honestly a complete waste of time. We are a different completely different company. We sold PMI formalized manufacturing for $23 million in January. So what does that have? And Pharma has actually lost money last year. So we take away all that overhead, all those losses, and we clean up the balance sheet and all the expense related to the payables and the interest on the debt associated with the debt that went away when we sold PMI.

Ted Carcass: On top of all that and this is one of the things we highlighted in the press release.

Ted Carcass: We're a different company today.

Ted Carcass: Then we were in 2024, that's why I'm not even going to focus on the financials of 2024, that's honestly a complete waste of time, we are a different completely different company, we sold PMI formalized manufacturing for $23 million in January.

Ted Carcass: So what does that have an formula is actually lost money last year. So we take away all that overhead all of those losses, and we clean up the balance sheet and all the expense related to the payables and the interest on the debt associated with.

Ted Carcass: With the deaths it went away while we saw PMI. So all of that are our balance sheet today is very different than it was then.

Ted Karkus: So all that, our balance sheet today is very different than it was. So that's, you know, obviously we're a different company.

Ted Carcass: So that's that.

Ted Carcass: Obviously, we're different company the second thing we did was.

Ted Karkus: The second thing we did was we shut down our Nebula Genomics Laboratory. And again, when I talk about Nebula in a few minutes, I'll talk a little bit more about that. Enormous overhead associated with the lab major mistake that we ever built Now, when we built it, we built it with the idea that we had all this COVID testing revenues come in, but the revenues slowed down. Ultimately, we ended up with a big accounts receivable, and we ended up with enormous overhead, leased equipment. And at the same time, a B2B business that my former management led me to believe was going to be a big business, which it wasn't.

Ted Carcass: We shut down our Nebula genomics laboratory and again when I talk about nebula in a few minutes I'll talk a little bit more about that.

Ted Carcass: Enormous overhead associated with the lab major mistake that we ever built it now.

Ted Carcass: Now when we built it we built it with the idea that we had all this COVID-19 testing revenues coming in but the revenues slowed down and ultimately we ended up with a big accounts receivable and we ended up with enormous overhead leased equipment.

Ted Carcass: And at the same time, a BTB business that my former management led me to believe was going to be a big business, which what we could not support the lab with a b to b business. It didn't make it just did not make sense. So finally, we shut it down there was enormous amount of overhead that's got the overhead with formalized is gone.

Ted Karkus: We could not support the lab with a B2B business. It didn't make, it just did not make sense. So, finally, we shut it down. It was enormous amount of overhead that's gone. The overhead with formalize is gone. A lot of the debt is gone. And in addition to all that, we, completely streamlined operations and cut headcount dramatically. I basically have done the same thing. And I did that in conjunction with Jason Karkus and Stu Hollinshead, who think the same way that I do. And now that the three of us are running the company together, we completely cut out an enormous amount of our rent.

A lot of the debt is gone and in addition to all that.

Ted Carcass: We completely.

Ted Carcass: Completely streamlined operations and cut head count dramatically.

Speaker Change: Alright, and I said that you can look at the press release I don't have it in front of me what the exact numbers are my point being when I first took over control of this company and the first thing I did I spoke of our head count from 27 people down to within six months. They took it down to about four or five people and then we added a few more we ran the company more efficiently more successfully with $700.

Ted Carcass: Nine people than we had 27, that's just in our headquarters and nothing to do their manufacturing facility or elsewhere.

Ted Carcass: I basically have done the same thing and I did that in conjunction with Jason Charcas and stew Hollinshead, who thinks the same way that I do and that is the three of US are running the company together, we completely cut out an enormous amount of already so we're a different company even now than we were in the first quarter again, because we sold formalized in January.

Ted Karkus: So we're a different company even now than we were in the first quarter. Again, because we sold formalized in January, I think we shut down the laboratory approximately in January, February, we cut headcount in February, March. And so the second quarter is going to be dramatically different from the first quarter in terms of our overhead, employee count, the efficiency of our company, I do not ever want to run the company any differently than the way we have now gotten it to a point of being significantly more efficient.

Ted Carcass: I think we shut down the laboratory approximately in January February we cut head count in February March and so the second quarter is going to be dramatically different from the first quarter in terms of.

Ted Carcass: Our overhead employee count the efficiency of our company I do not ever want to run the company any differently than the way we have now gotten to a point of being significantly more efficient my focus at our management focus now is on building revenues and and working towards profitability. Okay. So what.

Ted Karkus: My focus and our management's focus now is on building revenues and working towards profitability. Okay, so with that, Prophase Biopharma.

Ted Carcass: That prophage Biopharma.

Ted Karkus: led by our esophageal cancer. This is an incredibly exciting test. Now, interestingly, I wouldn't normally start with this, but somebody asked me, they're concerned. They read the press release and asked me, I said, I'll address it on the call. They're concerned that we're not going to spend a lot of money to commercialize this test. It couldn't be further from what I plan to do, as I just outlined. And to be clear, we have this great early stage therapeutic called linebacker. I don't even talk about it. The reason I talk about it is it's a it received phenomenal preclinical results.

Ted Carcass: Led by our esophageal cancer test.

Ted Carcass: This is incredibly exciting tests now interestingly I wouldn't normally start with this but somebody asked me their concerns.

Ted Carcass: They read the press release and asked me I said I'll address it on the call. They're concerned that we're now going to spend a lot of money too.

Ted Carcass: [noise] commercialize this test.

Ted Carcass: It couldn't be further from what I plan to do as I've, just outlined and to be clear we have this great.

Ted Carcass: Early stage therapeutic 12 linebacker I don't even talk about it the reason I talk about it is.

Ted Carcass: It received phenomenal pre clinical results im not spending millions of dollars to develop it I just won't so I haven't even been talking about it in the presentation. If we can partner at great. If we can't partner I'm, probably not going to develop it but I'm certainly not going to spend millions of dollars of development. The same thing where they're suffering geo cancer deaths.

Ted Karkus: I'm not spending millions of dollars to develop it. I just won't. So I haven't even been talking about it in the presentation. If we can partner it, great. If we can't partner, I'm probably not going to develop it. But I'm certainly not going to spend millions of dollars to develop it. The same thing with esophageal cancer test. I am not going to spend Significant amounts of money that would hurt the company and dilute the company. Our stock, in my personal opinion, is at a ridiculously low price. The last thing I'm going to do is take on new overhead on a new initiative.

Ted Carcass: I am not going to spend.

Ted Carcass: Significant amounts of money that would hurt the company and dilute the company our stock in my personal opinion is that a ridiculous low price. The last thing I'm going to do is take our new overhead on a new initiative. We have so many great assets in the company. We have so much potential liquidity come in until coming what do I want to destroy all of that to spend an enormous amount of money.

Ted Karkus: We have so many great assets in the company. We have so much potential liquidity coming into the company. What do I want to destroy all that to spend an enormous amount of money to commercialize anything? I won't do it. We have some great businesses to develop here and we can do them methodically the same way I did with the Kaldi's business, where I might have lost a million dollars a year on Kaldi's, but that's when I was building the brand and then sold it for $50,000. So, could I do that, you know, with Nebula Genomics, could I do that with their dietary supplements?

Ted Carcass: To commercialize anything I won't do it.

Ted Carcass: We have some great businesses to develop here and we can do them methodically the same way I did with the cold These business, where I might have lost a million dollars Euro uncalled. These but that's what I was building the brand and then sold the $50 million so could I do that.

Ted Carcass: Nebula genomics can I do that with their dietary supplements I don't even know that I'll have to I actually believe that some of those business Nebula genomics, we may have gotten to a point, where actually breakeven to profitable now going forward and we can actually grow that business now last thing I'm going to do is blow up our company.

Ted Karkus: I don't even know that I'll have to. I actually believe that some of those business, Nebula Genomics, we may have gotten to a point where actually break even to profitable now going forward, and we can actually grow that business down. Last thing I'm going to do is blow up our company after our stock price is so low.

Ted Carcass: After our stock price is so low so I do want to get into this though because I think that this is really exciting but I promise you. The goal here is to develop this to take a few steps there were some very large.

Ted Karkus: So, I do want to get into this though, because I think that this is really exciting. But I promise you, the goal here is to develop this, to take it a few steps. There are some very large. diagnostic cancer companies who are interested in this that we will work with. Ultimately, the goal is to partner this for a lot of money, but you have to go through the steps to prove it to them. So, for example, we have competitors, we have a, we believe we have a better test than what they have, but they may have already have some success in commercialization.

Ted Carcass: Diagnostic cancer companies, who are interested in this that we will work with ultimately the goal is to partner. This for a lot of money, but you have to go through the steps to prove it to them. So for example, we have competitors. We have we believe we have a better test than what they have but they may have already had some success in commercialization.

