Form 8-K - Current report

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of earliest event reported: January 16, 2025

 

NovaBay Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware	001-33678	68-0454536
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

 

2000 Powell Street, Suite 1150, Emeryville, CA 94608

(Address of Principal Executive Offices) (Zip Code)

 

[phone]

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Trading Symbol(s)		Name of Each Exchange On Which Registered
Common Stock, par value $0.01 per share		NBY		NYSE American

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.01 Completion of Acquisition or Disposition of Assets.

 

On January 17, 2025, NovaBay Pharmaceuticals, Inc. (the “Company”) completed the sale (the “Asset Sale Transaction”) of its eyecare products sold under the Avenova brand and related assets (the “Avenova Assets”) to PRN Physician Recommended Nutriceuticals, LLC (“PRN”), which constituted substantially all of the Company’s revenue generating and operating assets. The Asset Sale Transaction was consummated pursuant to the Asset Purchase Agreement, dated September 19, 2024, as amended by Amendment No. 1 to the Asset Purchase Agreement, dated November 5, 2024 (the “Purchase Agreement”). As previously disclosed in connection with the Asset Sale Transaction, the Company was also party to a secured promissory note, dated November 5, 2024 (the “Bridge Loan”), that had a principal amount borrowed, together with accrued and unpaid interest, of $507,953.72 as of the closing of the Asset Sale Transaction (the “Bridge Loan Balance”). In accordance with the Bridge Loan and the Purchase Agreement, the Bridge Loan Balance was paid to PRN, and, upon such payment, the Bridge Loan was discharged and all collateral was released.

 

Pursuant to the Purchase Agreement, the Company sold the Avenova Assets to PRN for a closing cash purchase price equal to $11.5 million, less (i) the amount of the Bridge Loan Balance and (ii) $500,000, which amount was deposited into an escrow account for up to six (6) months to be used for Company indemnification obligations or the payment of any Net Working Capital Adjustment (as defined below) after the closing. The purchase price is subject to a post-closing working capital adjustment, upward or downward, that will be limited to an amount of up to $500,000 (the “Net Working Capital Adjustment”). The Net Working Capital Adjustment will be mutually determined by PRN and the Company commencing ninety (90) days after the closing of the Asset Sale Transaction based upon the difference between the amount of the Company’s Net Working Capital (as defined in the Purchase Agreement) immediately prior to the closing and the agreed upon target working capital value of $800,000.

 

The closing of the Asset Sale Transaction was subject to certain conditions, which included the Company obtaining the consent of a majority of the outstanding shares of the Company’s common stock at a special meeting of the stockholders, held on November 22, 2024, as adjourned and reconvened on December 18, 2024, and as adjourned and reconvened on January 16, 2024 (the “Special Meeting”).

 

The proceeds received from the Asset Sale Transaction will be an asset of the Company, which the Company currently contemplates may be distributed to stockholders and others in connection with a planned liquidation and dissolution of the Company under Delaware law (the “Liquidation and Dissolution”) pursuant to the Plan of Complete Liquidation and Dissolution of the Company (the “Plan of Dissolution”). The Liquidation and Dissolution of the Company pursuant to the Plan of Dissolution is subject to the Company first receiving stockholder approval. Accordingly, the Special Meeting was adjourned by the Company until January 30, 2025 to allow additional time for stockholders to vote only on the last remaining proposal, Proposal Two, to approve the Liquidation and Dissolution pursuant to the Plan of Dissolution. Additional details about the Special Meeting are described in Item 5.07 and Item 8.01 of this Current Report on Form 8-K.

 

Additional information regarding the Asset Sale Transaction (including the Purchase Agreement and the Bridge Loan) and the Liquidation and Dissolution (including the Plan of Dissolution) are included in the Current Reports on Form 8-K that were filed by the Company with the Securities and Exchange Commission (the “SEC”) on September 20, 2024 and November 6, 2024 and in the Company’s definitive proxy statement on Schedule 14A for the Special Meeting filed with the SEC on October 16, 2024 (the “Special Meeting Proxy Statement”), as supplemented from time to time, including by the supplement to the Special Meeting Proxy Statement dated as of November 12, 2024 (the “Proxy Supplement”).

