SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement (“Proxy Statement”) forTo assist you in reviewing the 2022 Special Meeting of Stockholders (the “Special Meeting”) and may not contain all of the information that is importantProposals to you. To better understand the proposals being consideredbe acted upon at the SpecialAnnual Meeting, you should read this entire Proxy Statement carefully, including the materials attached as annexes, as well as other documents referredwe call your attention 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 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

about NovaBay Pharmaceuticals, Inc.’s (“NovaBay,”, the “Company,”, “we,”, “our” and or“us”) financial performance, key executive compensation actions and decisions, corporate governance highlights and financing transactions. 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, as amended, for the year ended December 31, 2022, the Company’s current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on April 27, 2023 and the complete Proxy Statement that follows.

If you have any questions in voting your shares, please contact:

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor, Bloomfield, NJ 07003

NOVA@allianceadvisors.com

855-643-7304

NovaBay develops and sells scientifically-created and clinically-proven eyecare, skincare and skincarewound care products.

Eyecare:

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 primarily through online distribution channels and is also often prescribedavailable by prescription 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, the i-Chek and the i-Chek.eyelash mirror.

On November 5, 2021, we significantly expandedSkincare:

Through our business by acquiringsubsidiary DERMAdoctor, LLC (“DERMAdoctor”), as our wholly-owned subsidiary. acquired in November 2021 (the “DERMAdoctor offers over-the-counter dermatologicalAcquisition”), we offer over 30 dermatologist-developed products targeting common skin concerns.concerns, ranging from aging and blemishes to dry skin, perspiration and keratosis pilaris. 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-QWound Care”), 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 addressWe also manufacture and sell 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 millionproprietary form of hypochlorous acid in the aggregatewound care market with our products NeutroPhase and PhaseOne. NeutroPhase and PhaseOne are used for cleansing and irrigation as part of additional capital,surgical procedures, as discussed in Proposal Onewell as to treat certain wounds, burns, ulcers and Proposal Two below. In the absence ofother injuries. We currently sell 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.wound care products primarily through distributors.

Company 2022 full year net product revenue of $14.4 million, which includes $7.7 million from the sale of Avenova products and $4.2 million from the sale of DERMAdoctor products.

Gross profit of $7.8 million in 2022, with a gross profit margin of 54.0%, as compared to gross profit of $6.5 million with a gross profit margin of 64.0% in 2021.

In 2022, the Company raised: (1) $2.1 million in capital by repricing outstanding Common Stock warrants and issuing new warrants to certain investors and (2) $3.25 million in capital by issuing units consisting of Series C Non-Voting Convertible Preferred Stock, Series A-1 Warrants and Series A-2 Warrants to certain qualified investors.

On November 15, 2022, the Company effected a 1-for-35 reverse stock split of our outstanding Common Stock (the “Reverse Stock Split”); and the next day, the Common Stock began trading on a split-adjusted basis.

On May 1, 2023, the Company raised $3.0 million in capital in a private placement by issuing the Debentures, the Long-Term Warrants and the Short-Term Warrants (each as defined in Proposal Three) to existing accredited institutional investors, as further discussed and described in Proposal Three of this Proxy Statement.

 

Compensation Highlights

The Compensation Committee (the “Proposal One (TheCompensation Committee”) of the Board of Directors (the “Board”) continues its historic practice of an annual performance incentive program, pursuant to which each Company Guide Proposal) (page 13)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 bonus in the form of equity compensation.

 

SummaryWe 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 a majority of Financing Transactionsstockholders approved the most recent Say-on-Pay proposal at the Company’s 2022 Annual Meeting. We will conduct our next vote on both our Say-on-Pay and the frequency of the Say-on-Pay proposal at our 2025 Annual Meeting of Stockholders.

Corporate Governance Highlights

NovaBay has a longstanding commitment to effective governance of its business and affairs for the benefit of stockholders, including through the below highlighted measures.

 

As more fullyBoard Leadership Structure

Our Board leadership structure currently consists of an independent Chair of the Board (the “Chair”) and independent committees. The Chair performs all duties and has all powers commonly incident to the office of Chair of the Board, including presiding at all meetings of the Board. In March 2019, the Board nominated Dr. Paul E. Freiman (“Dr. Freiman”) to serve as Chair 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, Dr. Freiman has and continues to serve as our Chair.

Beginning in August 2020, Mr. Justin M. Hall (“Mr. Hall”), the Company’s Chief Executive Officer, General Counsel and Chief Compliance Officer, was elected to serve on the Board. In his executive officer role, Mr. Hall has responsibility for the management and control of the day-to-day business and affairs of the Company, as well as general supervision of the Company’s executives, employees and agents. Given Mr. Hall’s tenure with the Company beginning in 2013 and his vast knowledge of its operations, the Board believes he offers invaluable business insight to its deliberations.

