NovaBay Pivots from Liquidation with $6M Lazar Investment, Seeks Major Shareholder Approvals

TL;DR

**NBY is making a desperate, highly dilutive pivot away from liquidation with a new investor, but the reverse split and massive share authorization are huge red flags for existing shareholders.**

AI Summary

NovaBay Pharmaceuticals, Inc. (NBY) is seeking stockholder approval for a series of critical proposals at its 2025 Annual Meeting on October 16, 2025, primarily driven by a new $6.0 million investment from David E. Lazar. The company has undergone significant divestitures, including the Avenova brand, wound care assets, and DERMAdoctor, leading to a substantial reduction in revenue-generating assets. The Investment Transaction with Mr. Lazar, initiated on August 19, 2025, has already provided $3.85 million in gross proceeds from the sale of 481,250 shares of Series D Preferred Stock, convertible into 77.0 million shares of common stock. A second closing is anticipated to bring an additional $2.15 million from 268,750 shares of Series E Preferred Stock, convertible into 43.0 million shares of common stock, contingent on stockholder approval of Proposal Five. Key proposals include electing three Class III directors, an advisory vote on executive compensation, ratifying WithumSmith+Brown, PC as the independent auditor, and crucially, approving the issuance of 120.0 million shares of common stock for the preferred stock conversion. The company also seeks to amend its 2017 Omnibus Incentive Plan to increase authorized shares by 1,000,000, approve $40,000 in equity consideration for resigning non-employee directors, effect a reverse stock split between 1-for-2 and 1-for-10, and significantly increase authorized common stock from 150,000,000 to 1,500,000,000 and preferred stock from 5,000,000 to 10,000,000. These actions are deemed essential by the Board to complete the Final Closing of the Investment Transaction and pursue future growth opportunities, including a potential Post-Investment Transaction, instead of the previously approved Dissolution.

Why It Matters

This DEF 14A filing signals a dramatic strategic shift for NovaBay Pharmaceuticals, Inc., moving away from a previously approved dissolution towards a new growth path fueled by a $6.0 million investment from David E. Lazar. For investors, the proposed reverse stock split and massive increase in authorized shares (from 150 million to 1.5 billion common shares) could significantly impact share price and ownership dilution, while the investment provides a lifeline for a company that divested most of its revenue-generating assets. Employees and customers will watch to see if the 'Post-Investment Transaction' can revitalize the company's business, which currently only manufactures wound care products for export to China. Competitively, this move positions NovaBay to potentially re-enter or expand in new markets, but the substantial dilution and reverse split carry inherent risks.

Risk Assessment

Risk Level: high — The risk level is high due to several factors. Proposal Five seeks approval for the issuance of 120,000,000 shares of common stock upon conversion of Series D and Series E Preferred Stock, representing significant potential dilution. Furthermore, Proposal Nine aims to increase authorized common stock from 150,000,000 to 1,500,000,000 shares, a tenfold increase, which could lead to further substantial dilution. The proposed reverse stock split (Proposal Eight) at a ratio of 1-for-2 to 1-for-10 is often a sign of a company struggling to maintain its listing and can lead to decreased liquidity and investor confidence.

Analyst Insight

Investors should carefully evaluate the significant dilution potential from the 120 million share issuance and the proposed increase in authorized common stock to 1.5 billion. Consider the implications of the reverse stock split on share price and liquidity. Existing shareholders should vote against Proposals Five, Eight, Nine, and Ten if they are concerned about dilution and the potential for further value destruction, or if they believe the previous dissolution plan was a better option.

Key Numbers

• $6.0 million — Aggregate investment by David E. Lazar (Total potential gross proceeds from the Investment Transaction)
• $3.85 million — Gross proceeds from First Closing (Received from the sale of Series D Preferred Stock)
• $2.15 million — Additional gross proceeds from Final Closing (Expected from the sale of Series E Preferred Stock, contingent on Proposal Five approval)
• 77,000,000 shares — Common stock from Series D conversion (Number of shares to be issued upon conversion of Series D Preferred Stock)
• 43,000,000 shares — Common stock from Series E conversion (Number of shares to be issued upon conversion of Series E Preferred Stock)
• 1,000,000 shares — Increase in 2017 Omnibus Plan shares (Additional shares authorized for issuance under the incentive plan)
• $40,000 — Equity consideration for resigning directors (Aggregate value of restricted Common Stock for each Resigning Non-Employee Director)
• 1-for-2 and 1-for-10 — Reverse stock split ratio range (Proposed range for the reverse stock split)
• 1,500,000,000 shares — New authorized common stock (Proposed increase from 150,000,000 shares)
• 10,000,000 shares — New authorized preferred stock (Proposed increase from 5,000,000 shares)