 

 

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The foregoing descriptions of the Purchase Agreement, including Amendment No. 1 to the Purchase Agreement, the Bridge Loan and the Plan of Dissolution contain only a brief description of the material terms of the Asset Sale Transaction and do not purport to be a complete description of the rights and obligations of the parties under such agreements, and such descriptions are qualified in their entirety by reference to the full text of the agreements, copies of which are filed as, or incorporated by reference to, Exhibits 2.1, 2.2, 2.3 and 10.1, respectively.

 

Additional Matters

 

The documents described or referred to above and/or attached as an exhibit to, or incorporated by reference to, this Current Report on Form 8-K (collectively, the “Form 8-K Documents”) contain representations and warranties of the parties to such agreements that may be subject to limitations, qualifications or exceptions agreed upon by the parties, and may be subject to a contractual standard of materiality that differs from the materiality standard that applies to reports and documents filed with the SEC. In particular, in review of the representations and warranties contained in the Form 8-K Documents and/or described in the foregoing summary, it is important to bear in mind that the representations and warranties were negotiated by the parties in connection with the Asset Sale Transaction and with the principal purpose of allocating contractual risk between the parties in the Asset Sale Transaction. The representations and warranties, other provisions of the Form 8-K Documents or any description of these provisions should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in the Special Meeting Proxy Statement, as supplemented, this Current Report on Form 8-K and in the other reports, statements and filings that the Company publicly files with the SEC.

 

Item 5.02         Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

(e)          In connection with the closing of the Asset Sale Transaction, the Company and PRN entered into a Transition Services Agreement, dated January 17, 2025, pursuant to which the Company has agreed to provide services to PRN with respect to specified accounting, marketing, sales, customer service, regulatory and operational support for a period of four (4) months after the closing of the Asset Sale Transaction. In exchange for providing such services, PRN and the Company agreed upon fees to be paid to the Company. As contemplated by the Transition Services Agreement, PRN separately entered into a Consultancy Agreement, dated January 17, 2025 (the “Consultancy Agreement”), directly with the Company’s Interim Chief Financial Officer, Tommy Law, pursuant to which Mr. Law will provide certain accounting and other services to PRN for a one-time payment of $85,000 when such services have been completed. The Company is not a party to the Consultancy Agreement.

 

Item 5.07     Submission of Matters to a Vote of Security Holders.

 

On November 22, 2024, the Company held its Special Meeting, whereby the Company’s stockholders were asked to consider three (3) proposals, each of which is described in more detail in the Special Meeting Proxy Statement, as supplemented. Proposal One presented to stockholders at the Special Meeting sought stockholder approval for the Asset Sale Transaction pursuant to the Purchase Agreement, Proposal Two sought stockholder approval to approve the Liquidation and Dissolution of the Company pursuant to the Plan of Dissolution, which, if approved, will authorize the Company to liquidate and dissolve in accordance with the Plan of Dissolution, pursuant to the discretion of the Board of Directors to proceed with the Liquidation and Dissolution and Proposal Three sought stockholder approval to provide the Company’s Board of Directors with discretionary authority to adjourn the Special Meeting from time to time to establish a quorum or to permit further solicitation of proxies if there were not sufficient votes in favor of Proposal One and/or Proposal Two.

 

 

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At the Special Meeting initially convened on November 22, 2024, where a quorum was present, as previously reported, the Company received stockholder approval for Proposal Three; however, at this time, it had not received greater than 50% of all outstanding shares of the Company’s common stock in favor of Proposal One or Proposal Two, which is the required minimum vote to approve each of Proposal One and Proposal Two. Accordingly, the Special Meeting was adjourned only with respect to the vote on Proposal One and Proposal Two until it was reconvened on December 18, 2024, and then further adjourned with respect to the vote on Proposal One and Proposal Two until it was reconvened on January 16, 2025 (collectively, the “Reconvened Meeting”). There were 4,885,693 outstanding shares of the Company’s common stock entitled to vote and there were 2,758,532 shares present in person or by proxy at the Reconvened Meeting, representing approximately fifty-six percent (56%) of the shares outstanding and entitled to vote. The voting results at the Reconvened Meeting on January 16, 2025, with respect to Proposal One, as certified by the inspector of elections for the Special Meeting, is presented below.

 

1.	To approve the Asset Sale, pursuant to the Purchase Agreement by and between the Company and PRN Physician Recommended Nutriceuticals, LLC.

