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 report (Date of earliest event reported): September 21, 2023

_____________________

Novan, Inc.

(Exact name of registrant as specified in its charter)

_____________________

Delaware

001-37880

20-4427682

(State or other jurisdiction of
incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

4020 Stirrup Creek Drive, Suite 110, Durham, North Carolina 27703

(Address of principal executive offices) (Zip Code)

(919) 485-8080

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

_____________________

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:


			☐			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, $0.0001 par value	NOVNQ	NONE

(1) Novan, Inc. Common Stock was previously traded on the Nasdaq Capital Market under the symbol “NOVN.” On July 26, 2023, Novan, Inc. Common Stock began trading exclusively on the over-the-counter (“OTC”) market under the symbol “NOVNQ.” On September 8, 2023, Nasdaq filed a Form 25 with the United States Securities and Exchange Commission to complete the delisting of Novan, Inc. Common Stock from Nasdaq, and the delisting became effective ten days after the Form 25 was filed.

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. ☐

Item 7.01. Regulation FD Disclosure.

As previously disclosed, on July 17, 2023, Novan, Inc. (the “Company”) and its wholly owned subsidiary, EPI Health, LLC (“EPI Health” and together with the Company, the “Debtors”) filed voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The case is being administered under the caption In re: Novan, Inc. et al, Case No. 23-10937 (the “Chapter 11 Case”).

On September 21, 2023, each of the Debtors filed with the Bankruptcy Court its monthly operating report for the month ended August 31, 2023 (the “Monthly Operating Reports”). The Monthly Operating Reports are attached hereto as Exhibit 99.1 and Exhibit 99.2 and are incorporated herein by reference. This Current Report on Form 8-K (including the exhibits hereto) will not be deemed an admission as to the materiality of any information required to be disclosed solely by Regulation FD. The Monthly Operating Reports and other filings with the Bankruptcy Court related to the Chapter 11 Case may be available electronically at www.kccllc.net/novan. The documents and other information available via website or elsewhere are not part of this Form 8-K and shall not be deemed incorporated herein.

The information contained in this Item 7.01 and in Exhibit 99.1 and Exhibit 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

Cautionary Statement Regarding the Monthly Operating Reports

The Company cautions investors and potential investors not to place undue reliance upon the information contained in the Monthly Operating Reports, which were not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of the Company. The Monthly Operating Reports are limited in scope, cover a limited time period and have been prepared solely for the purpose of complying with the monthly reporting requirements of the Bankruptcy Court. The Monthly Operating Reports were not audited or reviewed by independent accountants, were not prepared in accordance with generally accepted accounting principles in the United States, are in a format prescribed by applicable bankruptcy laws or rules and are subject to future adjustment and reconciliation. There can be no assurance that, from the perspective of an investor or potential investor in the Company’s securities, the Monthly Operating Reports are complete. The Monthly Operating Reports also contain information for periods which are shorter or otherwise different from those required in the Company’s reports pursuant to the Exchange Act, and such information might not be indicative of the Company’s financial condition or operating results for the period that would be reflected in the Company’s financial statements or in its reports pursuant to the Exchange Act. Results set forth in the Monthly Operating Reports should not be viewed as indicative of future results.

Cautionary Information Regarding Trading in the Company’s Securities

The Company cautions that trading in the Company’s securities (including, without limitation, the Company’s common stock) during the pendency of the Chapter 11 Case is highly speculative and poses substantial risks. The Company expects that the currently outstanding shares of its common stock will be eventually cancelled and extinguished by the Bankruptcy Court. The holders of the Company’s common stock are not expected to receive any proceeds from the sale of substantially all of the Company’s assets due to the Company’s obligations to creditors and others. As a result, the Company expects that its currently outstanding stock may have little or no value. Trading prices for the Company’s common stock may bear little or no relation to actual recovery, if any, by holders thereof in the Chapter 11 Case. Accordingly, the Company urges extreme caution with respect to existing and future investments in its common stock.

Cautionary Statement Regarding Forward-Looking Statements

This Form 8-K includes statements that are, or may be deemed, “forward-looking statements.” In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,” “should,” “approximately” or, in each case, their negative or other variations thereon or comparable terminology, although not all forward-looking statements contain these words. These forward-looking statements reflect the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to significant risks, uncertainties and assumptions that are difficult to predict and could cause actual results to differ materially and adversely from those expressed or implied in the forward-looking statements. Forward-looking statements are also subject to the risk factors and cautionary language described from time to time in the reports the Company files with the SEC, including in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2022 and any updates thereto in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These risks and uncertainties may cause actual future results to be materially different than those expressed in such forward-looking statements. Any forward-looking statements that we make in this Form 8-K speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Form 8-K or to reflect the occurrence of unanticipated events.

