SC 13D/A

SC 13D/A 1 d422335dsc13da.htm SC 13D/A SC 13D/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED

PURSUANT TO RULE 13d-2(a)

(Amendment No. 1)

ProPhase Labs, Inc.

(Name of Issuer)

Common Stock, $0.0005 Par Value

(Title of Class of Securities)

74345W108

(Cusip Number)

Matrixx Initiatives, Inc.

1 Grand Commons, Suite 130

Bridgewater, New Jersey 08807

Attn: Marylou Arnett

with a copy to:

Kirkland & Ellis LLP

300 North LaSalle Street

Chicago, IL 60654

Attn: James S. Rowe

Michael H. Weed, P.C.

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

October 9, 2012

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No. 74345W108		13D		Page 2 of 10


1	NAME OF REPORTING PERSON: Matrixx Initiatives, Inc.
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (a) ¨ (b) x
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS): OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E): ¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,453,427 (1)
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,453,427 (1)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.80% (1)
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): CO

(1)

Beneficial ownership of the Common Stock of the Issuer is being reported hereunder solely because the reporting person may be deemed to have beneficial ownership of such Common Stock as a result of the relationships described under Item 2 and Item 3 and the matters described in Item 3, Item 4 and Item 5 of this Schedule 13D. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission by any of the reporting persons that it is the beneficial owner of any shares of Common Stock referred to herein for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, or for any other purpose, and such beneficial ownership is expressly disclaimed. The above calculations are based on 14,836,340 shares of Common Stock outstanding as of August 13, 2012.

Page 2 of 10


CUSIP No. 74345W108		13D		Page 3 of 10


1	NAME OF REPORTING PERSON: Wonder Holdings Acquisition Corp.
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (a) ¨ (b) x
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS): OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E): ¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,453,427 (1)
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,453,427 (1)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.80% (1)
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): CO

(1)

Page 3 of 10


CUSIP No. 74345W108		13D		Page 4 of 10


1	NAME OF REPORTING PERSON: H.I.G. Bayside Debt & LBO Fund II, L.P.
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (a) ¨ (b) x
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS): OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E): ¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,453,427 (1)
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,453,427 (1)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.80% (1)
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): PN

(1)

Page 4 of 10


CUSIP No. 74345W108		13D		Page 5 of 10


1	NAME OF REPORTING PERSON: H.I.G. Bayside Advisors II, LLC
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (a) ¨ (b) x
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS): OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E): ¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,453,427 (1)
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,453,427 (1)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.80% (1)
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): OO

(1)

Page 5 of 10


CUSIP No. 74345W108		13D		Page 6 of 10


1	NAME OF REPORTING PERSON: H.I.G.-GPII, Inc.
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (a) ¨ (b) x
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS): OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E): ¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,453,427 (1)
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,453,427 (1)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.80% (1)
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): CO

(1)

Page 6 of 10


CUSIP No. 74345W108		13D		Page 7 of 10


1	NAME OF REPORTING PERSON: Sami W. Mnaymneh
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (a) ¨ (b) x
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS): OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E): ¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION: United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,453,427 (1)
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,453,427 (1)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.80% (1)
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): IN

(1)

Page 7 of 10


CUSIP No. 74345W108		13D		Page 8 of 10


1	NAME OF REPORTING PERSON: Anthony A. Tamer
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (a) ¨ (b) x
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS): OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E): ¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION: United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,453,427 (1)
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,453,427 (1)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.80% (1)
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): IN

(1)

Page 8 of 10

EXPLANATORY NOTE

The Statement on Schedule 13D originally filed with the Securities and Exchange Commission on September 14, 2012 (the “Statement”) by the persons named therein is hereby amended and supplemented by this Amendment No. 1 to Schedule 13D (this “Amendment”). This Amendment relates is the common stock, $0.0005 par value per share (“Shares”), of ProPhase Labs, Inc., a Nevada corporation (the “Issuer”). Capitalized terms used herein and not otherwise defined have the meanings assigned to such terms in the Statement. Except as otherwise provided herein, each Item of the Statement remains unchanged.

Item 4

Purpose of Transaction

Item 4 of the Statement is hereby amended by adding the following immediately following the last paragraph thereof:

On September 17, 2012, the Issuer rejected Purchaser’s proposal to acquire all of the outstanding Shares of the Issuer at a purchase price of $1.40 per share, in cash. On October 9, 2012, Purchaser sent a letter to the Issuer (the “October 9 letter”) increasing its offer to $1.60 per share in cash, which represents a 14.3% increase from Purchaser’s prior offer, a premium of 51.7% over the 30-day average closing price of the Issuer’s stock and a 53.7% premium to the Issuer’s average closing price over the 12 months preceding September 6, 2012, the day Purchaser and Seller entered into the Option Agreement. The October 9 Letter is set forth as Exhibit 99.6 hereto, and is incorporated by reference herein.

Purchaser believes this revised all-cash offer, which is not contingent on financing, is highly attractive to the Issuer’s shareholders, as it provides them with compelling, upfront and certain value relative to a difficult, uncertain and highly speculative multi-year turnaround program the Issuer has recently outlined. Purchaser believes that the Issuer faces significant challenges by remaining a standalone entity. These challenges include, among others:

•

Lack of scale to effectively compete in a highly competitive market;

•

Unsustainable financial model; and

•

Continued and substantial losses.

Purchaser hopes that the Issuer will act in the best interests of its shareholders by engaging in discussions with Purchaser, or by at least removing all obstacles so that the Issuer’s shareholders can make their own determinations regarding the adequacy of Purchaser’s offer. To that end, in addition to the October 9 Letter, Purchaser issued two press releases (the “October 9 Press Releases”) and a presentation (the “October 9 Presentation”) detailing the Issuer’s tenuous standalone prospects relative to the Issuer’s compelling and certain offer. Copies of the October 9 Press Releases and October 9 Presentation are set forth as Exhibits 99.7, 99.8 and 99.9, respectively, hereto, each of which is incorporated by reference herein.

Item 5

Material to be Filed as Exhibits.

Item 5 of the Statement is hereby amended by adding the following Exhibits:


Exhibit 99.6		Letter, dated, October 9, 2012, from Matrixx Initiatives, Inc. to ProPhase Labs, Inc.

Exhibit 99.7		Presentation, dated October 9, 2012.

Exhibit 99.8		Letter Press Release, dated October 9, 2012.

Exhibit 99.9		Presentation Press Release, dated October 9, 2012.

Exhibit 99.10		Schedule 13D Joint Filing Agreement, dated as of October 9, 2012, by and among each of the Reporting Persons.

Page 9 of 10

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: October 9, 2012


MATRIXX INITIATIVES, INC.

By:		/s/ Richard H. Siegel
Name:		Richard H. Siegel
Title:		Attorney-in-Fact

WONDER HOLDINGS ACQUISITION CORP.

By:		/s/ Richard H. Siegel
Name:		Richard H. Siegel
Title:		Attorney-in-Fact

H.I.G. BAYSIDE DEBT & LBO FUND II, L.P.

By: H.I.G. Bayside Advisors II, LLC
Its: General Partner

By: H.I.G.-GPII, Inc.
Its: Manager

By:		/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:		Vice President and General Counsel

H.I.G. BAYSIDE ADVISORS II, LLC

By: H.I.G.-GPII, Inc.
Its: Manager

By:		/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:		Vice President and General Counsel

H.I.G.-GPII, INC.

By:		/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:		Vice President and General Counsel

SAMI W. MNAYMNEH

By:		/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:		Attorney-in-Fact

ANTHONY A. TAMER

By:		/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:		Attorney-in-Fact