 

For	Against	Abstain
2,451,772	284,080	22,680

 

As a result of the vote received by stockholders on Proposal One representing greater than 50% of outstanding shares of the Company’s common stock, this Proposal One was approved by Company stockholders. At the Reconvened Meeting on January 16, 2025, however, Proposal Two had not yet received sufficient votes to approve the Liquidation and Dissolution pursuant to the Plan of Dissolution. Accordingly, as disclosed below under Item 8.01 of this Current Report on Form 8-K, which is incorporated herein by reference, the Special Meeting was adjourned until January 30, 2025, solely with respect to Proposal Two, to solicit additional stockholder votes.

 

Item 8.01          Other Events.

 

At the time of the Reconvened Meeting on January 16, 2025, Proposal Two had not yet received greater than 50% of outstanding shares of Company common stock necessary in order to approve the Liquidation and Dissolution pursuant to the Plan of Dissolution, with approximately 49% of the outstanding shares of the Company’s common stock having voted in favor of Proposal Two. Proposal Two provides for the approval of the Liquidation and Dissolution of the Company pursuant to the Plan of Dissolution, which, if approved, will authorize the Company to liquidate and dissolve in accordance with the Plan of Dissolution, and pursuant to the discretion of the Board of Directors to proceed with the Dissolution.

 

The Company believes that pursuing the Liquidation and Dissolution and wind-up of the Company in accordance with the Plan of Dissolution as a result of having completed the Asset Sale Transaction provides the best opportunity and most flexibility to optimize value for stockholders and is currently in the best interests of the Company and its stockholders. As a result, the Company has adjourned the Special Meeting, as authorized by stockholders at the Special Meeting, and continued to solicit and has received additional votes for Proposal Two as of the Reconvened Meeting on January 16, 2025. Of these votes received on Proposal Two, approximately 87% of those shares have voted in favor of the Liquidation and Dissolution, with 49% of the outstanding shares voting in favor. Accordingly, due to the continuing responses by stockholders to vote their shares at the Special Meeting and the favorable votes and support that has been received to date to approve Proposal Two, as well as other compelling business and financial considerations, the Company believes that it is in the best of interests of stockholders to further adjourn the Special Meeting until January 30, 2025, solely with respect to Proposal Two to allow for additional time to solicit stockholders to vote on this proposal.

 

 

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At the Reconvened Meeting on January 16, 2025, the Company announced that the meeting will reconvene again at 11:00 a.m. Pacific Time on January 30, 2025, virtually at http://www.virtualshareholdermeeting.com/NBY2024SM. During the period of adjournment, the Company will continue to solicit stockholder votes only on Proposal Two.

 

On January 23, 2025, the Company also issued a press release announcing the closing of the Asset Sale Transaction and the adjournment of the Reconvened Meeting until January 30, 2025. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K, which is incorporated by reference.

 

Item 9.01     Financial Statements and Exhibits.

 

(b) Pro Forma Financial Information

 

The following unaudited pro forma financial information of the Company is filed as Exhibit 99.2 to this Current Report on Form 8-K:

 

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Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2024;

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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2024;

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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2023; and

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Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

Cautionary Language Concerning Forward-Looking Statements

 

The pro forma financial information in Exhibit 99.2 contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. These forward-looking statements are based upon the Company and its management’s current expectations, assumptions, estimates, projections and beliefs. Such statements include, but are not limited to, statements regarding the Asset Sale Transaction (including the Purchase Agreement and the Bridge Loan), the Liquidation and Dissolution (including the Plan of Dissolution) and related matters. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or achievements to be materially different and adverse from those expressed in, or implied by, these forward-looking statements. Other risks relating to the Company’s business, including risks that could cause results to differ materially from those projected in the forward-looking statements in this Current Report on Form 8-K, are detailed in the Company’s latest Form 10-K, as amended, subsequent Forms 10-Q and/or Form 8-K filings with the SEC and the Special Meeting Proxy Statement, as supplemented, including by the Proxy Supplement, especially under the heading “Risk Factors.” The forward-looking statements in this release speak only as of this date, and the Company disclaims any intent or obligation to revise or update publicly any forward-looking statement except as required by law.