Ted Karkus: They may already have the distribution. So, this is smaller companies are smaller companies, you know, you know, tens of millions of dollars, hundreds of millions are, and then larger companies in the many billions of dollars, eight, ten billion dollars. Okay. There's the whole range. I can't tell you who we're going to partner with, who we're going to do a deal with. But what I can tell you is, there is no test like our Be Smart, Stop and Jill Capture test in the world. And I'm going to get into that a little bit right now. All right.

Ted Carcass: They may already have the distribution, so there's a smaller companies or smaller companies.

Ted Carcass: Tens of millions of dollars hundreds of millions or and then the larger companies in the many billions of dollars a $10 billion. Okay. There's a whole range.

Ted Carcass: I can't tell you, who we're going to partner with who we're going to do a deal with but what I can tell you is there's no test like our be smart esophageal cancer deaths in the world.

Ted Carcass: And I'm going to get into that a little bit right now alright.

Ted Karkus: So, first of all, just very quickly, and I know I'm going to run over time, but there's just so much to talk about here. And I think that's more important. I will get to the Q and A, but there's just too much to talk about right now. Very, very quickly, for those of you who don't know, I'm hoping most of you do esophageal cancer starts with girding your stomach after esophageal reflux disease that acid in your stomach eats away at the bottom of your esophagus, which is connected to your stomach over time and develop pre cancerous cells.

Ted Carcass: So first of all just very quickly and I know I'm going to run over time, but there's just so much to talk about here.

Ted Carcass: I think that's more important I will get to the Q&A, but there's just too much to talk about right now.

Ted Carcass: Very very quickly for those of you who don't know I'm, hoping most of you do.

Ted Carcass: Esophageal cancer it starts with gardenia stomach gastroesophageal reflux disease that asset in your stomach eats away at the bottom of your soft goods, which is connected to your stomach overtime. Its developed pre cancerous cells. That's a condition known as barracks esophagus people with berets esophagus.

Ted Karkus: That's a condition known as barrett's esophagus people with barrett's esophagus are between one and fifty one. One hundred will develop esophageal cancer. The reason why that's so terrible is because roughly eighty percent of people diagnosed with esophageal cancer will die of it. The big problem in this industry of esophageal cancer is that people are being diagnosed too late right now. The standard of care is to go to your GI and get an endoscopy where they remove tissue specimens from your esophagus and then pathologist studies them under microscope. The problem is two pathologists will look at the same specimen, same microscope.

Ted Carcass: Are between one and 51 100 will develop esophageal cancer of the reason why that's so powerful is because roughly 80% of people diagnosed with esophageal cancer will dive at the big problem. In this industry of esophageal cancer is that people are being diagnosed too late.

Ted Carcass: Right now the standard of care.

Ted Carcass: Is to go to your Gi and get an endoscopy, where they remove tissue specimens from yourself against and then pathologist studies them under a microscope the promise to pathologist well why don't I don't we'll look at the same specimen say microscope. One will tell you that you have esophageal cancer. One I'll tell you Doug It's an inexact science as proven by the fact that 80, 80%.

Ted Karkus: One will tell you that you have esophageal cancer, one will tell you don't. It's an inexact science. It's proven by the fact that eighty percent of people that are diagnosed are dying because they're being diagnosed too late. Okay, there are other tests out there. So just to go through those a couple of those tests to be clear, there are blood tests. Some of those blood tests after you have to understand esophageal cancer grows in the tissue of the esophagus. It doesn't grow in the blood. It takes time for it to seep into the blood because you have so much blood and it gets diluted.

Ted Carcass: People, they're diagnosed are dying because they're being diagnosed too late.

Ted Carcass: There are other test out there so just to go through those a couple of those tests to be clear there are blood test some of those blood tests out there you have to understand esophageal cancer grows in the tissue of the esophagus. It doesn't grow in the blood. It takes time for it to seep into the blood because you have so much blood. It gets diluted it takes time before tests will pick it up you're going to have higher.

Ted Karkus: It takes time before a test will pick it up. You're gonna have highly inaccurate results. More importantly, there's some blood tests that may become that are becoming more popular. That's fine. But the next step is you test positive is to go get an endoscopy. Anyway, our test is only is right now is planned for people who are getting endoscopy and then we're taking one or two of those specimens right now. Really, just one of those specimens. We run it through a mass spec machine. There's no naked eye, even through a microscope that can come close to the AI associated with mass spectrometry machine.

Ted Carcass: Ali inaccurate results more importantly, there are some blood tests that may become that are becoming more popular that's fine but the next step. If you test positive is to go get an endoscopy anyway. Our test is an only is right. Now is planned for people who are getting Endoscopies and then we're taking one or two of those specimens right now really.

Ted Carcass: One of those specimens we run it through a mass spec machine.

Ted Carcass: There is no naked eye, even through a microscope that can come close to the AI associated with mass mass spectrometry machine okay.

Ted Karkus: Okay. That's just a fact. And in addition to that, Um, so the bottom line is the blood test of a blood test is successful. It leads to adopt me. It's only going to grow the number of industries actually grow our target market. It's not the blood test really aren't competition. All right, we're working with some great consultants.

Ted Carcass: That's just a fact and in addition to that.

Ted Carcass: So the Bottomline is a blood test or a blood test is successful it leads to a duffy, it's only going to grow the number of industries Oxley grow our target market. It's not the blood test really aren't competition alright, we're working with some great consultants. This is really the slide I wanted to get through on this.

Ted Karkus: This is really the slide. I wanted to get to on this. These eight markers, these are proteins. There are thousands of proteins in the body that you can analyze. We, the scientists that co-developed this, Joe Abdu, who we just hired to work with our other consultants. he spent years and I believe he spent years studying this and came across the four proteins or markers that are virtually always prevalent when you're developing esophageal cancer. And we have the IP on these markers. look a lot of these other markers by some of our competing testing companies, they're testing markers that are not always prevalent.

Ted Carcass: These eight markers. These are proteins are thousands of proteins in the body that you can that you can analyze.

Ted Carcass: The scientists the co develop this joab do who we just hired to work with our other consultants.

Ted Carcass: He bent years and I believe he.

Ted Carcass: He spent years studying this and came across the four proteins or markers that are virtually always prevalent when you're developing esophageal cancer and we have the IP on these markers.

Ted Carcass: Look a lot of these other markers by some of our competing.

Ted Carcass: Testing companies Theyre testing markers that are not always prevalent and they might be testing hundreds of <unk>.

Ted Karkus: And they might be testing hundreds of proteins in order to test and search for those proteins or markers. Sometimes they need many, many specimens or tissue samples. We only need one or two at the most. Sometimes they even need you doing a second endoscopy. It becomes very difficult, given the number of specimens they have to look for, and also the number of specimens, the protein markers that they're looking for, don't always exhibit. They're not always expressed when you're developing esophageal cancer. It's not as accurate. Some of these other tests simply are not as accurate. They're not as efficient, but they have the distribution that we don't have yet because they've already started commercialization.

Ted Carcass: Proteins in order to test and searched for those proteins are markers, sometimes they need many many specimens or tissue samples, we only need one or two at the most sometimes they even need you're doing a second endoscopy it becomes very difficult.

Ted Carcass: Given the number of spectrum they have to look for and also the number of specimens.

Ted Carcass: Protein markers that are looking for.

Ted Carcass: Don't always exhibits theyre not always expressed when you're developing a stoppage of cancer, it's not as accurate at some of these other stuff simply are not as accurate theyre not as efficient, but they have the distribution that we don't have yet because they've already started commercialization.

Ted Karkus: So imagine we have a test that's a breakthrough with protein markers that no one else has the IP. marry that with a company that has a distribution, this could be a huge success. Huge.

Ted Carcass: Imagine we have a test that's a breakthrough with protein markers that no. One else has the IP for marry that with a company as a distribution that could be huge success huge so what we're doing is we're going to next steps. The next step is the manuscript and conservative on the timeline four to eight weeks I'm, hoping that's a lot sooner than that that didnt get public.

Ted Karkus: So what we're doing is we're going to the next step. The next step is the manuscript. I'm conservative on the timeline, 4 to 8 weeks. I'm hoping it's a lot sooner than that. That then gets published. It then is one step closer to commercialization. At the same time, we can look into commercialization, but not in a way where we would lose money or invest a lot of money. So, for example, there are sales forces out there that are already selling product services and tests into GI's office and doctor's offices. They could take on our test and sell it and we pay them on a per test basis.

Ted Carcass: It then is one step closer to commercialization at the same time, we can look into commercial <unk>, but not in a way, where we would lose money or invest a lot of money. So.

Ted Carcass: So for example, there are sales forces out there there are when he's selling product service and test into Gis office. The doctor's offices. They can take on our test and sell it and we pay them on a on a per test basis. We just we just pay them.

Ted Karkus: We just pay them a fee for selling tests as opposed to paying them monthly and taking on over it. So there are efficient ways that we could do this that we're looking into. We're looking at all angles. But at the end of the day.

Ted Carcass: Our fee for selling Seth as opposed to paying the monthly and taken out over it so they're efficient ways that we can do this and we're looking into we're looking at all angles, but at the end of the day.