Key Players & Entities

• NovaBay Pharmaceuticals, Inc. (company) — Registrant and company undergoing strategic changes
• David E. Lazar (person) — Investor providing up to $6.0 million and appointed as a director
• WithumSmith+Brown, PC (company) — Independent registered public accounting firm
• Paul E. Freiman (person) — Nominee for Class III director and Chair of the Board of Directors
• Swan Sit (person) — Nominee for Class III director
• NYSE American (regulator) — Stock exchange where NBY is listed and whose rules govern certain proposals
• Securities and Exchange Commission (regulator) — Regulator for SEC filings
• PRN Physician Recommended Nutriceuticals, LLC (company) — Purchaser of NovaBay's Avenova brand and related assets
• Phase One Health LLC (company) — Purchaser of a significant portion of NovaBay's wound care business
• DERMAdoctor, LLC (company) — Former wholly-owned subsidiary operating NovaBay's primary skin care business, which was sold

FAQ

Risk Factors

• Investment Transaction Risks [high — financial]: The company is seeking stockholder approval for a $6.0 million investment from David E. Lazar, which involves the issuance of preferred stock convertible into a significant number of common shares. Risks include potential dilution and the company's reliance on this transaction for future growth.
• Dilution from Preferred Stock Conversion [high — financial]: The conversion of Series D and Series E Preferred Stock into approximately 120.0 million shares of common stock (77.0 million from Series D and 43.0 million from Series E) will substantially dilute existing stockholders. This is a direct consequence of the Investment Transaction.
• Reverse Stock Split Necessity [medium — financial]: The company is proposing a reverse stock split (1-for-2 to 1-for-10) as a measure to increase the per-share market price of its common stock. This is often an indicator of past stock price underperformance and potential delisting concerns.
• Increased Authorized Shares [high — financial]: The proposal to increase authorized common stock from 150,000,000 to 1,500,000,000 and preferred stock from 5,000,000 to 10,000,000 provides significant future flexibility but also carries the risk of further dilutive issuances.
• Business Transformation and Divestitures [high — operational]: NovaBay has divested key assets including Avenova, wound care, and DERMAdoctor. This significantly reduces revenue-generating assets and shifts the company's focus, creating operational risks associated with the new strategic direction.
• Reliance on Investor Capital [high — financial]: The company's future growth and ability to execute its strategy are heavily dependent on the successful completion of the $6.0 million Investment Transaction with David E. Lazar.
• Equity Consideration for Directors [low — financial]: The company proposes to pay $40,000 in equity consideration to resigning non-employee directors. This adds to the equity dilution and compensation costs.
• Stockholder Approval Dependency [high — regulatory]: Many critical proposals, including the Investment Transaction and significant share increases, require stockholder approval. Failure to obtain approval could jeopardize the company's strategic plans and financial stability.

Industry Context

NovaBay Pharmaceuticals historically operated in the eyecare, wound care, and skin care markets. However, significant divestitures of its Avenova brand, wound care assets, and DERMAdoctor indicate a strategic pivot. The company is now heavily reliant on a new investment to fund future growth, suggesting a transition into a new operational phase or a focus on a specific, yet-to-be-fully-defined, area.

Regulatory Implications

The company's reliance on stockholder approval for critical proposals, such as the significant increase in authorized shares and the Investment Transaction, highlights regulatory compliance requirements. Failure to secure these approvals could lead to the abandonment of the company's strategic path, potentially triggering further SEC filings or disclosures regarding alternative plans.