 

 

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(d)         Exhibits

 

Exhibit No.		Description
2.1*		Asset Purchase Agreement, dated September 19, 2024, by and between NovaBay Pharmaceuticals, Inc. and PRN Physician Recommended Nutriceuticals, LLC (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed September 20, 2024)
2.2*		Amendment No. 1 to Asset Purchase Agreement, dated as of November 5, 2024, between PRN Physician Recommended Nutriceuticals, LLC and NovaBay Pharmaceuticals, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed November 6, 2024)
2.3		Plan of Complete Liquidation and Dissolution of NovaBay Pharmaceuticals, Inc. (incorporated by reference to Exhibit 2.2 of the Company’s Current Report on Form 8-K filed September 20, 2024)
10.1*		Secured Promissory Note, dated as of November 5, 2024, between NovaBay Pharmaceuticals, Inc., as borrower, and PRN Physician Recommended Nutriceuticals, LLC, as lender (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed November 6, 2024)
99.1		Press Release, dated January 23, 2025
99.2		Unaudited Pro Forma Condensed Consolidated Financial Information of NovaBay Pharmaceuticals, Inc.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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*Certain schedules and exhibits were omitted as well as certain confidential portions of such agreement by means of marking such portions with brackets (due to such confidential portions not being material and being the type of information that the Company treats as private or confidential) pursuant to Item 601 of Regulation S-K promulgated by the SEC. The Company agrees to supplementally furnish a copy of any omitted schedule, exhibit, or confidential portions of an exhibit to the SEC upon request.

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	NovaBay Pharmaceuticals, Inc.
	By:	/s/ Justin M. Hall
		Justin M. Hall
		Chief Executive Officer and General Counsel

 

Dated: January 23, 2025

 

 

Exhibit 99.1

 

 

NovaBay Pharmaceuticals Completes the Sale of its Eyecare Business to PRN and Further Adjourns its Special Meeting of Stockholders on Dissolution Proposal

 

Stockholders voted to unlock the value of NovaBay’s Avenova® eyecare business by approving the $11.5 million asset sale

 

Reconvened Special Meeting adjourned to allow additional time for votes to reach the 50% threshold of outstanding common stock in favor of Proposal Two, providing for the Dissolution of the Company

 

Stockholders who have not yet voted are strongly encouraged to vote FOR Proposal Two at the Special Meeting scheduled to reconvene on January 30, 2025

 

EMERYVILLE, Calif. (January 23, 2025) – NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) (“NovaBay” or the “Company”) announces the completion of the sale of its Avenova eyecare business and related assets to PRN Physician Recommended Nutriceuticals, LLC (“PRN”) for $11.5 million (the “Asset Sale”). The Asset Sale, representing substantially all of the assets of the Company, was consummated pursuant to the Asset Purchase Agreement dated September 19, 2024, as amended, which NovaBay stockholders approved at the Special Meeting of Stockholders (“Special Meeting”) reconvened on January 16, 2025. The Special Meeting has been further adjourned by the Company until January 30, 2025 at 11:00 a.m. Pacific time to allow additional time for stockholders to vote only on the last remaining proposal, Proposal Two, to approve the Company’s liquidation and dissolution (the “Dissolution”) pursuant to the Plan of Complete Liquidation and Dissolution of the Company (the “Plan of Dissolution”).

 

“The divestiture of our eyecare business has allowed us to monetize this valuable asset and to return value to our stockholders, while providing the Avenova brand an opportunity to grow, flourish and reach its full potential in the future,” said Justin Hall, NovaBay CEO. “This transaction brings significant change to NovaBay, ending one chapter and creating an exciting new opportunity for the Avenova brand. We will be excited to see the brand thrive in the years to come. We appreciate the support of our stockholders in approving this transaction.”

 

At the Special Meeting that was reconvened on January 16, 2025, approximately 49% of all outstanding shares of common stock voted in favor of Proposal Two; however, this proposal has not quite exceeded the 50% threshold of favorable votes of all outstanding shares of common stock required for its approval. Proposal Two provides for the approval of the Dissolution of the Company, which, if approved, will authorize the Company to liquidate and dissolve in accordance with the Plan of Dissolution at the discretion of the Board of Directors.