Item 9.01. Financial Statements and Exhibits.


			(d)			Exhibits

EXHIBIT INDEX



Exhibit No.						Description

99.1						Monthly Operating Report of Novan, Inc. for the period ended August 31, 2023 filed with the U.S. Bankruptcy Court for the District of Delaware
99.2						Monthly Operating Report of EPI Health, LLC for the period ended August 31, 2023 filed with the U.S. Bankruptcy Court for the District of Delaware
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

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

Novan, Inc.

Date: September 27, 2023

By:

/s/ Paula Brown Stafford

Paula Brown Stafford

Chairman, President and Chief Executive Officer

UST Form 11-MOR (12/01/2021) 1 UNITED STATES BANKRUPTCY COURT DISTRICT OF Delaware In Re. Novan, Inc. Debtor(s) § § § § Case No. 23-10937 Lead Case No. 23-10937 Jointly Administered Monthly Operating Report Chapter 11 Reporting Period Ended: 08/31/2023 Petition Date: 07/17/2023 Months Pending: 2 Industry Classification: 3 2 5 4 Reporting Method: Accrual Basis Cash Basis Debtor's Full-Time Employees (current): 36 Debtor's Full-Time Employees (as of date of order for relief): 37 Supporting Documentation (check all that are attached): (For jointly administered debtors, any required schedules must be provided on a non-consolidated basis for each debtor) Statement of cash receipts and disbursements Balance sheet containing the summary and detail of the assets, liabilities and equity (net worth) or deficit Statement of operations (profit or loss statement) Accounts receivable aging Postpetition liabilities aging Statement of capital assets Schedule of payments to professionals Schedule of payments to insiders All bank statements and bank reconciliations for the reporting period Description of the assets sold or transferred and the terms of the sale or transfer Signature of Responsible Party Printed Name of Responsible Party Date Address /s/ Scott Jones 09/21/2023 Scott Jones Morris, Nichols, Arsht & Tunnell LLP 1201 North Market Street, PO Box 1347 Wilmington, DE 19899-1347 STATEMENT: This Periodic Report is associated with an open bankruptcy case; therefore, Paperwork Reduction Act exemption 5 C.F.R. § 1320.4(a)(2) applies. Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 1 of 16 Exhibit 99.1

UST Form 11-MOR (12/01/2021) 2 Debtor's Name Novan, Inc. Case No. 23-10937 Part 1: Cash Receipts and Disbursements Current Month Cumulative a. Cash balance beginning of month $3,359,056 b. Total receipts (net of transfers between accounts) $2,501,384 $3,502,541 c. Total disbursements (net of transfers between accounts) $2,782,843 $3,585,154 d. Cash balance end of month (a+b-c) $3,077,597 e. Disbursements made by third party for the benefit of the estate $0 $0 f. Total disbursements for quarterly fee calculation (c+e) $2,782,843 $3,585,154 Part 2: Asset and Liability Status Current Month (Not generally applicable to Individual Debtors. See Instructions.) a. Accounts receivable (total net of allowance) $0 b. Accounts receivable over 90 days outstanding (net of allowance) $0 c. Inventory ( (attach explanation))Book Market Other $0 d Total current assets $6,833,723 e. Total assets $27,111,289 f. Postpetition payables (excluding taxes) $-530,543 g. Postpetition payables past due (excluding taxes) $0 h. Postpetition taxes payable $0 i. Postpetition taxes past due $0 j. Total postpetition debt (f+h) $-530,543 k. Prepetition secured debt $0 l. Prepetition priority debt $0 m. Prepetition unsecured debt $6,709,338 n. Total liabilities (debt) (j+k+l+m) $6,178,795 o. Ending equity/net worth (e-n) $20,932,494 Part 3: Assets Sold or Transferred Current Month Cumulative a. Total cash sales price for assets sold/transferred outside the ordinary course of business $0 $0 b. Total payments to third parties incident to assets being sold/transferred outside the ordinary course of business $0 $0 c. Net cash proceeds from assets sold/transferred outside the ordinary course of business (a-b) $0 $0 Part 4: Income Statement (Statement of Operations) Current Month Cumulative (Not generally applicable to Individual Debtors. See Instructions.) a. Gross income/sales (net of returns and allowances) $215,459 b. Cost of goods sold (inclusive of depreciation, if applicable) $0 c. Gross profit (a-b) $215,459 d. Selling expenses $0 e. General and administrative expenses $466,472 f. Other expenses $1,053,325 g. Depreciation and/or amortization (not included in 4b) $0 h. Interest $-1,384 i. Taxes (local, state, and federal) $0 j. Reorganization items $0 k. Profit (loss) $-1,302,954 $-1,991,573 Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 2 of 16