Ted Karkus: My first choice would be to potentially partner this joint venture with a very, very large company who would give us a big block of money up front.

Ted Carcass: My first choice would be to potentially partner this joint venture with a very very large company, who would give us a big block of money upfront.

Ted Karkus: Alright, that's enough. During the Q&A, I can answer more questions about this. Suffice it to say, you can go to the slide presentation. It's on the website. You can go through the bullet point. The next step, as it says here, is to submit the manuscript and so on and so forth, but I'm really looking forward to the next step. I promise you, I'm not going to bankrupt the company developing this test and commercializing it. That would be silly. I'm doing just the opposite. We cut all the overhead to work towards being a profitable company. So we will weigh alternatives on next step.

Ted Carcass: Right.

Ted Carcass: Enough during the Q&A I can answer more questions about this.

Ted Carcass: Suffice it to say you can go to the slide presentation. That's on the website you can go through the bullet points. The next step as it says here submit the manuscript.

Ted Carcass: And so on and so forth, but I'm really looking forward to next step I promise you I'm not going to bankrupt the company developing this test and commercializing it that would be silly I'm doing just the opposite we put all the overhead to work towards being a profitable company. So we will weigh alternatives on next step I'm just excited that we.

Ted Karkus: I'm just excited that we have this great test with this great IP. It's needed. This is a sorely needed test to save lives. It's that simple. As Joe Abdu and the other scientists working on this, he's working very closely with Dr. Christopher Hartley at the Mayo Clinic, and we're working with mProbe and others. And everybody's like, we have to get this to the patients to save patients' lives. of course, me as the CEO of a public company, and you as investors want to hear, we also want to get it out there because we want to make money.

Ted Carcass: Have this great tasked with this great IP it's needed.

Ted Carcass: This is sorely needed tests to save lives and festival.

Speaker Change: As Joe Abdou and the other scientists working on this is working very closely with Dr. Christopher Hartley at the Mayo clinic and were working with them probe and others.

Ted Carcass: And everybody is like we have to get this to the patients to save patients' lives.

Speaker Change: Of course me as the CEO of a public company and you as investors want to hear we also want to get it out there because we want to make money, but it's a win win you can help people you can save lives, we can reduce insurance cost by billions of dollars.

Ted Karkus: But it's a win win, you can help people you can save lives, we can reduce insurance costs by billions of dollars. And so it could be a win, win, win.

Ted Carcass: And so it could be a win win win all right.

Ted Karkus: All right. I'm DNA complete. Very simply, we shut down the laboratory, we built this incredibly efficient laboratory, but it took too long to build it. And the b2b business wasn't there. We're building a d2c business. Now. We hired Stu Holland said he is a world class marketer. All right, one of the top marketing experts in the country. He helped build up Barstool Sports. He was the COO and head of business for Barstool Sports, built it up into business results for hundreds of millions of dollars. He worked very closely, obviously, he was partnered with Dave Portnoy.

Ted Carcass: And DNA complete.

Speaker Change: Very simply we shut down the laboratory, we built this incredibly efficient laboratory, but it took too long to build it and the <unk> business wasn't there we're building the D to C business now we hired Stu Holland said he is a world class marketer alright, one of the top marketing experts in the country.

Speaker Change: He helped build a barstool sports he was the COO and head of business for Barstool sports built it up into bid.

Speaker Change: Business results for hundreds of millions of dollars. He worked very closely obviously was partner with Dave Portnoy. He would not have joined our company. If you didn't believe in our company and where we are number one and number two he so Jason carcass who completely.

Ted Karkus: He would not have joined our company if he didn't believe in our company and where we are, number one. And number two, he, so you have Jason Karkus who completely restructured the business. We're now focused on D2C. We shut down the laboratory. He developed relationships with multiple labs now who are competing with each other. So we're getting great pricing. And so we're in great shape now. And a key part of all of this is we're selling a subscription. When it gets renewed in year two, that's pure profit to us. So this is a business, we build it out this year.

Speaker Change: Restructured the business, we're now focused on D. C. We shut down the laboratory Keith.

Speaker Change: <unk> developed relationships with multiple labs, now who are competing with each other so we're getting great pricing and so we're in great shape now and a key part of all of this is we're selling a subscription when it gets renewed in year two.

Speaker Change: It's pure profit to us.

Speaker Change: So this is a business we built it out this year next year, we're going to it's going to be a profit machine for more of the business that we generate through even if we broke even on generating sales. This year that would imply that it's going to make a lot of money next year, even if we don't do anything so I'm really excited about the business of course, Dr. George Church.

Ted Karkus: Next year, it's gonna be a profit machine from all the business that we generate. So even if we broke even on generating sales this year, that would imply that it's going to make a lot of money next year, even if we don't do anything. So I'm really excited about the business. Of course, Dr. George Church, is still an advisor to our company. He's the founder and he's world renowned in the field of genomics over the last 20 years.

Speaker Change: Phil and adviser to our company he's the founder.

Speaker Change: And he is world renowned the fields of genomics over the last 20 years.

Ted Karkus: Prophase supplements, I'll just go through this very, very quickly. These products are already at CVS and Walgreens. We have great infrastructure. We now wanna ramp it up. The place to be selling these is online. That's where Stu comes in. We built this whole marketing machine online. Stu is connected to world-class influencers. His reach, I don't know how many tens of millions of people he has reached to, you know, consumers. We get to leverage all of that by Stu being our COO. So we get to leverage it both with DNA Complete. We get great pricing because of Stu.

Speaker Change: Prophage supplements I'll just go through very very quickly these.

Speaker Change: These products are already at Cvs or Walgreens, we have great infrastructure, we now want to ramp it up the place to be selling these as online. That's we're still comes in we built this whole marketing machine online stewards connected to world class Influencer. His reach I don't know how many tens of millions of people. He has reached two.

Speaker Change: Consumers, we get to leverage all of that by hit by still being our COO. So we get the leverage of both with DNA complete we get great pricing, because it's still alright blow cpm's cost per thousand that's what it cost to advertise and we get the leverage leverage our product <unk> is coming soon I'm really frustrated.

Ted Karkus: All right, low CPMs cost per thousand. That's what it costs to advertise. And we get to leverage our product. Equivir is coming soon. I'm really frustrated by waiting for the final clinical study results. We can't launch this until that happens. It's not cold season now anyway, but I am looking forward to this for next season. We are packaging it. We're doing a lot of things with it right now.

Speaker Change: By waiting for the final clinical study results, we can't launches until that happens, it's not cough cold season now anyway.

Speaker Change: But I am looking forward to.

Speaker Change: To this for next season.

Speaker Change: We are packaging, we're doing a lot of things with it right now.

Ted Karkus: Of course, I've run way over time already.

Speaker Change: Of course, I've run way over time already.

Ted Karkus: And look, we can go through the investment highlights. I pretty much, before we get to the Q&A, I just want to make sure, I also just want to mention to you that we have a couple of telehealth companies that reached out to us. They built all the infrastructure. They have the medical doctors in each state. They have all the infrastructure in place. What are they all missing? The key to almost any business being successful, it's the marketing, it's the reach. That's where we come in. I think that we could potentially acquire one of these telehealth companies on the cheap, not for a lot of money, we're not breaking the bank on anything.

Speaker Change: And look we can go through the investment highlights.

Speaker Change: Pretty much before we get to the Q&A I just want to make sure I also just want to mention to you that we have a couple of telehealth companies that reached out to us. They built all the infrastructure. They have the medical doctors in each day. They have all the infrastructure in place what are they all missing.

Speaker Change: The key to almost any business being successful.

Speaker Change: It's the marketing it's the reach that's where we come in I think that we could potentially acquire one of these telehealth companies on the cheap not for a lot of money, we're not breaking the bank on anything.

Ted Karkus: And we could, we could forget everything, we could build that enormous telehealth business, just leveraging the marketing expertise and the marketing reach of Stu Hollinson.

Speaker Change: And we could we could forget I mean, we can build that enormous telehealth business, just leveraging the marketing expertise in the marketing reach.

Ted Karkus: So, we have a lot to look forward to in the company. And I just want to be sure.

Stu Holland: Stu Holland said so.

Stu Holland: We have a lot to look forward to in the company.

Stu Holland: And I just want to be sure. So.

Noella Alexander Young: So, I'd like to go to the Q&A now.

Stu Holland: I'd like to go to the Q&A now.

Noella Alexander Young: And Noella, I'll turn it over to you. Thankfully, I had a lot to say, but I didn't run over by too much.

Speaker Change: And Noel I'll turn it over to you Thankfully I had a lot to say, but I didn't run over by too much.

Noella Alexander Young: Thank you so much, Chad, for the presentation.

Noel: Thank you so much I just had a presentation will now begin the Q&A.

Noella Alexander Young: We'll now begin the Q&A.