 

The Company believes that pursuing the Dissolution and wind-up of the Company in accordance with the Plan of Dissolution as a result of having completed the Asset Sale provides the best opportunity and most flexibility to optimize value for stockholders and is currently in the best interests of the Company and its stockholders. As a result, the Company has adjourned the Special Meeting, as authorized by stockholders at the Special Meeting, and has continued to solicit and has received additional votes for Proposal Two. Of the votes received on Proposal Two as of the date of the reconvened Special Meeting on January 16, 2025, approximately 86.7% of those shares have voted in favor of the Dissolution. Accordingly, due to the continuing responses by stockholders to vote their shares at the Special Meeting and the favorable votes and support that has been received to date to approve Proposal Two, as well as other compelling business and financial considerations, the Company believes that it is in the best interests of stockholders to further adjourn the Special Meeting until January 30, 2025 solely with respect to Proposal Two.

 

Stockholders as of the October 15, 2024 record date who have yet to vote, are uncertain whether they have voted or choose to change their vote on Proposal Two are encouraged to contact NovaBay’s proxy advisory firm Sodali & Co. at 800-607-0088. Proposal Two is further described in the Definitive Proxy Statement filed with the Securities and Exchange Commission (“SEC”) on October 16, 2024 (the “Special Meeting Proxy Statement”) as supplemented by the Additional Definitive Proxy Soliciting Materials filed on November 6, 2024 and November 12, 2024.

 

 

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Adjournment of Special Meeting of Stockholders

 

The adjourned Special Meeting will be held in a virtual format and stockholders will be able to listen and participate in the virtual Special Meeting, as well as to vote and submit questions during the live webcast of the meeting by visiting http://www.virtualshareholdermeeting.com/NBY2024SM and entering the 16‐digit control number included in your proxy card.

 

The Board of Directors and management requests that these stockholders consider and vote their proxies as soon as possible on Proposal Two, but no later than January 29, 2025 at 11:59 p.m. Eastern time.

 

Stockholders who have previously submitted their proxy or otherwise voted on Proposal Two at the Special Meeting and who do not want to change their vote need not take any action. For questions relating to the voting of shares or to request additional or misplaced proxy voting materials, please contact NovaBay’s proxy solicitor, Sodali & Co., for assistance in voting your shares by dialing U.S. Toll Free 800-607-0088.

 

As described in the Special Meeting Proxy Statement, stockholders may use one of the following methods to vote their shares, or to change their previously submitted vote, before the Special Meeting is reconvened on January 30, 2025 with respect to Proposal Two:

 

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By Internet – www.proxyvote.com. If you have Internet access, you may transmit your voting instructions up until 11:59 p.m. Eastern time on January 29, 2025, the day before the adjourned Special Meeting. Go to www.proxyvote.com. You must have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.

 

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By telephone – 800-690-6903. You may vote using any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern time on January 29, 2025, the day before the adjourned Special Meeting. Call 1-800-690-6903 toll free. You must have your proxy card in hand when you call this number and then follow the instructions.

 

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By mail – Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided.

 

Votes must be received by 11:59 p.m. Eastern time on January 29, 2025 to be counted. After this time, votes can only be cast during the adjourned Special Meeting on January 30, 2025, beginning at 11:00 a.m. Pacific time, at http://www.virtualshareholdermeeting.com/NBY2024SM.

 

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. These forward-looking statements are based upon the Company and its management’s current expectations, assumptions, estimates, projections and beliefs. Such statements include, but are not limited to, statements regarding the Asset Sale and its completion pursuant to the Asset Purchase Agreement, by and between PRN and the Company, dated as of September 19, 2024 and as amended on November 5, 2024, the potential Dissolution of the Company and related matters. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or achievements to be materially different and adverse from those expressed in, or implied by, these forward-looking statements. Other risks relating to NovaBay’s business, including risks that could cause results to differ materially from those projected in the forward-looking statements in this press release, are detailed in the Company’s latest Form 10-K, subsequent Forms 10-Q and/or Form 8-K filings with the SEC and the Special Meeting Proxy Statement, as supplemented including by the Supplement to the Special Meeting Proxy Statement dated as of November 12, 2024, especially under the heading “Risk Factors.” The forward-looking statements in this release speak only as of this date, and the Company disclaims any intent or obligation to revise or update publicly any forward-looking statement except as required by law. 