What Investors Should Do

1. Review the detailed risk factors associated with the Investment Transaction and the substantial increase in authorized shares, as these will significantly impact future dilution and company strategy.
2. Understand the implications of the proposed reverse stock split, which is often a precursor to addressing low stock prices or potential exchange delisting.
3. Vote on Proposal Five to approve the issuance of common stock upon conversion of Series D and Series E Preferred Stock, as this is critical for the $6.0 million investment to be fully realized.
4. Evaluate the proposed increase in authorized common stock to 1,500,000,000 shares and preferred stock to 10,000,000 shares, considering the potential for future dilutive issuances.
5. Consider the company's shift away from previously established product lines and assess the viability of its future growth strategy funded by the Lazar investment.

Key Dates

• 2025-10-16: 2025 Annual Meeting of Stockholders — Stockholders will vote on critical proposals, including the Investment Transaction, reverse stock split, and increases in authorized shares, which are essential for the company's future strategy.
• 2025-08-19: Initiation of Investment Transaction with David E. Lazar — Marked the beginning of the $6.0 million investment process, which has already seen a first closing and is contingent on stockholder approval for the second closing.
• 2025-09-23: Mailing of Proxy Statement and Annual Report — Provided stockholders with information to make informed voting decisions for the Annual Meeting.
• 2025-09-22: Record Date for Annual Meeting — Determined which stockholders are eligible to vote at the 2025 Annual Meeting.

Glossary

DEF 14A

A proxy statement filed with the U.S. Securities and Exchange Commission (SEC) by publicly traded companies when seeking stockholder approval for certain corporate actions. (This document contains the proposals and information necessary for stockholders to vote at NovaBay's 2025 Annual Meeting.)

Series D Preferred Stock

A class of preferred stock issued to David E. Lazar as part of the initial closing of the Investment Transaction, convertible into common stock. (Its conversion into 77.0 million shares of common stock is a key component of the Investment Transaction and requires stockholder approval.)

Series E Preferred Stock

A class of preferred stock to be issued to David E. Lazar in the second closing of the Investment Transaction, contingent on stockholder approval, convertible into common stock. (Its conversion into 43.0 million shares of common stock is crucial for completing the full $6.0 million investment and requires stockholder approval (Proposal Five).)

Reverse Stock Split

A corporate action where a company reduces the number of its outstanding shares by consolidating them into fewer, proportionally more valuable shares. (NovaBay is proposing a reverse stock split to increase its stock price, potentially to meet exchange listing requirements or improve marketability.)

2017 Omnibus Incentive Plan

A company plan that allows for the granting of stock options, restricted stock, and other equity-based awards to employees and directors. (The company seeks to increase the number of shares available under this plan by 1,000,000, impacting future equity compensation and dilution.)

Investment Transaction

The agreement between NovaBay and David E. Lazar for a $6.0 million investment, involving the sale of preferred stock convertible into common stock. (This transaction is central to the company's strategic direction and requires multiple stockholder approvals.)

Class III Directors

Directors whose terms are expiring and are up for election at the 2025 Annual Meeting. (Stockholders are being asked to elect three Class III directors.)

Proxy Statement

A document provided by a company to its shareholders before a meeting of shareholders, containing information about the matters to be voted on. (This document details all proposals, risks, and background information for the 2025 Annual Meeting.)

Year-Over-Year Comparison

This DEF 14A filing represents a significant strategic shift compared to previous filings. The company has divested major revenue-generating assets, leading to a substantial change in its operational and financial profile. The focus is now on securing a new $6.0 million investment, which necessitates a large increase in authorized shares and a reverse stock split, indicating a move away from its historical business model towards a new growth phase.