Noella Alexander Young: Your first question is, What is the projected timeline for securing CPT coding approval for the BSMART test? Sure. So that takes longer. Sometimes it can happen relatively quickly, and sometimes it can take a long period of time. Initially, the goal is to go in two directions on that. The other thing we can do is we can potentially start submitting with generic CPT codes. There are other companies that have actually done that successfully. There are a number of ways. We have some really, really good experts that we're working with, consultants, including we hired Joe Abdu and added him to our team.

Speaker Change: Your first question is.

Noel: What is the projected timeline for securing CPT coding approval for the piece might test.

Speaker Change: Sure so that takes longer.

Speaker Change: Sometimes it can happen relatively quickly and sometimes it can take a long period of time.

Speaker Change: Initially the goal is to go in two directions on that.

Speaker Change: The other thing we can do is we can potentially.

Speaker Change: Start submitting with generic CPT codes. There are other companies that have actually done that successfully there are a number of ways. We have some really really good experts that were working with consultants include.

Speaker Change: Including we hired Joe Abdou and added them to our team. So we have a number of different avenues, but again. The key here is and this goes back to someone who asked me a question before the conference call. After the press release came out to be clear, we're not going to spend a lot of money.

Ted Karkus: So we have a number of different avenues.

Ted Karkus: But again, the key here is, and this goes back to someone who asked me a question before the conference call, after the press release came out, to be clear, we're not going to spend a lot of money. to ramp up the commercialization of this test. So we have a number of avenues we can go in. But again, and what also understand if we, you know, There are other tests in the market. They're asking three $4,000 or more for the test. Let's suppose we have $2,500 for a test, but We only get reimbursed by one third of the patients that we test.

Speaker Change: To ramp up the commercialization of this test. So we have a number of avenues. We can go in but again and also understand if we.

Speaker Change: No.

Speaker Change: There are other tests in the market they are asking three $4000 or more for the test, let's suppose we asked $2500 for a test but.

Speaker Change: We only get reimbursed by one third of the patients that we test.

Ted Karkus: That would still be an incredibly profitable test for us. And we would be developing distribution and market presence.

Speaker Change: That would still be an incredibly profitable test for us and we would be developing distribution and market presence.

Ted Karkus: So understand, we're not going to break the bank. I'm not going to invest a lot of money. I'm not going to dilute shareholders further just to ramp up the steps. I won't do that.

Speaker Change: So understand we're not going to break the bank I'm not going to invest a lot of money I'm not going to dilute shareholders. Further just to ramp up the steps I won't do that but when I do want to do is I want to go to the next step with the manuscript I do want to start some outreach to more outreach actually to the key opinion leaders.

Ted Karkus: But what I do want to do is I want to go to the next step with the manuscript. I do want to start some outreach to, more outreach actually to the key opinion leaders. Again, we have Joe Abdu, we have Dr. Chris Hartley, the Mayo Clinic, MPro and others. We have some universities and so forth. And with publishing of the manuscript, that will go a long way. And we want to get the momentum going. In addition to which, once the marketplace really recognizes and understands our test, I really think there's going to be competition over it to do a deal with us.

Joe Abdou: We have Joe Abdou, we have Dr. Chris Hartley.

Joe Abdou: The Mayo clinic, and probe and others, we have some universities and so forth and with the publishing of the manuscript that will go a long way and we want to get the momentum going in addition to which once the marketplace really recognizes an understanding understands our tests I really think theres going to be competition.

Joe Abdou: <unk> over it to do a deal with us.

Ted Karkus: because we I believe we have the best test on the market. in my heart. I sincerely believe it. There are lots of other companies that are developing esophageal cancer tests. None of them have the eight proteins that we and none of them are as statistically accurate as our test. That's, that's my impression based on all the results I've reviewed, based on talking to our consultants, based on talking to our scientists. Somebody asked me, well, what about there's a test out there that tests for 400 proteins? Isn't that better than testing for the eight? The answer is absolutely not.

Joe Abdou: Because we I believe we have the best test on the market.

Joe Abdou: And my heart I sincerely believe it there are lots of other companies that are developing esophageal cancer tests, none of them have the <unk> proteins that we have.

Joe Abdou: And none of them are as such.

Joe Abdou: Statistically.

Joe Abdou: Accurate as our test.

Joe Abdou: My impression based on all the results I've reviewed based on talking to our consultants talk based on talking to our scientists somebody asked me well what about there's a test out there the test for 400 proteins isn't that better than testing for the eight the answer is absolutely not and the reason is because when you're testing for the 400 proteins first of all you need multiple.

Ted Karkus: And the reason is because when you're testing for the 400 proteins, first of all, you need multiple specimens to test, number one. Number two, the markers you're testing do not express themselves. The proteins do not express themselves in a lot of these markers and a lot of the esophageal cancer. So if you have esophageal cancer, there are eight proteins that are expressed almost every time you then have other proteins. Sometimes they're expressed. Sometimes you're not. They're not. So you might have a test that tests 400 proteins, but you're testing all these other proteins. Just think about that compared to testing the eight that are virtually always expressed.

Joe Abdou: Specimens to test number one number two the markers you're testing.

Joe Abdou: Do not express themselves the proteins do not express themselves and a lot of these markers and a lot of the esophageal.

Joe Abdou: Cancers.

Joe Abdou: So if you ever esophageal cancer. There are proteins that are expressed almost every time. You then have other proteins, sometimes are expressed sometimes theyre not theyre not.

Joe Abdou: So you might have a test to test 400 proteins, but you're touching all these other proteins just think about that compared to testing. The eight that are virtually always expressed of those eight based on the studies we did so far.

Ted Karkus: Of those eight, based on the studies we did so far, I don't remember the exact number, I could go back to the slide, but a number of them are expressed every single time. So why wouldn't you want to test those? Plus then you don't need, sometimes with these other tests, you actually need a second endoscopy just to get enough specimens, not to mention the fact, it's not so easy taking all of the specimens from the GI's office. Here, we just need one, maybe two, but typically we just need one. And again, we're running this through a mass spec machine combined with the AI, the supercomputing power associated with that.

Joe Abdou: I don't remember the exact number I would go back to the slide.

Joe Abdou: But a number of them are expressed every single time.

Joe Abdou: So why wouldn't you want to test those plus then you don't need sometimes with these other tests you actually need a second endoscopy just to get enough specimens not to mention the fact.

Joe Abdou: It's not so easy taking all of the specimens from the GI is with US here, we just need one maybe two but typically we just need one and.

Joe Abdou: And again, we're running this through a mass spec machine and combined with the AI supercomputing.

Joe Abdou: Supercomputing power associated with that and compare that to our pathologists looking with the naked eye through a microscope.

Ted Karkus: Compare that to a pathologist looking with the naked eye through a microscope. There's no comparison at all. This is going to save lives. And from the point of view of the insurance companies, again, there are roughly 7 million endoscopies performed each year in the United States alone, just on people at high risk of esophageal cancer. Insurance companies are reimbursing three, $4,000. So it's roughly a 21 to $28 billion a year insurance companies are reimbursing just for the endoscopies. So just imagine if with our test, we can tell you those eight markers are not being expressed in significance, you're at low risk, you don't have to get endoscopies regularly.

Joe Abdou: No comparison at all this is going to save lives and from the point of view of the insurance companies again, there are roughly 7 million endoscopies performed each year in the United States alone just on people at high risk of esophageal cancer insurance companies are reimbursing three $4000. So it's roughly at 20.

Joe Abdou: 1% to $28 billion, a year insurance companies to reimburse it just for the Endoscopies. So just imagine with our test. We can tell you. Those eight markers are not being expressed insignificance Europe low risk you don't have to get enough of these regularly that could save many many billions of dollars for the insurance company on the other hand, if you're at high risk and we catch it.

Ted Karkus: That could save many, many billions of dollars for the insurance companies. On the other hand, if you're at high risk and we catch it early in your high risk, you can get an ablation, which is a procedure that destroys the pre-cancer cells before you develop cancer. Again, it saves lives and saves the insurance companies billions of dollars.

Joe Abdou: Early in Euro I'd risk you can get an ablation.

Joe Abdou: Which a procedure that destroys the pre cancerous cells before you develop cancer again, it saves lives and saves the insurance companies billions of dollars to meet this test is a no brainer better than any test on the market. We are going the next steps to prove that it is the best test on the market I have no interest in spending tens of millions much less millions of dollar.

Ted Karkus: To me, this test is a no brainer, better than any test on the market. We are going the next steps to prove that it is the best test on the market. I have no interest in spending tens of millions, much less millions of dollars to commercialize this. And I won't. And I believe that we can do a deal which will take in potentially tens of millions of dollars to our company.

Joe Abdou: To commercialize this and I want and I believe that we can do a deal which will take in potentially tens of millions of dollars door company alright, what's the next question Noelle.

