NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) (“NovaBay”
or the “Company”) announces it has entered into a Securities
Purchase Agreement with certain institutional investors in
connection with a private placement of 3,250 shares of a newly
created Series C Non-Voting Convertible Preferred Stock (the
“Series C Preferred Stock”) at a price of $1,000 per share, Series
A-1 warrants (the “Series A-1 Warrants”) exercisable to purchase up
to an aggregate of 18,055,557 shares of Company common stock at an
exercise price of $0.18 per share and Series A-2 warrants (the
“Series A-2 Warrants” and, collectively with the Series A-1
Warrants, the “Warrants”) exercisable to purchase up to an
aggregate of 18,055,557 shares of Company common stock at an
exercise price of $0.18 per share. The Company expects to receive
gross proceeds from the private placement of approximately $3.25
million. The private placement is expected to close in the fourth
quarter of 2022 on or about the date of effectiveness of
Stockholder Approval and the Reverse Stock Split (each as defined
below) (the “Stockholder Approval Date”) and subject to
satisfaction of customary closing conditions in the Securities
Purchase Agreement. The exercise price for the Warrants and the
number of shares of Company common stock underlying the Warrants
will be adjusted to reflect the Reverse Stock Split.
NovaBay intends to use the net proceeds received from the
offering for working capital and general corporate purposes.
Ladenburg Thalmann & Co. Inc. is acting as the exclusive
placement agent for the private placement and as warrant
solicitation agent for the warrant reprice transactions.
The Series C Preferred Stock will initially be convertible into
an aggregate of approximately 18,055,557 shares of Company common
stock at a conversion price of $0.18 per share, subject to
adjustment following the Reverse Stock Split. In addition, the
conversion of the Series C Preferred Stock will be subject to
certain ownership limitations, as provided in the Securities
Purchase Agreement and in the Certificate of Designation of
Preferences, Rights and Limitations of the Series C Preferred
Stock, which will be filed and become effective in connection with
the closing of the private placement. The Series C Preferred Stock
will only be entitled to dividends in the event dividends are paid
on the Company common stock and will not have any preferences over
the Company common stock, including liquidation rights. As a result
of the number of shares of Company common stock that may be issued
upon the future conversion of the Series C Preferred Stock and
exercise of the Warrants and as a condition to closing as set forth
in the Securities Purchase Agreement, the Company will be required
to obtain stockholder approval in accordance with the NYSE American
LLC Company Guide Rule 713(a) and Rule 713(b) (“Stockholder
Approval”). In addition, as a further condition to closing the
private placement, the Company will take appropriate corporate
action, including at a meeting of stockholders, to effect a reverse
split of its common stock, as required by its governing documents
and applicable law, in order to have a sufficient number of shares
of Company common stock to issue upon the full conversion of the
Series C Preferred Stock and the full exercise of the Warrants
(“Reverse Stock Split”). After the closing of the private
placement, the Series C Preferred Stock issued will be immediately
convertible, the Series A-1 Warrants will be immediately
exercisable and will expire six years following the closing date
and the Series A-2 Warrants issued will be immediately exercisable
and will expire eighteen months following the closing date.
Pursuant to the Securities Purchase Agreement, the Purchasers
and the Company will enter into a Registration Rights Agreement,
which will provide for the Company to file an initial registration
statement with the Securities and Exchange Commission covering the
resale of the shares of the Company’s common stock underlying the
Series C Preferred Stock and the Warrants no later than 30 days
after the Stockholder Approval Date and to use best efforts to have
the registration statement declared effective as promptly as
practical thereafter, and in any event no later than 90 days after
the Stockholder Approval Date.
Warrant Reprice Transactions
The Company also entered into warrant reprice transactions with
certain of its existing warrant holders (such holders, the
“Participants”) to amend previously issued Company common stock
purchase warrants to reduce their exercise price, provide an
opportunity to make an initial cash exercise and for such
exercising holders to receive new Company common stock purchase
warrant, as well as certain other terms.
