ProPhase Labs and ABL Sign LOI for Proposed Reverse Merger

ProPhase Labs and Advanced Biological Laboratories entered into a non-binding Letter of Intent regarding a proposed reverse merger transaction pursuant to which ABL would become the majority owner of the combined entity. The LOI reflects preliminary understandings only and does not create any obligation to consummate a transaction, except with respect to customary confidentiality and expense provisions. The Proposed Transaction remains subject to completion of due diligence, negotiation and execution of definitive agreements, regulatory approvals, Nasdaq listing requirements, and other customary closing conditions. While subject to finalization in definitive agreements, the parties have discussed a preliminary, non-binding valuation framework for the legacy ProPhase business that may imply an enterprise value of up to approximately $30M. Under the terms contemplated in the LOI, subject to applicable law, board approvals, and definitive documentation, ProPhase Labs may declare a special cash dividend of up to $109M payable to shareholders of ProPhase Labs common stock as of a record date to be determined. Any such cash distribution would be separate from and not part of the merged operating company. Additionally, all Crown Medical Collections receivables are expected to be carved out for the exclusive benefit of current ProPhase shareholders. This framework represents the preliminary structure, subject to definitive documentation, for the transaction, expressly excludes certain cash distributions, asset carve-outs, and retained liabilities described below, and is subject to change based on due diligence, capitalization adjustments, financing activity, market conditions and final transaction terms. The parties currently anticipate working toward execution of definitive documentation within approximately 60 to 90 days. The Proposed Transaction envisions that ABL shareholders would own approximately 76% of the combined company at closing. Following completion of the merger, a newly established U.S. subsidiary would hold and operate ProPhase's Nebula Genomics platform, BE-Smart Esophageal Cancer Test program, and select consumer health businesses, enabling focused capital allocation and strategic execution. ABL would contribute its global infrastructure, including advanced data processing systems, cloud computing for health data, and financing capabilities. Under the LOI, ProPhase Labs may declare a special cash dividend of up to $10M payable to shareholders of record as of a date to be determined. This distribution would be separate from the merged operating company. Additionally, all Crown Medical Collections receivables are expected to be carved out for the exclusive benefit of current ProPhase shareholders, with anticipated collections of approximately $50M net. These estimates are forward-looking and subject to significant uncertainty, including collection risk and timing variability. The combined operating company would assume only those liabilities expressly agreed in definitive documentation, currently contemplated to include approximately $5M of ProPhase Labs' existing indebtedness. All other legacy liabilities would remain with ProPhase Labs and would not be obligations of the post-merger entity. The proposed transaction remains subject to due diligence, negotiation and execution of definitive agreements, regulatory approvals, Nasdaq listing requirements, and other customary closing conditions.