 

 

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Additional Information and Where to Find It

In connection with the solicitation of proxies, on October 16, 2024, NovaBay filed the Special Meeting Proxy Statement with the SEC with respect to the Special Meeting to be held in connection with the Asset Sale and the potential Dissolution of the Company. Promptly after filing the Special Meeting Proxy Statement with the SEC, NovaBay mailed the Special Meeting Proxy Statement and a proxy card to each stockholder entitled to vote at the Special Meeting to consider the Asset Sale and the potential Dissolution. Subsequently, the Company filed a Supplement to the Special Meeting Proxy Statement on November 12, 2024. STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT (INCLUDING THE SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT NOVABAY HAS FILED OR WILL FILE WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders may obtain, free of charge, the Special Meeting Proxy Statement, the supplements thereto, and any other relevant documents filed by NovaBay with the SEC in connection with the remaining proposal providing for the potential Dissolution at the SEC’s website (http://www.sec.gov) or at the Company’s investor relations website (https://novabay.com/investors/), or by writing to NovaBay Pharmaceuticals, Inc., Investor Relations, 2000 Powell Street, Suite 1150, Emeryville, CA 94608. The information provided on, or accessible through, our website is not part of this communication, and therefore is not incorporated herein by reference.

 

Participants in the Solicitation

NovaBay and its directors and executive officers may be deemed to be participants in the solicitation of proxies from NovaBay’s stockholders in connection with the Proposal Two providing for the potential Dissolution. A list of the names of the directors and executive officers of the Company and information regarding their interests in the potential dissolution, including their respective ownership of the Company’s common stock and other securities is contained in the Special Meeting Proxy Statement. In addition, information about the Company’s directors and executive officers and their ownership in the Company is set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and filed with the SEC on March 26, 2024, as amended on March 29, 2024 and as modified or supplemented by any Form 3 or Form 4 filed with the SEC since the date of such filing.

 

NovaBay Contact

Justin Hall

Chief Executive Officer and General Counsel

510-899-8800

[e-mail]

 

Investor Contact

Alliance Advisors IR

Jody Cain

310-691-7100

[e-mail]

 

# # #

 

 

Exhibit 99.2

 

Unaudited Pro Forma Condensed Consolidated Financial Information

 

 

On January 17, 2025, NovaBay Pharmaceuticals, Inc. (the “Company”) completed the sale (the “Avenova Divestiture”) of its eyecare products sold under the Avenova brand and related assets (the “Avenova Business”) to PRN Physician Recommended Nutriceuticals, LLC.

 

The following unaudited pro forma condensed consolidated financial information has been derived from the Company’s historical consolidated financial statements and gives effect to the Avenova Divestiture and to the Company’s sale of its wholly-owned subsidiary, DERMAdoctor, LLC (the “DERMAdoctor Business”) on March 25, 2024 (the “DERMAdoctor Divestiture”) to be accounted for as a discontinued operation, prepared in accordance with the guidance for discontinued operations, ASC 205-20 Presentation of Financial Statements – Discontinued Operations, under U.S. Generally Accepted Accounting Principles. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2024 reflects the Company’s financial position as if the Avenova Divestiture had occurred on September 30, 2024. The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2024 and the year ended December 31, 2023 reflect the Company’s operating results as if the DERMAdoctor Divestiture and Avenova Divestiture had occurred as of January 1, 2023.

 

The “As Reported” column of the unaudited pro forma condensed consolidated balance sheet as of September 30, 2024 and the unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2024 and year ended December 31, 2023 reflects the Company’s historical condensed consolidated financial statements as of and for each of the periods presented and does not reflect any adjustments related to the Avenova Divestiture, except as otherwise reflected in the accompanying notes.

 

The unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 filed with the Securities and Exchange Commission (the “SEC”) on November 7, 2024 and the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 26, 2024, as amended on March 29, 2024.

 

The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and has been prepared based upon currently available information and management estimates and is subject to the assumptions and adjustments outlined herein. The unaudited pro forma condensed consolidated financial information is not intended to be a complete presentation of the Company’s financial position or results of operations had the Avenova Divestiture occurred as of and for the periods presented. In addition, the unaudited pro forma condensed consolidated financial information is not necessarily indicative of the Company’s future results of operations or financial condition with its remaining assets and operations, which the Company may divest of in the near term. The Company’s actual financial position and results of operations may differ materially from the pro forma amounts reflected herein due to a variety of factors. Management believes these assumptions and adjustments used are reasonable, given the information available at the filing date.

