SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement (“Proxy Statement”) for the 2022 Special Meeting of Stockholders (the “Special Meeting”) and may not contain all of the information that is important to you. To assist you in reviewingbetter understand the proposals to be acted uponbeing considered at the AnnualSpecial Meeting, we call your attentionyou should read this entire Proxy Statement carefully, including the materials attached as annexes, as well as other documents referred to or referenced herein. Each item in this summary includes a page reference directing you to a more complete description of that item contained in later parts of this Proxy Statement.

Except where specifically noted, the following information about and all other information contained in this Proxy Statement does not give effect to the proposed Reverse Stock Split described in Proposal Two, which is summarized below and more fully described beginning on page 19 of this Proxy Statement.

About NovaBay

NovaBay Pharmaceuticals, Inc.’s (“NovaBay”,” the “Company”,” “we”,” “our” orand “us”) financial performance, key executive compensation actionsdevelops and decisions, and corporate governance highlights. The following description is only a summary. For more complete information about these topics, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and the complete Proxy Statement that follows.

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Transforming Clinical Skincare Together

We develop and sellsells scientifically-created and clinically-proven eyecare and skincare products.

Our leading product, Avenova® Antimicrobial Lid and Lash Solution (“Avenova Spray”), is proven in laboratory testing to have broad antimicrobial properties as it removes foreign material including microorganisms and debris from the skin around the eye, including the eyelid. Avenova Spray is formulated with our proprietary, stable and pure form of hypochlorous acid and is cleared by the U.S. Food and Drug Administration (“FDA”) for sale in the United States. Avenova Spray is available direct to consumers through online distribution channels and is also often prescribed and dispensed by eyecare professionals for blepharitis and dry-eye disease. Other eyecare products offered under the Avenova eyecare brand include Novawipes by Avenova, Avenova Lubricant Eye Drops, Avenova Moist Heating Eye Compress, and the i-Chek.

On November 5, 2021, we significantly expanded our business by acquiring DERMAdoctor, LLC (“DERMAdoctor”) as our wholly-owned subsidiary (the “DERMAdoctor Acquisition”).subsidiary. DERMAdoctor offers over 30 dermatologist-developedover-the-counter dermatological products targeting common skin concerns, ranging from aging and blemishes to dry skin, perspiration and keratosis pilaris.concerns. DERMAdoctor branded products are marketed and sold through the DERMAdoctor website, well-known traditional and digital beauty retailers, and a network of international distributors.

In our Quarterly Report on Form 10-Q filed with the SEC on August 11, 2022 (the “June Form 10-Q”), we reported that based primarily on the funds available as of June 30, 2022, our existing cash and cash equivalents and cash flows generated from product sales will be sufficient to fund our existing operations and meet our planned operating expenses into at least the first quarter of 2023. However, we also reported that we expected that our 2022 expenses will continue to exceed our 2022 revenues, as the Company continues to invest in both its Avenova and DERMAdoctor commercialization efforts. Based on the amount of capital and liquidity that our Company had available at the time, we determined that our planned operations raised substantial doubt about our ability to continue as a going concern. In addition, we also noted that changing circumstances may cause us to expend cash significantly faster than currently anticipated or planned, and that we may need to spend more cash than expected because of circumstances beyond our control that impact the broader economy such as periods of inflation, supply chain issues, the continuation of the COVID-19 pandemic and international conflicts (e.g., the conflict between Russia and Ukraine).

To address our need for liquidity and capital to fund our planned operations, we entered into financing transactions on September 9, 2022 to raise up to approximately $5.3 million in the aggregate of additional capital, as discussed in Proposal One and Proposal Two below. In the absence of our Company completing these financing transactions or substantial revenue growth from our commercialization efforts, there will be substantial doubt about our ability to continue as a going concern within one year after June 30, 2022, and we will be required to scale back or terminate operations and/or seek protection under applicable bankruptcy laws. For additional information regarding our capital and liquidity situation, please read our June 2022 Form 10-Q on file with the SEC. See “Where You Can Find More Information” on page 32.

We expectProposal One (The Company Guide Proposal) (page 13)

Summary of Financing Transactions

As more fully described in Proposal One in this Proxy Statement, on September 9, 2022, we entered into agreements relating to grow commercial sales of both Avenova and DERMAdoctor branded products through an expansion of domestic and international market penetration, with a particular focus on online channels, and the development of new product offerings under both brand names.

following private financing transactions:

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Completed2022 Private Placement. A private placement transaction with institutional accredited investors (the “2022 Private Placement”) to sell, pursuant to the DERMAdoctor AcquisitionSecurities Purchase Agreement, dated September 9, 2022 (the “Securities Purchase Agreement”), Company units (“Units”) that will consist of (i) a newly designated Series C Non-Voting Convertible Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), (ii) a new short-term Series A-1 warrant to purchase Common Stock (“Short-Term Warrants”), and (iii) a new long-term Series A-2 warrant to purchase common stock (“Long-Term Warrants” and, together with the Short-Term Warrants, the “2022 Warrants”). We expect to close the 2022 Private Placement in November 2021.the fourth quarter of 2022, subject to receiving stockholder approval of Proposal One and Proposal Two and after satisfying other customary closing conditions as provided in the Securities Purchase Agreement. Upon the closing of the 2022 Private Placement, we expect to receive gross proceeds of $3.3 million from the sale of the Units.

At the Special Meeting, we are asking stockholders to approve, in accordance with Sections 713(a) and 713(b) of the NYSE American Company Guide (the “Company Guide”), the issuance of an aggregate of 96,468,114 shares of Common Stock, subject to potential increase in the number of shares due to applicable anti-dilution adjustments, that will become issuable by the Company in connection with the Warrant Reprice Transactions and, if completed, the 2022 Private Placement as follows:

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Company 2021 full year net product revenuethe conversion of $8.4 million, which includes $0.6 million from3,250 shares of Series C Preferred Stock for 18,057,000 shares of Common Stock (subject to potential increase in the salenumber of DERMAdoctor products sinceshares due to applicable anti-dilution adjustments), the completionexercise of the DERMAdoctor Acquisition.

Gross profitLong-Term Warrants for 18,055,557 underlying shares of $5.6 millionCommon Stock (subject to potential increase in 2021, withthe number of shares due to applicable anti-dilution adjustments), and the exercise of the Short Term Warrants for 18,055,557 underlying shares of Common Stock (subject to potential increase in the number of shares due to applicable anti-dilution adjustments), all of which are contemplated to be issued and sold as provided in the Securities Purchase Agreement at the closing of the 2022 Private Placement. Upon the closing of the 2022 Private Placement, the shares of Series C Preferred Stock will be convertible into Common Stock and the 2022 Warrants will be exercisable into Common Stock, and such underlying shares of Common Stock will be registered by us for resale pursuant to a gross profit margin of 67.0% as compared to 60.0% in 2020.registration rights agreement that we will enter into at such closing.

For additional information about the Warrant Reprice Transactions and the 2022 Private Placement, please see “Proposal One: The Company Guide Proposal”.

The Compensation Committee (the “Reasons for Approval of Proposal One

Compensation CommitteeNYSE American Company Guide Requirements”). Since our Common Stock is currently listed on the NYSE American, we are required to comply with the continued listing rules of the Company Guide. Section 713(a) of the Company Guide requires stockholder approval in connection with any transaction, other than a public offering, involving the sale, issuance, or potential issuance, of common stock or securities convertible into common stock, equal to 20.0% or more of presently outstanding stock for less than the greater of book or market value (whichever is greater). Section 713(b) of the Company Guide requires stockholder approval of a transaction, other than a public offering, involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) when the issuance or potential issuance of additional shares may result in a change of control of the issuer. Since the aggregate number of shares of Common Stock underlying the Series C Preferred Stock (18,057,000 shares of Common Stock) and the 2022 Warrants (36,111,114 shares of Common Stock) following the closing of the 2022 Private Placement, the issuance of Common Stock underlying the Amended Warrants (30,825,000 shares of Common Stock) and the New Reprice Warrants (11,475,000 shares of Common Stock), will collectively represent 148% of the total number of shares of Common Stock currently outstanding, we are seeking approval under both Sections 713(a) and 713(b) of the Company Guide. Stockholder approval of Proposal One will constitute stockholder approval for purposes of Sections 713(a) and 713(b) of the Company Guide.

Required Pursuant to Our Financing Transaction Agreements. As a material condition of the Warrant Reprice Transactions and the 2022 Private Placement, we agreed to submit and recommend Proposal One and, as described below, Proposal Two to our stockholders. These contractual obligations address the Company’s obligation to satisfy the Company Guide requirement and for the Company to have a sufficient number of shares of Common Stock available for future issuance, as described under Proposal Two. Approval of Proposal One and Proposal Two will result in the restrictions on exercise under the Amended Warrants and the New Reprice Warrants no longer being effective. The Company’s Board of Directors (the “Board”) continues its historic practice of an annual performance incentive program, pursuantapproved the Warrant Reprice Transactions and the 2022 Private Placement and believes that satisfying our contractual obligations in those transactions by submitting Proposal One to which each Company executive may earn an annual performance bonus, tied to a percentage of his or her base salary. The Compensation Committee has the sole discretion to pay any portion of, or the entire, annual performance bonusstockholders for their approval at this Special Meeting is in the formbest interests of equity compensation.our Company and our stockholders.

Consequences of the Warrant Reprice Transaction and the 2022 Private Placement

Upon stockholder approval of Proposal One and Proposal Two, we will be able to close the 2022 Private Placement, which provides for the issuance of the Series C Preferred Stock and the 2022 Warrants and the Amended Warrants, and the New Reprice Warrants will become exercisable, resulting in a potential issuance of up to 96,468,114 shares of Common Stock or 148% of Common Stock currently outstanding as of the Record Date. If this occurs, it would result in significant dilution in ownership interests and voting rights to our stockholders. As a result of such annual performance incentive program, our practicethe consummation of issuing equity awards upon hire and/or as a partthe Warrant Reprice Transaction and the reduction of the exercise price of the Amended Warrant and the exercise price of the New Reprice Warrants, the anti-dilution protections of our employment arrangements,existing Series B Non-Voting Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), automatically adjusted the conversion price of the Series B Preferred Stock, which was $0.40 into 2,500 shares of Common Stock to be adjusted downward to now be $0.18 into 5,556 shares of Common Stock. Therefore, based on the 11,620 shares of Series B Preferred Stock currently outstanding there are an additional 35,510,720 shares of Common Stock issuable upon conversion, which resulted in significant dilution to our executives’ annual total compensationstockholders.

If either Proposal One or Proposal Two is variablenot approved by stockholders at the Special Meeting, then we will not be able to close the 2022 Private Placement and based upon their individual performanceraise additional capital for our Company, and the Amended Warrants and the New Reprice Warrants will not be exercisable and will remain subject to the exercise restrictions set forth in such warrants. In addition, the terms of the Securities Purchase Agreement and the Reprice Letter Agreements require us to continue to seek stockholder approval every four months until such proposals are approved.Also, if Proposal One and Proposal Two are not approved by stockholders, pursuant to the Securities Purchase Agreement, then NovaBay will be subject to restrictions on its ability to raise capital using Common Stock and Common Stock equivalents and incurring indebtedness, until such approvals are obtained, unless the Securities Purchase Agreement is terminated.

Vote Required and Other Matters

Stockholder approval of Proposal One requires a “FOR” vote from the holders of a majority of the shares of Common Stock present or represented and entitled to vote at the Special Meeting.

It is important to understand that we are not seeking stockholder approval of, and you are not being asked to vote on, the Warrant Reprice Transactions (which have already been completed) or the issuance of the Amended Warrants and the New Reprice Warrants (which have already been issued). In addition, although we committed, in connection with the Warrant Reprice Transactions, to seek stockholder approval of the Reverse Stock Split, as well as any approvals as may be required by the Company’s performance.Company Guide, and such approvals are conditions to the closing of the 2022 Private Placement, you are not being asked to approve the closing of the 2022 Private Placement or the issuance of the Units (including the Series C Preferred Stock and the 2022 Warrants). Instead, we are seeking your approval of the issuance of shares of Common Stock underlying the Amended Warrants, the New Reprice Warrants, the Series C Preferred Stock and the 2022 Warrants.

We implemented a stockholder advisory vote on executive compensation (commonly referred to as the “Say-on-Pay” proposal) beginning at our 2013 Annual Meeting and every three years thereafter, which gives stockholders the opportunity to endorse or not endorse the Company’s named executive compensation program. At the Company’s 2019 Annual Meeting, our stockholders voted to continue conducting its Say-on-Pay vote every three years, and approximately 99.5% of the votes cast on such proposal were voted in favor of the Say-on-Pay proposal. We will conduct our next vote on the frequency of the Say-on-Pay proposal at our 2025 Annual Meeting of Stockholders.

NovaBay has a longstanding commitment to effective governance of its business and affairs for the benefit of stockholders, including through the below highlighted measures.Proposal Two (The Reverse Stock Split Proposal) (page 19)

Board Leadership StructureReasons for Approval of Proposal Two

Required Pursuant to Our Board leadership structure currently consistsFinancing Transaction Agreements. As a material condition of the Warrant Reprice Transactions and the 2022 Private Placement, we agreed to call the Special Meeting within 75 days to seek stockholder approval of an independent Chairmanamendment to our Amended and Restated Certificate of Incorporation, as amended (“Certificate of Incorporation”), to effect a reverse stock split of all of our Common Stock issued and outstanding or held in treasury at a ratio of not less than 1-for-10 and not more than 1-for-35 (each 10 to 35 shares, as the case may be, of Common Stock will be combined to become one share of Common Stock without change to the number of authorized shares of Common Stock of the BoardCompany) (the “ChairmanReverseStockSplit”) and independent committees. The Chairman performs all duties and has all powers commonly incident to the office of Chairman of the Board, including presiding at all meetings of the Board. In March 2019, the Board nominated Paul E. Freiman to serve as Chairman due to his service on the Company’s Board since May 2002 and his prior position as the Board’s Lead Independent Director. Since this date, Mr. Freiman has and continues to serve as our Chairman..

Beginning in August 2020, Justin M. Hall,Maintain Compliance with NYSE American Continued Listing Requirements. We are also seeking approval of Proposal Two so that the Company’s Chief Executive Officer, General Counsel and Chief Compliance Officer, was electedCompany will continue to servecomply with the continued listing rules of the NYSE American under the Company Guide. Our Common Stock is listed on the Board.NYSE American under the symbol “NBY.” In his executive officer role, Mr. Hall has responsibility fororder to maintain continued listing on the managementNYSE American, among other requirements, our Common Stock must maintain an average minimum closing stock price of $0.20 over any 30-day consecutive trading period, with $0.20 being the current NYSE American internal precedent threshold of what the NYSE American considers to be a “low price per share” and controlconstitute “low selling price issues” of the day-to-day business and affairsissuer pursuant to Section 1003(f)(v) of the Company Guide.

As of September 16, 2022, our 30-day average closing stock price was $0.22 per share, which is above the $0.20 “low price per share” minimum threshold. However, our closing stock price has dropped below $0.20 per share on individual days in the month of September 2022, including a price of $0.14 as well as general supervisionof September 16, 2022. Pursuant to the Warrant Reprice Transactions, the exercise price of the Company’s executives, employeesAmended Warrants was reduced to, and agents. Given Mr. Hall’s tenurethe exercise price of the New Reprice Warrants is, $0.18 per share. The Board expects that the Reverse Stock Split will increase the market price of Common Stock so that the Company will be able to satisfy the continued listing requirements of the NYSE American for the foreseeable future, although the Company cannot assure that it will be able to do so.

Additional Authorized Common Stock. Due to the number of shares of Common Stock that we will be required to issue if all of the Amended Warrants and New Reprice Warrants in the Warrant Reprice Transactions are exercised and the Series C Preferred Stock and the 2022 Warrants to be issued in the 2022 Private Placement are converted or exercised, as the case may be, then we will not have a sufficient number of shares of Common Stock to issue upon exercise and/or conversion of these Company securities. If Proposal Two is approved by stockholders and the Board determines to effect the Reverse Stock Split, the number of authorized shares of Company capital stock, consisting of 150,000,000 authorized shares of Common Stock and 5,000,000 authorized shares of preferred stock, will remain unchanged. As a result of there being no change to the number of shares of our authorized capital stock in connection with the Company beginningReverse Stock Split, the number of authorized shares of Common Stock that will be available for future issuance will increase significantly. Therefore, the Reverse Stock Split will  provide for a sufficient number of authorized shares under our Certificate of Incorporation in 2013order to permit the issuance of shares of Common Stock upon the exercise of the Amended Warrants and his vast knowledgethe New Reprice Warrants and upon conversion of its operations, the Board believes he offers invaluable business insight to its deliberations.Series C Preferred Stock and the exercise of the 2022 Warrants if the 2022 Private Placement closes. In addition, it will provide for additional shares of Common Stock that may be issued in any future offerings or potential strategic transactions that we may pursue.

The Board believes that separatingImprove the roles of ChairmanMarketability and Chief Executive Officer enhances both the independenceLiquidity of the BoardCommon Stock and its effectivenessAppeal to a Broader Range of Investors and Generate Greater Investor Interest. We also believe that the expected increased market price of our Common Stock resulting from the Reverse Stock Split will improve the marketability and liquidity of our Common Stock and will encourage interest and trading in discharging its responsibilitiesour Common Stock. A Reverse Stock Split could allow a broader range of institutions to invest in our Common Stock, potentially increasing the liquidity of our Common Stock, and that NovaBay is currently best servedmay also help increase analyst and broker interest in our Common Stock as their policies can discourage them from following or recommending companies with an independent Chairman.low stock prices. However, the market price of our Common Stock will also be based on performance of the Company and other factors, some of which are unrelated to the number of shares outstanding.

Board CommitteesFor additional information, see “Reasons for the Reverse Stock Split” under Proposal Two below for addition reasons and information.

The three (3) standing committees established by the Board meet on a regular basis and operate under written charters approved by the Board. Each committee performs an annual self-evaluation to determine whether the committee is functioning effectively and fulfilling its duties as prescribed by its charter. All directors serving on the Audit Committee of the Board (the “Audit Committee”), the Compensation Committee and the Nominating and Corporate Governance Committee (the “N&CG Committee”) are independent, and each committee has the ability to hire and terminate its own outside advisors. A copy of each committee’s charter is available on the Corporate Governance section of our website at www.novabay.com.

Board Composition and Diversity

Our Board seeks directors with a broad diversity of experience, professions, skills, geographic representation and backgrounds as well as gender and racial/ethnic diversity that will enhance the quality of the Board’s governance. Our directors’ expertise combines to provide a broad mix of skills, qualifications and proven leadership abilities. This N&CG Committee regularly identifies individuals who have expertise that would complement and enhance the current Board’s skills and experience. In addition, as part of our stockholder engagement dialogue, we routinely ask our investors for input regarding director recommendations.

 

Other Governance Practices

In January 2022, the Board increased the number of directors from six (6) to eight (8) to expand the range of talents and perspectives on the Board.

The Board reflects a range of talents, ages, skills, diversity, and expertise.

Each director attended over 75% of applicable Board/Committee meetings in fiscal year 2021.

The Board conducts an annual evaluation of the CEO.

The directors participate in an annual evaluation of the full Board and each committee on which they serve, in order to assess the performance and effectiveness of the Board and its committees. The responses and comments are presented to, and discussed with, the Board and each committee of the Board.

No stockholder rights plan or “poison pill” has been adopted.

Corporate Governance Policies

NovaBay has established Corporate Governance Guidelines, as routinely reviewedBackground, Process and updated by the N&CG Committee, to maintain effective and appropriate standardsEffects of corporate governance. We have also established a Code of Ethics and Business Conduct (the “Code of Ethics”) that establishes standards of conduct and expectations for our employees and the overall manner in which we conduct business. The Code of Ethics, along with our other policies and business standards and our overall risk and compliance programs, are components of mitigating the risks associated with the operation of our business. The full text of our Code of Ethics is available on the Corporate Governance section of our website at www.novabay.comReverse Stock Split.

NovaBay also maintains an Insider Trading Policy. Pursuant to the Company’s Insider Trading Policy, the Company considers it improper and inappropriate for any employee, officer or director of the Company to engage in short-term or speculative transactions in the Company’s securities. The Insider Trading Policy specifically prohibits directors, officers and other employees from engaging in short sales, margin accounts, pledging or hedging transactions of the Company’s securities. To the Company’s knowledge, each of the NEOs (as defined below) and directors complied with the Insider Trading Policy during fiscal year 2021.

Stockholder Proposals at the 2022 Annual Meeting

Election of Directors (Proposal One)

You will find important information in the Proxy Statement about the qualifications and experience of each of the director nominees listed below whom you are being asked to elect at the 2022 Annual Meeting. The N&CG Committee performs an annual assessment to evaluate whether each of NovaBay’s directors has the skills and experience to oversee the Company effectively. All of our directors, including the director nominees listed below, have demonstrated that they have proven leadership ability, sound judgment, integrity and a commitment to the success of our Company.

Director Nominees	Director Since	Age	Independent	Principal Occupation	NovaBay Board Committees
Paul E. Freiman	2002	87	Yes	Independent Pharmaceutical Professional Consultant	Compensation (Chair), Audit and N&CG
Swan Sit	2019	44	Yes	Independent Business Consultant	Audit, Compensation and N&CG

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Our Board recommends unanimously that you vote “FOR” the two (2) Class III director nominees listed above.

Approval of Executive Compensation (Proposal Two)

Our Board is requesting stockholder approval of an advisory, non-binding resolution to approve the Company’s executive compensation as described in this Proxy Statement. The Board and the Compensation Committee value the opinions of the Company’s stockholders and, based on the outcome of this vote, will consider stockholders’ concerns regarding executive compensation, if any, and evaluate whether any action is necessary to address those concerns.