Key Financial Figures

• $0.01 — 0,000 shares of common stock, par value $0.01 per share (" Common Stock "), upon the
• $40,000 — Common Stock with an aggregate value of $40,000, at a price per share which may be belo
• $0 — hares of our preferred stock, par value $0.01, from 5,000,000 to 10,000,000 (" Pro
• $6.0 million — Lazar in two separate closings of up to $6.0 million in the aggregate in exchange for newly
• $3.85 million — ng in aggregate gross proceeds to us of $3.85 million (the " First Closing "). The Purchase A
• $2.15 m — additional aggregate gross proceeds of $2.15 million, which are contemplated to be iss
• $8.00 — $0.01 (" Common Stock "), at a price of $8.00 per share resulting in aggregate gross
• $2.15 million — additional aggregate gross proceeds of $2.15 million at the second and final closing of the
• $175,000 — rant Holders and (ii) a cash payment of $175,000 to each of the Remaining Warrant Holder
• $0.80 — al cash dividend that equals or exceeds $0.80 per share, which we will satisfy as a r

Filing Documents

• novabay_def14a.htm (DEF 14A) — 1200KB
• img_001.jpg (GRAPHIC) — 13KB
• img_002.jpg (GRAPHIC) — 20KB
• img_003.jpg (GRAPHIC) — 59KB
• img_004.jpg (GRAPHIC) — 61KB
• proxy_001.jpg (GRAPHIC) — 219KB
• proxy_002.jpg (GRAPHIC) — 154KB
• 0001829126-25-007608.txt ( ) — 3162KB
• cik0001389545-20241231.xsd (EX-101.SCH) — 6KB
• cik0001389545-20241231_def.xml (EX-101.DEF) — 9KB
• cik0001389545-20241231_lab.xml (EX-101.LAB) — 57KB
• cik0001389545-20241231_pre.xml (EX-101.PRE) — 41KB
• novabay_def14a_htm.xml (XML) — 105KB

RISK FACTORS

RISK FACTORS 14 Overview 14 General Risks Related to the Investment Transaction 14 Risks Related to the Our Securities and Control of Our Company 16 General Risks Related to the Reverse Stock Split Proposal 18 THE ANNUAL MEETING 19 Purpose of Meeting 19 Attendance at the Annual Meeting 19 Voting; Quorum 19 Voting Commitments 19 Required Votes and Effects of Abstentions and Broker Non-Votes 20 Effect of Not Voting 22 Voting Methods 22 Revoking Proxies 22 Solicitation 23 Other Matters 23 Results of the Voting at the Annual Meeting 23 MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING 24 PROPOSAL ONE: ELECTION OF DIRECTORS 24 Current Directors and Nominees 24 Class III Directors – Terms Expiring at the 2025 Annual Meeting 24 Stockholder Approval 26 Class I Directors – Terms Expiring at the 2026 Annual Meeting 26 Class II Directors – Terms Expiring at the 2027 Annual Meeting 27 Family Relationships 28 CORPORATE GOVERNANCE 29 Code of Ethics and Business Conduct 29 Director Independence 29 Board Committees and Meetings 29 Other Board Matters 34 Communications to the Board 37

EXECUTIVE COMPENSATION AND OTHER INFORMATION

EXECUTIVE COMPENSATION AND OTHER INFORMATION 38 Executive Officers 38 Summary Compensation Table 38 Outstanding Equity Awards at Fiscal Year End 41 Employment-Related Agreements and Potential Payments upon Termination or Change in Control 42 Director Compensation 43 PAY-VERSUS-PERFORMANCE 46 PROPOSAL TWO: ADVISORY, NON-BINDING VOTE TO APPROVE EXECUTIVE COMPENSATION 50 Stockholder Approval 50 PROPOSAL THREE: ADVISORY, NON-BINDING VOTE ON THE FREQUENCY OF SOLICITATION OF ADVISORY STOCKHOLDER APPROVAL OF EXECUTIVE COMPENSATION 51 Stockholder Approval 51 - i - PROPOSAL FOUR: ADVISORY, NON-BINDING VOTE TO RATIFY THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 52 Fees Paid to Independent Registered Public Accounting Firm 52 Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services 53 Stockholder Approval 53 Audit Committee Report 53 DESCRIPTION OF THE INVESTMENT TRANSACTION AND PREFERRED STOCK 54 Investment Transaction and Related Transactions 54 The Purchase Agreement and Related Transaction Documents 55 Description of the Preferred Stock and Lazar Investor Rights 58 PROPOSAL FIVE: APPROVAL OF ISSUANCE OF COMMON STOCK UPON CONVERSION OF SERIES D PREFERRED STOCK AND SERIES E PREFERRED STOCK 62 Overview of Investment Transaction 63 Reasons for this Proposal Five 64 Effect and Consequences of the Investment Transaction 65