Ted Karkus: All right, what's the next question, Noel? Thank you, Ted. Next is, do you expect the cash paid diagnostic model for the B-SMART test to generate significant revenue in the interim period before CPT approval, or would it be viewed more as a trial period? Right, so I view it more as a trial period. The idea is to get the product out there to get GIs talking about it and get GIs using it and realizing just how important the test this is. That's the goal this year. My point is, I'm excited because, you know, we were talking, maybe it's gonna be a year, two years, three years.

Noelle: Thank you Ted next is do you expect the cash pay diagnostic now for the piece Mike has to generate significant revenue in the interim period before CPT approval or would it be viewed more as a trial period.

Noelle: So I view it more as a trial period. The idea is to get the product out there to get <unk> talking about it and gets you guys using it and realizing just how important the test. This is that's the goal. This year. My point is I'm excited because we were talking maybe it's going to be year. Two years three years I'm excited that we're going to.

Ted Karkus: I'm excited that we're going to roll it out. And our goal is to get in GIs offices this year and testing people this year and do it without breaking the bank without spending a lot of money. That's the goal. At that point. I, I believe there are several companies that will want to join venture. Now having said that, we might, I might surprise everybody and join venture partner with a large, with a very large cancer diagnostic company long before that. But we'll, we'll see how this plays out. I believe that we're going to have options as to what we do.

Noelle: Our roll it out and our goal is to get in Gis offices. This year and testing people this year and do it without breaking the bank without spending a lot of money. That's the goal at that point.

Noelle: I believe there are several companies that will want to joint venture with now having said that we might I might surprise, everybody and joint venture partner with a large with a very large cancer diagnostic company long before that but we'll see how this plays out I believe that we're going to have options as to what we do with this.

Noella Alexander Young: you for clarifying that.

Noelle: Thank you for clarifying that.

Noella Alexander Young: Your next question is, you purchased Nebula and the rights to be smart for just a few million dollars each. What is the potential you see in these assets that the sellers slash marketplace does not? I swear that sounds like a short ask that question, because we didn't pay a few million dollars, or be smart off the top of my head. Don't quote me somewhere around 10 million plus dollars that we paid for a couple years ago. And we've invested more money we've developed it further. So it's more about it's significantly more valuable than when we acquired it.

Noelle: Question is you.

Speaker Change: You purchased nebula and the rights to be smart for just a few million dollars. Each what is the potential you see in these assets that the sellers slash marketplace does not.

Speaker Change: I swear that sounds like a short asked that question because we didn't pay a few million dollars or be smart off the top of my head don't quote me somewhere around $10 million plus dollars that we paid for a couple of years ago.

Speaker Change: And we've invested more money we've developed it further so it's more about it's significantly more valuable than when we acquired it we acquired it for I believe Morton north of $10 million and we acquired from a company that was.

Ted Karkus: We acquired it for I believe more north of $10 million. And we acquired it from a company that was that didn't have the capital and the wherewithal to commercialize it themselves. Otherwise, they would never have sold it to us. And I also believe that they got some shares of stock in our company. So they, I believe that they will participate on the upside, if and when we're sold.

Speaker Change: That didn't have the capital and the wherewithal to commercialize it themselves otherwise they would never sold it to us and I also believe that they got some shares of stock in our company. So.

Speaker Change: I believe that they will participate on the upside if and when we're successful as far as nebulous concerned again, a few million dollars.

Ted Karkus: As far as Nebula is concerned, again, a few million dollars, that's almost an offensive question. We paid, I believe, approximately $14 million. We probably spent $10 or $20 million building the business. Now, a part of that went into building the lab, which we've now shut down. But we also significantly improved the go-to-market strategy, the offerings. We enhanced the Ancestry. We built a whole DNA-complete business. We also built out DNA Expand. DNA Expand, we can now take an Ancestry test and provide you with detailed, health-related information from your Ancestry. So right now in ancestry companies are charging approximately $69 a year for that service.

Speaker Change: Almost an offensive question, we paid I believe was approximately.

Speaker Change: Approximately $14 million, we probably spent 10 or $20 million building the business now a part of that went into building the lab, which we've now shut down but we also.

Speaker Change: Significantly improved the go to market strategy.

Speaker Change: The Walgreens, we enhanced the ancestry, we built a whole DNA complete busy.

Business.

We also built out DNA expand DNA expand we can now take an ancestry test and provide you with detailed health related information from your ancestry test. So right now in ancestry companies discharging approximately $69 a year for that service will charge $49 a cost us under five it's been amazing.

Ted Karkus: We'll charge $49 request us under five. It's an amazing cash cow for us. These are all businesses that we've developed nebula. I believe is worth significantly more than what we pay for it.

Speaker Change: Cash cow for US. These are all businesses that we've developed that'd be Ola I believe is worth significantly more than what we paid for it now we might do a quick sale of it because that will take care of all of our cash flow needs. It will clean up our debt completely it'll give us more than enough cash flow, who knows might even give us enough cash to buy back some stock.

Ted Karkus: Now, we might do a quick sale of it because that will take care of all of our cash flow needs. It'll clean up our debt completely. It'll give us more than enough cash flow. Who knows might even give us enough cash to buy back some stock, you know, I'm just talking off the cuff. This is not a guarantee of doing any of those things. But my point is to say, you know, why is it worth a few million dollars? It's a silly question, but I'm glad the question was asked anyway, so that I can address it.

Speaker Change: I'm just talking about the cost this is not a guarantee of doing any of those things, but my point is to say why is it worth a few million.

Speaker Change: A silly question, but I'm glad the question was asked there anyway, so that I can address it both of these businesses are very valuable businesses I'm excited about.

Ted Karkus: Both of these businesses are very valuable businesses. I am excited about the prospects for nebula genomics. The biggest issue we have is the timing of liquidity events. Do we sell it now? We could potentially sell it now in the next, let's say, eight weeks, taking a nice block of money, take care of all of our cash concerns forever while building our other businesses. On the other hand, I believe that if we build nebula for the next year, it'll be worth significantly more, significantly more, like multiples of what it's worth today if we waited a year.

Speaker Change: The prospects for Nebula genomics. The biggest issue. We have is the timing of liquidity events do we sell it now we could potentially sell it now in the next let's say eight weeks taken a nice block of money take care of all of our cash concerns forever, while building our other businesses on the other hand, I believe that if we build nebula for the next year it'll be where.

More significantly more like multiples of what it's worth today, if we waited a year I would also mentioned I didn't even highlight this I think we might have referred to it.

Ted Karkus: I would also mention, I didn't even highlight this. I think we might have referred to it in the press release. We have a database with significant underlying value. We now have, I think the number is over 60,000 whole genome sequencing tests performed and the data on that. And again, Ancestry test study less than 1% of your DNA. We study virtually 100%. So the amount of data that we're collecting is an enormous amount of data compared to your typical ancestry test, which is a SNP-based test. The database that we have is the equivalent to over 150 million SNP-based ancestry tests.

Speaker Change: In the press release, we have a database with significant underlying value.

Speaker Change: We are we now have.

Speaker Change: Think the numbers over 60000.

Speaker Change: Whole genome sequencing test performed in the data on that and again.

Speaker Change: Ancestry test study less than 1% of your DNA, we study virtually 100%. So the amount of data that we're collecting is an enormous amount of data compared to your typical ancestry tab, which is the SNP based that the database that we have is the equivalent to over 150 million SNP based ancestry test it's an.

Ted Karkus: It's an incredible database. It's a hidden value. That's a part of nebula.

Speaker Change: <unk> database, it's a hidden value that is a part of nebula alright. So again, if we were to sell nebula in our database would be part of it is possible. We may not want to sell the database by itself. There may be all kinds of issues twenty-three me has issues people protecting data I don't want to get into that.

Ted Karkus: All right. So again, if we were to sell nebula and and our database would be part of people as possible, we may not want to sell the database by itself. There may be all kinds of issues. Twenty three and me has issues, you know, people protecting data. I don't want to get into that. We're not selling people's data or anything like that, but it just it just gives you an idea of the intrinsic value of nebula.

Speaker Change: Selling people's data or anything like that but it just it just gives you an idea of the intrinsic value of Nebula next question. Please.

Noella Alexander Young: Next question. Please. Thank you.

Noella Alexander Young: The next question is, what is the possibility of a reverse split? I have access to quite a few whales, but I don't want to suggest Prophase if a reverse split is a possibility in the next year or so. Yeah, so I'm actually I'm glad you asked that question. So, first of all, when your stock price goes below a dollar, NASDAQ informs you, obviously, we were informed, you get six months for it to trade back over a dollar. However, at the end of those six months, if you've been in compliance in the past and you haven't done reverse splits in the past, they will almost, don't quote me, but it's almost automatic, they will give you an additional six months.

Speaker Change: Thank you. The next question is what is the possibility of a reverse split I have access to quite a few wells, but I don't want to suggest prophage and a reverse split is a possibility in the next year or so yes.

Speaker Change: Yes.

Speaker Change: Excellent glad you asked that question.

Speaker Change: So first of all when your stock price goes below a dollar NASDAQ informed you. Obviously, we were informed you get six months for it to trade back over dollar. However at the end of those six months, if you've been in compliance in the past and you haven't done reverse splits in the past they will almost don't quote me, but.