UST Form 11-MOR (12/01/2021) 3 Debtor's Name Novan, Inc. Case No. 23-10937 Part 5: Professional Fees and Expenses Approved Current Month Approved Cumulative Paid Current Month Paid Cumulative a. Debtor's professional fees & expenses (bankruptcy) Aggregate Total $50,000 $50,000 $50,000 $50,000 Itemized Breakdown by Firm Firm Name Role i Raymond James Financial Professional $50,000 $50,000 $50,000 $50,000 ii iii iv v vi vii viii ix x xi xii xiii xiv xv xvi xvii xviii xix xx xxi xxii xxiii xxiv xxv xxvi xxvii xxviii xxix xxx xxxi xxxii xxxiii xxxiv xxxv xxxvi Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 3 of 16

UST Form 11-MOR (12/01/2021) 4 Debtor's Name Novan, Inc. Case No. 23-10937 xxxvii xxxvii xxxix xl xli xlii xliii xliv xlv xlvi xlvii xlviii xlix l li lii liii liv lv lvi lvii lviii lix lx lxi lxii lxiii lxiv lxv lxvi lxvii lxviii lxix lxx lxxi lxxii lxxiii lxxiv lxxv lxxvi lxxvii lxxvii Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 4 of 16

UST Form 11-MOR (12/01/2021) 5 Debtor's Name Novan, Inc. Case No. 23-10937 lxxix lxxx lxxxi lxxxii lxxxii lxxxiv lxxxv lxxxvi lxxxvi lxxxvi lxxxix xc xci xcii xciii xciv xcv xcvi xcvii xcviii xcix c ci Approved Current Month Approved Cumulative Paid Current Month Paid Cumulative b. Debtor's professional fees & expenses (nonbankruptcy) Aggregate Total $0 $0 $15,450 $37,450 Itemized Breakdown by Firm Firm Name Role i Law office of Kathleen Lynch, PSpecial Counsel $0 $0 $8,750 $8,750 ii Myers Bigel Sibley & Sajovec, Special Counsel $0 $0 $6,700 $28,700 iii iv v vi vii viii ix x xi xii xiii xiv Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 5 of 16

UST Form 11-MOR (12/01/2021) 6 Debtor's Name Novan, Inc. Case No. 23-10937 xv xvi xvii xviii xix xx xxi xxii xxiii xxiv xxv xxvi xxvii xxviii xxix xxx xxxi xxxii xxxiii xxxiv xxxv xxxvi xxxvii xxxvii xxxix xl xli xlii xliii xliv xlv xlvi xlvii xlviii xlix l li lii liii liv lv lvi Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 6 of 16

UST Form 11-MOR (12/01/2021) 7 Debtor's Name Novan, Inc. Case No. 23-10937 lvii lviii lix lx lxi lxii lxiii lxiv lxv lxvi lxvii lxviii lxix lxx lxxi lxxii lxxiii lxxiv lxxv lxxvi lxxvii lxxvii lxxix lxxx lxxxi lxxxii lxxxii lxxxiv lxxxv lxxxvi lxxxvi lxxxvi lxxxix xc xci xcii xciii xciv xcv xcvi xcvii xcviii Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 7 of 16

UST Form 11-MOR (12/01/2021) 8 Debtor's Name Novan, Inc. Case No. 23-10937 xcix c c. All professional fees and expenses (debtor & committees) $0 $0 Part 6: Postpetition Taxes Current Month Cumulative a. Postpetition income taxes accrued (local, state, and federal) $0 $0 b. Postpetition income taxes paid (local, state, and federal) $0 $0 c. Postpetition employer payroll taxes accrued $8,415 $16,593 d. Postpetition employer payroll taxes paid $22,094 $27,566 e. Postpetition property taxes paid $0 $0 f. Postpetition other taxes accrued (local, state, and federal) $0 $0 g. Postpetition other taxes paid (local, state, and federal) $0 $0 Part 7: Questionnaire - During this reporting period: a. Were any payments made on prepetition debt? (if yes, see Instructions) Yes No b. Yes NoWere any payments made outside the ordinary course of business without court approval? (if yes, see Instructions) c. Yes NoWere any payments made to or on behalf of insiders? d. Yes NoAre you current on postpetition tax return filings? e. Yes NoAre you current on postpetition estimated tax payments? f. Were all trust fund taxes remitted on a current basis? Yes No g. Yes NoWas there any postpetition borrowing, other than trade credit? (if yes, see Instructions) h. Were all payments made to or on behalf of professionals approved by the court? Yes No N/A i. Do you have: Worker's compensation insurance? Yes No If yes, are your premiums current? Yes No N/A (if no, see Instructions) Casualty/property insurance? Yes No If yes, are your premiums current? Yes No N/A (if no, see Instructions) General liability insurance? Yes No If yes, are your premiums current? Yes No N/A (if no, see Instructions) j. Has a plan of reorganization been filed with the court? Yes No k. Has a disclosure statement been filed with the court? Yes No l. Are you current with quarterly U.S. Trustee fees as set forth under 28 U.S.C. § 1930? Yes No Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 8 of 16