Ratification of the Selection of the Independent Registered Public Accounting Firm (Proposal Three)

 

The Audit CommitteeBoard has appointed WithumSmith+Brown, PC (“Withum”)unanimously approved resolutions to (i) effect a reverse split of all of our outstanding shares of Common Stock or held in treasury by a ratio of not less than 1-for-10 and not more than 1-for-35 (each 10 to 35 shares of Common Stock, as the Company’s independent registered public accounting firmcase may be, shall be combined to become 1 share of Common Stock) that will be effected by amending our Certificate of Incorporation and (ii) directing that a proposal be submitted to our stockholders at the Special Meeting for 2022. While we are not requiredthe prior approval of the Reverse Stock Split, which proposal has been submitted at the Special Meeting as Proposal Two. The proposed Reverse Stock Split is a contractual commitment the Company made as part of the Warrant Reprice Transactions and as a condition to close the 2022 Private Placement.

If Proposal Two is approved by our stockholders, the Board will have stockholders ratifysole discretion pursuant to Section 242(c) of the selection of WithumDelaware General Corporation Law to elect, as it determines to be in the Company’s independent auditor, we are doing so because we believe it is good corporate practice. Ifbest interests and without further action by our stockholders, dowhether or not ratifyand when to effect the selection,Reverse Stock Split, or to abandon it. The Company reserves the Audit Committee will reconsider the appointment, but may nevertheless retain Withum as the Company’s independent auditor. Even if the selection is ratified, the Audit Committee may, at its discretion, direct the appointment ofright to abandon a different independent registered public accounting firmreverse stock split without further action by our stockholders at any time duringbefore the yeareffectiveness of the filing with the Secretary of the State of Delaware of a Certificate of Amendment (the “Certificate ofAmendment”), even if the authority to effect a reverse stock split has been approved by our stockholders at the Special Meeting. By voting in favor of Proposal Two, you are expressly also authorizing the Board to delay, not to proceed with, and/or abandon, the Reverse Stock Split if it determinesshould so decide, in its sole discretion, that such changeaction is in the best interests of the Company and its stockholders.

 

Should the Board proceed with the Reverse Stock Split, the exact ratio shall be set at a whole number within the above range as determined by the Board in its sole discretion without further action by our stockholders. Proportional adjustments (i.e., in proportion to the reverse stock split ratio) will be made to the maximum number of shares issuable under, outstanding awards under, and other terms of our 2002 Stock Option Plan, 2005 Stock Option Plan, 2007 Omnibus Incentive Plan, and 2017 Omnibus Incentive Plan (collectively, the “Plans”), and the terms of the Company’s outstanding warrants to purchase Common Stock, including the Amended Warrants and the New Reprice Warrants, will also be proportionally adjusted. The Reverse Stock Split, if effected, would affect all of our holders of Common Stock, as well as all of our holders of Series B Preferred Stock, which are convertible into shares of Common Stock, uniformly. The Board believes that the availability of alternative Reverse Stock Split ratios will provide it with the flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for the Company and its stockholders.

By approving Proposal Two and if the Reverse Stock Split is made effective, then 150,000,000 authorized shares of Common Stock and 5,000,000 authorized shares of preferred stock under our Certificate of Incorporation will remain unchanged, which will result in the number of authorized shares of Common Stock that will be available for future issuance to increase significantly. If Proposal Two is approved by our stockholders and the Reverse Stock Split is effective, then these additional authorized shares of Common Stock will be available for issuance for any proper corporate purpose as determined by the Board, without further approval by the stockholders, except as required by law.

Certain Risks Associated with a Reverse Stock Split

There are certain risks associated with a reverse stock split, and we cannot accurately predict or assure that the Reverse Stock Split will produce or maintain the desired results, which include the following:

 

Submission of Stockholder Proposals/Nominations for 2023 Annual Meeting●

The proposed Reverse Stock Split, if effected, may not increase our stock price, and could lead to a decrease in our overall market capitalization.

 

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The proposed Reverse Stock Split, if effected, may decrease the liquidity of our Common Stock.

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If we do not obtain stockholder approval of the Reverse Stock Split at the Special Meeting, we may not be able to satisfy our obligations in connection with the Warrant Reprice Transactions and the 2022 Private Placement.

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The proposed Reverse Stock Split, if effected, may result in some stockholders owning “odd lots” that may be more difficult to sell or require greater transaction costs per share to sell.

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The proposed Reverse Stock Split, if effected, will result in a significant increase in our authorized Common Stock and may result in future dilution to our stockholders.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Proxy Statement and documents referenced herein contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended must(the “Exchange Act”), including, but not limited to, statements that are based upon management’s current expectations, assumptions, estimates, projections and beliefs, including statements about the commercial progress and future financial performance of the Company, as well as matters relating to the Warrant Reprice Transactions, the 2022 Private Placement, Proposal One (the Company Guide Proposal) and Proposal Two (the Reverse Stock Split Proposal). The use of words such as, but not limited to, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” and similar words or expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements regarding the financial and business impact and effect of the completed Warrant Reprice Transactions, the expected timing of, our ability to complete, and impact of the 2022 Private Placement and the Reverse Stock Split, our partnerships, and any future revenue that may result from selling the Company’s products, as well as the Company’s expected future financial results. These statements involve risks, uncertainties and other factors that may cause actual results or achievements to be receivedmaterially different and adverse from those expressed in or implied by usthese forward-looking statements. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. 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 Proxy Statement, are detailed in the Company’s latest Form 10-K, subsequent Forms 10-Q and/or Form 8-K filings with the U.S. Securities and Exchange Commission (the “SEC”), especially under the heading “Risk Factors.” The forward-looking statements in this Proxy Statement and documents referenced herein 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 November 30, 2022. Notice of stockholder proposals to nominate a person for election as a director or to introduce an item of business at the 2023 annual meeting of stockholders outside Rule 14a-8 must be received by us no earlier than January 11, 2023 and no later than February 10, 2023.law.

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2000 Powell Street, Suite 1150

Emeryville, California 94608

This proxy statement (the “(“Proxy Statement”), ourthe accompanying Notice of 2022 Annualthe Special 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 2022 AnnualSpecial Meeting of Stockholders to be held on Wednesday, May 11,Thursday, November 10, 2022 (the “AnnualSpecial Meeting”), and at any adjournment or postponement of the AnnualSpecial Meeting. The AnnualThis Special Meeting will be held at 11:00 a.m. Pacific Timeand in line with prior practice, will be a virtual meeting of stockholders. You will be able to participate in the 2022 AnnualSpecial Meeting, vote, and submit your questions during the meeting via live webcast by visiting www.virtualshareholdermeeting.com/NBY2022.NBY2022SM. You must have your 16-digit control number on your proxy card to enter and participate in the virtual meeting. This Proxy Statement and the proxy card are being made available over the Internet or delivered by mail on or about MarchSeptember 30, 2022, to stockholders of record as of March 16, 2022.September 13, 2022 (the “Record Date”).

Except where specifically noted, the following information and all other information contained in this Proxy Statement does not give effect to the proposed Reverse Stock Split described in Proposal Two, beginning on page 19 of this Proxy Statement.

The three specific proposals to be considered and acted upon at the AnnualSpecial Meeting are summarized in the Notice of Special Meeting and the Summary of the Proxy Statement and are described in more detail below and in the description of each of the three proposals that has been included elsewhere in this Proxy Statement.

We are pleased to offer our stockholders the convenience of notice and access to our electronic Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”) and the opportunity to vote online. This delivery method also helps NovaBay reduce the mailing of paper copies of our proxy materialsmaterials. By participating in the “notice and Annual Report.access” process, we save printing and mailing expenses and reduce the environmental impact of the Special Meeting. Pursuant to rules adopted by the U.S. Securities and Exchange Commission (the “SEC,”), we are permitted to furnish proxy materials, including this Proxy Statement, to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. Consequently, our stockholders generally will not receive paper copies of our proxy materials unless they request them. them, or unless we elect to send them to stockholders.

Beginning on or about MarchSeptember 30, 2022, we will send to our stockholders of record a Notice of Internet Availability (the “Availability Notice”) containing instructions on how to access this Proxy Statement our Annual Report and proxy card via the Internet and vote online. As a result, you will not receive a printed copy of the proxy materials in the mail unless you request a copy.copy, or unless we elect to send a printed copy to you. All stockholders will have the ability to access the proxy materials on a website referred to in the Availability Notice and may request a printed set of the proxy materials free of charge by mail or electronically from such website. If you would like to receive a printed set of our proxy materials, you should follow the instructions for requesting such materials included in the Availability Notice. By participating in the Availability Notice process, we save printing and mailing expenses and reduce the environmental impact of our Annual Meeting.

As permitted by Delaware law and our Amended and Restated Bylaws (the “Bylaws”), the AnnualSpecial Meeting will be held solely as a virtual meeting live via the Internet. You will be able to attend the AnnualSpecial Meeting via live webcast by visiting NovaBay’sour virtual meeting website (www.virtualshareholdermeeting.com/NBY2022)NBY2022SM) at the meeting time. Upon visiting the meeting website, you will be prompted to enter your 16-digit control number provided on your Availability Notice or your proxy card.card if you receive proxy materials by mail. Your unique control number allows us to identify you as a stockholder and will enable you to securely log on, vote and submit questions during the AnnualSpecial Meeting on the meeting website.

Shares of which you are the beneficial owner but not the stockholder of record also may be voted electronically during the AnnualSpecial Meeting if you have a 16-digit control number. If there is no 16-digit control number included on your instructions, please refer to the information provided by your broker, bank or other holder of record for voting information and/or instruction on how to attend the AnnualSpecial Meeting.

Even if you plan to attend the AnnualSpecial Meeting virtually, NovaBay recommendswe recommend that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the AnnualSpecial Meeting.

The record dateRecord Date for determining those stockholders who are entitled to notice of, and to vote at, the AnnualSpecial Meeting has been fixed as March 16, 2022 (“Record Date”).September 13, 2022. Only stockholders of record at the close of business on the Record Date are entitled to notice of, and to vote at, the AnnualSpecial Meeting and any adjournment or postponement thereof. Each stockholder is entitled to one (1) vote for each share of our common stockCommon Stock held by such stockholder as of the Record Date. As of the Record Date, 51,018,364 shares of our common stock were outstanding, and 12,570 shares of our Series B Non-Voting Convertible Preferred Stock (the “Preferred Stock”) were outstanding. The holders of the Series B Preferred Stock have no voting rights for any of the ProposalsProposal One, Proposal Two or Proposal Three, and therefore will not vote at the AnnualSpecial Meeting. As of the Record Date, 64,988,364 shares of Common Stock were outstanding, and 11,620 shares of Series B Preferred Stock were outstanding.

The presence at the AnnualSpecial Meeting, either in person or by duly authorized proxy, of holders of a majority of the voting power of all the outstanding shares of our Common Stock entitled to vote will constitute a quorum for the transaction of business at the AnnualSpecial Meeting. Stockholders who log on and vote at our virtual meeting of stockholders with their 16-digit control number (which is provided on your Availability Notice or proxy card) are considered present in person at the meeting. Abstentions are counted as present for purposes of determining the presence of a quorum. Shares of our common stock that are represented by broker non-votes will not be counted as shares present for purposes of determining the presence of a quorum at the Special Meeting.

A broker non-vote occurs when the broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because such broker, bank or other nominee does not have discretionary voting power to vote on that proposal without specific voting instructions from the beneficial owner. Proposal One and Proposal Two described in this Proxy Statement are non-discretionary items, and Proposal Three in this Proxy Statement is a discretionary item. If a quorum is not present, the AnnualSpecial Meeting will be adjourned or postponed in order to permit further solicitation of proxies until a quorum is obtained.

All votes will be tabulated by the inspector of election appointed for the AnnualSpecial Meeting, who will separately tabulate “FOR” votes, “AGAINST”affirmative and negative votes, abstentions and broker non-votes.

Broker non-votes and votes marked “ABSTAIN” will not be counted towards the tabulation of votes cast on the proposal presented to the stockholders.

For Proposal One, a stockholder may vote “FOR” the election of any one of the Class III director nominees proposedVotes Generally.  Votes will be counted by the Boardinspector of election appointed for the Special Meeting, who will separately count, for each proposal, votes “FOR” and “Against,” abstentions, and, if applicable, broker non-votes.

Abstentions and Broker Non-Votes.  Abstentions will count towards the quorum. Shares constituting broker “non-votes” are not counted or “WITHHOLD” authoritydeemed to vote for one or more of the proposed nominees. In accordance with our Bylaws, as amended (“Bylaws”), and as permitted under Delaware law, our directors are elected by a plurality of votes represented and entitled to vote at a meeting of stockholders. Accordingly, for our election of Class III directors, the two (2) director candidates nominated by our Board who receive the highest number of “FOR” votes of our common stock,be present or represented by proxy duly authorized and entitled to votefor the purpose of determining whether stockholders have approved a matter or, unless the beneficial holder has provided voting instructions on at least one proposal, whether a quorum exists at the Annual Meeting, will be elected. “WITHHELD” votes and broker non-votes will have no effect.

For Proposal Two, to approve, on an advisory basis, the compensation of NovaBay’s named executive officers, as disclosed in this proxy statement requires “FOR” votes from a majority of the shares present or represented by proxy duly authorized and entitled to vote at the AnnualSpecial Meeting. Abstentions will have the same effect as “AGAINST” votes and broker non-votes will have no effect.

For Proposal Three, the ratification of the appointment by our Audit Committee of WithumSmith+Brown, PC as our independent registered public accounting firm for the fiscal year ending December 31, 2022 will reflect stockholder approval of such advisory vote if we receive “FOR” votes from a majority of the shares present or represented by proxy duly authorized and entitled to vote at the Annual Meeting. Abstentions will have the same effect as “AGAINST” votes and we do not expect to have any broker non-votes on this proposal.

Required Vote.  The following table summarizes the minimum vote needed to approve each proposal and the effect of abstentions and broker non-votes.

As described under “Proposal One: The Company Guide Proposal”, each of the warrant holders that participated in the Warrant Reprice Transactions signed and delivered a voting commitment letter (referred to herein as “Participant Voting Commitment”) that provides for such participating warrant holder to vote its shares of Common Stock to approve Proposal One and Proposal Two. In connection with the Warrant Reprice Transactions, the Company also obtained voting commitments from its executive officers, directors, more than 10% stockholders and certain other significant stockholders similar to the Participant Voting Commitments to vote in favor of Proposal One and Proposal Two. As a result of having these voting commitment letters, we expect a significant number of shares of Common Stock, up to approximately 33% of the outstanding Common Stock as of the Record Date, to support Proposal One and Proposal Two; however, such number of shares will not be sufficient to approve these proposals.

It is important to understand that we are not seeking stockholder approval of, and you are not being asked to vote on, the Warrant Reprice Transactions (which have already been completed) or the issuance of the Amended Warrants and the New Reprice Warrants (which have already been issued). In addition, although we committed, in connection with the Warrant Reprice Transactions, to seek stockholder approval of the Reverse Stock Split, as well as any approvals as may be required by the Company Guide, and such approvals are conditions to the closing of the 2022 Private Placement, you are not being asked to approve the closing of the 2022 Private Placement or the issuance of the Units (including the Series C Preferred Stock and the 2022 Warrants). Instead, we are seeking your approval of the issuance of shares of Common Stock underlying the Amended Warrants, the New Reprice Warrants, the Series C Preferred Stock and the 2022 Warrants.

Stockholder of Record; Shares Registered in Your Name

If you are a stockholder of record and do not vote by completing your proxy card, by telephone, or over the Internet or by completing and returning your proxy card,in person at the Special Meeting, your shares will not be voted.

Beneficial Owner; Shares Registered in the Name of a Broker, Bank or Other Nominee

If you are a beneficial owner and do not instruct your broker, bank or other nominee how to vote your shares, the question of whether your broker, bank or other nominee will still be able to vote your shares depends on whether the New York Stock Exchange (“NYSE”) deems the particular proposal to be a “routine” matter. Brokers, banks or other nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management supported. Proposal One (the Company Guide Proposal) is believed to be a “non-routine” matter. Accordingly, your broker, bank or other nominee may not vote your shares on Proposal One orwithout voting instructions from you. Proposal Two but(the Reverse Stock Split Proposal) and Proposal Three (the Adjournment Proposal) are believed to be “routine” matters. Accordingly, your broker, bank or other nominee may vote your shares on Proposal Three.

such proposals even if you do not give it instructions.

If you were a registered stockholder of record on the Record Date, you may vote your shares at the virtual AnnualSpecial Meeting, www.virtualshareholdermeeting.com/NBY2022,NBY2022SM, which contains voting instructions. You may also vote your shares by telephonevisiting www.proxyvote.com or by calling (toll free within the U.S.United States and Canada) 1-800-690-6903 and following the voting instructions read to you by the automated operator. Internet and telephone voting facilities for stockholders of record will be available 24 hours a day beginning at 12:01 a.m. Pacific Time on MarchSeptember 30, 2022. Internet and telephone voting will close promptly at 11:59 p.m. PacificEastern Time on Tuesday, May 10,Wednesday, November 9, 2022.

After this,that time, you will only be able to vote by attending the AnnualSpecial Meeting via live webcast and voting at the AnnualSpecial Meeting. The meeting starts at 11:00 a.m. (Pacific Time).Pacific Time. After voting is closed during the AnnualSpecial Meeting, you will no longer have the ability to vote your shares for the specific proposals considered at the AnnualSpecial Meeting.

Upon visiting the meeting website or calling the call-in telephone line,number provided above, you will be prompted to enter your 16-digit control number provided to you on your proxy card. Your unique control number allows us to identify you as a stockholder and will enable you to securely cast votes.

If you are a registered stockholder as of the Record Date and hold your shares in more than one fund or other affiliated investment vehicle, you will receive separate voting credentials for each such entity that is a record holder of shares of our Common Stock. Please be sure to log on separately for each fund in order to cast all votes that you are entitled to cast at the Annual Meeting.

If you receive proxy materials by mail or if you request paper copies of the proxy materials, you can vote by mail by marking, dating, signing and returning your proxy card in the postage-paid envelope. Further instructions on how to vote by mail are included on the proxy card. Only proxy cards that have been signed, dated, and timely returned will be counted towards the quorum and entitled to vote.

If your proxy card does not specify how the shares represented thereby are to be voted, the proxy will be voted “FOR” the election of the directors proposed by the Board under Proposal One, and “FOR” the approval of ProposalsProposal Two and Proposal Three, as described in the Notice and this Proxy Statement. The proxy card also grants the proxy holder discretionary authority to vote on any other business that may properly come before the Annual Meeting. We have not been notified by any stockholder of his or her intent to present a stockholder proposal at the Annual Meeting.

If your shares are held in your name, you may revoke or change your vote at any time before the AnnualSpecial Meeting by (i) submitting another proxy on a later date on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the AnnualSpecial Meeting will be counted); or, (ii) attending the AnnualSpecial Meeting live via webcast and voting during the meeting (simply attending the virtual meeting will not, by itself, revoke your proxy);, or (iii) by filing a notice of revocation or submitting another signed proxy card with a later date with our Corporate Secretary, Mr. Justin Hall, Esq., at our principal executive offices at 2000 Powell Street, Suite 1150, Emeryville, California 94608. Unless so revoked, the shares represented by such proxies or voting instructions will be voted at the Annual Meeting and all adjournments or postponements of the Annual Meeting. Proxies solicited on behalf of the Board will be voted in accordance with the directions given.

NovaBayWe will bear the entire cost of proxy solicitation, including the costs of preparing, assembling, printing and mailing this Proxy Statement, the Availability Notice, the proxy card and any additional solicitation materials furnished to theour stockholders. Copies of these materials will be furnished to brokers, banks or other nominees holding shares in their names that are beneficially owned by others so they may forward these materials to such beneficial owners. In addition, we may reimburse such persons for their reasonable expenses in forwarding the solicitation materials to the beneficial owners. The original solicitation of proxies by mail may be supplemented by a solicitation by personal contact, telephone, facsimile, email or any other means by our directors, officers or employees. No additional compensation will be paid to these individuals for any such services.

Other than the proposals described In addition, we have engaged Alliance Advisors, LLC, to assist in the solicitation of proxies and provide related advice and informational support. For additional information about this engagement, please see “Method of Proxy Statement, the Board is not aware of any other business that will be presented for consideration at the Annual Meeting. If any other matters should be properly presented at the Annual Meeting or any adjournments or postponements of the Annual Meeting for action by stockholders, the person named in the form of proxy will vote the proxy, pursuant to the authority provided to him or her, in accordance with his or her best judgment on that matter.Solicitation” below.

PreliminaryWe expect to announce preliminary voting results will be announced at the AnnualSpecial Meeting. In addition, we expect that final voting results will be published infiled with the SEC on a current reportCurrent Report on Form 8-K that we expect to file within four (4) business days after the AnnualSpecial Meeting.

Our Certificate of Incorporation provides forMatters to be Considered a classified Board consisting of three (3) classes of directors, Class I, Class II and Class III, each with staggered three (3)-year terms. As a result, a portion of our Board will be elected at each year’ annual meeting. Our Board currently consists of eight (8) directors. At this year’s Annual Meeting, the current term of the Class III directors will expire and our stockholders will vote on the two Class III director nominees identified below.t the Special Meeting

Upon the recommendation of the Nominating and Corporate Governance (“N&CG”) Committee of the Board, our Board selected and approved Mr. Paul Freiman (“Mr. Freiman”) and Ms. Swan Sit (“Ms. Sit”) as nominees for election as Class III directors at this Annual Meeting to serve for a term of three (3) years, expiring at the 2025 Annual Meeting of Stockholders, until their successors are duly elected and qualified or until their earlier resignation or removal. Each nominee has agreed to serve if elected. Management has no reason to believe either of the nominees will be unable to serve. In the event either of the nominees named herein is unable to serve or declines to serve at the time of the Annual Meeting, the proxy holders will exercise discretionary authority to vote for substitutes. Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” the nominees named above.

On January 27, 2022, the Board expanded the size of the Board from six (6) directors to eight (8) directors. The Board filled the two new vacancies created by the expansion of the Board by appointing Dr. Audrey Kunin as a Class I director and Ms. Julie Garlikov (“Ms. GarlikovProposal One:”) as a Class II director. Also on January 27, 2022, director Xinzhou (Paul) Li, a Class II director, resigned from the Board, and the Board appointed Mr. Yongxiang (Sean) Zheng (“Mr. Sean Zheng”) to fill the vacancy as a Class II director created by the resignation of Mr. Li, effective the same day.