 

 

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2024

(in thousands)

 

						Avenova					Pro Forma
		As Reported				Disposition (f)			Note 2		Adjustments (g)			Note 2		Pro Forma
ASSETS
Current assets:
Cash and cash equivalents		$	776			$	-				$	10,500				$	11,276
Accounts receivable, net of $3 allowance for credit losses			704				(699	)				-					5
Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments of $126			473				(462	)				-					11
Prepaid expenses and other current assets			326				(88	)				500					738
Total current assets			2,279				(1,249	)				11,000					12,030
Operating lease right-of-use assets			1,042				-					-					1,042
Property and equipment, net			61				(10	)				-					51
Other assets			495				-					-					495
TOTAL ASSETS		$	3,877				(1,259	)				11,000					13,618
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current liabilities:
Accounts payable		$	396			$	(206	)			$	-				$	190
Accrued liabilities			1,147				(911	)				931					1,167
Tax liabilities			-				-					1,017					1,017
Unsecured Convertible Notes, net of discounts			51				-					-					51
Operating lease liabilities			390				-					-					390
Total current liabilities			1,984				(1,117	)				1,948					2,815
Operating lease liabilities-non-current			821				-					-					821
Total liabilities			2,805				(1,117	)				1,948					3,636
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000 shares authorized;
Series B preferred stock; 1 share issued and outstanding			6				-					-					6
Common stock, $0.01 par value; 150,000 shares authorized, 4,885 shares issued and outstanding			49				-					-					49
Additional paid-in capital			183,262				-					-					183,262
Accumulated deficit			(182,245	)			(142	)				9,052					(173,335	)
Total stockholders' equity			1,072				(142	)				9,052					9,982
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	3,877			$	(1,259	)			$	11,000				$	13,618

 

 

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

(in thousands, except per share amounts)

 

						Pro Forma
		As Reported				Adjustments			Note 2		Pro Forma
Sales:
Product revenue, net		$	7,435			$	(7,198	)	(d)		$	237
Other revenue, net			37				(22	)	(d)			15
Total sales, net			7,472				(7,220	)				252
Cost of goods sold			2,493				(2,445	)	(d)			48
Gross profit			4,979				(4,775	)				204
Operating expenses:
Research and development			32				(32	)	(e)			-
Sales and marketing			3,021				(3,021	)	(e)			-
General and administrative			5,611				-					5,611
Loss on divestiture of subsidiary			865				-					865
Total operating expenses			9,529				(3,053	)				6,476
Operating loss			(4,550	)			(1,722	)				(6,272	)
Non-cash gain on changes in fair value of warrant liabilities			114				-					114
Non-cash gain (loss) on change in fair value of embedded derivative liability			(18	)			-					(18	)
Accretion of interest and amortization of discounts on convertible notes			(871	)			-					(871	)
Extinguishment of Secured Convertible Note			(13	)			-					(13	)
Other expense, net			(549	)			-					(549	)
Net loss from continuing operations			(5,887	)			(1,722	)				(7,609	)
Net loss from discontinued operations (Note 18)			(124	)			-					(124	)
Net loss			(6,011	)			(1,722	)				(7,733	)
Less: Increase to accumulated deficit due to adjustment to common stock warrants exercise price			(1,005	)			-					(1,005	)
Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion price			(380	)			-					(380	)
Net loss attributable to common stockholders		$	(7,396	)		$	(1,722	)			$	(9,118	)
Basic and diluted net loss per share
Loss per share from continuing operations		$	(3.90	)							$	(4.83	)
Loss per share from discontinued operations			(0.07	)								(0.07	)
Net loss per share attributable to common stockholders (basic and diluted)		$	(3.97	)							$	(4.89	)
Weighted-average shares of common stock used in computing net loss per share attributable to common stockholders (basic and diluted)			1,863									1,863

 

 

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2023

(in thousands, except per share amounts)

 