Speaker Change: It's almost automatic they will give you an additional six months. So we have roughly nine months to deal with this issue I believe we are going to have significant liquidity events over the next nine months My hope and expectation is that with any one of those liquidity events that our stock will no longer be trading under a dollar.

Ted Karkus: So we have roughly nine months to deal with this issue. I believe we are going to have significant liquidity events over the next nine months. My hope and expectation is that with any one of those liquidity events, that our stock will no longer be trading under a dollar. All right. I don't want to go into more details than that. I can't talk about things like, are we going to do stock buybacks and things of that nature? But I am. optimistic that that our stock will be trading over dollar and we won't ever need to do a reverse split.

Speaker Change: Alright, I don't want to go into more details than that I can't talk about things like are we going to do stock buybacks and things of that nature, but I am.

Speaker Change: Optimistic that that our stock will be trading over a dollar and we won't ever need to do a reverse split it is not a guarantee again go back to the forward looking statements I can tell you sitting here today I feel pretty good about the probability that we will never have to do a reverse split it's no different than when I turned around the company.

Ted Karkus: It is not a guarantee. Again, you know, go back to the forward looking statement. I can tell you sitting here today, I feel pretty good about the probability that we will never have to do a reverse split. It's no different than when I turned around the company, you know, a dozen years ago, and the stock price was 65 cents. I think we probably asked for an extension got it and then the stock went over a dollar. It was never, you know, we bought back stock. I did Dutch auctions and bought back even more stock and it wasn't an issue.

Speaker Change: And years ago in the stock price was 65, I think we probably aspirin extension got it and then the stock went over a dollar was never you know we bought back stock I did Dutch auctions and bought back even more stock and it wasn't an issue our stock price is so low here. If we I mean, just imagine crowd medical things are collecting $50 million for us.

Ted Karkus: Our stock price is so low here. If we, I mean, just imagine, Crown Medical thinks they're collecting $50 million for us. Imagine if we even collected $25 million. Imagine I did a $5 million buyback, you know, at 50 cents at 50, that's 10 million shares of stock. Who's selling 10 million shares of stock at 50 cents? Ridiculous. So look, I'm just saying that to put that in perspective. This is all hypothetical. I don't want to have any issues with the SEC. But again, I just want to put this in some perspective. The market cap of our company compared to the underlying assets are accounts receivable in the other potential liquidity events.

Speaker Change: We haven't collected $25 million I imagine I did a 5 million dollar buyback at.

At 50 centers at 50 10 million shares of stock, who still like 10 million shares of stock for 50 cents ridiculous. So look I'm, just saying that to put that in perspective. This is all hypothetical I don't want to have any issues with the SEC, but again I just want to put this in some perspective.

Speaker Change: The market cap of our company compared to the underlying assets are accounts receivable and the other potential liquidity events. Thank you next question. Please.

Noella Alexander Young: Thank you. Next question, please, Noelle. Thank you for clarifying that.

Speaker Change: Gary clarifying that and next question is what is the update on equity no news on the long awaited research report and labeling yes.

Ted Karkus: Your next question is, what is the update on Equivir? No news on the long-awaited research report and labeling. Yeah, so I just mentioned that in the presentation, the bottom line is, we're waiting for the statisticians and the CRO to complete their final analysis and results. This stuff is complicated. We did a very large study. There were a lot of variables, and there's a lot in it. Again, we got excellent. The early results were first of all, the preclinical were phenomenal results. And then in the clinical study, the early results were all excellent. I'm just waiting for the final result.

Speaker Change: So I just mentioned that in the presentation and the bottom line is we're waiting for the statisticians and the CRO to complete their final analysis and results. This stuff is complicated and we did a very large study there were a lot of variables and there's a lot in.

Speaker Change: Again, we got excellent.

Speaker Change: The early results of our first of all the preclinical were phenomenal results and then in the clinical study. The early results were all excellent I'm just waiting for the final results. We are moving forward with branding the product and the packaging and finalizing the claims and all those other things in concert. So we're waiting once we get that final study we.

Ted Karkus: We are moving forward with branding the product and the packaging and finalizing the claims and all those other things in concert. So we're waiting. Once we get that final study, we get the write up. We move forward with all of it.

Speaker Change: We get the right up we move forward with all of them.

Ted Karkus: Thank you. Thank you, Ted.

Speaker Change: Thank you.

Ted Karkus: Next, how long do you think it will take to implement the plan and return to profitability? Also, what is your burn rate per month present? Great question. Um, I can't get too much into the numbers today. We, you know, obviously, we didn't even report the first quarter yet. We're going into the second quarter. I would really like to just focus on the numbers that we put into the press release. The bottom line is we've cut our head count down dramatically, not just PMI, because we sold PMI, but also our headquarters. We also shut down our lab.

Speaker Change: Thank you Pat next how long do you think it will take to implement the plan and return to profitability also what is your burn rate per month presently.

Speaker Change: Great question.

Speaker Change: I can't get too much into the numbers today, we obviously wouldn't even report the first quarter yet.

Speaker Change: We're going into the second quarter I would really like to just focus on the numbers that we put into the press release. The Bottomline is we cut our head count down.

Speaker Change: Dramatically not just PMI, because we sold PMI, but also our headquarters we also shut down our lab to lab alone was I don't know off the top of my head.

Ted Karkus: The lab alone was, I don't know, off the top of my head. Our finance team estimated that it cut, like, six million dollars of overhead just by shutting the lab down. All right. And PharmaLoft. lost over $2 million last year, right. And, and also we had all sorts of payables, we all had all sorts of capital expenditures associated that we're gonna have to pay. So it was enormous cash burn over PMI. Again, our lab was, was an enormous cash burn. We're also we're going to be able to cut out our head, our headquarters, we're going to move our headquarters, it's going to save us close to a million dollars a year, just moving our headquarters.

Speaker Change: Our finance team estimated that a cut like $6 million of overhead just by shutting the lab Bill Alright, and pharma laws.

Speaker Change: Lost over $2 million last year, alright, and.

Speaker Change: And also we had all sorts of payables, we all had all sorts of.

Speaker Change: Capital expenditures associated were going to have to pay so it was enormous cash burn over a PMI again, our lab was was an enormous cash burn. We're also we're going to be able to cut out.

Speaker Change: Our head our headquarters were going to move our headquarters, it's going to save us close to $1 million a year just moving our headquarters.

Ted Karkus: And it just goes on and on. So I've cut our overhead, we're dramatically different company in the second quarter this year. I think even then from the first quarter in the first quarter, obviously, from last year, the first quarter, as I mentioned, sold PMI shut down the lab. And also later in the in the first quarter, cut down the overhead, cut out not only the majority of the employees in the company, we also cut out enormous amounts. We had over a million dollars a year of IT expense, we cut that down dramatically. So it just cuts everywhere.

Speaker Change: And it just goes on and not so cut our overhead were dramatically different company in the second quarter of this year I think even from the first quarter in the first quarter, obviously from last year. The first quarter as I mentioned, so PMI shut down in the lab and also later in the in the first quarter cut down the overhead.

Speaker Change: Cut out not only.

The majority of the employees in the company. We also cut out enormous meant we had over a million dollars a year of it expense, we cut that down dramatically. So it just cuts everywhere I want to get to a point, where virtually there to be in a lean mean company and then at the same time now nebula genomics as I mentioned it maybe we haven't done.

Ted Karkus: I want to get to a point where we're virtually there, to being a lean, mean company, and then at the same time, now Nebula Genomics, as I mentioned, it may be, we haven't done the final analysis, it depends on how much we spend on advertising. If we only spend a small amount of advertising, we can make it incredibly efficient. If we spend a larger amount, it's not quite as efficient, but I believe that if we wanted to, we could actually make Nebula a profitable business today. That doesn't mean the company overall, but our overhead has dropped dramatically.

Speaker Change: The final analysis it depends on how much we spend on advertising.

Speaker Change: If we only spend a small amount of advertising, we can make an incredibly efficient if we spend a larger amount, it's not quite as efficient, but I believe that if we wanted to we could actually make nebula a profitable business today that doesn't mean the company overall, but our overhead has dropped dramatically I don't want to give exact numbers today, but youll.

Ted Karkus: I don't want to give exact numbers today, but you'll see, obviously. second quarter is going to be dramatically better than anything you ever saw in 2024. We're basically a different company.

Speaker Change: See obviously.

Speaker Change: Second quarter is going to be dramatically better than anything ever spud 2024, where we're basically a different company. That's why I didn't want to spend any time on 2024 numbers I don't even see the point of it we are a different company than the company that reported 2024 numbers.

