The restatement and going concern warning signal severe financial distress and likely continued dilution from convertible debt conversions. Monitor for potential bankruptcy, asset sales, or emergency financing. The stock's OTC listing and minimal cash make any positive catalyst unlikely in the near term.
Price Chart
Executive Summary
ProPhase Labs filed Amendment No. 2 to its Q1 2026 10-Q, restating previously issued financial statements to correct material errors in revenue, cost of goods sold, and deferred revenue. The restatement reduced the reported net loss by $179,000, but the company still posted a $5.175 million net loss from continuing operations on revenue of $1.169 million (down 18% YoY). The filing reiterates a going concern warning with only $31,000 cash, a $52.8 million working capital deficit, and negative stockholders' equity of $435,000, reflecting severe financial distress.
Key Facts
- Restated Q1 2026 financials: revenue corrected from $478K to $1.169M, net loss reduced from $5.354M to $5.175M.
- Cash and cash equivalents of only $31,000 as of March 31, 2026.
- Working capital deficit of $52.8 million; total stockholders' deficit of $435,000.
- Substantial doubt about ability to continue as a going concern; management's plans do not alleviate doubt.
- Diagnostic subsidiaries (PDX) filed Chapter 11 in September 2025 and were deconsolidated.
- Total debt of ~$5.4M net of discounts, with multiple convertible notes featuring variable conversion prices and embedded derivatives.
- Derivative liability grew from $50K to $490K during the quarter.
- Revenue declined 18% YoY to $1.169M; gross margin fell from 36.8% to 25.3%.
- Interest expense rose to $651K; debt extinguishment losses of $278K.
Financial Impact
Restatement adjustments increased revenue by $691K and cost of revenue by $563K, netting a $128K improvement in gross profit. Net loss improved by $179K. However, the company's liquidity position is critical with $31K cash against $55.7M current liabilities.
Risk Factors
- Bankruptcy or restructuring risk given going concern and Chapter 11 filing of subsidiaries.
- Massive dilution from convertible notes with variable conversion prices (65-80% of VWAP).
- Potential delisting or further OTC trading restrictions.
- Ongoing litigation including False Claims Act qui tam and arbitration with noteholders.
- Negative equity and inability to service debt obligations.
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 10-Q/A Filing (Primary) | 0001493152-26-032658 |
| Exhibit: ex31-1.htm | 0001493152-26-032658 |
| Exhibit: ex32-1.htm | 0001493152-26-032658 |
| Document: 0001493152-26-032658-index-headers.html | 0001493152-26-032658 |
| Document: 0001493152-26-032658-index.html | 0001493152-26-032658 |
| Document: 0001493152-26-032658.txt | 0001493152-26-032658 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 19, 2026 7d ago | SC 13G | $0.3626 | awaiting T+20 | — | $0.010000 (−97.24%) |
Aug 6, 2026 11w ago | 8-K | $0.3626 $0.3626 | · 0.00% | ▼ −0.40% | $0.010000 (+97.24%) |
Jul 9, 2026 15w ago | 10-Q/A | $0.0800 $0.0400 | ▲ +50.00% | ▲ +52.24% | $0.010000 (+87.50%) |
Jul 7, 2026 15w ago | 10-Q/A | $0.0900 $0.0480 | ▲ +46.67% | ▲ +49.83% | $0.010000 (+88.89%) |
US Market Status
Subscribe to SecBot
Get Real-Time SEC Filing Intelligence
Comprehensive SEC filing analysis delivered the moment filings hit EDGAR. Sentiment scoring, impact analysis, and actionable insights for every material event.
Create a free account Live analysis, Telegram alerts, watchlists and the MCP server for subscribers