Mr. Mijia (Bob) Wu (“Mr. Wu”) and Dr. Yenyou (Jeff) Zheng (“Dr. Jeff Zheng”) have been designated as Class I directors whose terms expire at the 2023 Annual Meeting of Stockholders. Mr. Justin M. Hall (“Mr. Hall”), Ms. Garlikov and Mr. Sean Zheng have been designated as Class II directors whose terms expire at the 2024 Annual Meeting of Stockholders.

The names of our current directors and nominees, their ages and biographical information about them are as follows:

Class III Directors – Terms Expiring at the 2022 Annual MeetingThe Company Guide Proposal

Since January 2009, Mr. Freiman has been an independent pharmaceutical professional and consultant. Currently, he is also a board member of Chronix Biomedical Inc., a private molecular diagnosis company. Mr. Freiman’s prior experience includes serving as the president and chief executive officer of Neurobiological Technologies, Inc. (OTC: NTII) and a member of its board of directors from April 1997 until 2009. Mr. Freiman’s prior experience also includes serving as the former chairman and chief executive officer of Syntex from 1989 to 1994. He is credited with much of the marketing success of Syntex’s lead product, Naprosyn, and was responsible for moving the product to over-the-counter status, marketed as Aleve. Mr. Freiman served as chairman of the board of Neurotrope, Inc. (OTCBB: BLFL) from 2013 until August 2016. Mr. Freiman served as chairman of Penwest Pharmaceutical Co. (NASDAQ: PPCO) until 2010 and served on the board of directors of Otsuka American Pharmaceuticals, Inc. and Otsuka America, Inc. until 2011, NeoPharm, Inc. (NASDAQCM: NEOL) until 2010 and Calypte Biomedical Corporation (OTC: CBMC) until September 2009. Mr. Freiman also served on the board (including as chairman) of the Pharmaceutical Research and Manufacturers Association of America. He has also served on a number of industry task forces both domestically and internationally. Mr. Freiman received a B.S. in pharmacy from Fordham University and an honorary doctorate from the Arnold & Marie Schwartz College of Pharmacy.

Ms. Sit currently acts as an independent business consultant to various public and private companies. Ms. Sit also serves as a director of Edgewell Personal Care Company (NYSE: EPC) (since September 2020) and Far Niente Winery (since August 2020). She previously served as the Vice President of NA Digital Commerce Capabilities, Business Operations and Service and the Vice President of Global Digital Marketing of Nike, Inc. from 2018 to 2019. Prior to such position, Ms. Sit served as the Vice President of Global Digital of Revlon and Elizabeth Arden, Inc. from 2015 to 2017 and the Executive Director of Strategy and Planning, Online of The Estée Lauder Companies, Inc. Ms. Sit brings business experience including digital transformation experience supplemented by management consulting, brand management and advertising. Ms. Sit has built front-end consumer experiences across ecommerce, omnichannel, mobile, media, social, apps and innovation as well as integrated back-end operations. Ms. Sit received an MBA from Columbia Business School and a B.A. in Economics from Harvard University.

Class I Directors – Terms Expiring at the 2023 Annual Meeting

Dr. Audrey Kunin is the Chief Product Officer and a director of NovaBay. Dr. Audrey Kunin co-founded DERMAdoctor and served as the Chief Creative Officer of DERMAdoctor since March 2018 and as the Chief Executive Officer at its predecessor since 1998. Dr. Audrey Kunin graduated from Ohio State University in December 1980 and received her M.D. at the Medical College of Ohio in June 1985. She received her postgraduate training in Dermatology at the Medical College of Virginia after serving as Chief Resident in July 1989. She is a fellow of the American Academy of Dermatology and formerly served as an Assistant Clinical Instructor of Dermatology at the University of Kansas School of Medicine.

Since June 2008, Mr. Wu has been the Managing Director of China Kington (an affiliated entity of China Kington Investment Co. Ltd.), which has a long-standing relationship with NovaBay. Certain related-party transactions between the Company and China Kington are described in the “Certain Relationships and RelatedFinancing Transactions” section below and further historic transactions are described in the Company’s prior filings with the SEC. Concurrently, Mr. Wu serves as the Managing Director of Shanghai Ceton Investment Management Co. Ltd. From October 2013 until December 2021, he also served as a Non-Executive Director of China Pioneer Pharma Holdings Limited, an affiliate of one of the Company’s largest stockholders, Pioneer Pharma (Hong Kong) Company Ltd. Previously, Mr. Wu served as director at UBS AG, Hong Kong Branch, in 2007 and Vice President of BNP Paribas Hong Kong from 2005 to 2006. He was also the Assistant Vice President at ABN AMRO Bank (China) Co., Ltd. from 2002 to 2005. He holds an M.B.A. from Manchester Business School, University of Manchester, and an Executive M.B.A. from Cheung Kong Graduate School of Business.

Dr. Zheng currently serves as the Director of Business Development of, and as a broker with, Craft Capital Management LLC and has served in such positions since September 2019. Prior to that, Dr. Zheng served as the Director of Business Development of Spartan Securities Group, Ltd. from 2014 to August 2019. Dr. Zheng’s experience includes providing innovative financial solutions and consulting services for initial public offering underwriting and investment banking as well as corporate financing solutions with a particular focus on Chinese companies listed overseas. Dr. Zheng  previously served as a financial advisor for various Canadian public companies including: P & P Ventures Inc. (TSX-V: PPV.H) where he served as president and a director; Damon Capital Corp (TSX-V: DAM.H) where he served as Chief Financial Officer and a director; and Cantronic Systems Inc. (TSX-V: CTS) where he served as a director and chair of the audit committee. Dr. Zheng received a Ph.D. in physics from Flinders University of South Australia.

Class II Directors – Terms Expiring at the 2024 Annual Meeting

Mr. Hall currently serves as NovaBay’s Chief Executive Officer, General Counsel and Chief Compliance Officer and has served in such positions since June 2019. Mr. Hall served as the Company’s Interim President and Chief Executive Officer from March 2019 to June 2019 and as the Company’s Senior Vice President and General Counsel beginning in December 2015. Prior to this, he served as the Company’s lead in-house counsel beginning in February 2013. Prior to joining the Company, Mr. Hall worked as Corporate Counsel at Accuray Incorporated, a radiation oncology company, which he joined in October 2006, where he provided substantive legal advice on a broad range of complex legal matters with a focus on employment, corporate compliance, and corporate governance. Mr. Hall’s prior experience also includes serving as an investment advisor at Sagemark Consulting from 2000 to 2006, and a stockbroker at First Security Van Kasper from 1998 to 2001. Mr. Hall received a B.A. in Business Administration and Management from the University of California, San Diego, and a J.D. from the University of San Diego, School of Law.

Mr. Sean Zheng currently serves as the Managing Director of Q3 Medical Devices (Shanghai) Co. Ltd. Prior to joining Q3 Medical, Mr. Zheng held several leadership positions, including Managing Director of Boill Fund Management (HK) Co., Ltd. and Managing Director and Chief Executive Officer of Sprott- Zijin Mining fund, a JV fund between Zijin Mining Group and Sprott Asset Management LP. From 2007 to 2011, Mr. Sean Zheng served as a director of Dingtian Asset Management. Mr. Zheng has also been a CFA chartered holder since 2006. Mr. Zheng graduated from Renmin University of China in 1992 and holds a B.S degree in Commodity Science. He received his MBA from the University of New South Wales in 2002 and earned a master’s degree of EMBA from China Europe International Business School (CEIBS) in 2010.

Ms. Garlikov is the Vice President of Marketing of GRAIL, LLC, a biotechnology and pharmaceutical company. She has served in this position since November 2020. Ms. Garlikov has over 25 years of experience in marketing, which includes serving as the Chief Marketing Officer at New Age and Shaklee, as well as senior marketing positions at Rodan & Fields, Obagi Medical and Nuvesse Skin Therapies. Julie is a classically trained CPG marketer who gained her consumer experience at Procter & Gamble, Johnson & Johnson and PepsiCo. She has deep expertise in both health and beauty and eyecare products, as well as in DTC advertising and digital demand generation. Ms. Garlikov has a Bachelors degree from the University of California, Berkley and a Masters degree in Business Administration from Columbia University.

ThereAt the Special Meeting, we are no family relationships among anyasking stockholders to approve, in accordance with Sections 713(a) and 713(b) of our directors, director nominees or executive officers, except Dr. Audrey Kunin, NovaBay’s Chief Product Officer and a director, is the spouse of Dr. Jeff Kunin, the President and Chief Executive Officer of DERMAdoctor, LLC.

Our Board has adopted a Code of Ethics and Business Conduct (the “Code of Ethics”) which applies to all directors, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) and employees. The full text of our Code of Ethics is available on the Corporate Governance section of our website at www.novabay.com. We intend to disclose future amendments to certain provisions of the Code of Ethics, and any waivers of provisions of the Code of Ethics required to be disclosed under the rules of the SEC, at the same location on our website.

Our Board has determined that each of Mr. Freiman, Ms. Sit, Dr. Jeff Zheng and Ms. Garlikov satisfies the requirements for “independence” as defined in the NYSE American Company Guide, (the “the issuance of an aggregate of 96,468,114 shares of Common Stock, subject to potential increase in the number of shares due to applicable anti-dilution adjustments, which will be issuable by the Company Guide”). The remaining non-independent directors do notin connection with our Warrant Reprice Transactions (as described below) and, will not serve on any committees ofif closed, the Board as long as they are not independent.2022 Private Placement (as described below).

On September 9, 2022, we entered into written agreements relating to the following two private financing transactions:

Our Board has an Audit Committee, a Compensation Committee and an N&CG Committee. Each such committee has a written charter that is reviewed annually and revised as appropriate. A copy of each committee’s charter is available on the Corporate Governance section of our website at www.novabay.com.

The table below showsSince our Common Stock is currently listed on the number of Board and Committee meetings held in 2021.

DirectorsNYSE American, we are expectedrequired to attend Board meetings, our annual stockholders’ meeting andcomply with the meetingscontinued listing rules of the committees on which they serve. In 2021, no director attended fewerCompany Guide. Section 713(a) of the Company Guide requires stockholder approval in connection with any transaction, other than 75%a public offering, involving the sale, issuance, or potential issuance, of common stock or securities convertible into common stock, equal to 20.0% or more of presently outstanding stock for less than the greater of book or market value (whichever is greater). Section 713(b) of the Company Guide requires stockholder approval of a transaction, other than a public offering, involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) when the issuance or potential issuance of additional shares may result in a change of control of the issuer. Since the aggregate number of Boardshares of Common Stock underlying the Series C Preferred Stock (18,057,000 shares of Common Stock) and Committee meetingsthe 2022 Warrants (36,111,114 shares of Common Stock) following the closing of the Board2022 Private Placement, the issuance of Common Stock underlying the Amended Warrants (30,825,000 shares of Common Stock) and committees on which he or she served. Following allthe New Reprice Warrants (11,475,000 shares of Common Stock), will collectively represent 148% of the regularly scheduled 2021 Board meetings, the independent directors met in an executive session. During 2021, Mr. Freiman served as Chairmantotal number of shares of Common Stock currently outstanding, we are seeking approval under both Sections 713(a) and 713(b) of the Board.

NovaBay is committed to operating in a sustainable manner and being a responsible corporate citizen for the benefit of our consumers, our investors, the environment, and the communities in which we live and work. Consistent with our values and commitments, NovaBay has taken steps to further its environmental, social and governance (“ESG”) practice, including:

NovaBay and DERMAdoctor are strongly committed to conducting quality control and performance tests before products are marketed to ensure all products meet our high standards. Testing activities are performed by laboratories with ISO 17025 accreditation and FDA registration and no tests are performed on animals.

In the first half of 2020, we responded to the national need for protective personal equipment (“PPE”) by tapping into our international supply network and launching the sale of KN95 Masks and other PPE. In 2022, NovaBay has committed to donating 2.5 million KN95 protective masks to schools, youth groups and other charitable organizations.

We value our employees and suppliers and prioritize inclusivity, work ethic, collaboration, and a commitment to deliver quality results. In 2021, we continued to monitor and implement COVID-19 protocols for the safety of our employees and other stakeholders.

Board’s Leadership Structure. Mr. Freiman has served as the Board’s independent Chairman since March 2019.

Board’s Role in Risk Oversight. OneIn addition, as a material condition of the Board’s key functionsWarrant Reprice Transactions and the 2022 Private Placement, we agreed to submit and recommend this Proposal One and, as described below, Proposal Two to our stockholders. If we do not obtain stockholder approval of this Proposal One and Proposal Two at the Special Meeting, we have agreed to call a meeting of stockholders every four months thereafter to seek stockholder approval until stockholder approval is informed oversightobtained. These contractual obligations address the Company’s obligation to satisfy the Company Guide requirement and for the Company to have a sufficient number of NovaBay’s risk management process.shares of Common Stock available for future issuance, as described under Proposal Two. Approval of this Proposal One and Proposal Two will result in the restrictions on exercise under the Amended Warrants and the New Reprice Warrants no longer being effective. The Board doesapproved the Warrant Reprice Transactions and the 2022 Private Placement and believes that satisfying our contractual obligations in those transactions by submitting this Proposal One to stockholders for their approval at this Special Meeting is in the best interests of our Company and our stockholders.

It is important to understand that we are not seeking stockholder approval of, and you are not being asked to vote on, the Warrant Reprice Transactions (which have already been completed) or the issuance of the Amended Warrants and the New Reprice Warrants (which have already been issued). In addition, although we committed, in connection with the Warrant Reprice Transactions, to seek stockholder approval of the Reverse Stock Split, as well as any approvals as may be required by the Company Guide, and such approvals are conditions to the closing of the 2022 Private Placement, you are not being asked to approve the closing of the 2022 Private Placement or the issuance of the Units (including the Series C Preferred Stock and the 2022 Warrants). Instead, we are seeking your approval of the issuance of shares of Common Stock underlying the Amended Warrants, the New Reprice Warrants, the Series C Preferred Stock and the 2022 Warrants.

We previously disclosed that we issued (i) Common Stock purchase warrants to a limited number of accredited investors (the “2020 Investors”) in connection with our prior warrant reprice transaction that closed on July 23, 2020 (the “2020 Original Warrants”), and (ii) Common Stock purchase warrants to a limited number of accredited investors (the “2021 Investors”) in connection with our private placement financing transaction that closed on November 2, 2021 (the “2021 Original Warrants”). Prior to the completion of the Warrant Reprice Transactions, the 2020 Original Warrants had an aggregate of 6,898,566 underlying shares of Common Stock, exercisable at $1.65 per share, and the 2021 Original Warrants had an aggregate of 37,500,000 underlying shares of Common Stock, exercisable at $0.53 per share.

Reprice Letter Agreements

On September 9, 2022, certain of the 2020 Investors holding 2020 Original Warrants (the “2020 Participants”) entered into separate latter agreements with the Company (the “2020 Reprice Letter Agreements”) and all of the 2021 Investors holding 2021 Original Warrants (the “2020 Participants” and together with the 2020 Participants, the “Participants”) entered into separate letter agreements with the Company (the “2021 Reprice Letter Agreements” and, together with the 2020 Reprice Letter Agreements, the “Reprice Letter Agreements”) that provided for their respective warrants to be amended 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 also provide for a new restriction on exercise until the later of (i) six months from September 9, 2022 and (ii) the Stockholder Approval Date, except for an Initial Exercise (as described below).The Reduced Exercise Price of the Amended Warrants and the number of shares of Common Stock underlying the Amended Warrants will be adjusted to reflect the Reverse Stock Split if Proposal Two is approved and becomes effective.

Also pursuant to the Reprice Letter Agreements, (i) the 2020 Participants had the opportunity (but were not required) to elect to make a cash exercise of a portion of their Amended 2020 Warrants at the Reduced Exercise Price, which resulted in the exercise of an aggregate of 2,100,000 shares of Common Stock (the “2020InitialExercise”) and (ii) the 2021 Participants all agreed to exercise an aggregate of 9,375,000 shares, or 25% of the shares of Common Stock underlying their respective Amended 2021 Warrants, at the Reduced Exercise Price (the “2021 Initial Exercise” and, together with the 2020 Initial Exercise, the “Initial Exercise”). The Company received $2,065,500 in aggregate gross proceeds from the Initial Exercise.

In exchange, the Company issued to each 2021 Participant, as well as each 2020 Participant that participated in the 2020 Initial Exercise, a New Reprice Warrant to purchase a number of shares of Common Stock equal to 100% of the shares of Common Stock received by such Participant in its Initial Exercise. The form of New Reprice Warrants issued to all 2021 Participants (the “New 2021 Participant Warrants”) is substantially similar to the 2021 Original Warrants, and the form of New Reprice Warrants issued to the 2020 Participants that elected to make a 2020 Initial Exercise (the “New 2020 Participant Warrants” and, together with the New 2021 Participant Warrants, the “New Reprice Warrants”) is substantially similar to the 2020 Original Warrants. All of the New Reprice Warrants will be initially exercisable on the later to occur of (i) the six-month anniversary of the date of issuance and (ii) the Stockholder Approval Date. In addition, the New Reprice Warrants have a formal risk management committee, but rather administers this oversight function through various standing committeesterm of exercise of six years and an exercise price equal to $0.18, which exercise price and the number of underlying shares of Common Stock will be adjusted to reflect the Reverse Stock Split if Proposal Two is approved and becomes effective. The New Reprice Warrants are also subject to a provision prohibiting the exercise thereof to the extent that, after giving effect to such exercise, the holder of such Warrant (together with the holder’s affiliates, and any other persons acting as a group together with the holder or any of the Board that address risks inherentholder’s affiliates), would beneficially own in their respective areasexcess of oversight. Our Audit Committee is responsible for considering and discussing financial and enterprise risk exposures, including internal controls, and discusses with management, and the independent registered public accountants, our policies with respect to risk assessment and risk management, including risks related to fraud, liquidity, credit operations and regulatory compliance. In addition, under our whistleblower policy, employees wishing to report concerns4.99% or complaints they have related to accounting, auditing and internal controls submit such concerns in confidence, or anonymously if desired, to an outside administrator who forwards such complaints to our Audit Committee Chairman. Our Audit Committee monitors the effectiveness9.99% of the whistleblower policy. Our N&CG Committee monitors the effectiveness of our compliance and ethics policies, including whether they are successful in preventing illegal or improper liability-creating conduct, and our compliance with legal and regulatory requirements. Our Compensation Committee monitors NovaBay’s compensation policies to ensure that the compensation packages offered to our executive officers do not present such individuals with the potential to engage in excessive or inappropriate risk-taking activities.

Management is responsible for the day-to-day management of the risks that we face, while our Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board is responsible for satisfying itself that our risk management processes are adequate and functioning as designed. Our Board’s involvement in risk oversight includes receiving regular reports from members of management and evaluating areas of material risk, including operational, financial, legal, regulatory, strategic and reputational risks. As a smaller reporting company with a reasonably-sized Board, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters.

Annual Meeting Attendance. Weoutstanding Common Stock. The New Reprice Warrants do not have any preemptive rights or a formal policy regarding attendance by members of our Board at the annual meetings of stockholders; however, directors are encouraged to attend all such meetings. In 2021, allsix (6) of our directors then serving attended our 2021 Annual Meeting of Stockholders.

Director Selection. The N&CG Committee reviews the appropriate qualities and skills required of directors in the contextpreference upon any liquidation, dissolution or winding-up of the current Board composition. This includes an assessment of each candidate’s independence, personal and professional integrity, financial literacy or other professional or business experience relevant to an understanding of our business, ability to think and act independently and with sound judgment, and ability to serve our stockholders’ long-term interests. These factors, and others deemed appropriate by the N&CG Committee in contributing to our Board’s heterogeneity, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. As a result, the priorities and emphasis of the N&CG Committee and of the Board may change from time to time to take into account changes in business and other trends, rules and laws related to board criteria, and the portfolio of skills and experience of current and prospective directors. The N&CG Committee leads the search for and selects, or recommends that the Board select, candidates for election to the Board. Consideration of new director candidates typically involves a series of committee discussions, review of information concerning candidates and interviews with selected candidates. Candidates for nomination to our Board typically have been suggested by other members of the Board or by our executive officers or by our large stockholders or investment partners.Company.

From time to time, the N&CG Committee may engage the services of a third-party search firm to identify director candidates. The Board strives to achieve a membership of qualified individuals with a combination of qualities that best serves the Company’s needs. The N&CG Committee consults with the Board to determine the most appropriate mix of characteristics, skills and experiences for the Board as a whole to possess at any given time and will consider diversity in its process to the extent it deems appropriate. For example, the N&CG Committee took into account (1) gender diversity in its determination to recommend that Ms. Sit be appointed to our Board in 2019 and that Dr. Audrey Kunin and Ms. Garlikov be appointed to our Board in 2022 and (2) ethnic diversity in its determination to recommend that Mr. Wu be appointed to our Board in 2016, that Dr. Jeff Zheng and Ms. Sit be appointed to our Board in 2019 and that Mr. Sean Zheng be appointed to our Board in 2022.