UST Form 11-MOR (12/01/2021) 9 Debtor's Name Novan, Inc. Case No. 23-10937 Part 8: Individual Chapter 11 Debtors (Only) a. Gross income (receipts) from salary and wages $0 b. Gross income (receipts) from self-employment $0 c. Gross income from all other sources $0 d. Total income in the reporting period (a+b+c) $0 e. Payroll deductions $0 f. Self-employment related expenses $0 g. Living expenses $0 h. All other expenses $0 i. Total expenses in the reporting period (e+f+g+h) $0 j. Difference between total income and total expenses (d-i) $0 k. List the total amount of all postpetition debts that are past due $0 l. Are you required to pay any Domestic Support Obligations as defined by 11 U.S.C § 101(14A)? Yes No m. Yes No N/AIf yes, have you made all Domestic Support Obligation payments? Privacy Act Statement 28 U.S.C. § 589b authorizes the collection of this information, and provision of this information is mandatory under 11 U.S.C. §§ 704, 1106, and 1107. The United States Trustee will use this information to calculate statutory fee assessments under 28 U.S.C. § 1930(a)(6). The United States Trustee will also use this information to evaluate a chapter 11 debtor's progress through the bankruptcy system, including the likelihood of a plan of reorganization being confirmed and whether the case is being prosecuted in good faith. This information may be disclosed to a bankruptcy trustee or examiner when the information is needed to perform the trustee's or examiner's duties or to the appropriate federal, state, local, regulatory, tribal, or foreign law enforcement agency when the information indicates a violation or potential violation of law. Other disclosures may be made for routine purposes. For a discussion of the types of routine disclosures that may be made, you may consult the Executive Office for United States Trustee's systems of records notice, UST-001, "Bankruptcy Case Files and Associated Records." See 71 Fed. Reg. 59,818 et seq. (Oct. 11, 2006). A copy of the notice may be obtained at the following link: http:// www.justice.gov/ust/eo/rules_regulations/index.htm. Failure to provide this information could result in the dismissal or conversion of your bankruptcy case or other action by the United States Trustee. 11 U.S.C. § 1112(b)(4)(F). I declare under penalty of perjury that the foregoing Monthly Operating Report and its supporting documentation are true and correct and that I have been authorized to sign this report on behalf of the estate. /s/ John M. Gay Signature of Responsible Party CFO Printed Name of Responsible Party 09/21/2023 DateTitle John M. Gay Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 9 of 16

UST Form 11-MOR (12/01/2021) 10 Debtor's Name Novan, Inc. Case No. 23-10937 PageOnePartOne PageOnePartTwo PageTwoPartOne PageTwoPartTwo Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 10 of 16

UST Form 11-MOR (12/01/2021) 11 Debtor's Name Novan, Inc. Case No. 23-10937 Bankruptcy51to100 NonBankruptcy1to50 NonBankruptcy51to100 Bankruptcy1to50 Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 11 of 16

UST Form 11-MOR (12/01/2021) 12 Debtor's Name Novan, Inc. Case No. 23-10937 PageFour PageThree Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 12 of 16

Novan, Inc. Balance Sheet As of August 31, 2023 Cash and cash equivalents 3,077,597$ Prepaid expenses and other current assets 3,756,126 TOTAL CURRENT ASSETS 6,833,723 Restricted cash 582,703 Property and equipment, net 13,669,432 Intangible assets, net 75,000 Other assets 173,812 Right-of-use lease asset 1,720,957 Goodwill 4,055,662 TOTAL ASSETS 27,111,289$ Accounts payable 2,462,404$ Accrued expenses 3,716,391 Deferred revenue, current portion 2,585,508 Research and development service obligation liability, current portion - Operating lease liabilities, current portion 271,968 TOTAL CURRENT LIABILITIES 9,036,271 Deferred revenue, net of current portion 6,356,040 Ligand bridge and DIP loan 6,305,000 Research and development service obligation liability, net of current portion 25,000,000 Operating lease liabilities, net of current portion 3,460,208 Contingent Consideration due to EPG for purchase, net of current portion 2,352,961 Other long-term liabilities 112,000 Due to/from EPI Health, LLC 13,377,587 [1] TOTAL LIABILITIES 66,000,067 Common Stock 3,683 Additional paid-in capital 291,393,658 Treasury stock (155,268) Accumulated deficit (330,130,851) TOTAL EQUITY (DEFICIT) (38,888,778) TOTAL LIABILITIES & EQUITY (DEFICIT) 27,111,289$ Footnote: [1] This line item includes an intercompany balance related to goodwill totaling $4.1 million, presented in total assets above. Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 13 of 16