						DERMAdoctor Pro Forma					DERMAdoctor				Avenova Pro Forma					Avenova
		As Reported				Adjustments			Note 2		Pro Forma				Adjustments			Note 2		Pro Forma
Sales:
Product revenue, net		$	14,687			$	(3,552	)	(a)		$	11,135			$	(9,078	)	(d)		$	2,057
Other revenue, net			39				-					39				-					39
Total sales, net			14,726				(3,552	)				11,174				(9,078	)				2,096
Cost of goods sold			6,831				(2,145	)	(a)			4,686				(3,119	)	(d)			1,567
Gross profit			7,895				(1,407	)				6,488				(5,959	)				529
Operating expenses:
Research and development			68				(34	)	(b)			34				(34	)	(e)			-
Sales and marketing			6,500				(1,795	)	(b)			4,705				(4,705	)	(e)			-
General and administrative			6,330				(742	)	(b)			5,588				-					5,588
Goodwill, intangible and other asset impairment			2,593				(2,593	)	(b)			-				-					-
Total operating expenses			15,491				(5,164	)				10,327				(4,739	)				5,588
Operating loss			(7,596	)			3,757					(3,839	)			(1,220	)				(5,059	)
Non-cash gain on changes in fair value of warrant liabilities			272				-					272				-					272
Non-cash gain (loss) on change in fair value of embedded derivative liability			40				-					40				-					40
Accretion of interest and amortization of discounts on convertible notes			-				-					-				-					-
Non-cash loss on modification of common stock warrants			(292	)			-					(292	)			-					(292	)
Other expense, net			(2,064	)			2		(c)			(2,062	)			-					(2,062	)
Net loss before taxes			(9,640	)			3,759					(5,881	)			(1,220	)				(7,101	)
Taxes
Current Tax Expense			-				-					-				1,017		(f)			1,017
Net loss			(9,640	)			3,759					(5,881	)			(2,237	)				(8,118	)
Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion price			(7,057	)			-					(7,057	)			-					(7,057	)
Net loss attributable to common stockholders		$	(16,697	)		$	3,759				$	(12,938	)		$	(2,237	)			$	(15,175	)
Basic and diluted net loss per share
Net loss per share attributable to common stockholders (basic and diluted)		$	(137.99	)							$	(106.93	)							$	(125.41	)
Weighted-average shares of common stock used in computing net loss per share attributable to common stockholders (basic and diluted)			121									121									121

 

 

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Note 1. Basis of Presentation

 

The unaudited pro forma condensed consolidated financial information has been prepared based on NovaBay’s historical consolidated financial statements and in accordance with Article 11 of SEC Regulation S-X, Pro Forma Financial Information.

 

Note 2. Pro Forma Adjustments and Assumptions

 

(a)	This adjustment reflects the elimination of the profit and loss of the DERMAdoctor Business for the period presented.

 

(b)	This adjustment reflects the elimination of operating expenses of the DERMAdoctor Business, excluding the anticipated effects of other costs that may be reduced or eliminated as a result of having completed the DERMAdoctor Divestiture.

 

(c)	This adjustment reflects the elimination of other expenses.

 

(d)	This adjustment reflects the elimination of the profit and loss of the Avenova Divestiture for the period presented.

 

(e)	This adjustment reflects the elimination of operating expenses of the Avenova Business, excluding the anticipated effects of other costs that may be reduced or eliminated as a result of having completed the sale.

 

(in thousands)
Estimated net cash proceeds (including working capital)		$	11,500
Historical Company assets			(1,259	)
Historical Company liabilities			1,117
Income tax payable			(1,017	)
Transaction costs and fees			(1,438	)
Bridge Loan			507
Estimated gain on divestiture		$	9,410

 

(f)	These adjustments reflect the elimination of the book value of the Avenova Business of $1.2 million and liabilities of $1.1 million as of September 30, 2024.

 

(g)

These adjustments reflect the $11.5 million in cash proceeds from PRN, consisting of $11.0 million received upfront and $0.5 million placed into an escrow account for 90 days for final net working capital adjustment. These adjustments include $0.9 million, consisting of the accrual of certain transaction expenses known at the time of closing of $1.4 million and repayment of the Bridge Loan of $0.5 million. The cumulative adjustments resulted in an adjustment to accumulated deficit of $9.1 million. The proceeds are subject to post-closing adjustments and any required distributions for tax purposes.

 

 

Document And Entity Information	Jan. 16, 2025
Document Information [Line Items]
Entity, Registrant Name	NovaBay Pharmaceuticals, Inc.
Document, Type	8-K
Document, Period End Date	Jan. 16, 2025
Entity, Incorporation, State or Country Code	DE
Entity, File Number	001-33678
Entity, Tax Identification Number	68-0454536
Entity, Address, Address Line One	2000 Powell Street
Entity, Address, Address Line Two	Suite 1150
Entity, Address, City or Town	Emeryville
Entity, Address, State or Province	CA
Entity, Address, Postal Zip Code	94608
City Area Code	510
Local Phone Number	899-8800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	NBY
Security Exchange Name	NYSE
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0001389545

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