To identify the best candidates for the Board’s needs, the N&CG Committee considers the following as the minimum qualifications a nominee must have:

experience at a strategic or policymaking level in a business, government, non-profit or academic organization;

be highly accomplished in his or her respective field, with superior credentials and recognition;

be well regarded in the community and possess a long-term reputation for the highest ethical and moral standards; In addition to entering into the Reprice Letter Agreements, each Participant also signed and delivered a Participant Voting Commitment to vote to approve this Proposal One and Proposal Two, and also entered into a Leak-Out Agreement, dated September 9, 2022, which agreements were effective only until September 13, 2022, the Record Date for the special meeting. Other Post-Closing Obligations and Anti-Dilution Adjustment of Series B Preferred Stock Resale Registration. Pursuant to the Reprice Letter Agreements, we are required to prepare and file a registration statement with the SEC that will cover the resale of all of the Common Stock underlying the New Reprice Warrants within 30 days of the Stockholder Approval Date. Voting Commitments. Each of the warrant holders that participated in the Warrant Reprice Transactions signed and delivered a Participant Voting Commitment that provides for such participating warrant holder to vote its shares of Common Stock to approve Proposal One and Proposal Two. In connection with the Warrant Reprice Transactions, the Company also obtained voting commitments from its executive officers, directors, more than 10% stockholders and certain other significant stockholders similar to the Participant Voting Commitments to vote in favor of Proposal One and Proposal Two. As a result of having these voting commitment letters, we expect a significant number of shares of Common Stock, up to approximately 33% of the outstanding Common Stock as of the Record Date, to support Proposal One and Proposal Two; however, such number of shares will not be sufficient to approve these proposals. Anti-Dilution Adjustment to Series B Preferred Stock. The Certificate of Designation of Preferences, Rights and Limitations for the Company’s issued and outstanding Series B Preferred Stock (the “Series B Certificate of Designation”) provides for anti-dilution protections in the event that the Company grants any right to reprice any Company security that would entitle the holder to acquire Common Stock at an effective price per share that is lower than the conversion price of the Series B Preferred Stock, which is referred to as “full-ratchet” anti-dilution protection. As a result of the consummation of the Warrant Reprice Transactions, which resulted in the Amended Warrants being exercisable at the Reduced Exercise Price and the issuance of New Reprice Warrants at the same Reduced Exercise Price, this anti-dilution protection in the Series B Certificate of Designation was triggered. Accordingly, the conversion price of each share of Series B Preferred Stock, which was $0.40 into 2,500 shares of Common Stock, was automatically adjusted downward and is now $0.18 into 5,556 shares of Common Stock. The adjusted conversion price of the Series B Preferred Stock is the same as the Reduced Exercise Price of the Amended Warrants and the exercise price of the New Reprice Warrants. Therefore, based on the 11,620 shares of Series B Preferred Stock currently outstanding, there are an additional 35,510,720 shares of Common Stock that are issuable upon conversion as a result of the reduction in exercise price.

sufficient time and availability to devote to the affairs of the Company, particularly in light of the number of boards on which the nominee may serve; and

to the extent such nominee serves or has previously served on other boards, a demonstrated history of actively contributing at board meetings.2022 Private Placement

Securities Purchase Agreement

On September 9, 2022, we entered into the Securities Purchase Agreement with each of the purchasers named therein (the “2022 Purchasers”) that provides for the Company to sell in a private placement up to $3,250,000 of Units, with each Unit consisting of (i) one share of Series C Preferred Stock, (ii) one Short-Term Warrant, and (iii) one Long-Term Warrant. The N&CG Committee also considers industry experience or qualifications, such as generic, brand or biotech experience, general management or financial experience,closing of the 2022 Private Placement is conditioned upon the Company obtaining stockholder approval of this Proposal One and diverse experience in business, education, government, law, technology, regulatory compliance, medicine and science. When considering candidates for election (or re-election) to the Board, the N&CG Committee considers the entirety of a candidate’s credentials and backgroundProposal Two, in addition to the specific minimum qualifications outlined above. Moreover, the members of the N&CG Committee believe that each member of the Board should have the highest character and integrity, a reputation for working constructively with others, and minimal conflicts of interest that might interfere with his or her performance as a director.

The N&CG Committee will consider candidates for director recommended by our stockholders who meet the eligibility requirements for submitting stockholder proposals for inclusionsatisfaction other customary closing conditions set forth in our next proxy statement, as described in the Bylaws and provided that such recommendations are received withinSecurities Purchase Agreement. The Securities Purchase Agreement also provides for customary termination rights, including the timeframe required under the caption “Deadline for Receipt of Stockholder Proposals or Nominations” below. Such stockholder’s notice shall set forth: (A) as to each nominee such stockholder proposes to nominate at the meeting: (1) the name, age, business address and residence address of such nominee, (2) the principal occupation or employment of such nominee, (3) the class and number of shares of each class of capital stockright of the Company which are owned of record and beneficially by such nominee, (4)or any Purchaser to terminate the date(s) on which such shares were acquired andSecurities Purchase Agreement if the investment intent of such acquisition, (5) a statement of whether such nominee, if elected, intends to tender, promptly following such person’s failure to receive the required vote for election or re-election at the next meeting at which such person would face election or re-election, his or her resignation, and (6) such other information concerning such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest (even if an election contest is not involved), or that is otherwise required to be disclosed pursuant to § 14consummation of the Exchange Act and2022 Private Placement has not occurred on or before the rules and regulations promulgated thereunder (including such person’s written consent to being named as a nominee and to serving as a director if elected); and (B) as offifth trading day following the date of the notice and as toStockholder Approval Date. Accordingly, the stockholder givingUnits (including the noticeSeries C Preferred Stock and the beneficial owner, if any, on whose behalf the nomination or proposal is made (each, a “Proponent”2022 Warrants) will not be issued unless and collectively, the “Proponents”): (1) the nameuntil both this Proposal One and address of each Proponent, as they appear on the Company’s books; (2) the class, seriesProposal Two are approved and number of shares of the Company thatbecome effective. If Proposal One and Proposal Two are owned beneficially and of recordapproved by each Proponent; (3) a description of any agreement, arrangement or understanding (whether oral or in writing) with respect to such nomination or proposal between or among any Proponent and any of its affiliates or associates, and any others (including their names) acting in concert, or otherwise under the agreement, arrangement or understanding, with any of the foregoing; (4) a representation that the Proponent(s) are holders of record or beneficial owners, as the case may be, of shares of the Company entitled to votestockholders at the meeting andSpecial Meeting, we expect to close the 2022 Private Placement after the Stockholder Approval Date. We intend to appear in person or by proxy duly authorized atuse the meeting to nominatenet proceeds from the person(s) specified in the notice; (5) a representation as to whether the Proponent(s) intend to deliver a proxy statement2022 Private Placement for working capital and form of proxy to holders of a sufficient number of holders of the Company’s voting shares to elect such nominee or nominees; (6) to the extent known by any Proponent, the name and address of any other stockholder supporting the proposal on the date of such stockholder’s notice; and (7) a description of any agreement, arrangement, interest or understanding entered into by, or on behalf or for the benefit of, any Proponent or any of its affiliates or associates, whether record or beneficial (each, a “Derivative Transaction”) by each Proponent during the previous 12-month period, including the date of the transactions and the class, series and number of securities involved in, and the material economic terms of, such Derivative Transactions.

The N&CG Committee evaluates each candidate, including Board incumbents, based on the same criteria. After a candidate has been contacted and agrees to be considered as a nominee, the N&CG Committee will review the candidate’s resume and other credentials and evaluate the expertise and experience that the candidate would provide to the Board and the Company.

Any potential candidates for director nominee, including candidates recommended by stockholders, are reviewed in the context of the current composition of the Board, our operating requirements and the long-term interests of stockholders. In conducting this assessment, the N&CG Committee considers such factors as it deems appropriate given our current needs and those of our Board to maintain a balance of knowledge, experience and capability. The N&CG Committee reviews directors’ overall service during their term, including the number of meetings attended, level of participation and quality of performance. The N&CG Committee also determines whether the nominee would be independent, which determination is based upon the Company Guide and applicable SEC rules and regulations. The N&CG Committee then compiles a list of potential candidates from suggestions it may receive. The N&CG Committee conducts any appropriate and necessary inquiries into the background and qualifications of possible candidates as it deems appropriate, then meets to discuss and consider such candidates’ qualifications, and then selects a nominee for recommendation to the Board by majority vote.general corporate purposes.

No candidates for director nominations were submittedDescription of Series C Preferred Stock

The Series C Preferred Stock will be a newly-created series of stock that will have the powers, preferences, rights, qualifications, limitations and restrictions, including anti-dilution protections, as set forth in the Certificate of Designation of Preferences, Rights and Limitations of Series C Preferred Stock (the “Series C Certificate of Designation”). The holders of Series C Preferred Stock will not have any voting rights, except as required by law and in other limited circumstances, such as to alter or change adversely the powers, preferences or rights given to the N&CG Committee bySeries C Preferred Stock or alter or amend the Series C Certificate of Designation, to amend the Certificate of Incorporation or other charter documents in any stockholder in connection with the election of directors at the Annual Meeting.Bothmanner that adversely affects any rights of the director nominees standing for election at this Annual Meeting are current directors of NovaBay.

Our Board has implemented a process by which stockholders may send written communications directly to the attentionholders of the Board,Series C Preferred Stock, to increase the number of authorized shares of Series C Preferred Stock, and to enter into any committeeagreement with respect to any of the Board or any individual Board member, careforegoing. The holders of our Corporate Secretary, Mr. Justin M. Hall, Esq., at 2000 Powell Street, Suite 1150, Emeryville, California 94608. The namethe Series C Preferred Stock will be entitled to receive, and the Company will be required to pay, dividends on shares of any specific intended Board recipient should be notedthe Series C Preferred Stock equal (on an as if converted to Common Stock basis) to and in the communication. Our Corporate Secretary will be responsible for collecting, organizingsame form as dividends actually paid on shares of the Common Stock when, as and monitoring communications from stockholders and, where appropriate dependingif such dividends are paid on shares of the facts and circumstances outlined in the communication, providing copies of such communications to the intended recipients. Communications will be forwarded to directors if they relate to appropriate and important substantive corporate or Board matters. Communications that are primarily commercial in nature or related to an improper or irrelevant topicCommon Stock. The Series C Preferred Stock will not be forwardedentitled to any other dividends. In the event of the Company’s liquidation, dissolution or winding up, the holders of Series C Preferred Stock will be entitled to receive the same amount that a holder of Common Stock would receive if the Series C Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder).

Each share of Series C Preferred Stock will be convertible at a current conversion price of $0.18 into 5,556 shares of Common Stock, or an aggregate of 18,057,000 shares of Common Stock (which conversion price and number of shares will be adjusted to reflect the Reverse Stock Split if Proposal Two is approved and becomes effective). Pursuant to the Board.Series C Certificate of Designation, the Series C Preferred Stock will be subject to another limitation on conversion to the extent that, after giving effect to such conversion, the holder of such Series C Preferred Stock (together with the holder’s affiliates, and any other persons acting as a group together with the holder or any of the holder’s affiliates), would beneficially own in excess of 4.99% or 9.99% of the outstanding Common Stock.

The Series C Preferred Stock also has anti-dilution protections that could result in an increase in the number of shares of Common Stock to be issued upon conversion of the Series C Preferred Stock in the future, in certain circumstances, including if the Company: (i) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of the Series C Preferred Stock or payment of a dividend on the Series C Preferred Stock); (ii) subdivides outstanding shares of Common Stock into a larger number of shares; (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (iv) issues by reclassification of shares of Common Stock any shares of capital stock of the Company, then in each case the conversion price of the Series C Preferred Stock will be adjusted as provided in the Series C Certificate of Designation. In addition, these anti-dilution protections also apply if the Company sells or grants any Common Stock or any securities of the Company, subject to certain limited exceptions, which would entitle the holder thereof to acquire Common Stock at an effective price per share that is lower than the applicable conversion price of the Series C Preferred Stock, and, as a result, the conversion price of the Series C Preferred Stock will be reduced to such lower price, which is referred to as a “full-ratchet” anti-dilution protection. This full-ratchet anti-dilution protection is subject to termination as provided in the Series C Certificate of Designation upon the earlier of: (x) the Common Stock achieving an average trading price of 250% of the conversion price during any 10 days during a 30-consecutive trading day period and (y) 75% of the Series C Preferred Stock issued on the original issue date has been converted. The holders of Series C Preferred Stock will not have any preemptive rights as a result of their ownership of Series C Preferred Stock. The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series C Preferred Stock, including the anti-dilution protections, set forth in the Series C Certificate of Designation will be filed with the Secretary of State of the State of Delaware prior to closing of the 2022 Private Placement.

Description of 2022 Warrants

The 2022 Warrants will have an exercise price equal to $0.18, subject to customary anti-dilution adjustments as provided in the 2022 Warrants. The Long-Term Warrants will be immediately exercisable for a period of six (6) years after the date of issuance and the Short-Term Warrants will be immediately exercisable for a period of eighteen (18) months after the date of issuance. The 2022 Warrants will be exercisable for an aggregate of 36,111,114 shares of Common Stock. The exercise price for the 2022 Warrants and the number of shares of Common Stock underlying the 2022 Warrants will be adjusted at the time of issuance to reflect the Reverse Stock Split.

In accordance with Section 14(a)The 2022 Warrants are subject to a provision prohibiting the exercise of the Exchange Act, stockholders are being given the opportunity to vote on an advisory (non-binding) resolution to approve the compensation of the Company’s executive officers or NEOs, as described below under “Executive Compensation and Other Information,” which includes compensation tables and narrative discussions of the NEOs’ compensation in this Proxy Statement. Consistent with the say-on-frequency voting results at the 2019 Annual Meeting, an advisory vote to approve executive compensation is conducted every three years.

We are asking our stockholders to indicate their support for our NEO compensation as set forth in this Proxy Statement. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our NEOs’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophies, policies and practices described in this Proxy Statement. We are asking our stockholders to vote “FOR” the following non-binding resolution at the Annual Meeting:

“RESOLVED, that the compensation of NovaBay Pharmaceuticals, Inc.’s named executive officers, as disclosed in NovaBay’s Proxy Statement for thesuch 2022 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the “Executive Compensation and Other Information,” the compensation tables and related narrative disclosures, is hereby approved.”

The Say-on-Pay vote is advisory, and therefore not binding on NovaBay, the Compensation Committee or the Board. The Board and the Compensation Committee value the opinions of NovaBay’s stockholders and,Warrants to the extent there isthat, after giving effect to such exercise, the holder of such 2022 Warrant (together with the holder’s affiliates, and any significant vote againstother persons acting as a group together with the NEO compensation as disclosedholder or any of the holder’s affiliates), would beneficially own in this Proxy Statement,excess of 4.99% or 9.99% of the Board andoutstanding Common Stock. The 2022 Warrants will not have any preemptive rights or a preference upon any liquidation, dissolution or winding-up of the Compensation Committee will consider stockholders’ concerns and evaluate whether any actions are necessary to address those concerns.Company.

NYSE American Company Guide Requirements

Since our Common Stock is currently listed on the NYSE American, we are required to comply with the continued listing rules of the Company Guide. Section 713(a) of the Company Guide requires stockholder approval in connection with any transaction, other than a public offering, involving the sale, issuance, or potential issuance, of common stock or securities convertible into common stock, equal to 20.0% or more of presently outstanding stock for less than the greater of book or market value (whichever is greater). Section 713(b) of the Company Guide requires stockholder approval of a transaction, other than a public offering, involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) when the issuance or potential issuance of additional shares may result in a change of control of the issuer. Since the aggregate number of shares of Common Stock underlying the Series C Preferred Stock (18,057,000 shares of Common Stock) and the 2022 Warrants (36,111,114 shares of Common Stock) following the closing of the 2022 Private Placement, the issuance of Common Stock underlying the Amended Warrants (30,825,000 shares of Common Stock) and the New Reprice Warrants (11,475,000 shares of Common Stock), will collectively represent 148% of the total number of shares of Common Stock currently outstanding, we are seeking approval under both Sections 713(a) and 713(b) of the Company Guide. Stockholder approval of this Proposal One will constitute stockholder approval for purposes of Sections 713(a) and 713(b) of the Company Guide.

Required Pursuant to Our Financing Transaction Agreements

As a material condition of the Warrant Reprice Transactions and the 2022 Private Placement, we agreed to submit and recommend this Proposal One and, as described below, Proposal Two to our stockholders. If we do not obtain stockholder approval of this Proposal One and Proposal Two at the Special Meeting, we have agreed to call a meeting of stockholders every four months thereafter to seek stockholder approval until stockholder approval is obtained. These contractual obligations address the Company’s obligation to satisfy the Company Guide requirement and for the Company to have a sufficient number of shares of Common Stock available for future issuance, as described under Proposal Two. Approval of this Proposal One and Proposal Two will result in the restrictions on exercise under the Amended Warrants and the New Reprice Warrants no longer being effective. The Board approved the Warrant Reprice Transactions and the 2022 Private Placement and believes that satisfying our contractual obligations in those transactions by submitting this Proposal One to stockholders for their approval at this Special Meeting is in the best interests of our Company and our stockholders.

Dilutive Effect of Issuances of Common Stock

If stockholder approval of this Proposal One and Proposal Two is received and they become effective, then the Amended Warrants and the New Reprice Warrants will be exercisable for an aggregate of 42,300,000 shares of Common Stock, subject to adjustment to account for the Reverse Stock Split. In addition, after the Stockholder Approval Date, we intend to close the 2022 Private Placement and issue the Units, consisting of the Series C Preferred Stock (which will be convertible into 18,057,000 shares of Common Stock) and the 2022 Warrants (which will be exercisable for 36,111,114 shares of Common Stock). Accordingly, an aggregate of 96,468,114 shares of Common Stock, 148% of the total number of shares of Common Stock currently outstanding, will be issuable pursuant to exercise or conversion (as applicable) of the Amended Warrants, the New Reprice Warrants, the Series C Preferred Stock and the 2022 Warrants, subject to adjustment to account for the Reverse Stock Split and any applicable anti-dilution adjustments. If the Amended Warrants and New Reprice Warrants become exercisable and we close the 2022 Private Placement and issue the Series C Preferred Stock and the 2022 Warrants, then existing stockholders of the Company will experience significant dilution in their ownership interests and voting rights.

Obligations Upon Failure of Stockholder Approval

If only Proposal One or Proposal Two is approved (but not both) a condition to closing the 2022 Private Placement will not be satisfied and the Amended Warrants and the New Reprice Warrants will not be exercisable. In addition, the terms of the Securities Purchase Agreement will require us to continue to seek stockholder approval every four months until both such proposals are approved, and we will be restricted in our ability to raise capital using Common Stock and Stock equivalents or to incur indebtedness.

Rights of Purchasers

If stockholder approval of this Proposal One and Proposal Two is received and they become effective, then the shares of Common Stock issuable upon exercise of the Amended Warrants and the New Reprice Warrants, and, assuming the closing of the 2022 Private Placement, the shares of Common Stock issuable upon conversion of the Series C Preferred Stock and exercise of the 2022 Warrants, will have the same privileges and rights as all other shares of Common Stock that are currently issued and outstanding, including the right to vote on all matters presented to the holders of Common Stock.

In connection with the Securities Purchase Agreement, we will enter into a registration rights agreement with the 2022 Purchasers at the closing of the 2022 Private Placement to register the Common Stock underlying the Series C Preferred Stock and the Common Stock underlying the 2022 Warrants. Pursuant to the Reprice Letter Agreements, we also agreed to file a registration statement providing for the resale by of the shares of Common Stock underlying the Amended Warrants and the New Reprice Warrants.

The Audit Committeeaffirmative vote of our Board has selected WithumSmith+Brown, PC (“Withum”) as our independent registered public accounting firmthe holders of a majority of the shares of Common Stock present or represented and entitled to vote at the Special Meeting is required for approval of this Proposal One.

It is important to understand that we are not seeking stockholder approval of, and you are not being asked to vote on, the fiscal year ending December 31, 2022. AfterWarrant Reprice Transactions (which have already been completed) or the 2021 Annual Meeting, as reported by us on a Form 8-K filedissuance of the Amended Warrants and the New Reprice Warrants (which have already been issued). In addition, although we committed, in connection with the SEC on July 21, 2021, NovaBay was informed by OUM & Co., LLP (“OUM”) that certain of its assets had been acquired by Withum, effective on July 15, 2021. As a resultWarrant Reprice Transactions, to seek stockholder approval of the acquisition, OUM requested that NovaBay consent to the assignment and assumption of OUM’s engagement by NovaBay to Withum, which would provide for Withum to become our independent registered public accounting firm. Withum is registered with the Public Company Accounting Oversight Board (PCAOB) and the Center for Audit Quality and has over 20 years of experience representing public companies with over 200 SEC registrants for which they perform public company audits. After consideration of the request and the background and experience of Withum, the Audit Committee consented to the assignment, and Withum was engaged to serveReverse Stock Split, as our independent registered public accounting firm for the fiscal year ending December 31, 2021. Our stockholders further ratified this engagement at the special meeting of stockholders held on December 17, 2021.

Prior to the acquisition by Withum, OUM servedwell as the Company’s independent registered public accounting firm since 2011. We are asking our stockholders to ratify the selection by the Audit Committee of Withumany approvals as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2022, and to perform other appropriate services. Stockholder ratification of the selection of Withum as our independent registered public accounting firm is notmay be required by the Bylaws or otherwise. In the event that stockholders fail to ratify the appointment, the Audit Committee will reconsider its selection. Even if the selection is ratified, the Audit Committee, in its sole discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee feels thatCompany Guide, and such a change would be in the Company’s best interests and our stockholders’ best interests.

A representative of Withum is expected to be present at the Annual Meeting, will have the opportunity to make a brief presentationapprovals are conditions to the stockholders if heclosing of the 2022 Private Placement, you are not being asked to approve the closing of the 2022 Private Placement or she so desiresthe issuance of the Units (including the Series C Preferred Stock and is expected to be available to respond to appropriate questions from stockholders.

the 2022 Warrants). Instead, we are seeking your approval of the issuance of shares of Common Stock underlying the Amended Warrants, the New Reprice Warrants, the Series C Preferred Stock and the 2022 Warrants.

The following table sets forthFor the fees billed to us forreasons described in this Proxy Statement, the fiscal years ended December 31, 2021 and 2020, by Withum and OUM, as applicable, for such years:

		2021				2020
Audit Fees		$	221,550			$	268,159
Audit-Related Fees			8,905				3,592
Tax Fees		―				―
All Other Fees			98,800				59,350
Total Fees		$	329,255			$	331,101

Board unanimously recommends that you vote “Audit FeesFOR. Audit fees consisted of fees billed by Withum and OUM, as applicable, for professional services rendered in connection with” the audit and quarterly reviews of our consolidated financial statements and other engagements, such as review of documents filed with the SEC.

Audit-Related Fees. Audit-related fees comprise fees for professional services rendered by Withum and OUM, as applicable that are reasonably related to the performanceapproval of the audit or reviewissuance of our consolidated financial statementsan aggregate of 96,468,114 shares of Common Stock upon exercise of the Amended Warrants and internal controls over financial reporting that are not reportedthe New Reprice Warrants and the conversion of the Series C Preferred Stock and the exercise of the Long-Term Warrants and the Short-Term Warrants to be issued upon closing of the 2022 Private Placement, including any additional shares of Common Stock due to an increase as a result of applicable anti-dilution adjustments, as required by and in “Audit Fees.”In 2021accordance with Sections 713(a) and 2020, such audit-related fees were related to out-of-pocket expenses incurred in conjunction with713(b) of the performance of audits and reviews.Company Guide.