Novan, Inc. Statement of Operations Reporting Period: August 1 to August 31, 2023 License and collaboration revenue 215,459$ Government research contracts and grants revenue - TOTAL REVENUE 215,459 Research and development 1,053,325 General & administrative 466,472 TOTAL OPERATING EXPENSES 1,519,797 Interest income 1,384 NET INCOME (LOSS) (1,302,954)$ Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 14 of 16

Novan, Inc. Statement of Cash Receipts and Disbursements Summary (Cash Basis) Reporting Period: August 1 to August 31, 2023 BEGINNING CASH BALANCE 3,359,056$ Receipts: DIP funding from Ligand Pharmaceuticals 2,500,000 Interest income 1,384 TOTAL RECEIPTS 2,501,384 Operating Disbursements: Payroll and benefits 606,281 Employee insurance 59,128 Rent and utilities 100,355 Intellectual property activities 29,961 Manufacturing and QA services 1,065,117 Facility and information technology services 422,606 Activities and services related to lead R&D asset (SB206) 161,986 Transfers to EPI Health, LLC 161,000 Bank fees and other misc. 176,409 TOTAL DISBURSEMENTS 2,782,843 NET CASH FLOW (281,459) ENDING CASH BALANCE 3,077,597$ Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 15 of 16

Novan, Inc. Summary of Cash Book Balances As of August 31, 2023 Cash and cash equivalents Account Description Bank Account Number Last 4 Digits Book Balance as of 8/31/2023 Investment FICA/Stone Castle 1607 -$ Investment Silicon Valley Bank 9620 - Sweep Silicon Valley Bank 1484 - Operational Silicon Valley Bank 7949 951,626 Payroll Silicon Valley Bank 9616 - Investment Account Raymond James Y011 2,058 Utility Motion Account East West Bank 0000 18,125 Operational PNC Bank 0299 2,094,662 Operational PNC Bank 3407 (185) Payroll PNC Bank 2423 - Collateral/Unrestricted (Letter of Credit) PNC Bank 3374 11,311 3,077,597$ Restricted Cash, current Account Description Bank Account Number Last 4 Digits Book Balance as of 8/31/2023 Collateral/Restricted (Letter of Credit) PNC Bank 3374 582,703$ Case 23-10937-LSS Doc 308 Filed 09/21/23 Page 16 of 16

UST Form 11-MOR (12/01/2021) 1 UNITED STATES BANKRUPTCY COURT DISTRICT OF Delaware In Re. EPI Health, LLC Debtor(s) § § § § Case No. 23-10938 Lead Case No. 23-10937 Jointly Administered Monthly Operating Report Chapter 11 Reporting Period Ended: 08/31/2023 Petition Date: 07/17/2023 Months Pending: 2 Industry Classification: 4 2 4 2 Reporting Method: Accrual Basis Cash Basis Debtor's Full-Time Employees (current): 1 Debtor's Full-Time Employees (as of date of order for relief): 1 Supporting Documentation (check all that are attached): (For jointly administered debtors, any required schedules must be provided on a non-consolidated basis for each debtor) Statement of cash receipts and disbursements Balance sheet containing the summary and detail of the assets, liabilities and equity (net worth) or deficit Statement of operations (profit or loss statement) Accounts receivable aging Postpetition liabilities aging Statement of capital assets Schedule of payments to professionals Schedule of payments to insiders All bank statements and bank reconciliations for the reporting period Description of the assets sold or transferred and the terms of the sale or transfer Signature of Responsible Party Printed Name of Responsible Party Date Address /s/ Scott Jones 09/21/2023 Scott Jones Morris, Nichols, Arsht & Tunnell LLP 1201 North Market Street, PO Box 1347 Wilmington, DE 19899-1347 STATEMENT: This Periodic Report is associated with an open bankruptcy case; therefore, Paperwork Reduction Act exemption 5 C.F.R. § 1320.4(a)(2) applies. Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 1 of 16 Exhibit 99.2