Ted Karkus: That's why I didn't want to spend any time on 2024 numbers. I don't even see the point of it. We are a different company than the company that reported 2024 numbers, you know, without the lab and without PMI and with reducing overhead so much. I'm back to basic. The only reason I wasn't back to basics. before where, you know, whereas when I took over the company, we built a COVID business, it was so explosive, I had to hire hundreds of people in a very short period of time, it's impossible to be that careful on every dollar of overhead while a bid building a business from zero to $100 million in a matter of months, if you can't have it both ways.

Speaker Change: Without the lab and without PMI and reducing overhead so much I'm back to basics.

Speaker Change: The only reason I want them back to basics.

Speaker Change: Before whereas whereas when I took over the company as we built the Covid business.

Speaker Change: So explosive idea the hire hundreds of people in a very short period of time, it's impossible to be that careful on every dollar of overhead while bids building a business from zero to $100 million in a matter of months. It you can't have it both ways and so I did the right thing by building up that business and a tremendous amount of overhead but had.

Ted Karkus: And so I did the right thing by building up that business as a tremendous amount of overhead, but had a more revenues during those And then again, when we built that nebula, it was the same approach. except the B2B business wasn't there for Nebula the way it was for COVID. And quite frankly, it was premature to build up that laboratory and take out all that overhead. And so we've now cleaned that up. Jason cleaned all that up. And then Stu came in. He is as tight as Jason. And the two of them went to town and I support him.

Speaker Change: Even more revenues earnings associated.

Speaker Change: And then again when we built out nebula. It was the same approach except the b to B business wasn't there for nebula is the way it was for Covid and quite frankly, it was premature to build US a laboratory and take out all that over it and so we've now clean that up Jason Jason cleaned all that up and then still came in he is as tight as Jay.

Speaker Change: And the two of them went to town and a nice supporting the three of us really cut everywhere.

Ted Karkus: You know, the three of us really cut everywhere. And by the way, a shout out to our finance team, our head of finance, Lance Besaisar, who, you know, frankly, we sold PharmaLize at the beginning of January, technically, we wanted to sell it December 31st, but that was a Herculean test. We brought in new auditors, plus sold a major operating asset of the company. And to still get our press release out on time on March 31st, without even asking for an extension, we could have done the two week extension. I thought shareholders wouldn't want to hear, oh, what's this extension all about?

Speaker Change: And by the way a shout out to our finance team.

Speaker Change: Our head of finance.

Lance this ASR who.

Speaker Change: Frankly, we sold.

Speaker Change: Formalized.

Speaker Change: At the beginning of January technically we wanted to sell at December 31, but that was a herculean task. We brought a new auditor's plus sold a major operating asset of the company and to still get our press release out on time on March 31, without even asking for an extension we could we could have done.

Speaker Change: The two week extension I thought shareholders wouldn't Wanna hear Oh, what's what's as expected all about so I really pressed with though is like I really want to get this out on time on March 31, which we did so I'm really proud of impressed of lands in the whole finance team, we actually had people who used to work for a company who came back just to help out which was incredibly nicely.

Ted Karkus: So I really pressed Lance. I was like, I really want to get this out on time on March 31st, which we did. So I'm really proud of and impressed of Lance and the whole finance team. We actually had people who used to work for our company who came back just to help out, which was incredibly nice. I'm not going to mention them by name. I don't want to embarrass them, or I don't know if it's appropriate. And then also, thank you to our new auditors, Frucci, who really did a phenomenal job to come in, you know, late in the year.

Speaker Change: I'm not going to mention them by name I know embarrass them or I don't know it's appropriate and then also thank you to our new auditors <unk>, who really did a phenomenal job to come in.

Ted Karkus: Our previous orders no longer do public companies. They let us know, like, at the last minute. Somebody passed away that was very senior at the company, so they no longer do public companies. Because we had to find new auditors. And so, really, Herculean effort, and I appreciate the efforts of all of them.

Speaker Change: Late in the year, our previous orders no longer do public companies. They let us know like at the last minute.

Speaker Change: He passed away that was very senior at the company. So they no longer do public companies, we have to find new waters and.

Speaker Change: So really.

Speaker Change: Herculean effort and I appreciate the efforts of all of them.

Noella Alexander Young: Do we have any more questions, Noella? We have a couple more, if you have time for that. Okay.

Noah: We have any more questions Noah.

Noah: We have a couple more okay.

Noah: Okay excellent. So this next question is in today's press release. It looks like you have 700 can you comment on the credit facility and what is the maximum that we can access.

Ted Karkus: So the next question is, in today's press release, it looks like you have 700k in the bank. Can you comment on the credit facility and what is the maximum amount you can ask? So look, we could always access capital if we need it. My goal right now is to wrap up a multi-million dollar loan, which will bridge us to either selling Nebula or bridge us to Crown Medical Collections starting to come in. That's the goal. So we've cut overhead tremendously. I'd rather do a loan, even if it was a high interest rate loan. rather than do something with shares and dilute shareholders further.

Noah: So look we can always access capital if we need it my goal right now is to wrap up a multimillion dollar alone, which will bridge us to either selling nebula or bridge us too crowded medical collection starting to come in that's adult so we've cut overhead tremendously I'd, rather do alone even if it was a high interest rate loan.

Noah: Rather than do something with shares and dilutes shareholders. Further. So look this is a dynamic world no guarantees and how this all plays out I haven't closed on the <unk> loan yet I'm very optimistic that I'm going to that should then Bridget and at the same time bridge. The gap and then at the same time Crown medical as indicated to me that there may be some.

Ted Karkus: So look, this is a dynamic world, no guarantees on how this all plays out. I haven't closed on the loan yet. I'm very optimistic that I'm going to. That should then bridge it. And at the same time, bridge the gap. And then at the same time, Crown Medical has indicated to me that there may be some low hanging fruit. We may be able to take in some dollars short term before we formally bankrupt the subsidiaries and launch litigation against the insurance companies. And then again, once you launch litigation against the insurance companies. some of them will rush to settle before the litigation even gets going.

Noah: Low hanging fruit, we may be able taken some dollars short term before we formally bankrupt the subsidiaries.

Noah: And launched litigation against the insurance companies.

Noah: And then again once you launched litigation against the insurance companies.

Noah: All of them will rush to settle before the litigation to even get going they don't want to spend the time money effort. They know that they owe the money you settle out on amount and we will be very happy with that so we have to see it as a dynamic world we have to see how this all plays out.

Ted Karkus: They don't want to spend the time, money, effort. They know that they owe the money. You settle on an amount and we will be very happy with that. So we have to see it's a dynamic role. We have to see how this all plays out. But we have all these different liquidity events. So I have, you know, I wish I could give exact answers to people. I just can't. But at the end of the day, my opinion is the stock price. should be higher. There's a disconnect between the value of the company and the stock price.

Noah: But we have all these different liquidity events, so I have.

Noah: I wish I could give exact answers to people I just cant, but at the end of the day My opinion is the stock price.

Noah: Should be higher there is a disconnect between the value of the company and the stock price.

Ted Karkus: Unfortunately, we're in a market environment where the stock market doesn't like companies that are losing money that need money. So it put us in this position. And now I want to get out of this position. I never want to have to rely on investment bankers, the stock market again, for capital. And so I want to get into a position. And so the best way to get in a position is to sell an asset. like nebula partner, be smart, there's possibility we be we partner be smart, get in a block of money, right? We have crown medical coming in.

Noah: Unfortunately, we're in a market environment, where the stock market doesn't like companies that are losing money that need money.

Noah: So it put us in this position and now I want to get us out of this position I never want to have to rely on investment bankers the stock market again for capital.

Noah: And so I want to get into a position and so the best way to get in a position either sell an asset.

Noah: Like Nebula partner.

Noah: Be smart there's possibility we partner be smart getting a block of money right. We are crammed medical coming in and also potentially I have alone than other them lining up and we'll see the specifics I don't have the final terms of the goal were working on that now so the number of variables I wish I had definitive answers, but I can tell you I'm a shareholder friendly I have.

Ted Karkus: And also, potentially I have a loan that I'm that I'm lining up. And we'll see the specifics. I don't have the final terms of it. But we're working on that now. So there are a number of variables. I wish I had definitive answers.

Ted Karkus: But I can tell you I'm shareholder friendly. I have been in the past the largest shareholder in the company. I've been a shareholder. Some of my shares I bought at six $8 a share in 2008, when I was just an investor. Okay, so obviously, my heart's with the company, my soul is with the company. with the stock price among I am a shareholder friendly CEO. I like to think I'm smart. I was smart for 40 years until this last six or nine months. I like to think I'm going to be smart again. And I like to think we've turned the corner in terms of the outlook for the future of our company.

Noah: Been in the past the largest shareholder in the company I've been a shareholder some of my shares I bought at $68 a share in 2008, when it was just an investor okay. So.

Noah: Obviously by Hearts with the company my solid with the company.

Noah: With the stock price among I am a shareholder friendly CEO I'd like to thank on Smart I was smart for 40 years until this last six to nine months I'd like to think I'm going to be smart again, and I like to think we've turned the corner in terms of the outlook for the future of our company in terms of the overhead the cash flow come in and I feel like we're in a bit.