 

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Tax Fees. Proposal Two:These are fees for professional services with respect to tax compliance, tax advice and tax planning. There were no such services rendered by Withum or OUM in 2021 and2020 that meet the above category description.

 

All Other FeesThe Reverse Stock Split Proposal. All other fees consisted of fees associated with the review of registration statements, comfort letters and consents performed by Withum and OUM, as applicable.

 

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services

All engagements for services by Withum and OUM or other independent registered public accounting firms are subject to prior approval by the Audit Committee; however, de minimis non-audit services may be approved in accordance with applicable SEC rules. The Audit Committee approved all services provided by Withum and OUM for the fiscal years ended December 31, 2021 and December 31, 2020.

Recommendation of Our Board Our Board recommends unanimously that you vote “FOR” the ratification of the selection of Withum as our independent registered public accounting firm for the fiscal year ending December 31, 2022.

Audit Committee ReportOverview

 

The following isBoard has unanimously approved resolutions to (i) effect a reverse split of all of our outstanding shares of Common Stock or held in treasury by a ratio of not less than 1-for-10 and not more than 1-for-35 (each 10 to 35 shares of Common Stock, as the reportcase may be, shall be combined to become 1 share of Common Stock) that will be effected by amending our Certificate of Incorporation and (ii) directing that a proposal be submitted to our stockholders at the Special Meeting for the prior approval of the Audit CommitteeReverse Stock Split, which proposal has been submitted at the Special Meeting as this Proposal Two. The proposed Reverse Stock Split is a commitment the Company made to its investors both as part of the Warrant Reprice Transactions, and is as a condition to close the 2022 Private Placement, as described below, in Proposal One and elsewhere in this Proxy Statement. In addition, the Reverse Stock Split is also being presented to our stockholders to remain in compliance with respect to the audited consolidated financial statements of NovaBay Pharmaceuticals, Inc.NYSE American’s continued listing requirements under the Company Guide and for the fiscal year ended December 31, 2021, includedother reasons detailed below under “— Reasons for the Reverse Stock Split”.

If this Proposal Two is approved by our stockholders, the Board will have sole discretion pursuant to Section 242(c) of the Delaware General Corporation Law to elect, as it determines to be in the Annual ReportCompany’s best interests and without further action by our stockholders, whether or not and when to effect the Reverse Stock Split, or to abandon it. The Company reserves the right to abandon the Reverse Stock Split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of the State of Delaware of the Certificate of Amendment, even if the authority to effect the Reverse Stock Split has been approved by our stockholders. By voting in favor of Proposal Two, you are expressly also authorizing the Board to delay, not to proceed with, and/or abandon, the Reverse Stock Split if it should so decide, in its sole discretion. No further action on Form 10-K for that year.the part of stockholders will be required to either implement or abandon the Reverse Stock Split.

 

The Audit Committee has reviewedIf this Proposal Two is approved by stockholders and discussedif the audited financial statementsReverse Stock Split is made effective, the number of NovaBayauthorized shares of Company capital stock, consisting of 150,000,000 authorized shares of Common Stock and 5,000,000 authorized shares of preferred stock, will remain unchanged, which will result in the number of authorized shares of Common Stock that will be available for future issuance to increase significantly. If Proposal Two is approved by our stockholders and the fiscal year ended December 31, 2021 with NovaBay’s management. The Audit Committee has discussed with NovaBay’s independent registered public accounting firm, Withum, the matters required toReverse Stock Split is effective, then these additional authorized shares of Common Stock will be discussed by Auditing Standard No. 61, Communications with Audit Committees,available for issuance for any proper corporate purpose as adopteddetermined by the PublicBoard, without further approval by the stockholders, except as required by law.

Should the Board proceed with the Reverse Stock Split, the exact ratio will be set at a whole number within the above range as determined by the Board in its sole discretion without further action by our stockholders. If the Board elects to effect the Reverse Stock Split with a ratio of 1-for-10 (the low end of the range set forth above), each 10 shares of Common stock will be combined to become one share of Common Stock. Following a 1-for-10 Reverse Stock Split, the Company Accounting Oversightwould continue to have 150,000,000 authorized shares of Common Stock, but would only have approximately 6,498,837 shares of Common Stock outstanding (as compared to 64,988,364 shares outstanding as of the Record Date). If the Board (“PCAOB”)elects to effect a Reverse Stock Split with a ratio of 1-for-35 (the high end of the range set forth above), each 35 shares of Common stock will be combined to become one share of Common Stock. Following a 1-for-35 Reverse Stock Split, the Company would similarly continue to have 150,000,000 authorized shares of Common Stock, but would only have approximately 1,856,810 shares of Common Stock outstanding (as compared to 64,988,364 shares outstanding as of the Record Date). The foregoing numbers of shares of Common Stock outstanding will be subject to adjustments that may result from the treatment of fractional shares as described below under the heading “— Fractional Shares”.

 

The Audit Committee has receivedBoard believes that the written disclosures and the letter from Withum required by applicable requirementsavailability of the PCAOB regarding Withum’s communicationsalternative Reverse Stock Split ratios will provide it with the Audit Committee concerning independenceflexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for the Company and has discussed with Withumits stockholders. In determining the independence of Withum.

Based onspecific Reverse Stock Split ratio, the review and discussions referred to above in this report, the Audit Committee recommended to NovaBay’s Board that the audited financial statements be included in NovaBay’s Annual Report for filing with the SEC.may consider, among other things, factors such as:

 

		●	Submitted by the Audit Committee historical trading price and trading volume of the Board of Directors:our Common Stock;
			Yenyou (Jeff) Zheng, Chair Paul E. Freiman Swan Sit

 

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Executive Compensation and Other Information

Executive Officers

The table below sets forth certain information regarding our executive officers. Our executive officers are elected by, and serve at the discretion of, our Board of Directors. The following provides the biographical information regarding our Chief Financial Officer and the President of DERMAdoctor. Information concerning the business experience of Mr. Hall and Dr. Audrey Kunin is provided in “Class II Directors” and “Class I Directors” above, respectively.

Name●		Age		Current Position(s)
Justin M. Hall, Esq.		44		CEO & General Counselthe then prevailing trading price and Chief Compliance Officer
Andrew Jones		51		Chief Financial Officer
Dr. Audrey Kunin		62		Chief Product Officer
Dr. Jeff Kunin		59		President, DERMAdoctor

Andrew Jones (“Mr. Jones”) Prior to joining the Company in May 2020, Mr. Jones served as the Vice President of Finance of MyoScience, Inc., a commercial stage company that produces pain management devices, from July 2017 until its acquisition by Pacira BioSciences, Inc. (Nasdaq: PCRX) in August 2019, during which time he was responsible for all financial, accounting, investor relations and risk management functions as well as leading debt and equity fundraising. Mr. Jones has served as Controller for various public and private life sciences companies including Armetheon, Inc. (May 2015 to July 2017), Asante Solutions, Inc. (Oct. 2014 to May 2015) and Genelabs Technologies, Inc. (then, Nasdaq: GNLB) (2005 to 2009) and began his career with PriceWaterhouseCoopers. Mr. Jones received a B.S. degree in Business Administration from the University of Washington in Seattle.

Dr. Jeff Kunin co-founded DERMAdoctor and has served as the President and Chief Executive Officer of DERMAdoctor since March 2018. Dr. Jeff Kunin served as the Chairman of the Department of Radiology at Saint Luke’s Hospital in Kansas City from 2007 to 2017. He graduated college with a B.S. degree in Biochemistry and Cell Biology from the University of California, San Diego. He then graduated medical school and earned his M.D. from the University of Texas Medical Branch in Galveston, Texas. Then he completed a residency in diagnostic radiology at the Medical College of Virginia and Henry Ford Hospital. Subsequently, he completed a fellowship in body imaging at the University of Michigan Hospitals. Dr. Jeff Kunin received his MBA degree from Washington University in St. Louis Olin School of Business.

Business Highlightstrading volume of our Common Stock and the anticipated impact of the Reverse Stock Split on the trading market for our Common Stock;

 

●

Completedcompliance with the DERMAdoctor Acquisition in November 2021.NYSE American continued listing rules under the Company Guide with respect to minimum share price requirements for our Common Stock;

 

●

Company 2021 full year net product revenueour ability to have our shares of $8.4 million, which includes $0.6 million fromCommon Stock remain listed on the sale of DERMAdoctor products (since the completion of the DERMAdoctor Acquisition).NYSE American;

 

●

Gross profitthe anticipated impact of $5.6 millionthe Reverse Stock Split on our ability to raise additional financing, including the 2022 Private Placement; and

●

prevailing general market and economic conditions.

If the Board determines that effecting the Reverse Stock Split is in our best interest, the Reverse Stock Split will become effective as provided in the Certificate of Amendment, which will set forth the number of shares to be combined into one share of Common Stock within the limits set forth in this proposal. The Reverse Stock Split, if effected, would affect holders of Common Stock and holders of Series B Non-Voting Preferred Stock, which are convertible into shares of Common Stock, uniformly, as described below under the heading “— Principal Effects of the Reverse Stock Split”. Except for adjustments that may result from the treatment of fractional shares as described below under the heading “— Fractional Shares”, each stockholder will hold the same percentage of our outstanding Common Stock immediately following the Reverse Stock Split as such stockholder held immediately prior to the Reverse Stock Split. The following description of the proposed Reverse Stock Split and Certificate of Amendment is a summary and is subject to the full text of the proposed Certificate of Amendment, which is attached to this Proxy Statement as Annex A. The text of the form of Certificate of Amendment accompanying this Proxy Statement is, however, subject to revision to reflect the exact ratio for the Reverse Stock Split and any changes that may be required by the office of the Secretary of State of the State of Delaware or that the Board may determine to be necessary or advisable to comply with applicable law and to effect the Reverse Stock Split.

Effective Date

If our stockholders approve this Proposal Two, we expect our Board to determine a reverse split ratio within the range approved by stockholders and then file the Certificate of Amendment with the Secretary of State of the State of Delaware, substantially in the form as attached in Annex A hereto to effect the Reverse Stock Split, as soon as practicable following stockholder approval of this Proposal Two. The Certificate of Amendment will become effective after filing with the Secretary of State of the State of Delaware and on the date and time set forth therein.

If this Proposal Two is approved and the Board determines to proceed with the Reverse Stock Split, the exact timing of the filing of the Certificate of Amendment will be determined by the Board. We refer to this time and date as the “EffectiveDate.” Except as explained below with respect to fractional shares, each issued share of Common Stock immediately prior to the Effective Date will automatically be changed, as of the Effective Date, into a fraction of a share of Common Stock based on the exchange ratio within the approved range determined by the Board.

Reasons for the Reverse Stock Split

The Board currently believes that a Reverse Stock Split is desirable and in the best interest of the Company and its stockholders for four primary reasons listed and described below. Notwithstanding these reasons, the Board reserves its right to abandon the Reverse Stock Split if it determines, in its sole discretion, that it would no longer be in our Company’s and our stockholders’ best interests.

●

The Board has determined that the Reverse Stock Split will allow us to fulfill our obligations in 2021,connection with the Warrant Reprice Transactions and the 2022 Private Placement.

●

The Board believes that effecting the Reverse Stock Split will cause the minimum bid price of our Common Stock to increase and may reduce the risk of a gross profit margindelisting of 67.0% as compared to 60.0%the Common Stock from the NYSE American in 2020.the future.

●

The Board believes that the Reverse Stock Split will result in additional share capacity for future capital raises, including closing the 2022 Private Placement.

 

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Summary Compensation Table●

The Board believes that the Reverse Stock Split could improve the marketability and liquidity of our Common Stock.

 

The following table shows information regarding the compensation earned during the fiscal years ended December 31, 2021 and December 31, 2020 by (1) our Chief Executive Officer, General Counsel and Chief Compliance Officer, (2) our Chief Financial Officer, and (3) our Chief Product Officer. The individuals listed below are collectively referredRequired Pursuant to as the “NEOs” in this Proxy Statement.Our Financing Transaction Agreements

 

Name and principal position(s)		Fiscal year		Salary ($)				Bonus ($)				Stock awards ($)				Option awards(1) ($)				All other compensation(2) ($)				Total ($)
Justin M. Hall, Esq.		2021		$	328,667			$	70,000			$	395,000			$	−			$	1,854			$	795,521
CEO, GC and Chief		2020			286,000				114,000				−				346,500				720				747,220
Compliance Officer
Andrew Jones(3)		2021		$	291,667			$	73,500			$	197,500			$	−			$	1,854			$	564,521
Chief Financial Officer		2020			182,452				54,669				164,800				333,750				1,104				736,775
Dr. Audrey Kunin(4)		2021		$	31,538			$	−			$	177,000			$	86,715			$	−			$	295,253
Chief Product Officer

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(1)

These amounts represent the aggregate grant date fair value of the equity awards granted to the Company’s NEOs during the fiscal year. The aggregate grant date fair value is computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. See Note 15, “Equity-Based Compensation” to the Company’s consolidated financial statements in our Annual Report, regarding assumptions underlying the valuation of the Company’s equity awards. These amounts do not correspond to the actual value that may be recognized by the Company’s NEOs.

(2)	These amounts include individual life insurance premiums paid for by the Company.

(3)	Mr. Jones was appointed our Chief Financial Officer effective May 4, 2020, and therefore 2020 compensation only reflects a partial year.

(4)	Dr. Audrey Kunin was appointed our Chief Product Officer effective November 5, 2021, and therefore 2021 compensation only reflects a partial year.

Compensation Peer SurveyAs a material condition of the Warrant Reprice Transactions and the 2022 Private Placement, we agreed to call the Special Meeting within 75 days to seek stockholder approval of the Reverse Stock Split. If we do not obtain stockholder approval of the Reverse Stock Split at the Special Meeting, we have agreed, in connection with the Warrant Reprice Transactions, to continue to hold stockholder meetings every four months to seek such approval until it is obtained. Any need to continue to seek such approval would result in increased expense to the Company and diversion of management’s attention, time, and effort.

 

Maintain Compliance with NYSE American Continued Listing Requirements

We are also seeking approval of Proposal Two so that the Company will continue to comply with the continued listing rules of the NYSE American under the Company Guide. Our Common Stock is listed on the NYSE American under the symbol “NBY.” In order to maintain continued listing on the NYSE American, among other requirements, our Common Stock must maintain an average minimum closing stock price of $0.20 over any 30-day consecutive trading period, with $0.20 being the current NYSE American internal precedent threshold of what the NYSE American considers to be a “low price per share” and constitute “low selling price issues” of the issuer pursuant to Section 1003(f)(v) of the Company Guide.

As of September 16, 2022, our 30-day average closing stock price was $0.22 per share, which is above the $0.20 “low price per share” minimum threshold. However, the Company’s closing stock price has dipped below $0.20 per share on individual days in the month of September 2022. Pursuant to the Warrant Reprice Transactions, the exercise price of the Amended Warrants was reduced to, and the exercise price of the New Reprice Warrants is, $0.18 per share. Should the Company’s 30-day average closing stock price go below the $0.20 per share threshold, the NYSE American may issue to the Company a formal “Early Warning Letter.” The Early Warning Letter may initiate a six-month period under which the NYSE American urges the Company to effect a reverse stock split and closely monitors the performance of the Common Stock. At the end of the six-month period, the NYSE American may evaluate the Company’s most recent formal compensation peer survey conducted by a third party was in 2021. The Compensation Committee retained Pay Governance LLC (the “Compensation Consultant”) to conduct a survey (the “Pay Governance Survey”)30-day average closing price, as well as the Company’s absolute closing price before the end of the Company’s executive compensation program and Board compensation program and recommend any appropriate changes for 2021. The Pay Governance Survey benchmarked the Company’s compensation practices as comparedsix-month period, to the Company’s peer group. The Company’s peer group was approved by the Compensation Committee on May 4, 2021 and is comprised of the following 17 comparably-sized pharmaceutical companies:

AcelRx Pharmaceuticals, Inc. Adamis Pharmaceuticals Corporation Alimera Sciences, Inc. Anika Therapeutics, Inc. Aytu BioScience, Inc. BioDelivery Sciences International, Inc.

Cipher Pharmaceuticals Inc. Cumberland Pharmaceuticals Inc. DURECT Corporation EyeGate Pharmaceuticals, Inc. EyePoint Pharmaceuticals, Inc. Harrow Health, Inc.

Jaguar Health, Inc. Neos Therapeutics, Inc. Otonomy, Inc. Plus Therapeutics, Inc. Sonoma Pharmaceuticals, Inc.

The Pay Governance Survey found that whiledetermine whether the Company is positioned slightly abovebelow the 25th percentileNYSE American compliance standards. While the NYSE American will evaluate the totality of the peer group oncircumstances, there is a revenue basis,potential that the Company’s overall compensation to Messrs. Hall and Jones was belowNYSE American could initiate delisting procedures against the peer median, particularly (1)Company.

We expect that the Company’s base salary amount and target bonus amount for Mr. Hall, which was belowReverse Stock Split will increase the market 25th percentile, (2)price of Common Stock so that the Company’s base salary amountCompany will be able to satisfy the continued listing requirements of the NYSE American for the foreseeable future. We also expect that the Reverse Stock Split will provide for sufficient authorized shares under our Certificate of Incorporation in order to permit the issuance of shares of Common Stock upon the exercise of the Amended Warrants and target bonus amountthe New Reprice Warrants and upon conversion of the Series C Preferred Stock, as well as the exercise of the 2022 Warrants if the 2022 Private Placement closes and/or in any future offerings or potential strategic transactions.

Additional Authorized Common Stock

Due to the number of shares of Common Stock that we will be required to issue if all of the Amended Warrants and New Reprice Warrants in the Warrant Reprice Transactions are exercised and the Series C Preferred Stock and the 2022 Warrants to be issued in the 2022 Private Placement are converted or exercised, as the case may be, we will not have a sufficient number of shares of Common Stock to issue upon exercise and/or conversion of these Company securities. If Proposal Two is approved by stockholders and the Board determines to effect the Reverse Stock Split, the number of authorized shares of Company capital stock, consisting of 150,000,000 authorized shares of Common Stock and 5,000,000 authorized shares of preferred stock, will remain unchanged. As a result of there being no change to the number of shares of our authorized capital stock in connection with the Reverse Stock Split, the number of authorized shares of Common Stock that will be available for Mr. Jones, which was belowfuture issuance will increase significantly.

Therefore, the regressed revenue median,Reverse Stock Split will provide for a sufficient number of authorized shares under our Certificate of Incorporation in order to permit the issuance of shares of Common Stock upon the exercise of the Amended Warrants and (3) the Company’s long-term incentive equity grantsNew Reprice Warrants and upon conversion of the Series C Preferred Stock and the exercise of the 2022 Warrants if the 2022 Private Placement closes. In addition, it will provide for both Messrs. Hall and Jones, which were below the market 25th percentile.additional shares of Common Stock that may be issued in any future offerings or potential strategic transactions that we may pursue.

 

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We plan to use the additional authorized shares resulting from the Reverse Stock Split to continue to pursue our historical financing strategy of raising additional capital in order to fund our operations and meet our ongoing obligations. As a resultdiscussed elsewhere in this Proxy Statement, we intend to close the 2022 Private Placement as soon as possible after the effectiveness of the Pay Governance SurveyReverse Stock Split. Following the completion of the 2022 Private Placement, an additional 54,168,114 shares of Common Stock will be issuable upon exercise or conversion, as the case may be, of the Series C Preferred Stock and based2022 Warrants issued in the 2022 Private Placement. The effectiveness of the Reverse Stock Split is a condition to closing the 2022 Private Placement. If we do not obtain stockholder approval of the Reverse Stock Split, we will not benefit from the anticipated proceeds from that financing transaction. We also committed, in connection with the Warrant Reprice Transactions, to seek stockholder approval for the Reverse Stock Split, and to effect the Reverse Stock Split after receiving such approval.

In addition to allowing us to satisfy our obligations in connection with the Warrant Reprice Transactions and to close the 2022 Private Placement and receive the proceeds from that transaction, we believe that maintaining our current number of authorized shares in our Certificate of Incorporation will better equip us to engage in additional capital raising efforts in the future. While we do not have any current and/or definite plans, agreements or arrangements, whether written or oral, to issue any newly authorized shares in connection with a capital raising transaction other than the previously disclosed Warrant Reprice Transactions and 2022 Private Placement, such a transaction could arise at any time following the date of this Proxy Statement, either prior to or after the Special Meeting.

Improve the Marketability and Liquidity of the Common Stock and Appeal to a Broader Range of Investors and Generate Greater Investor Interest

We also believe that the expected increased market price of our Common Stock resulting from the Reverse Stock Split will improve the marketability and liquidity of our Common Stock and will encourage interest and trading in our Common Stock. A Reverse Stock Split could allow a broader range of institutions to invest in our Common Stock (namely, funds that are prohibited or discouraged by internal policies and practices from buying stocks whose price is below a certain threshold), potentially increasing the liquidity of our Common Stock. Additionally, because brokers’ commissions on the Compensation Consultant’s recommendations, the Compensation Committee approved increases to Messrs. Hall’s and Jones’ annual base salary and target bonus amounts to be effective as of May 1, 2021. The base salary of Mr. Justin Hall, the Company’s Chief Executive Officer and General Counsel, increased from $286,000 to $350,000 and his target bonuslow-priced stocks generally represent a higher percentage of base salary increased from 40% to 50%. The base salarythe stock price than commissions on higher-priced stocks, the current average price per share of Mr. Andrew Jones, the Company’s Chief Financial Officer, increased from $275,000 to $300,000 and his target bonusour Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of base salary increased from 30%their total share value than would be the case if the share price were substantially higher.

Risks Relating to the Reverse Stock Split

There are risks associated with a reverse stock split, and we may fail to 35%.realize the expected benefits.