UST Form 11-MOR (12/01/2021) 2 Debtor's Name EPI Health, LLC Case No. 23-10938 Part 1: Cash Receipts and Disbursements Current Month Cumulative a. Cash balance beginning of month $44,782 b. Total receipts (net of transfers between accounts) $2,430,299 $2,456,698 c. Total disbursements (net of transfers between accounts) $199,397 $205,401 d. Cash balance end of month (a+b-c) $2,275,684 e. Disbursements made by third party for the benefit of the estate $0 $0 f. Total disbursements for quarterly fee calculation (c+e) $199,397 $205,401 Part 2: Asset and Liability Status Current Month (Not generally applicable to Individual Debtors. See Instructions.) a. Accounts receivable (total net of allowance) $5,005,508 b. Accounts receivable over 90 days outstanding (net of allowance) $161,684 c. Inventory ( (attach explanation))Book Market Other $1,489,163 d Total current assets $11,201,470 e. Total assets $37,312,765 f. Postpetition payables (excluding taxes) $125,514 g. Postpetition payables past due (excluding taxes) $0 h. Postpetition taxes payable $0 i. Postpetition taxes past due $0 j. Total postpetition debt (f+h) $125,514 k. Prepetition secured debt $0 l. Prepetition priority debt $0 m. Prepetition unsecured debt $27,517,898 n. Total liabilities (debt) (j+k+l+m) $27,643,412 o. Ending equity/net worth (e-n) $9,669,353 Part 3: Assets Sold or Transferred Current Month Cumulative a. Total cash sales price for assets sold/transferred outside the ordinary course of business $0 $0 b. Total payments to third parties incident to assets being sold/transferred outside the ordinary course of business $0 $0 c. Net cash proceeds from assets sold/transferred outside the ordinary course of business (a-b) $0 $0 Part 4: Income Statement (Statement of Operations) Current Month Cumulative (Not generally applicable to Individual Debtors. See Instructions.) a. Gross income/sales (net of returns and allowances) $10,891 b. Cost of goods sold (inclusive of depreciation, if applicable) $58,318 c. Gross profit (a-b) $-47,427 d. Selling expenses $0 e. General and administrative expenses $549,927 f. Other expenses $0 g. Depreciation and/or amortization (not included in 4b) $164,381 h. Interest $12,776 i. Taxes (local, state, and federal) $0 j. Reorganization items $0 k. Profit (loss) $-774,511 $-1,007,124 Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 2 of 16

UST Form 11-MOR (12/01/2021) 3 Debtor's Name EPI Health, LLC Case No. 23-10938 Part 5: Professional Fees and Expenses Approved Current Month Approved Cumulative Paid Current Month Paid Cumulative a. Debtor's professional fees & expenses (bankruptcy) Aggregate Total Itemized Breakdown by Firm Firm Name Role i ii iii iv v vi vii viii ix x xi xii xiii xiv xv xvi xvii xviii xix xx xxi xxii xxiii xxiv xxv xxvi xxvii xxviii xxix xxx xxxi xxxii xxxiii xxxiv xxxv xxxvi Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 3 of 16

UST Form 11-MOR (12/01/2021) 4 Debtor's Name EPI Health, LLC Case No. 23-10938 xxxvii xxxvii xxxix xl xli xlii xliii xliv xlv xlvi xlvii xlviii xlix l li lii liii liv lv lvi lvii lviii lix lx lxi lxii lxiii lxiv lxv lxvi lxvii lxviii lxix lxx lxxi lxxii lxxiii lxxiv lxxv lxxvi lxxvii lxxvii Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 4 of 16

UST Form 11-MOR (12/01/2021) 5 Debtor's Name EPI Health, LLC Case No. 23-10938 lxxix lxxx lxxxi lxxxii lxxxii lxxxiv lxxxv lxxxvi lxxxvi lxxxvi lxxxix xc xci xcii xciii xciv xcv xcvi xcvii xcviii xcix c ci Approved Current Month Approved Cumulative Paid Current Month Paid Cumulative b. Debtor's professional fees & expenses (nonbankruptcy) Aggregate Total $0 $0 $32,971 $32,971 Itemized Breakdown by Firm Firm Name Role i Pharmaceutical Project SolutioOther $0 $0 $32,971 $32,971 ii iii iv v vi vii viii ix x xi xii xiii xiv Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 5 of 16

UST Form 11-MOR (12/01/2021) 6 Debtor's Name EPI Health, LLC Case No. 23-10938 xv xvi xvii xviii xix xx xxi xxii xxiii xxiv xxv xxvi xxvii xxviii xxix xxx xxxi xxxii xxxiii xxxiv xxxv xxxvi xxxvii xxxvii xxxix xl xli xlii xliii xliv xlv xlvi xlvii xlviii xlix l li lii liii liv lv lvi Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 6 of 16