Risk Factors

Risk Factors 65 Additional Information 65 Stockholder Approval 66 PROPOSAL SIX: APPROVAL TO INCREASE SHARES AVAILABLE FOR ISSUANCE UNDER THE 2017 OMNIBUS PLAN 67 Amendment Language 67 Summary of the 2017 Omnibus Plan 68 Certain Federal Income Tax Consequences 71 Award Issuances under the 2017 Omnibus Plan 72

Risk Factors

Risk Factors 73 Additional Information 73 Stockholder Approval 73 PROPOSAL SEVEN: APPROVAL OF THE PAYMENT OF THE EQUITY CONSIDERATION TO RESIGNING NON-EMPLOYEE DIRECTORS 74 Overview of the Release Agreement and Equity Consideration 74 Certain United States Federal Income Tax Consequences 75

Risk Factors

Risk Factors 76 Stockholder Approval 76 PROPOSAL EIGHT: THE REVERSE STOCK SPLIT PROPOSAL 77 Overview 77 Effective Date 78 Reasons for the Reverse Stock Split 79 Principal Effects of the Reverse Stock Split 79 Fractional Shares 81 No Dissenters' Rights 81 Certain United States Federal Income Tax Consequences 81 Accounting Consequences 82 Stock Certificates 82 Book-Entry Shares 83

Risk Factors

Risk Factors 83 Stockholder Approval 83 PROPOSAL NINE: APPROVAL TO INCREASE AUTHORIZED COMMON STOCK 84 Background of the Charter Amendment to Increase Authorized Common Stock 84 Reasons for Stockholder Approval 84 Effect and Consequences of the Amendment 85

Risk Factors

Risk Factors 86 Additional Information 86 Stockholder Approval 86 PROPOSAL TEN: APPROVAL TO INCREASE AUTHORIZED PREFERRED STOCK 88 Background of the Charter Amendment to Increase Authorized Preferred Stock 88 Reasons for Stockholder Approval 88 Preferred Stock Generally 89 Effect and Consequences of the Amendment 89

Risk Factors

Risk Factors 90 Additional Information 90 Stockholder Approval 91 - ii - PROPOSAL ELEVEN: THE ADJOURNMENT PROPOSAL 92 Stockholder Approval 92

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 93 EQUITY COMPENSATION PLAN INFORMATION 95 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 96 OTHER PROXY MATTERS 98 Delinquent Section 16(a) Reports 98 Deadlines for Receipt of Stockholder Proposals and Nominations 98 Householding of Proxy Materials 99 Method of Proxy Solicitation 100 Where You Can Find More Information 100 Other Business 100 - iii - 2000 Powell Street, Suite 1150 Emeryville, California 94608 Proxy Statement For The 2025 Annual Meeting of Stockholders This proxy statement (the " Proxy Statement "), our Notice of 2025 Annual Meeting of Stockholders (the " Notice ") and our proxy card are being furnished in connection with the solicitation of proxies by the Board of Directors (the " Board ") of NovaBay Pharmaceuticals, Inc., a Delaware corporation (" NovaBay , " the " Company , " " we , " " our , " or " us "), to be voted at the 2025 Annual Meeting of Stockholders to be held on Thursday, October 16, 2025 (the " Annual Meeting "), and at any adjournment or postponement of the Annual Meeting. The Annual Meeting will be held at 11:00 a.m. Pacific Time and will be a virtual meeting of stockholders. You will be able to participate in the Annual Meeting, vote, and submit your questions during the meeting via live webcast by visiting www.virtualshareholdermeeting.com/NBY2025. You must have your 16-digit control number on your proxy card to enter and participate in the virtual meeting. This Proxy Statement, the proxy card and our Annual Report on Form 10-K, as amended, for the year ended December 31, 2024 (the " Annual Report ") are being delivered by mail on or about September 23, 2025 to stockholders of record as of September 22, 2025. If you have any questions in voting your shares, please contact: Sodali & Co. 333 Ludlow Street – 5th Floor South Tower Stamford, CT 06902 nby.info@investor.morrowsodali.com 800-662-5200 Summary of th

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