Ted Karkus: In terms of the overhead, the cash flow coming in, I feel like we're in a pretty good place right now.

Noah: Pretty good place right now.

Noella Alexander Young: Thank Thank you, Ted. We do have a lot more questions left.

Noah: Thank you.

Noah: Thank you Ted but do you have a lot more questions left but we have time for one more sure. One more finally agreed can you find me a good one you don't have a good one but what I would consider a good one go ahead with an excellent let's say way. So those last question with the closing of twenty-three need as a company plan on increasing leverage.

Noella Alexander Young: But do you have time for one more? Sure, one more. Can you find me a good one? You don't know the good ones from the bit what I would consider a good one. Go ahead. What's the next one? Let's do one more.

Ted Karkus: So this last question is, with the closing of 23andMe, does the company plan on increasing leverage on does the company plan on increased leveraging that business opportunity to increase revenue through C&E Complete? Interesting, interesting question. So look, my perspective on 23andMe is that the Ancestry business was a great business. If they had just focused on the Ancestry business, they could have made a lot of money. It's a great business. The problem is, they had all this cash and cash flow, and they went into drug development. Now, what did I say at the beginning? That's exactly what I'm not going to do.

Noah: Does the company plan increased leveraging that business opportunity to increase revenue in Guinea complete.

Noah: Interesting interesting question. So look my perspective on 23 and me is that the accessory business was a great business. If they just focus on the <unk> business. They could have made a lot of money, it's a great business.

Noah: The problem is that all this cash and cash flow and then went into drug development now what did I say at the beginning of this exactly but I'm not going to do we have this great cancer therapeutic called linebacker I'm not spending the money development I thought that's as good as anything with 23 me once about I won't do it.

Ted Karkus: We have this great cancer therapeutic called Linebacker. I'm not spending the money developing. I thought that's as good as anything that 23andMe wants to develop. I won't do it. It may create an opportunity, we will see. What's also interesting is that there are people looking at 23andMe's database as being incredibly valuable. Well, guess what? We have a database. I don't know how big their database is. But my guess is, off the top of my head, our database is multiples of the size of theirs, and much more in depth, because we're studying the whole genome. So when we have information on a test, is significantly more in depth and more valuable than a SNP based ancestor.

Noah: It may create an opportunity we will see what's also interesting is that there are people looking at 'twenty three <unk> database has been incredibly valuable well guess, what we have a database I don't know how big their databases, but my guess is well off the top of my head. Our database is multiples of the size of the Earth and much more.

Noah: Debt because we're studying the whole genome. So when we have information on a test it.

Noah: It's significantly more in depth and more valuable than a snip based ask us retail.

Ted Karkus: And as I said, we have the equivalent of 150 million ancestors. So if you think they're talking about the 23andMe, you know, database being valuable, look at ours. Now, having said that, there's also a lot of issues about sharing personal information. First of all, we would de-identify all of the personal information. I don't want to get into all the politics involved in that. And I'm not implying that we're going to sell our database. I'm just saying it's a very valuable database. And that comes with Nebula. That's a part of Nebula. So there's intrinsic value in Nebula that people don't understand.

Noah: And as I said, we have the equivalent of $150 million ancestry testing. So if you think they're talking about the 23 Mi.

Noah: Database being valuable look at ours now having said that there's also a lot of issues.

Noah: About sharing personal information first of all we did identify all of the personal information I don't want to get into all the politics involved in that.

Noah: And I'm not imply.

Noah: Implying that we're going to sell our database I'm, just saying, it's a very valuable database and that comes with nebula. That's a part of nebula, So theres intrinsic value and nebulous people don't understand the database is a part of that so the answer is are there opportunities look we'll see.

Ted Karkus: The database is a part of that. So the answer is, are there opportunities? Look, we'll see. The bottom line, also among other things, I mentioned our DNA Expand product. We can go after 23andMe's customers. And what happens is 23andMe and MyHeritage and Ancestry.com, you're allowed as a customer to download your data from them. When you download it, you can upload it to us and we can give you this very valuable health related information and health insights. which is probably more in depth than what the ancestry companies are providing you. That's the interesting thing. You know, we've been doing this for seven years.

Noah: The bottom line also among other things I mentioned are DNA expand product. We can go after 'twenty three in knees customers and.

Noah: And what happens in 'twenty, three me and my Heritage and ancestry Dot Com you were allowed as a customer to download your data from them. When you download you can upload it to us and we can give you this very valuable health related information and health insights.

Noah: Which probably more in depth and what the ancestry companies are providing you. That's the interesting thing we've been doing this for seven years, we have such an enormous database is developed so nicely our reporting system is among the best in the world. So we can provide some really valuable insights. So we can do at a lower price. So there's definitely a lot of potential there as well and again the key to all this.

Ted Karkus: We have such an enormous database. It's developed so nicely. Our reporting system is among the best in the world. So we can provide some really valuable insights so we can do it at a lower price. So there's definitely a lot of potential there as well. And again, the key to all this is marketing. And we now have a marketing guru who's COO of our company. It's great having him as a partner. Jason, Stu and I, we do conference calls every day, literally every day. And we're all excited. Excellent.

Speaker Change: Is marketing and we now have a marketing guru those COO of our company.

Noah: It's a really.

Speaker Change: Great having him as a partner Jason Stewart I would do conference calls every day literally every day and.

Noah: We're all excited for the future.

Noella Alexander Young: Well, thank you very much, Ted, for your responses today. That concludes the Q&A session.

Speaker Change: Excellent. Thank you very much taxpayer responses today that concludes the Q&A session, but before we go I will turn it back to <unk> for final remarks.

Ted Karkus: But before we go, I will turn back the floor to you, Ted, for final remarks. Wow, I think we covered an awful lot in that hour. I want to appreciate everybody for joining me today and being supportive. Look, on the one hand, I feel bad that our stock price came down over the last couple of years. I always look at all these other companies where the stock price came down, where I say to myself, they just didn't know what they were doing. I know exactly what I was doing. And yet we still got into this position.

Speaker Change: Well I think we covered an awful lot in that hour.

Speaker Change: I want to appreciate everybody for joining me today and being supportive.

Speaker Change: Look on the one hand, I feel bad that our stock price came down over the last couple of years.

Speaker Change: I always look at all these other companies where the stock price came down where I say to myself. They just didn't know what they were doing I know exactly what it was doing and yet we still got into this position we did for different reasons, because we got into cash flow buying from accounts receivable.

Ted Karkus: We did for different reasons, because we got into a cash flow buying from our cash receivable. I want to clean that all up and get back to basics, the way I've run the company for the last dozen years. And that is paying attention to the both the top line and the paying attention to the things that affect stock price, paying attention to dilution. Those are all things that got thrown out the door over the last six or nine months. I want to get back to basics. We're already 80% of the way there between selling PMI, between shutting down the laboratory, between cutting the headcount dramatically, cutting IT expenses dramatically.

Speaker Change: I want to clean that all up and get back to basics the way I run the company.

Speaker Change: For the last dozen years and that is paying attention to the both the topline and the bottomline paying attention to the things that affects stock price paying attention to dilution. Those are all things that got thrown out the door over the last 696 to nine months I want to get back to basics, we've we're already 80% of the way there.

Speaker Change: Between selling PMI between shutting down the laboratory between cutting head count dramatically cutting expenses dramatically.

Ted Karkus: We're moving out of our headquarters, which is another million, almost a million dollars a year. We're just cutting everywhere so that we are a lean, mean company. The amount of capital we'll require to run the company in the future will be a mere fraction of what it cost in the past. And at the same time, we got these great assets to develop. We have a history of being successful in developing assets. And I'm really looking forward to very positive reports and surprises in the future. Everybody have a great day.

Speaker Change: We're moving out of our headquarters, which is another 1 million almost a million dollars a year I.

Speaker Change: I mean, we're just cutting everywhere. So that we are a lean mean company the amount of capital will require to run the company in the future will be a mere fraction of what it cost in the past and at the same time. We've got these great assets to develop we have a history of being successful in developing these alpha and developing assets and.

Speaker Change: And look I'm really looking forward to very positive reports and surprises in the future everybody have a great day Noel enjoys.

Noella Alexander Young: Noelle as always. Thank you for being the moderator. I love having you on these calls. Thank you so much. Thank you, Ted.

Speaker Change: Thank you for being the moderator I love, having you on these calls thank you so much.

Speaker Change: Thank you, Ken and once again that such prophase labs trading on the NASDAQ under the ticker symbol <unk>. Thank you everyone for joining us today for Purples labs quite quiet.

Noella Alexander Young: And once again, this was Prophase Labs trading on the NASDAQ under the ticker symbol PRPH. Thank you, everyone, for joining us today for Prophase Labs' fourth quarter and year-end 2024 results. Stay tuned for the next quarterly call and see you next time.

Speaker Change: 'twenty 'twenty four resolved stay tuned for the next quarterly call next time.