UST Form 11-MOR (12/01/2021) 7 Debtor's Name EPI Health, LLC Case No. 23-10938 lvii lviii lix lx lxi lxii lxiii lxiv lxv lxvi lxvii lxviii lxix lxx lxxi lxxii lxxiii lxxiv lxxv lxxvi lxxvii lxxvii lxxix lxxx lxxxi lxxxii lxxxii lxxxiv lxxxv lxxxvi lxxxvi lxxxvi lxxxix xc xci xcii xciii xciv xcv xcvi xcvii xcviii Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 7 of 16

UST Form 11-MOR (12/01/2021) 8 Debtor's Name EPI Health, LLC Case No. 23-10938 xcix c c. All professional fees and expenses (debtor & committees) $0 Part 6: Postpetition Taxes Current Month Cumulative a. Postpetition income taxes accrued (local, state, and federal) $0 $0 b. Postpetition income taxes paid (local, state, and federal) $0 $0 c. Postpetition employer payroll taxes accrued $2,953 $3,307 d. Postpetition employer payroll taxes paid $3,716 $5,872 e. Postpetition property taxes paid $0 $0 f. Postpetition other taxes accrued (local, state, and federal) $0 $0 g. Postpetition other taxes paid (local, state, and federal) $0 $0 Part 7: Questionnaire - During this reporting period: a. Were any payments made on prepetition debt? (if yes, see Instructions) Yes No b. Yes NoWere any payments made outside the ordinary course of business without court approval? (if yes, see Instructions) c. Yes NoWere any payments made to or on behalf of insiders? d. Yes NoAre you current on postpetition tax return filings? e. Yes NoAre you current on postpetition estimated tax payments? f. Were all trust fund taxes remitted on a current basis? Yes No g. Yes NoWas there any postpetition borrowing, other than trade credit? (if yes, see Instructions) h. Were all payments made to or on behalf of professionals approved by the court? Yes No N/A i. Do you have: Worker's compensation insurance? Yes No If yes, are your premiums current? Yes No N/A (if no, see Instructions) Casualty/property insurance? Yes No If yes, are your premiums current? Yes No N/A (if no, see Instructions) General liability insurance? Yes No If yes, are your premiums current? Yes No N/A (if no, see Instructions) j. Has a plan of reorganization been filed with the court? Yes No k. Has a disclosure statement been filed with the court? Yes No l. Are you current with quarterly U.S. Trustee fees as set forth under 28 U.S.C. § 1930? Yes No Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 8 of 16

UST Form 11-MOR (12/01/2021) 9 Debtor's Name EPI Health, LLC Case No. 23-10938 Part 8: Individual Chapter 11 Debtors (Only) a. Gross income (receipts) from salary and wages $0 b. Gross income (receipts) from self-employment $0 c. Gross income from all other sources $0 d. Total income in the reporting period (a+b+c) $0 e. Payroll deductions $0 f. Self-employment related expenses $0 g. Living expenses $0 h. All other expenses $0 i. Total expenses in the reporting period (e+f+g+h) $0 j. Difference between total income and total expenses (d-i) $0 k. List the total amount of all postpetition debts that are past due $0 l. Are you required to pay any Domestic Support Obligations as defined by 11 U.S.C § 101(14A)? Yes No m. Yes No N/AIf yes, have you made all Domestic Support Obligation payments? Privacy Act Statement 28 U.S.C. § 589b authorizes the collection of this information, and provision of this information is mandatory under 11 U.S.C. §§ 704, 1106, and 1107. The United States Trustee will use this information to calculate statutory fee assessments under 28 U.S.C. § 1930(a)(6). The United States Trustee will also use this information to evaluate a chapter 11 debtor's progress through the bankruptcy system, including the likelihood of a plan of reorganization being confirmed and whether the case is being prosecuted in good faith. This information may be disclosed to a bankruptcy trustee or examiner when the information is needed to perform the trustee's or examiner's duties or to the appropriate federal, state, local, regulatory, tribal, or foreign law enforcement agency when the information indicates a violation or potential violation of law. Other disclosures may be made for routine purposes. For a discussion of the types of routine disclosures that may be made, you may consult the Executive Office for United States Trustee's systems of records notice, UST-001, "Bankruptcy Case Files and Associated Records." See 71 Fed. Reg. 59,818 et seq. (Oct. 11, 2006). A copy of the notice may be obtained at the following link: http:// www.justice.gov/ust/eo/rules_regulations/index.htm. Failure to provide this information could result in the dismissal or conversion of your bankruptcy case or other action by the United States Trustee. 11 U.S.C. § 1112(b)(4)(F). I declare under penalty of perjury that the foregoing Monthly Operating Report and its supporting documentation are true and correct and that I have been authorized to sign this report on behalf of the estate. /s/ John M. Gay Signature of Responsible Party CFO Printed Name of Responsible Party 09/21/2023 DateTitle John M. Gay Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 9 of 16

