DOYLESTOWN, PA, Aug. 14, 2018 (GLOBE NEWSWIRE) -- ProPhase Labs, Inc. (NASDAQ: PRPH, www.ProPhaseLabs.com), a
vertically integrated and diversified branding, marketing and technology company with deep experience in over-the-counter dietary
supplements and remedies (“ProPhase” or “Company”), announced today that the Company’s management, after consultation and
discussions with EisnerAmper LLP, the Company’s independent registered public accounting firm, and the Audit Committee of the Board
of Directors, has determined to restate the Company’s previously issued audited consolidated financial statements for the fiscal
year ended December 31, 2017 and unaudited consolidated financial statements for the fiscal quarters ended March 31, 2017, June 30,
2017, September 30, 2017 and March 31, 2018 to correct certain accounting errors related to the Company’s recognition of income tax
benefit. In light of these errors, the Company’s previously filed financial statements and other financial information for
these periods should no longer be relied upon.
The Company has
determined that it miscalculated its income tax benefit by incorrectly utilizing certain net operating losses without taking into
account the statutory limitation imposed by the State of Pennsylvania, which resulted in an overstatement of net income as
discussed below. The Company also incorrectly allocated the amount of income tax benefit to continuing operations, which resulted
in an overstatement of income from continuing operations, and an understatement of the gain on sale of discontinued operations,
presented net of taxes, which had no impact on net income.
Based on its review,
the Company has determined that its income tax expense was understated and its net income was overstated by approximately $1.2
million for the fiscal year ended December 31, 2017. Based on its review to date, management anticipates that the
restatements will result in a decrease of approximately $16.5 million to income tax benefit from continuing operations and an
increase of approximately $15.4 million to gain on sale of discontinued operations, net of taxes. After giving effect to these
changes, net income for the fiscal year ended December 31, 2017 is expected to be $40.6 million, or $2.61 per basic share and $2.59
per diluted share of the Company's common stock, compared with previously reported net income of approximately $41.8 million, or
$2.69 per basic share and $2.67 per diluted share of the Company’s common stock.
The Company is still
in the process of evaluating the impact of this error on its quarterly financial statements for the fiscal quarters ended March 31,
2017, June 30, 2017, September 30, 2017 and March 31, 2018.
The Company has
determined that the calculation errors described above affect only the periods described in this press release and that the errors
have no impact on any prior period results. The Company is not currently aware of any other accounting errors requiring adjustment
to any prior period financial statement. However, there can be no assurances that the Company or its independent registered
public accounting firm will not find additional accounting errors requiring further adjustment in those or earlier reports.
The Company expects
to file an amendment on Form 10-K/A to its Annual Report on Form 10-K for the fiscal year ended December 31, 2017 to restate the
audited consolidated financial statements included in the Form 10-K and amendments on Form 10-Q/A to its Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and March 31, 2018 to correct the errors
described above. The Company is seeking to file the amendments on Form 10-K/A and Form 10-Q/A as soon as reasonably
practicable.
About ProPhase Labs
ProPhase is a vertically integrated manufacturer, marketer and distributor of a diversified range of
over-the-counter (“OTC”) dietary supplements. We are engaged in the research and development of additional OTC dietary supplements,
including Legendz XL, which are marketed under our TK Supplements brand. The Company is also developing ProPhase Digital Media as a
service that leverages and applies technology to the direct-to-consumer marketing of consumer products. With our enhanced liquidity
following the sale of our Cold-EEZE brand, we are also actively exploring additional opportunities outside of the consumer products
industry. For more information visit us at www.ProPhaseLabs.com.
Forward-Looking Statements
All statements contained in this press release, other than statements of historical fact, are forward-looking
statements, including statements related to the restatements described above. These statements speak only as of the date of this
press release and are based on our current plans and expectations and involve risks and uncertainties that could cause actual
future events or results to be different from those described in or implied by such forward-looking statements, including risks and
uncertainties relating to our ability to timely complete the restatements, risks that other errors or internal control deficiencies
or weaknesses will be identified during our preparation of the restatements and/or risks that additional adjustments will be
required. Further information about these matters can be found in our Securities and Exchange Commission filings. Except as
required by applicable law or regulation, we do not undertake any obligation to update our forward-looking statements to reflect
future events or circumstances.
Investor Contact Ted Karkus, Chairman and CEO ProPhase Labs, Inc. (267) 880-1111