The Participants in the warrant reprice transactions include
warrant holders from the Company’s prior warrant reprice
transaction that closed on July 23, 2020 where the Company issued
common stock purchase warrants (“2020 Original Warrants”) to a
limited number of accredited investors (the “2020 Investors”) and
from its prior private placement transaction that closed on
November 2, 2021 where the Company issued common stock purchase
warrants (the “2021 Original Warrants”) to a limited number of
accredited investors (the “2021 Investors”). The 2020 Original
Warrants have an aggregate of 6,898,566 underlying shares of
Company common stock that are currently exercisable at $1.65 per
share. The 2021 Original Warrants have an aggregate of 37,500,000
underlying shares of Company common stock that are currently
exercisable at $0.53 per share.
By letter agreement, dated September 9, 2022, the Company
provided the 2020 Investors holding 2020 Original Warrants and the
2021 Investors holding 2021 Original Warrants with an opportunity
to amend their respective warrants to reduce their exercise price
to $0.18 (“Reduced Exercise Price”) and, in the case of the 2021
Original Warrants, extend the term of those warrants (the “Amended
Warrants”). The Amended Warrants will not be exercisable until the
later of six months and the Stockholder Approval Date, except for
an Initial Exercise (as defined below) by a Participant. The terms
of the letter agreements also provided the Participants with the
opportunity to make a cash exercise of their respective warrants at
the Reduced Exercise Price (the “Initial Exercise”), and to receive
a new common stock purchase warrant (“New Warrant”) to purchase a
number of shares of Company common stock equal the shares of
Company common stock received by such Participant in its own
Initial Exercise. The New Warrants will be initially exercisable on
the later to occur of the six-month anniversary of the date of
issuance and the Stockholder Approval Date. In addition, the New
Warrants will have a term of exercise of six (6) years and an
exercise price equal to $0.18. The Company will receive
approximately $2 million in aggregate proceeds from the Initial
Exercise.
The offer and sale of the Preferred Stock and the Warrants in
the private placement and the New Warrants in the warrant reprice
transactions are each being made in a transaction not involving a
public offering, and these securities have not been registered
under the Securities Act of 1933, as amended (the “Securities
Act”), or applicable state securities laws. Accordingly, these
securities may not be reoffered or resold in the United States
except pursuant to an effective registration statement or an
applicable exemption from the registration requirements of the
Securities Act and such applicable state securities laws.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy, nor will there be any sales of
these securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction.
About NovaBay Pharmaceuticals, Inc.
NovaBay Pharmaceuticals, Inc. creates science-based,
problem-solving, accessible solutions for improved well-being
through its two brands, Avenova® and DERMAdoctor®. Avenova products
are scientifically created and clinically proven to help patients
and consumers with common eye irritations. DERMAdoctor products are
premium dermatologist-developed skincare solutions sold through
traditional domestic retailers, digital beauty channels and
international distributors.
Forward-Looking Statements
This press release contains forward‑looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including statements
about the commercial progress and future financial performance of
NovaBay, the private placement of Series C Preferred Stock and the
Warrants (“Private Placement”), and the warrant reprice
transactions. This release contains forward-looking statements that
are based upon management’s current expectations, assumptions,
estimates, projections and beliefs. These statements include, but
are not limited to, statements regarding our current product
offerings and marketing efforts, the financial and business impact
and effect of the completed warrant reprice transactions, the
expected completion of and impact of the Private Placement, our
partnerships, and any future revenue that may result from selling
our products, as well as generally NovaBay’s expected future
financial results. 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 NovaBay’s latest Form 10-Q, Form 10-K and/or 8-K filings with
the SEC, especially under the heading “Risk Factors.” The
forward-looking statements in this release speak only as of this
date, and NovaBay disclaims any intent or obligation to revise or
update publicly any forward-looking statement except as required by
law.
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Avenova Purchasing
Information For NovaBay Avenova purchasing information:
Please call 800-890-0329 or email sales@avenova.com Avenova.com
DERMAdoctor Purchasing
Information For DERMAdoctor purchasing information:
Please call 877-337-6237 or email service@dermadoctor.com
DERMAdoctor.com
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version on businesswire.com: https://www.businesswire.com/news/home/20220909005127/en/
NovaBay Contact Justin Hall
Chief Executive Officer and General Counsel 510-899-8800
jhall@novabay.com
Investor Contact LHA
Investor Relations Jody Cain 310-691-7100 jcain@lhai.com
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