UST Form 11-MOR (12/01/2021) 10 Debtor's Name EPI Health, LLC Case No. 23-10938 PageOnePartOne PageOnePartTwo PageTwoPartOne PageTwoPartTwo Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 10 of 16

UST Form 11-MOR (12/01/2021) 11 Debtor's Name EPI Health, LLC Case No. 23-10938 Bankruptcy51to100 NonBankruptcy1to50 NonBankruptcy51to100 Bankruptcy1to50 Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 11 of 16

UST Form 11-MOR (12/01/2021) 12 Debtor's Name EPI Health, LLC Case No. 23-10938 PageFour PageThree Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 12 of 16

EPI Health, LLC Balance Sheet As of August 31, 2023 Cash and cash equivalents 2,275,684$ Trade accounts receivable, net 5,005,508 Inventory, net 1,489,163 Prepaid expenses and other current assets 2,431,115 TOTAL CURRENT ASSETS 11,201,470 Intangible Assets, Net 26,111,295 TOTAL ASSETS 37,312,765$ Accounts payable 21,197,597$ Accrued expenses 6,445,815 TOTAL CURRENT LIABILITIES 27,643,412 Other long-term liabilities 494,070 Due to/from Novan, Inc. (13,377,587) [1] TOTAL LIABILITIES 14,759,895 Additional paid-in capital 32,045,966 Accumulated deficit (9,493,096) TOTAL EQUITY 22,552,870 TOTAL LIABILITIES & EQUITY 37,312,765$ Footnote: [1] This line item includes an intercompany balance related to goodwill totaling $4.1 million. Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 13 of 16

EPI Health, LLC Statement of Operations Reporting Period: August 1 to August 31, 2023 Net product sales 10,891$ [1] License and collaboration revenue - TOTAL REVENUE 10,891 Cost of goods sold 58,318 [2] GROSS PROFIT (47,427) Sell, General & Administrative 549,927 Amortization expense 164,381 TOTAL OPERATING EXPENSES 714,308 Interest Expense 12,776 NET INCOME (LOSS) (774,511)$ Footnotes: [1] This amount represents adjusting entries made to gross-to-net accruals. Adjustments flow through the statement of operations as they occur. [2] This amount represents adjusting entries made to cost of goods sold related to the prior periods. Adjustments flow through the statement of operations as they occur. Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 14 of 16

EPI Health, LLC Statement of Cash Receipts and Disbursements Summary (Cash Basis) Reporting Period: August 1 to August 31, 2023 BEGINNING CASH BALANCE 44,782$ Receipts: Transfers from Bayview Funding 2,269,299 Transfers from Novan, Inc. 161,000 TOTAL RECEIPTS 2,430,299 Operating Disbursements: Rent and utilities 8,877 Intellectual property activities 4,661 Third-party logistics provider 76,526 Regulatory activities and services 50,602 Market related activities and services 58,731 TOTAL DISBURSEMENTS 199,397 NET CASH FLOW 2,230,902 ENDING CASH BALANCE 2,275,684$ Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 15 of 16

EPI Health, LLC Summary of Cash Book Balances As of August 31, 2023 Cash and cash equivalents Account Description Bank Account Number Last 4 Digits Book Balance as of 8/31/2023 Operational Silicon Valley Bank 9806 6,385$ [1] DIP Deposit East West Bank 0007 2,269,299 [2] 2,275,684$ Restricted Cash, current Account Description Bank Account Number Last 4 Digits Book Balance as of 8/31/2023 Lockbox Bank of America 1379 -$ Footnotes: [1] This account, while owned by parent Debtor, Novan, Inc., is used to track operational activities related to EPI Health, LLC. [2] This new account represents funds received from the Bayview Factoring facility upon its termination. Case 23-10937-LSS Doc 309 Filed 09/21/23 Page 16 of 16

Cover	Sep. 21, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Sep. 21, 2023
Entity Registrant Name	Novan, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-37880
Entity Tax Identification Number	20-4427682
Entity Address, Address Line One	4020 Stirrup Creek Drive, Suite 110
Entity Address, City or Town	Durham
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27703
City Area Code	919
Local Phone Number	485-8080
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	NOVNQ
Security Exchange Name	NONE
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0001467154