 

2021The proposed Reverse Stock Split, if effected, may not increase our stock price, and 2020 Cash Bonuses

The Board, upon the recommendation of the Compensation Committee, established Mr. Hall and Mr. Jones would receivecould lead to a bonus of $70,000 and $73,500, respectively, for fiscal year 2021 performance. Dr. Audrey Kunin was not granted a bonus for fiscal year 2021 due to her beginning date of service on November 5, 2021.

The Board, upon the recommendation of the Compensation Committee, established Mr. Hall and Mr. Jones would receive a bonus of $114,000 and $54,669, respectively, for fiscal year 2020 performance (with Mr. Jones’ bonus only reflecting his partial year of servicedecrease in 2020).

2021 Equity Awardsour overall market capitalization.

 

On May 4, 2021,September 16, 2022, the Compensation Committee granted performance restricted stock units (“Performance RSUs”)closing sale price of our Common Stock on the NYSE American was $0.14 per share. We expect that the Reverse Stock Split, if effected, will increase the per share trading price of our Common Stock. However, the market price per share of our Common Stock after the Reverse Stock Split may not rise (or remain constant) in proportion to Messrs. Hall and Jonesthe reduction in the amount of 500,000 Performance RSUs and 250,000 Performance RSUs, respectively. Subsequently, on November 5, 2021, Dr. Audrey Kunin was granted 300,000 Performance RSUs in relation to her Executive Employment Agreement (as described in more detail below).

The Performance RSUs are designed to align each executive’s total direct compensation with the long-term interests of the Company and its stockholders by further linking compensation to performance. The Performance RSUs represent the right to receive a number of shares of Common Stock outstanding before the Company’s commonReverse Stock Split. We cannot predict the effect of the Reverse Stock Split on the per share trading price of our Common Stock, and the history of reverse stock onsplits for other companies is varied, particularly since some investors may view a one-to-one basis withreverse stock split negatively. In many cases, the numbermarket price of Performance RSUs granted, subjecta company’s shares declines after a reverse stock split, or the market price of a company’s shares immediately after a reverse stock split does not reflect a proportionate or mathematical adjustment to the Company's achievement of certain performance goals set forth in the award agreement. Under the Performance RSUs, the awards will vestmarket price based on the achievement of three performance goals as determined by the Compensation Committee at the endratio of the performance period ending December 31, 2023.reverse stock split. Accordingly, our total market capitalization after a Reverse Stock Split may be lower than our total market capitalization before the Reverse Stock Split, and it is possible that a Reverse Stock Split may not result in a per share trading price that would attract investors who do not trade in lower priced stocks.

 

The Performance RSUs are tiedEven if we implement the Reverse Stock Split, the per share trading price of our Common Stock may decrease due to three categories of performance goals to be achieved during the performance period, which will be equally weighted at the end of the performance period: (1) 1/3 of the Performance RSUs will be earned if the Company’s revenue meets a threshold amount for a trailing 12 month period; (2) 1/3 of the Performance RSUs will be earned if the Company achieves a threshold amount of cash flow for at least two consecutive quarters; and (3) 1/3 of the Performance RSUs will be earned if the Company achieves a threshold market capitalization for twenty consecutive trading days.

The Performance RSUs will only vest upon the achievement of the performance goals as determined by the Compensation Committee at the end of the performance period, subject, in general,factors unrelated to the executive's continuous employment withReverse Stock Split. Other factors, such as our financial results, market conditions and the Company throughmarket perception of our business, may adversely affect the endper share trading price of our Common Stock. As a result, we cannot assure you that the performance period; provided, however, an executiveReverse Stock Split, if completed, will be entitled to a pro-rated portion of the awardresult in the eventbenefits that his employment ceases upon his deathwe anticipate, that the per share trading price of our Common Stock will increase following the Reverse Stock Split or permanent disability. Further, if a change in controlthat the per share trading price of the Company occurs, the Performance RSUsour Common Stock will immediately vest, even if the performance goals have not been met, and be settleddecrease in the form of consideration consistent with the terms of the change in control.

On November 5, 2021, Dr. Audrey Kunin was also granted 150,000 stock options in relation to her Executive Employment Agreement (as described in more detail below). Such stock options will vest over a two (2) year period (with 50% of the options vesting on the one-year anniversary of Dr. Audrey Kunin’s first day of employment and the remaining 50% of the Options vesting on the two (2) year anniversary of Dr. Audrey Kunin’s employment immediately prior to the expiration of the term of her Employment Agreement).future.

 

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2020 Equity AwardsThe proposed Reverse Stock Split, if effected, may decrease the liquidity of our Common Stock.

 

On August 20, 2020, Mr. HallThe liquidity of our Common Stock may be harmed by the proposed Reverse Stock Split, given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the per share trading price does not increase proportionately as a result of the Reverse Stock Split. While the Board believes that a higher stock price may help generate the interest of new investors, the Reverse Stock Split may not result in a per-share price that will attract certain types of investors, such as institutional investors or investment funds, and Mr. Jones were awarded 350,000such share price may not satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our Common Stock may not improve as a result of a Reverse Stock Split and 75,000could be adversely affect by a higher per share price. Accordingly, the Reverse Stock Split may not increase marketability of our Common Stock. In addition, investors might consider the increased proportion of unissued authorized shares to issued shares to have an anti-takeover effect under certain circumstances, because the proportion allows for dilutive issuances that could prevent certain stockholders from changing the composition of the Board or render tender offers for a combination with another entity more difficult.

If we do not obtain stockholder approval of the Reverse Stock Split at the Special Meeting, we may not be able to satisfy our obligations in connection with the Warrant Reprice Transactions and the 2022 Private Placement.

In connection with the Warrant Reprice Transactions, we committed to seek stockholder approval for the Reverse Stock Split, and to effect the Reverse Stock Split after receiving such approval. In addition, the effectiveness of the Reverse Stock Split is a condition to closing the 2022 Private Placement. If we do not obtain stockholder approval of the Reverse Stock Split at the Special Meeting, we have agreed, in connection with the Warrant Reprice Transactions, to continue to hold stockholder meetings every four months to seek such approval until it is obtained. Any need to continue to seek such approval would result in increased expense to the Company and diversion of management’s attention, time, and effort.

The proposed Reverse Stock Split, if effected, may result in some stockholders owning “odd lots” that may be more difficult to sell or require greater transaction costs per share to sell.

If the proposed Reverse Stock Split is implemented, it will increase the number of stockholders who own “odd lots” of less than 100 shares of Common Stock. A purchase or sale of less than 100 shares of Common Stock may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own less than 100 shares of our Common Stock following the Reverse Stock Split may be required to pay higher transaction costs if they sell their shares of Common Stock.

The proposed Reverse Stock Split, if effected, will result in a significant increase in our authorized Common Stock and may result in future dilution to our stockholders.

The Reverse Stock Split will reduce the number of outstanding shares of our Common Stock without a proportionate reduction in the number of shares of authorized but unissued Common Stock in our Certificate of Incorporation, which will give the Company a significantly larger number of authorized shares, as a percentage of total outstanding shares, available for future issuance without further stockholder action, except as may be required by applicable laws or the rules of any stock options, respectively, to vest over four years. In 2020, Mr. Jones was also granted 160,000 restricted stock units and 300,000 stock options in relation to his Executive Employment Agreement (as described in more detail below). Such restricted stock units will fully vestexchange on which our Common Stock is listed. The issuance of additional shares of Common Stock may have a dilutive effect on the one year anniversaryownership of his first day of employment and such stock options will vest over four years.existing stockholders.

 

Federal Income Tax Law

Principal Effects of the Reverse Stock Split

 

Federal income tax law prohibits publicly held companies, such as the Company, from deducting compensation paid to a NEO that exceeds $1 million during the tax year. Prior to the adoption of the Tax CutsCommon Stock and Jobs Act of 2017 (“Tax ActPreferred Stock.”), to the extent that compensation was based upon the attainment of performance goals set by the Compensation Committee pursuant to plans If Proposal Two is approved by the stockholders at the compensation was exemptedSpecial Meeting, we expect the Board to establish the Reverse Stock Split ratio and proceed to effect the Reverse Stock Split, including the filing the Certificate of Amendment with the Secretary of State of the State of Delaware. Except for adjustments that may result from the $1 million deduction limit. The Tax Act repealed this exemption, and now compensation paidtreatment of fractional shares as described below, each issued share of Common Stock immediately prior to NEOs in excess of $1 million is no longer deductible, even if performance-based. The Compensation Committee intends to continue to use performance metrics in compensation when it is in the best interestsEffective Date will automatically be changed, as of the CompanyEffective Date, into a fraction of a share of Common Stock based on the exchange ratio within the approved range determined by the Board. In addition, proportional adjustments (i.e., in proportion to the Reverse Stock Split ratio determined by the Board) will be made to any convertible or exchangeable securities entitling the holders thereof to purchase, exchange for, or convert into shares of Common Stock. The Reverse Stock Split, if effected, would affect holders of Common Stock and its stockholders even if such compensation is not deductible for tax purposes.

Outstanding Equity Awards at Fiscal Year End

The following table presents the outstanding equity awards, asholders of December 31, 2021, held by eachSeries B Non-Voting Preferred Stock, which are convertible into shares of our NEOs.Common Stock, options were granted pursuant to our 2002 Stock Option Plan (“2002 Plan”) and 2005 Stock Option Plan (“2005 Plan”) prior to our initial public offering in October 2007, pursuant to our 2007 Plan thereafter until its expiration in March 2017, and all awards since then have been pursuant to our 2017 Omnibus Incentive Plan (“2017 Plan”). All options granted under our 2002 Plan and 2005 Plan were immediately exercisable and subject to a right of repurchase for any shares exercised prior to vesting. The options granted under our 2007 Plan and 2017 Plan are not exercisable until they have vested.uniformly.

				Option Awards																Stock Awards
Name		Grant date		Number of securities underlying unexercised options (#) exercisable(1)				Number of securities underlying unexercised options (#) unexercisable(1)				Option exercise price ($)				Option expiration date				Number of shares or units of stock that have not vested (#)				Market value of shares or units of stock that have not vested ($)				Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)				Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)
Justin M. Hall, Esq.		05/04/21			–				–			$	–				–				–			$	–				500,000	(2)		$	395,000
		08/20/20			109,375				240,625			$	0.99			08/20/30					–			$	–				–			$	–
		05/31/18			166,250				23,750			$	2.20			05/31/28					–			$	–				–			$	–
		01/25/17			21,450	(3)			–			$	3.60			01/25/27					–			$	–				–			$	–
		06/06/16			130,000	(4)			–			$	2.78			06/06/26					–			$	–				–			$	–
		10/01/15			2,000				–			$	6.75			10/01/25					–			$	–				–			$	–
		09/26/14			1,200				–			$	18.75			09/26/24					–			$	–				–			$	–
		09/26/13			760				–			$	42.75			09/26/23					–			$	–				–			$	–
		02/01/13			1,200				–			$	30.50			02/01/23					–			$	–				–			$	–
Andrew Jones		05/04/21			–				–			$	–				–				–			$	–				250,000	(2)		$	197,500
		08/20/20			25,000				–			$	0.99			08/20/30
		05/04/20			300,000				–			$	1.03			05/04/30
Dr. Audrey Kunin		11/05/21			–				–				–				–				–				–				300,000	(2)		$	177,000
		11/05/21			–				150,000	(5)		$	0.56				–				–				–				–				–

_________________

(1)	Unless otherwise noted, each option vests as to 25% of the shares underlying the option on the first anniversary of the grant date, with the remainder vesting in 12 equal installments thereafter at the end of each calendar quarter. Options expire ten (10) years from the date of grant.

(2)	Under the Performance RSUs, the awards will vest based on the achievement of three performance goals as determined by the Compensation Committee at the end of the performance period ending December 31, 2023, as described in further detail above.

(3)	Mr. Hall was granted 143,000 stock options to vest on January 31, 2018, in direct proportion to the percentage achievement of the stated 2017 corporate goals, as approved and determined by the Board. Such determination resulted in a 15% payout, or 21,450 shares vesting.

(4)	Mr. Hall was granted 130,000 stock options to vest on January 31, 2017, in direct proportion to the percentage achievement of the stated 2016 corporate goals, as approved and determined by the Board, which was 100%.

(5)	Dr. Audrey Kunin was granted 150,000 stock options to vest in two equal tranches on November 5, 2022 and November 5, 2023.

 

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Employment-Related Agreements and Potential Payments upon Termination or Change in Control

On January 31, 2020, May 4, 2020Voting Rights. Except for adjustments that may result from the treatment of fractional shares as described below, because the Reverse Stock Split would apply to all issued shares of our common stock, the proposed Reverse Stock Split would not alter the relative rights and November 5, 2021,preferences of existing stockholders nor affect any stockholder’s proportionate equity interest in the Company entered into an employment agreement with eachCompany. For example, a holder of Mr. Hall, Mr. Jones2% of the voting power of the outstanding shares of Common Stock immediately prior to the effectiveness of the Reverse Stock Split will generally continue to hold 2% of the voting power of the outstanding shares of Common Stock immediately after the Reverse Stock Split, and Dr. Audrey Kunin, respectively, in connection with their respective appointments to serve as an executive officer. Mr. Hall’s employment agreement was subsequently amended on January 26, 2022.the number of stockholders of record will also remain unaffected by the Reverse Stock Split.

 

The principalStock-Based Plans. Proportional adjustments (i.e., in proportion to the reverse stock split ratio) will be made to the maximum number of shares issuable under, outstanding awards under, and other terms of our NEOs employment agreements are summarized below.the Plans, including adjustments (based upon the Reverse Stock Split ratio) by the Board or a committee thereof, as applicable, to the number of shares available for future grant under the Plans, the number of shares underlying outstanding awards, the exercise price per share of outstanding stock options, and other terms of outstanding awards issued pursuant to the Plans to equitably reflect the effects of the Reverse Stock Split, so as to avoid the effect of increasing the value of awards previously granted.

 

Justin HallListing. Our Common Stock currently trades on the NYSE American. The Reverse Stock Split will not directly affect the listing of our Common Stock on the NYSE American, although we believe that a Reverse Stock Split could potentially increase our stock price, thereby facilitating compliance with the NYSE American’s continued listing standards. Following the Reverse Stock Split, we expect that our Common Stock will continue to be listed on the NYSE American under the symbol “NBY”, although our Common Stock would have a new committee on uniform securities identification procedures (or “CUSIP”) number (which is a number used to identify our Common Stock). Any stock certificates with the older CUSIP number will need to be exchanged for stock certificates with the new CUSIP number by following the procedures described below “— Stock Certificates”.

 

Mr. Hall’s employment agreement,“Public Company” Status. Our Common Stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934, as amended provides for at-will employment(the “Exchange Act”), and a term commencing on January 31, 2020 and ending on December 31, 2023 unless earlier terminated. Mr. Hall’s employment agreement originally provided for an annual base salary of two hundred eighty-six thousand dollars ($286,000),we are subject to annual reviewthe “public company” periodic reporting and increases determinedother requirements of the Exchange Act. The Reverse Stock Split would not affect our status as a public company or our registration under the Exchange Act. The Reverse Stock Split is not intended as, and we do not believe that it will have the effect of, a “going private transaction” covered by Rule 13e-3 under the Compensation Committee and/or Board (such amount,Exchange Act.

Authorized but Unissued Shares; Potential Anti-Takeover Effects. Our Certificate of Incorporation currently authorizes 150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, and the “Hall Base Salary”).Reverse Stock Split would not change those numbers. Therefore, the number of issued and outstanding shares of Common Stock would decrease, and the number of shares remaining available for issuance by us in the future would increase.

 

In addition Mr. Hall shallto shares of Common Stock issuable in connection with the Warrant Reprice Transactions and the closing of the 2022 Private Placement, these additional shares would be eligibleavailable for issuance from time to time for corporate purposes, such as issuances of Common Stock in connection with capital-raising transactions and acquisitions of companies or other assets, as well as for issuance upon conversion or exercise of securities such as convertible preferred stock, convertible debt, warrants or options convertible into or exercisable for Common Stock. We believe that the availability of the additional shares will provide us with the flexibility to meet business needs as they arise, to take advantage of favorable opportunities and to respond effectively in a changing corporate environment. For example, we may elect to issue shares of Common Stock to raise equity capital, to make acquisitions through the use of stock, to establish strategic relationships with other companies, to adopt additional employee benefit plans or reserve additional shares for issuance under such plans, where the Board determines it advisable to do so, without the necessity of soliciting further stockholder approval, subject to applicable stockholder vote requirements under Delaware General Corporation Law and the Company Guide rules. If we issue additional shares for any bonus plan that is deemed appropriate byof these purposes, the Board. The bonus amount shall be determined by the Board, in its sole discretion, based upon factors, including: (i) the fulfillment, during the relevant year,aggregate ownership interest of specific milestones and tasks delegated, for such year, to the executive as set by the executiveour current stockholders, and the Company’s Board, before the endinterest of the first calendar quarter; (ii) the evaluation of the executive by the Company’s Board; (iii) the Company’s financial, product and expected progress and (iv) other pertinent matters relating to the Company’s business and valuation. Any bonus willeach such existing stockholder, would be payable within two and a half (2¹/₂) months following the end of the year for which the bonus was earned. The Compensation Committee of the Board of Directors shall have the sole discretion to pay any or all of the annual bonus in the form of equity compensation. Any such equity compensation shall be issued from the Company’s equity incentive plan, and shall be fully vested upon issuance.diluted, possibly substantially.

 

In the event the Company terminates Mr. HallThe additional shares of Common Stock that would become available for cause (as defined in the employment agreement), he shallissuance upon an effective Reverse Stock Split could also be entitledused by us to any earned but unpaid wagesoppose a hostile takeover attempt or other compensation (including reimbursements of his outstanding expenses and unused vacation) earned through the termination date.

In the event the Company terminates Mr. Hall without cause (including death, disabilitydelay or for constructive termination) (each as defined in the employment agreement) which is not in connection withprevent a change of control provided such termination constitutesor changes in, or removal of, our management, including any transaction that may be favored by a “separation from service” as such termmajority of our stockholders or in which our stockholders might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner. Although the increased proportionate number of authorized but unissued shares to issued shares could, under certain circumstances, have an anti-takeover effect, the Reverse Stock Split is definednot being proposed in Section 409A of the Code and, subjectorder to his execution ofrespond to a release of claims in favor of the Company, he shall be entitledhostile takeover attempt or to an amount equalattempt to the Hall Base Salary in effect on the dateobtain control of separation from service plus the full target annual bonus percentage for the current fiscal year (the “Hall Severance Amount”). The Hall Severance Amount will be paid in twelve (12) equal consecutive monthly installments at the monthly rate of the Hall Base Salary rate in effect at the time of his termination, with such installments commencing within sixty (60) days following the executive’s separation from service. The Hall Severance Amount shall be in addition to Mr. Hall’s earned wages and other compensation (including reimbursements of his outstanding expenses and unused vacation) through the date his employment is terminated from theour Company.

In the event the Company terminates Mr. Hall without cause in connection with a change of control (as defined in the employment agreement), he shall be entitled to a Change of Control Severance (the “Hall CoC Severance Amount”) in place of the Hall Severance Amount described above. The Hall CoC Severance Amount shall be: (i) an amount equal to twice the Hall Base Salary and (ii) an amount equal to the cash portion of his target Annual Bonus for the fiscal year in which the termination occurs (with it deemed that all performance goals have been met at one hundred percent (100%) of budget or plan) multiplied by one hundred fifty percent (150%). For a period of eighteen (18) months, Mr. Hall may elect coverage for, and the Company shall reimburse him for, the amount of his premium payments for group health coverage, if any, elected by the executive pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"); provided, however, that Mr. Hall shall be solely responsible for all matters relating to his continuation of coverage pursuant to COBRA, including (without limitation) his election of such coverage and his timely payment of premiums.

Moreover, all outstanding equity awards held by Mr. Hall will be subject to full accelerated vesting on the date of termination without cause, in both the standard Hall Severance Amount and the Hall CoC Severance Amount, and the exercise period shall be extended to three (3) years from the date of termination. In order to terminate Mr. Hall for cause (or for Mr. Hall to resign for constructive termination), the acting party shall give notice to the other party specifying the reason for termination and providing a period of thirty (30) days to cure the reason specified. If there is no cure within thirty (30) days or the notified party earlier refuses to effect the cure, the termination shall then be deemed effective.

Andrew Jones

Mr. Jones’ employment agreement provides for at-will employment and a term commencing on May 4, 2020 and continuing until terminated in accordance with the terms of the employment agreement. The employment agreement included an original annual base salary of two hundred seventy-five thousand dollars ($275,000), subject to annual review and increases determined by the Compensation Committee (such amount, the “JonesBase Salary”), as well as an initial equity grant of 160,000 restricted stock units and an initial stock option award of 300,000 shares, as further described above.

 

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Board Discretion to Implement or Abandon Reverse Stock Split

In addition, Mr. Jones shall have

After stockholder approval, the opportunity to earn an annual performance bonus in an amount up to thirty percent (30%) of the Jones Base Salary, with such maximum amount subject to increases determinedReverse Stock Split will be effected, if at all, only upon a determination by the Compensation Committee and/or Board (the “Annual Bonus”). The bonus amount shall bethat the Reverse Stock Split (with an exchange ratio determined by the Board as described above) is in the Company’s and its stockholders’ best interests. Such determination will be based upon certain factors, including, but not limited to, the Board’s consideration of our commitments made in connection with the Warrant Reprice Transaction and the 2022 Private Placement, our need for the proceeds of the 2022 Private Placement, which will not be consummated prior to the effectiveness of the Reverse Stock Split, the historical trading price and trading volume of our Common Stock, the then prevailing trading price and trading volume of our Common Stock and the anticipated impact of the Reverse Stock Split on the trading market for our Common Stock, our ability to have our shares of Common Stock remain listed on the NYSE American, the anticipated impact of the Reverse Stock Split on our ability to raise additional financing, and prevailing general market and economic conditions. No further action on the part of stockholders would be required to either implement or abandon the Reverse Stock Split. If our stockholders approve the proposal, and the Board determines to effect the Reverse Stock Split, we would communicate to the public additional details regarding the Reverse Stock Split, including the specific ratio selected by the Board. The Board reserves the right to elect not to proceed with the Reverse Stock Split if it determines, in its sole discretion, based uponthat the following factors: (i)Reverse Stock Split is no longer in the fulfillment, during the relevant year, of specific milestones and tasks delegated, for such year, to Mr. Jones as set by Mr. Jones and the Company’s CEO and/or the Board, before the endbest interests of the first calendar quarter (or the first three months of his employment, as appropriate); (ii) the evaluation of Mr. Jones by the Company’s CEO and/or the Board; (iii) the Company’s financial, productCompany and expected progress and (iv) other pertinent matters relating to the Company’s business and valuation. Any bonusits stockholders.

Fractional Shares

We will be payable within two and a half (2 ½) months following the end of the year for which the bonus was earned. The Committee shall have the sole discretion to pay any or all of the Annual Bonus in the form of equity compensation, except to the extent that the Annual Bonus is paidnot issue fractional shares in connection with the Reverse Stock Split. To the extent any holders of pre-Reverse Stock Split Shares are entitled to fractional shares as a Jones Severance Amount (as defined below) orresult of the Reverse Stock Split, we will instead issue one whole share of Common Stock to all holders that would otherwise receive a Jones CoC Severance Amount (as defined below). Any such equity compensation shall be issued from the Company’s equity incentive plan, and shall be fully vested upon payment.fractional share of Common Stock.

 

No Dissenters’ Rights’

In the event the Company terminates Mr. Jones for cause (as defined in the employment agreement), he shall

Under Delaware law, our stockholders will not be entitled to any earned but unpaid wagesdissenters’ rights or other compensation (including reimbursementsrights of his outstanding expenses and unused vacation) earned through the termination date. In the event the Company terminates Mr. Jones without cause (including death, disability, or for constructive termination) (each as defined in the employment agreement), which is notappraisal in connection with the implementation of the Reverse Stock Split, and we will not independently provide our stockholders with any such rights.

Certain United States Federal Income Tax Consequences

The following is a changesummary of control, he shall,certain United States federal income tax consequences of the Reverse Stock Split. It does not address any state, local or foreign income or other tax consequences, which, depending upon the jurisdiction and the status of the stockholder/taxpayer, may vary from the United States federal income tax consequences. It applies to you only if you held shares of pre-reverse stock split Common Stock as capital assets for United States federal income tax purposes. This discussion does not apply to you if you are a member of a class of holders subject to his executionspecial rules, such as (a) a dealer in securities or currencies, (b) a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings, (c) a bank, (d) a life insurance company, (e) a tax-exempt organization, (f) a person that owns shares of Common Stock that are a hedge, or that are hedged, against interest rate risks, (g) a person who owns shares of Common Stock as part of a release of claims in favor ofstraddle or conversion transaction for tax purposes or (h) a person whose functional currency for tax purposes is not the Company, be entitled to an amount equal to the Jones Base Salary in effectU.S. dollar. The discussion is based on the dateInternal Revenue Code of separation from service plus the full target Annual Bonus percentage of the then current fiscal year (with it deemed that all performance goals have been met at 100% of budget or plan)1986, as amended (the “Jones Severance AmountInternal Revenue Code”), which will be paid in twelve (12) equal consecutive monthly installments. The Jones Severance Amount shall be in addition to Mr. Jones’ earned wagesits legislative history, existing, temporary and proposed regulations under the Internal Revenue Code, published rulings and court decisions, all as of the date hereof. These laws, regulations and other compensation (including reimbursementsguidance are subject to change, possibly on a retroactive basis. We have not sought, and will not seek, an opinion of his outstanding expenses and unused vacation) through the date his employment is terminatedcounsel or a ruling from the Company.Internal Revenue Service regarding the United States federal income tax consequences of a reverse stock split.

 

In the event the Company terminates Mr. Jones without cause in connection with a change of control (as defined in the employment agreement), he shall be entitled to a Change of Control Severance (the “Jones CoC Severance Amount”) in place of the Jones Severance Amount described above. The Jones CoC Severance Amount shall be: (i) an amount equal to twice the Jones Base Salary in effect on the date of separation from service and (ii) an amount equal to the cash portion of Mr. Jones’ target Annual Bonus for the fiscal year in which the termination occurs (with it deemed that all performance goals have been met at one hundred percent (100%) of budget or plan) multiplied by one hundred fifty percent (150%). For a period of eighteen (18) months, Mr. Jones may elect coverage for, and the Company shall reimburse Mr. Jones for, the amount of his premium payments for group health coverage, if any, elected by Mr. Jones pursuant to the COBRA; provided, however, that Mr. Jones shall be solely responsible for all matters relating to his continuation of coverage pursuant to COBRA, including (without limitation) his election of such coverage and his timely payment of premiums.

Moreover, in the event of either a termination without cause or a termination in connection with a change of control, all outstanding equity awards held by Mr. Jones will be subject to full accelerated vesting on the date of termination, and the exercise period shall be extended to three (3) years from the date of termination. In order for Mr. Jones to resign for constructive termination, Mr. Jones shall give notice to the Company within thirty (30) days of the initial existence of such grounds for constructive termination and providing a period of thirty (30) days to cure the reason specified. Mr. Jones must then terminate his employment within thirty (30) days of the expiration of the cure period.

Dr. Audrey Kunin

Dr. Audrey Kunin’s employment agreement provides for at-will employment and a two-year term commencing on November 5, 2021. Her Employment Agreement provides for an annual base salary of $200,000 (“Kunin Base Salary”). Additionally, Dr. Audrey Kunin’s employment agreement includes an equity grant of 300,000 Performance RSUs and a stock option award of 150,000 shares, as further described above.PLEASE CONSULT YOUR OWN TAX ADVISOR CONCERNING THE CONSEQUENCES OF THE REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.

 

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Dr. Audrey Kunin’s employment agreement also provides her with the opportunityTax Consequences to earn an annual performance bonus (“Kunin Annual BonusUnited States Holders of Common Stock.”) in an amount up to one hundred percent (100%) A United States holder, as used herein, is a stockholder who or that is, for United States federal income tax purposes: (a) a citizen or individual resident of the Kunin Base Salary. ForUnited States, (b) a domestic corporation, (c) an estate whose income is subject to United States federal income tax regardless of its source, or (d) a trust that (i) is subject to the Kunin Annual Bonus, sixty percent (60%)primary supervision of a U.S. court and the control of one or more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. This discussion applies only to United States holders.

The Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes and, therefore, a reorganization within the meaning of Section 368(a)(1)(E) of the total amountInternal Revenue Code. As a result, a stockholder should not recognize gain or loss upon the Reverse Stock Split. A stockholder’s aggregate tax basis in the shares of Common Stock received pursuant to the Reverse Stock Split (including any whole share received in exchange for a fractional share) will equal the aggregate tax basis of the Kunin Annual Bonus shall be determined byshares of Common Stock surrendered. The stockholder’s holding period in the Boardshares of the common stock received (including any whole share received in its sole discretion, based uponexchange for a fractional share) will include the following factors: (i)holding period in the fulfillment, duringshares of Common Stock surrendered. Treasury regulations promulgated under the relevant year,Internal Revenue Code provide detailed rules for allocating the tax basis and holding period of specific milestones and tasks delegated, for such year, to Dr. Audrey Kunin as set by Dr. Audrey Kunin and NovaBay and/or its authorized representative; (ii) the evaluationshares of Dr. Audrey Kunin by NovaBay and/or its authorized representative; (iii) DERMAdoctor’s financial, product and expected progress and (iv) other pertinent matters relating to DERMAdoctor’s business and valuation. Dr. Audrey Kunin shall also be entitledCommon Stock surrendered to the remaining portionshares of Common Stock received pursuant to the Reverse Stock Split. Stockholders who acquired their shares of Common Stock on different dates and at different prices should consult their tax advisors regarding the allocation of the Kunin Annual Bonustax basis and holding period of up to forty percent (40%)such shares.

Accounting Consequences

Following the Effective Date of any Reverse Stock Split, if any, the net income or loss and net book value per share of Common Stock will be increased because there will be fewer shares of Common Stock outstanding. We do not anticipate that any other accounting consequences would arise as a result of the Kunin Base Salary,Reverse Stock Split.

Stock Certificates

As of the Effective Date, each certificate representing shares of Common Stock outstanding before the Reverse Stock Split will be deemed, for all corporate purposes, to evidence ownership of the reduced number of shares of Common Stock resulting from the Reverse Stock Split. All options, warrants and other securities exchangeable or exercisable for, or convertible into, Common Stock also automatically will be adjusted on the Effective Date.

Our transfer agent, Computershare Shareholder Services, Inc., will act as considered and approved by NovaBay’s Boardthe exchange agent for purposes of Directors in its sole discretion, upon meeting certain performance metrics relatedexchanging stock certificates subsequent to the Membership Unit Purchase Agreement entered intoReverse Stock Split. Shortly after the Effective Date, stockholders of record will receive written instructions requesting them to complete and return a letter of transmittal and surrender their old stock certificates for new stock certificates reflecting the adjusted number of shares as a result of the Reverse Stock Split. Certificates representing shares of Common Stock issued in connection with the DERMAdoctor Acquisition. Any bonusReverse Stock Split will continue to Dr. Audrey Kuninbear the same restrictive legends, if any, that were borne by the surrendered certificates representing the shares of Common Stock outstanding prior to the Reverse Stock Split. No new certificates will be payable within seventy-four (74) days followingissued until such stockholder has surrendered any outstanding certificates, together with the endproperly completed and executed letter of transmittal, to the exchange agent. Until surrendered, each certificate representing shares of Common Stock outstanding before the Reverse Stock Split would continue to be valid and would represent the adjusted number of shares, based on the ratio of the year for which the such bonus was earned. Upon the mutual agreement of Dr. Audrey Kunin and NovaBay’s Board of Directors, any or all of the Kunin Annual Bonus may be paid in the form of equity compensation. Any such equity compensation shall be issued from NovaBay’s equity incentive plan, and shall be fully vested upon payment.Reverse Stock Split.

 

In the event that Dr. Audrey Kunin is terminated for cause (as defined in the her employment agreement)Any stockholder whose stock certificates are lost, destroyed or such employment is terminated due to her death or disability, she shallstolen will be entitled to any earned but unpaid wagesa new certificate or other compensation (including reimbursements of her outstanding expensescertificates representing post-reverse stock split shares upon compliance with the requirements that we and unused vacation) earned through the termination date. In the event that Dr. Audrey Kunin is terminated without cause (as defined in her employment agreement), she shall execute a release of claims in favor of NovaBay, be entitled to an amount equal to the Kunin Base Salary in effect on the date of separation from service plus the full target Annual Bonus percentage of the then current fiscal year (with it deemed that all performance goals have been met at 100% of budget or plan) (the “Kunin Severance Amount”), which will be paid in twelve (12) equal consecutive monthly installments. The Kunin Severance Amount shall be in addition to Dr. Audrey Kunin’s earned wages and other compensation (including reimbursements of her outstanding expenses and unused vacation) through the date her employment is terminated. Further, in the event that Dr. Audrey Kunin is terminated for cause, she and the other applicable parties will no longer be entitled to the earn out payments provided for in the Membership Unit Purchase Agreement entered intoour transfer agent customarily apply in connection with lost, destroyed or stolen certificates. Instructions as to lost, destroyed or stolen certificates will be included in the DERMAdoctor Acquisition; however, if Dr. Audrey Kunin is terminated without cause or terminated as a resultletter of death or disability, her andinstructions from the other applicable parties will remain entitled to the earn out payments.exchange agent.

 

Moreover,Upon the Reverse Stock Split, we intend to treat stockholders holding Common Stock in “street name,” through a broker, bank, or other nominee, in the event of either a termination without cause,same manner as registered stockholders whose shares are registered in their names. Brokers, banks, and subject to her execution of a release, all outstanding equity awards then held by Dr. Audrey Kuninother nominees will be subjectinstructed to full accelerated vesting oneffect the date of termination,Reverse Stock Split for their beneficial holders holding Common Stock in “street name.” However, such brokers, banks, and other nominees may have different procedures than registered stockholders for processing the exercise period shall be extendedReverse Stock Split. If you hold your shares in “street name” with a bank, broker or other nominee, and if you have any questions in this regard, we encourage you to three (3) years from the date of termination.

Director Compensation

The compensation and benefits for services as non-employee members of our Board is determined by our Board. Directors employed by us, such as Mr. Hall and Dr. Audrey Kunin, are not compensated for service on the Boardcontact your broker, bank, or any committee of the Board; however, we reimburse all directors for any out-of-pocket expenses incurred in connection with attending meetings of our Board and committees of our Board.

The Board, upon the recommendation of the Compensation Committee, approved the Non-Employee Director Compensation Program, effective January 1, 2021 (the “2021 Non-Employee Director Compensation Plan”). Subsequently, the Pay Governance Survey found that the Company’s 2021 Non-Employee Director Compensation Plan was below the market 25th percentile of the Company’s peers. As a result, the Board, upon the recommendation of the Compensation Committee, revised the previously adopted 2021 Non-Employee Director Compensation Plan to increase certain cash retainer amounts and alter the director’s annual equity grant from stock options to restricted stock units, effective as of July 1, 2021.

Under the 2021 Non-Employee Director Compensation Plan, each director receives his or her annual retainer compensation in cash and an annual grant of 30,000 restricted stock units. All cash compensation is payable quarterly on the first (1^st) business day of the quarter.Approved non-employee director compensation for 2021 was as follows:nominee.

 

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YOU SHOULD NOT DESTROY YOUR STOCK CERTIFICATES AND YOU SHOULD NOT SEND THEM NOW. YOU SHOULD SEND YOUR STOCK CERTIFICATES ONLY AFTER YOU HAVE RECEIVED INSTRUCTIONS FROM THE EXCHANGE AGENT AND IN ACCORDANCE WITH THOSE INSTRUCTIONS.

If any certificates for shares of Common Stock are to be issued in a name other than that in which the certificates for shares of Common Stock surrendered are registered, the stockholder requesting the reissuance will be required to pay to us any transfer taxes or establish to our satisfaction that such taxes have been paid or are not payable and, in addition, (a) the transfer must comply with all applicable federal and state securities laws, and (b) the surrendered certificate must be properly endorsed and otherwise be in proper form for transfer.

Board Meetings		Chairman of Committee forBook-Entry Committee Meetings Shares		All Other Members for Committee Meetings
Chairman of the Board: Annual cash compensation of $52,000 per year. Member of the Board: The annual fee consists of: (i) $40,000 in cash and (ii) 30,000 restricted stock units granted. The restricted stock units are granted at the Company’s Annual Meeting of Stockholders, and vest on the one year anniversary of the grant date.		Chairman of the Audit Committee: Annual cash compensation of $17,500 per year. Chairman of the Compensation Committee: Annual cash compensation of $13,000 per year. Chairman of the N&CG Committee: Annual cash compensation of $10,000 per year. Lead Independent Director (if different from Chairman of the Board): Annual cash compensation of $30,000 per year.		Member of the Audit Committee: Annual cash compensation of $7,500 per year. Member of the Compensation Committee: Annual cash compensation of $6,000 per year for each committee. Member of the N&CG Committee: Annual cash compensation of $5,000 per year for each committee.

 

Non-employee directors also mayRegistered stockholders are stockholders who hold some or all of their shares electronically in book-entry form with our transfer agent and do not have stock certificates evidencing their ownership of Common Stock. They are, however, provided with a statement reflecting the number of shares of Common Stock registered in their accounts. If you hold registered shares of Common Stock in book-entry form, you do not need to take any action to receive your post-Reverse Stock Split shares of Common Stock in registered book-entry form. If you are entitled to post-Reverse Stock Split shares of Common Stock, a transaction statement will automatically be granted additional awards undersent to your address of record by our equity incentive plans attransfer agent as soon as practicable after the discretionEffective Date indicating the number of our Board.shares of Common Stock you hold.

 

The compensation received during 2021 by each non-employee director is set forth below. Due to their nominations to the Board that occurred after the end of the 2021 fiscal year on January 27, 2022, Dr. Audrey Kunin, Ms. Garlikov and Mr. Sean Zheng are not included in the below.

Name		Fees Earned or Paid in Cash ($)				Stock Awards(1) ($)				Total ($)
Paul E. Freiman, Ph.D.		$	74,250			$	20,400			$	94,650
Xinzhou (Paul) Li(2)		$	—			$	20,400			$	20,400
Swan Sit		$	52,250			$	20,400			$	72,650
Mijia (Bob) Wu, M.B.A.		$	35,000			$	20,400			$	55,400
Yenyou (Jeff) Zheng, Ph.D.		$	64,250			$	20,400			$	84,650

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(1)

These amounts represent the aggregate grant date fair value of $0.68 per share for the 30,000 restricted stock awards granted to each director as part of his or her annual fee in fiscal year 2021. The assumptions used to determine the value of restricted stock units are described in Note 15 “Equity-Based Compensation” to the Company’s consolidated financial statements in our Annual Report. At December 31, 2021, each of Mr. Freiman, Mr. Li, Ms. Sit, Mr. Wu and Dr. Jeff Zheng had an aggregate of 30,000 unvested restricted stock units. At December 31, 2021, the aggregate number of vested stock options for each of the non-employee directors who served in 2021 and held stock options was as follows (with no such director holding any unvested stock options at such time): Mr. Freiman, 122,097; Mr. Li, 65,248; Ms. Sit, 20,000; Mr. Wu, 55,244; and Mr. Zheng, 20,000.Stockholder Approval

 

The affirmative vote of a majority of the shares of Common Stock outstanding as of the Record Date is required for approval of this Proposal Two.

If our stockholders approve this Proposal Two, we expect the Board to determine a Reverse Stock Split ratio within the range approved by stockholders and then file the Certificate of Amendment with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, as soon as practicable following stockholder approval of Proposal Two. The Certificate of Amendment will become effective after filing with the Secretary of State of the State of Delaware and on the date and time set forth therein.

(2)	Mr. Li elected to forgo any compensatory cash fees during 2021.Recommendation of the Board

 

For the reasons described in this Proxy Statement, the Board unanimously recommends that you vote “FOR” the approval of an amendment to the Certificate of Incorporation, as amended, to effect a Reverse Stock Split of all of our Common Stock issued and outstanding shares or held in treasury at a ratio of not less than 1-for-10 and not more than 1-for-35, and to grant authorization to the Board to determine, in its sole discretion, the specific ratio at any whole number within the above share range and the timing of the Reverse Stock Split becoming effective or to abandon the Reverse Stock Split.

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Proposal Three:

The Adjournment Proposal

Overview

A proposal will be submitted to the stockholders at the Special Meeting to approve the adjournment of the Special Meeting to establish a quorum or to solicit additional proxies in the event that there are not sufficient votes at the time of the Special Meeting to approve Proposal One or Proposal Two. Any adjournment of the Special Meeting may be made without notice, other than by an announcement made at the Special Meeting. Any adjournment of the Special Meeting for the purpose of soliciting additional proxies will allow stockholders who have already sent in their proxies to revoke them at any time prior to the time that the proxies are used.

Stockholder Approval

The affirmative vote of the holders of a majority of the shares of Common Stock present or represented and entitled to vote at the Special Meeting is required for approval of this Proposal Three.

Recommendation of the Board

The Board recommends unanimously that you cast your vote “FOR” the approval of the adjournment of the Special Meeting to establish a quorum or to solicit additional proxies in the event that there are not sufficient votes at the time of the Special Meeting to approve Proposal One or Proposal Two.

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Security Ownership of Certain Beneficial Owners and ManagementSecurity Ownership of Certain Beneficial Owners and Management

 

The following table indicates information as of March 16,September 13, 2022 regarding the beneficial ownership of our securities by:

 

●

each person who is known by us to beneficially own more than five percent (5%) of our securities;

 

●

our current executive officers;

 

●

each of our directors; and

 

●

all of our directors and executive officers as a group.

 

The percentage of shares beneficially owned is based on 51,018,36464,988,364 shares of our Common Stock outstanding as of March 16,September 13, 2022. Except as indicated in the footnotes to this table, and as affected by applicable community property laws, all persons listed have sole voting and investment power for all shares shown as beneficially owned by them and no shares are pledged. 

 

Name and Address of Beneficial Owner (1)		Number of Shares Beneficially Owned				Percent of Class
Beneficial Owners Holding More Than 5%
Pioneer Pharma (Hong Kong) Company Ltd. (“Pioneer Hong Kong”) (2)			5,188,421				10.2	%
682 Castle Peak Road
Lai Chi Kok, Kowloon, Hong Kong
FGP Protective Opportunity Master Fund SP (3)			5,605,790				9.9	%
94 Solaris Ave, 2nd Floor
Camana Bay
P.O. Box 30 745 Grand Cayman
Hudson Bay Master Fund Ltd. (4)			4,971,292				8.9	%
c/o Hudson Bay Capital Management LP 28 Havemeyer Place, 2nd Floor Greenwich, CT 06830
Jian Ping Fu (“Mr. Fu”) (5)			4,000,000				7.8	%
11 Williams Road
Mt. Eliza, Melbourne VIC 3930, Australia
Executive Officers and Directors
Justin M. Hall, Esq. (6)			471,657				*
Andrew Jones (7)			268,086				*
Dr. Audrey Kunin (8)			500,000				1.0	%
Dr. Jeff Kunin (9)			500,000				1.0	%
Paul E. Freiman, Ph.D. (10)			124,409				*
Julie Garlikov			—				*
Swan Sit (11)			20,000				*
Mijia (Bob) Wu, M.B.A. (12)			55,244				*
Yenyou (Jeff) Zheng, Ph.D. (13)			20,000				*
Yongxiang (Sean) Zheng			—				*
All directors and executive officers as a group (10 persons)			1,459,396				2.8	%

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Name and Address of Beneficial Owner (1)		Number of Shares Beneficially Owned				Percent of Class
Beneficial Owners Holding More Than 5%
Pioneer Pharma (Hong Kong) Company Ltd. (“Pioneer Hong Kong”) (2)			5,188,421				8.0	%
682 Castle Peak Road
Lai Chi Kok, Kowloon, Hong Kong
Hudson Bay Master Fund Ltd. (3)			4,971,292				7.1	%
c/o Hudson Bay Capital Management LP
28 Havemeyer Place, 2nd Floor
Greenwich, CT 06830
FGP Protective Opportunity Master Fund SP (4)			7,212,906				9.9	%
94 Solaris Ave, 2nd Floor
Camana Bay
P.O. Box 30 745 Grand Cayman
Jian Ping Fu (“Mr. Fu”) (5)			4,000,000				6.2	%
11 Williams Road
Mt. Eliza, Melbourne VIC 3930, Australia
Executive Officers and Directors
Justin M. Hall, Esq. (6)			527,282				*
Andrew Jones (7)			327,461				*
Audrey Kunin, M.D. (8)			575,000				*
Jeff Kunin, M.D. (9)			500,000				*
Paul E. Freiman, Ph.D. (10)			154,409				*
Julie Garlikov			-				*
Swan Sit (11)			50,000				*
Mijia (Bob) Wu, M.B.A. (12)			85,244				*
Yenyou (Jeff) Zheng, Ph.D. (13)			50,000				*
Yongxiang (Sean) Zheng			-				*
All directors and executive officers as a group (10 persons)			1,769,396				2.7	%

 

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*	*         Less than one percent (1%).

 

(1)

The address for each director and officer of NovaBay listed is c/o NovaBay Pharmaceuticals, Inc., 2000 Powell Street, Suite 1150, Emeryville, CA 94608. Number of shares beneficially owned and percent of class is calculated in accordance with SEC rules. A beneficial owner is deemed to beneficially own shares the beneficial owner has the right to acquire within 60 days of March 16,September 13, 2022. For purposes of calculating the percent of class held by a single beneficial owner, the shares that such beneficial owner has the right to acquire within 60 days of March 16,September 13, 2022 are also deemed to be outstanding; however, such shares are not deemed to be outstanding for purposes of calculating the percentage ownership of any other beneficial owner.

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(2)	Based upon information contained in the Schedule 13D/A filed by Pioneer Hong Kong and China Pioneer Pharma Holdings Limited, the parent company of Pioneer Hong Kong, with the SEC on January 13, 2017, Pioneer Hong Kong beneficially owned 5,188,421 shares of Common Stock as of December 9, 2016, with shared voting and dispositive power of all shares and sole voting and dispositive power of no shares.
(3)	Based upon the Company’s records, as of March 16, 2022, FGP Protective Opportunity Master Fund SP owned at least 5,605,790 shares of Common Stock issuable upon the exercise of warrants and/or the conversion of shares of the Preferred Stock (with such number of shares of Common Stock representing the maximum amount exercisable and/or convertible up to a beneficial ownership threshold of 9.9%).
(4)(3)	Based upon information contained in the Schedule 13G filed by Hudson Bay Capital Management LP and Sander Gerber with the SEC on February 4, 2022, Hudson Bay Capital Management LP beneficially owned 4,971,292 shares of Common Stock (including 4,804,326 shares of Common Stock issuable upon exercise of warrants and/or conversion of shares of the Series B Preferred Stock) as of December 31, 2021, with shared voting and dispositive power of all shares and sole voting and dispositive power of no shares.
(4)	Based upon the Company’s records, as of September 13, 2022, FGP Protective Opportunity Master Fund SP owned at least 7,212,906 shares of Common Stock issuable upon the conversion of shares of the Series B Preferred Stock (with such number of shares of Common Stock representing the maximum amount convertible up to a beneficial ownership threshold of 9.9%).
(5)	Based upon information contained in the Schedule 13D/A filed by Mr. Fu with the SEC on August 24, 2020, Mr. Fu beneficially owned 4,000,000 shares of Common Stock as of August 1, 2020, with sole voting power over 4,000,000 shares, shared voting power over no shares, sole dispositive power over 4,000,000 shares and shared dispositive power over no shares.
(6)	IncludesConsists of (i) 73,172 shares of Common Stock held directly by Mr. Hall and (ii) 398,485454,110 shares issuable upon the exercise of outstanding options which are exercisable as of March 16,September 13, 2022 or within 60 days after such date. Does not include 500,000 performance restricted stock units granted to Mr. Hall on May 4, 2021 that will vest based on the achievement of three performance goals at the end of a three-year performance period ending December 31, 2023.
(7)	IncludesConsists of (i) 127,461 shares of Common Stock held directly by Mr. Jones and (ii) 140,625200,000 shares issuable upon exercise of outstanding options which are exercisable as of March 16,September 13, 2022 or within 60 days after such date. Does not include 250,000 performance restricted stock units granted to Mr. Jones on May 4, 2021 that will vest based on the achievement of three performance goals at the end of a three-year performance period ending December 31, 2023.
(8)	Consists of (i) 500,000 shares held by The Audrey G. Kunin Trust of which Dr. Audrey Kunin serves as the trustee (with sole voting and investment power). and (ii) 75,000 shares issuable upon exercise of outstanding options which are exercisable as of September 13, 2022 or within 60 days after such date. Does not include 300,000 performance restricted stock units granted to Dr. Audrey Kunin on November 8, 2021 that will vest based on the achievement of three performance goals at the end of a three-yearthree year performance period ending December 31, 2023.
(9)	Consists of 500,000 shares held by The Audrey G. Kunin Trust of which Dr. Jeff Kunin's spouse (Dr. Audrey Kunin) serves as the trustee (with sole voting and investment power).
(10)	IncludesConsists of (i) 2,31132,311 shares held by the Paul Freiman and Anna Mazzuchi Freiman Trust, of which Mr.Dr. Freiman and his spouse are trustees (with sole voting power over 625 shares, shared voting power over 1,061 shares, sole investment power over no shares and shared investment power over 1,686 shares), and (ii) 122,097 shares issuable upon exercise of outstanding options which are exercisable as of March 16,September 13, 2022 or within 60 days after such date.
(11)	ReflectsConsists of (i) 30,000 shares of Common Stock held directly by Ms. Sit and (ii) 20,000 shares issuable upon exercise of outstanding options which are exercisable as of March 16,September 13, 2022 or within 60 days after such date.
(12)	ReflectsConsists of (i) 30,000 shares of Common Stock held directly by Mr. Wu and (ii) 55,244 shares issuable upon exercise of outstanding options which are exercisable as of March 16,September 13, 2022 or within 60 days after such date. As Non-Executive Director of China Pioneer, the parent company of Pioneer Hong Kong.Kong, Mr. Wu disclaims beneficial ownership of the shares of the Common Stock held by China Pioneer Pharma and Pioneer Hong Kong.
(13)	ReflectsConsists of (i) 30,000 shares of Common Stock held directly by Dr. Jeff Zheng and (ii) 20,000 shares issuable upon exercise of outstanding options which are exercisable as of March 16,September 13, 2022 or within 60 days after such date.

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Equity Compensation Plan Information

The following table provides information as of December 31, 2021 with respect to shares of our common stock that may be issued under existing equity compensation plans.

Plan category		Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights				Weighted Average Exercise Price of Outstanding Options and Rights				Number of Securities Remaining Available For Future Issuance under Equity Compensation Plans (excluding some securities reflected in first column)
Equity compensation plans approved by security holders(1)			4,449,048			$	1.39				1,842,993
Equity compensation plans not approved by security holders			—				—				—
Total			4,449,048			$	1.39				1,842,993

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(1)	Consists of the 2007 Plan and 2017 Plan. No additional option grants are being made under the 2002 Plan, 2005 Plan or 2007 Plan. The 2017 Plan became effective on June 2, 2017, and 1,842,993 shares were reserved for issuance under that plan at December 31, 2021.

 

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Certain Relationships and Related Party Transactions

NovaBay’s Audit Committee has the responsibility of reviewing any possible related party transactions. In conducting its review, the Audit Committee applies the principles of the Code of Ethics and its Conflict of Interest Policy to: (i) the relationship of the related persons to the transaction; (ii) the relationship between the Company and the related persons; (iii) the importance of the interest to the related persons; and (iv) the amount involved in the transaction. Since December 31, 2019, there has not been any transaction, nor is there any proposed transaction, in which NovaBay was a participant, and in which a “related party” of NovaBay had or is expected to have a direct or indirect material interest, in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent (1%) of the average of NovaBay’s total assets at the end of the last two (2) completed fiscal years, that would require disclosure, except for the following:

November 2021 DERMAdoctor Acquisition

On November 5, 2021, pursuant to a membership unit purchase agreement, dated as of September 27, 2021 (the “Purchase Agreement”), NovaBay acquired 100% of the membership units of DERMAdoctor from Papillon Partners, Inc., a Missouri corporation indirectly owned by Dr. Audrey Kunin and Dr. Jeff Kunin (“Papillon”) and (v) Midwest Growth Partners, L.L.L.P., an Iowa limited liability limited partnership (together with Papillon, the “Sellers”) for a closing purchase price of $12.0 million (as adjusted for certain indebtedness, transaction expenses and cash of DERMAdoctor at closing as set forth in the Purchase Agreement, the “Closing Cash Consideration”) and potential future earn out payments of up to an aggregate of $3.0 million over a period of two calendar years post-closing. The earn out payments are for up to $1.5 million after closing for each of the 2022 and 2023 calendar years (or an aggregate $3.0 million) if the legacy business of DERMAdoctor achieves certain contribution margin targets each year conditioned upon Dr. Audrey Kunin’s and Dr. Jeff Kunin’s continued employment with DERMAdoctor (except if either are terminated without cause or terminated as a result of death or disability). Such earn out payments are to be paid in cash or unregistered shares of NovaBay’s common stock, subject to certain restrictions. Under the terms of the Purchase Agreement, Papillon and Midwest Growth Partners, L.L.L.P. received approximately 82.2% and 17.8%, respectively, of the Closing Cash Consideration and will subsequently receive such proportion of the earn out payments, if any. An aggregate amount of $1.2 million of the Closing Cash Consideration is being held in escrow for 12 months after the closing to secure certain payment and indemnification obligations of DERMAdoctor and the Sellers, as applicable and in accordance with the terms of the Purchase Agreement.

Both Dr. Audrey Kunin and Dr. Jeff Kunin are parties to executive employment agreements, as described above and in the Current Report on Form 8-K filed with the SEC on November 12, 2021, which is incorporated by reference. Further, in connection with the closing of the DERMAdoctor Acquisition, NovaBay also entered into a Side Letter with Dr. Audrey Kunin to provide for her appointment to the Board, which occurred on January 27, 2022.

June 2020 Reprice of August 2019 Preferred Private Placement Warrants

On August 8, 2019, we entered into a securities purchase agreement (the “2019 SecuritiesPurchase Agreement”) for the sale to accredited investors of (i) 2,700,000 shares of NovaBay’s Series A Non-Voting Convertible Preferred Stock that automatically converted into 2,700,000 shares of Common Stock upon the approval of our stockholders at the special meeting of stockholders on October 9, 2019 and (ii) Common Stock purchase warrants exercisable for 2,700,000 shares of Common Stock for an aggregate purchase price of $2,700,000 (the “August Private Placement”). China Kington agreed to serve as placement agent in exchange for a commission equal to six percent (6%) of the gross proceeds received by us in the August Private Placement.

In July 2020, the Common Stock purchase warrants issued in the August Private Placement were exercised in full as consideration for the issuance of an equivalent number of new warrants to the same investor with a reduced exercise price (the “June 2020 Reprice”). China Kington did not participate and did not receive any commission for the June 2020 Reprice. Our Audit Committee recommended to our Board and our Board approved the 2019 Securities Purchase Agreement on August 8, 2019 and then further approved the June 2020 Reprice, upon the Audit Committee’s recommendation, on July 20, 2020. Mr. Wu, who serves as a director on our Board, also serves as the Managing Director of China Kington.

February 2019 Promissory Note Amended June 25, 2019 and May 14, 2020

On February 27, 2019, NovaBay issued a promissory note payable to Pioneer Hong Kong, which was amended on June 25, 2019 and May 14, 2020, pursuant to which Pioneer Hong Kong loaned us $1,000,000 (the “Promissory Note”). The interest payment in the Promissory Note was amended from a payment of $300,000 (initially $150,000) to the delivery of 65,178 units of NeutroPhase (40ml) to Pioneer Hong Kong, or an affiliate of Pioneer Hong Kong. We repaid the Promissory Note in full in May 2020 using proceeds raised through certain at-the-market equity offerings pursuant to the At the Market Offering Agreement, dated April 27, 2020, with Ladenburg Thalmann & Co. Inc. The loan was facilitated by China Kington which, until repaid in full, had a perfected security interest in all tangible and intangible assets of NovaBay. In connection with the Promissory Note, we paid China Kington a 2% fee for brokering the transaction and entered into a consulting agreement with China Kington for a term of one year. Mr. Mijia (Bob) Wu, acting in a dual role as a member of the Board and as principal of China Kington, was paid $100,000 pursuant to this consulting agreement. The Board, upon the recommendation of the Audit Committee, approved the loan and related documents on February 24, 2019, as well as the First Amendment to the Promissory Note and Second Amendment to the Promissory Note on May 30, 2019 and May 14, 2020, respectively.

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Other Proxy Matters

Delinquent Section 16(a) Reports

Under the federal securities laws, our directors and officers and any persons holding more than ten percent (10%) of our common stock are required to report their ownership of our common stock and any changes in that ownership to the SEC. Specific due dates for these reports have been established, and we are required to report in this Proxy Statement any failure to file by these dates.

In making this statement, we have relied upon examination of the copies of Forms 3, 4 and 5, and amendments to these forms, provided to us and the written representations of our directors, executive officers and ten percent (10%) stockholders. Based solely on our review of copies of the reports on the Section 16(a) forms filed with the SEC with respect to the fiscal year ended December 31, 2021, and the written representations received from the reporting persons that no other reports were required, we believe that all directors, executive officers and persons who own more than ten percent (10%) of our common stock have complied with the reporting requirements of Section 16(a) and have filed all reports required by such section, except for: (i) the initial Forms 3 for Dr. Audrey Kunin and Dr. Jeff Kunin, both reflecting current holdings of one stock option grant to Dr. Audrey Kunin and (ii) one Form 4 for Mr. Jones, representing one disposition of common stock for the payment of tax liability due to the vesting of restricted stock units.

Annual Report

Our Company’s Internet address, located at www.novabay.com, includes electronic files of this Proxy Statement and our Annual Report, as well as our other SEC filings. For those stockholders who do not participate in electronic delivery of proxy materials, a copy of our Annual Report (excluding the exhibits thereto) accompanies this Proxy Statement, the Notice, the proxy card and other proxy materials being mailed to all stockholders. The Annual Report (including the exhibits thereto) is also available on the SEC’s website at www.sec.gov. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Proxy Statement, and you should not consider it part of this Proxy Statement.

DeadlineDeadlines for Receipt of Future Stockholder Proposals and Nominations for Our 2023 Annual Meeting

Due Date for Stockholder Proposals and Nominations for Next Year’s Annual Meeting

 

Under applicable SEC rules, to be considered for inclusion in our proxy materials next year, your proposal must be submitted by November 30, 2022; however, if NovaBay’sour 2023 Annual Meeting of Stockholders is held on a date more than 30 calendar days from May 11, 2023, then the deadline will be a reasonable time prior to the time we begin to print, mail or electronically deliver our proxy materials. If notice is received after November 30, 2022 it will be considered untimely, and we will not be required to present the matter at the stockholders meeting. All stockholder proposals must comply with applicable rules and regulations adopted by the SEC.

 

Pursuant to our Bylaws, if you wish to submit a proposal to be included in next year’s proxy materials or nominate a director, you must do so no earlier than the close of business on the 120^th day, and not later than the close of business on the 90^th day, prior to the first anniversary of the preceding year’s annual meeting (for next year’s 2023 Annual Meeting, these dates would be January 11, 2023 and February 10, 2023, respectively); provided, however, that in the event that the date of the 2023 Annual Meeting of Stockholders is held more than 30 days prior to or more than 30 days after May 11, 2023, your notice must be delivered not earlier than the close of business on the 120^th day prior to the 2023 Annual Meeting of Stockholders and not later than the close of business on the later of the 90^th day prior to the 2023 Annual Meeting of Stockholders or the 10^th day following the day on which public announcement of the date of the 2023 Annual Meeting of Stockholders is first made. Stockholders are also advised to review the Bylaws, which contain additional requirements with respect to advance notice of stockholder proposals and director nominations.

 

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Stockholder proposals must be in writing and should be addressed to our Corporate Secretary, at our principal executive offices at 2000 Powell Street, Suite 1150, Emeryville, California 94608. It is recommended that stockholders submitting proposals direct them to our Corporate Secretary and utilize certified mail, return receipt requested, to provide proof of timely receipt. The presiding officer of the Annual Meeting reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements, including conditions set forth in the Bylaws and conditions established by the SEC.

 

 

Householding of Proxy Materials

 

The SEC has adopted rules that permit companies and intermediaries (e.g.(e.g., brokers, banks or other nominees) to satisfy the delivery requirements for proxy statements and annual reports with respect to two (2) or more stockholders sharing the same address (and who do not receive electronic delivery of proxy materials) by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

 

For those who receive proxy materials by mail, a single proxy statement may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker, bank or other nominee or NovaBay that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you notify your broker, bank or other nominee or NovaBay that you no longer wish to participate in “householding.” If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report in the future, you may (1) notify your broker, bank or other nominee or (2) direct your written request to our Corporate Secretary, NovaBay Pharmaceuticals, Inc., 2000 Powell Street, Suite 1150, Emeryville, California 94608, (510) 899-8800. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request “householding” of their communications should likewise contact their broker, bank or other nominee or NovaBay using the above information. In addition, NovaBaywe will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the Annual Report and this Proxy Statement to a stockholder at a shared address to which a single copy of the documents was delivered.

 

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Other BusinessMethod of Proxy Solicitation

 

The Board isWe will pay all costs of preparing, assembling, printing and distributing the proxy materials. NovaBay has engaged Alliance Advisors, LLC, to assist in the solicitation of proxies and provide related advice and informational support, for a services fee, plus customary disbursements, which are not awareexpected to exceed $100,000 in total. No fees will be paid for solicitation of any other matter which will be presented for action at the Annual Meeting other than the matters set forthstockholder to vote in this Proxy Statement. If any other matter requiring a votefavor of one of the stockholders arises, it is intended that the proxy holders will vote the shares they represent asProposals. Our employees may solicit proxies on behalf of the Board may recommend. Thethrough the mail, in person, by telephone or by other forms of electronic communication, without additional compensation. We will reimburse brokers, banks and other nominees who hold shares of Common Stock in their names for the expenses of furnishing proxy grantsmaterials to beneficial owners of the proxy holders discretionary authority to vote on any such other matters properly brought before the Annual Meeting.shares.

 

MarchWhere You Can Find More Information

NovaBay files reports, proxy statements and other information with the SEC as required by the Exchange Act. You may read and copy reports, proxy statements and other information filed by NovaBay with the SEC at the SEC’s website, which contains reports, proxy statements and other information, at: http://www.sec.gov.

This Proxy Statement is available without charge to stockholders of NovaBay upon written or oral request. If you would like additional copies of this Proxy Statement or if you have questions about the Proposals to be presented at the Special Meeting, you should contact NovaBay in writing at NovaBay Pharmaceuticals, Inc., 2000 Powell Street, Suite 1550, Emeryville, CA 94608 or by telephone at (510) 899-8800.

Information and statements contained in this Proxy Statement and the Annex hereto are qualified in all respects by reference to the copy of the Annex.

September 30, 2022			By Order of the Board of Directors,
			Paul E. Freiman, Ph.D. Chairman of the Board

 

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Annex A

CERTIFICATE OF AMENDMENT OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

NOVABAY PHARMACEUTICALS, INC.

NOVABAY PHARMACEUTICALS, INC., a corporation organized and existing under, and by virtue of, the General Corporation Law of the State of Delaware, hereby certifies that:

FIRST: The name of the Corporation is NovaBay Pharmaceuticals, Inc. (the “Corporation”).

SECOND: The Corporation was originally incorporated under the same name and the original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on April 19, 2010.

THIRD: The Board of Directors of the Corporation, acting in accordance with the provisions of Sections 141 and 242 of the General Corporation Law of the State of Delaware, adopted resolutions amending and restating Paragraph C of Article IV of the Certificate of Incorporation to read in its entirety as follows:

“Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock).

Upon [Date/Time] (the “Effective Time”), each ____________ outstanding shares of Common Stock (the “Old Common Stock”) shall be combined and converted into one (1) share of Common Stock (the “New Common Stock”). This reverse stock split (the “Reverse Split”) of the outstanding shares of Common Stock shall not affect the total number of shares of capital stock, including the Common Stock, that the Corporation is authorized to issue, which shall remain as set forth under this Article IV.

The Reverse Split shall occur without any further action on the part of the Corporation or the holders of shares of New Common Stock and whether or not certificates representing such holders’ shares prior to the Reverse Split are surrendered for cancellation. No fractional interest in a share of New Common Stock shall be deliverable upon the Reverse Split, all of which shares of New Common Stock shall be rounded up to the nearest whole number of such shares. All references to “Common Stock” in these Articles shall be to the New Common Stock.

The Reverse Split will be effectuated on a stockholder-by-stockholder basis. Certificates dated as of a date prior to the Effective Time representing outstanding shares of Old Common Stock shall, after the Effective Time, represent a number of shares equal to the same number of shares of New Common Stock as is reflected on the face of such certificates, divided by ______ and rounded up to the nearest whole number. The Corporation shall not be obligated to issue new certificates evidencing the shares of New Common Stock outstanding as a result of the Reverse Split unless and until the certificates evidencing the shares held by a holder prior to the Reverse Split are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates.” 

FOURTH: Also pursuant to a resolution of the Board of Directors, thereafter this Certificate of Amendment was submitted to the stockholders of the Corporation for their approval, and was duly adopted at the Special Meeting of Stockholders held on ________ __, 202__, in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

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FIFTH: All other provisions of the Certificate of Incorporation shall remain in full force and effect.

IN WITNESS WHEREOF, NOVABAY PHARMACEUTICALS, INC. has caused this Certificate of Amendment to be signed by its Chief Executive Officer & General Counsel this ____ day of _________________, 202__.

NOVABAY PHARMACEUTICALS, INC.
By:
	Justin M. Hall
	Chief Executive Officer & General Counsel

 

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