The Board believes that separating the roles of Chair and Chief Executive Officer enhances both the independence of the Board and its effectiveness in discharging its responsibilities and that NovaBay is currently best served with an independent Chair.

Board Committees

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 Board’s 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.

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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. The diversity of our current Board as of May 5, 2023 includes:

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 2022.

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.

On March 23, 2022, the Board authorized an amendment to, and the restatement of, the Amended and Restated Bylaws (“Bylaws”) to update Article XI (Indemnification) to indemnify directors to the fullest extent permitted by Delaware law and to add a new Section 48 (Exclusive Forums for Adjudication of Disputes) to provide that the Delaware Court of Chancery shall be the exclusive forum for derivative actions, actions for breach of fiduciary duty, actions pursuant to the Delaware General Corporation Law, the Company’s Certificate of Incorporation or the Bylaws or actions under the internal affairs doctrine. The directors believe that such amendments will better assist the Company in attracting qualified directors and officers as well as prevent forum shopping.

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

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Corporate Governance Policies

NovaBay has established Corporate Governance Guidelines, as routinely reviewed and updated by the N&CG Committee, to maintain effective and appropriate standards 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.com.

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 named executive officers (as provided in the Proxy Statement) and directors complied with the Insider Trading Policy during fiscal year 2022.

Stockholder Proposals at the 2023 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 2023 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
Mr. Mijia (Bob) Wu	2016	46	No	Managing Director of both China Kington Asset Management and Shanghai Ceton Investment Management Co. Ltd.	None
Dr. Yenyou (Jeff) Zheng	2019	64	Yes	Director of Business Development of Craft Capital Management LLC	Audit (Chair); N&CG (Chair); Compensation

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

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

The Audit Committee has appointed WithumSmith+Brown, PC (“Withum”) as the Company’s independent registered public accounting firm for 2023. While we are not required to have stockholders ratify the selection of Withum as the Company’s independent auditor, we are doing so because we believe it is good corporate practice. If our stockholders do not ratify the selection, 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 of a different independent registered public accounting firm at any time during the year if it determines that such change is in the best interests of the Company and its stockholders. Our Board recommends unanimously that you vote “FOR” Proposal Two.

Approval of the Company Guide Proposal (Proposal Three)

You will find important information in the Proxy Statement about the Company’s 2023 Private Placement of the Debentures, the Long-Term Warrants and the Short-Term Warrants (collectively, the “2023 Warrants”), each as further defined and described in Proposal One in this Proxy Statement,Three (or the “Company Guide Proposal”). The 2023 Private Placement closed on September 9, 2022, we entered into agreements relatingMay 1, 2023. The full conversion of the Debentures and the exercise of the 2023 Warrants of an aggregate of 7,615,392 shares of Common Stock is subject to stockholder approval.

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Our Common Stock is listed on the NYSE American, and, as such, is subject to the following private financing transactions:

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Warrant Reprice Transactions. Our warrant reprice transactions (the “Warrant Reprice Transactions”) with certain existing Company warrant holders provide for, pursuant to warrant reprice letter agreements, dated September 9, 2022, (i) amendments to previously issued Company common stock, par value $0.01 per share (“Common Stock”) purchase warrants (the “Amended Warrants”), which included a reduction of the exercise price to $0.18 per share and provided for exercise restrictions on such warrants (other than an initial cash exercise) until the later of (a) six months from September 9, 2022 and (b) or the date that Proposal One and Proposal Two as providedapplicable rules of the NYSE American as set forth in this Proxy Statement are approved by stockholders and become effective (such date, the “Stockholder Approval Date”) and (ii) an initial cash exercise by certain of the participating warrant holders at the reduced exercise price and the issuance of a New Reprice Warrant (as defined below) to such exercising holders, which is described in additional detail in Proposal One. The Warrant Reprice Transactions became effective and resulted in us receiving approximately $2.1 million in proceeds from the cash exercise of the Amended Warrants at the reduced exercise price.

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2022 Private Placement. A private placement transaction with institutional accredited investors (the “2022 Private Placement”) to sell, pursuant to the Securities 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 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 Transactionsincluding Section 713(a) and if completed, the 2022 Private Placement as follows:

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the future exercise of the Amended Warrants for 30,825,000 underlying shares of Common Stock and the New Reprice Warrants for 11,475,000 underlying shares of Common Stock that were both issued as part of the Warrant Reprice Transactions, such warrants not being exercisable until the later to occur of (i) six months from September 9, 2022 and (ii) the Stockholder Approval Date; and

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the conversion of 3,250 shares of Series C Preferred Stock for 18,057,000 shares of Common Stock (subject to potential increase in the number of shares due to applicable anti-dilution adjustments), the exercise of the Long-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), 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 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”.

Reasons for Approval of Proposal One

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(b) of the Company Guide. We are seeking stockholder approval of Proposal Three at the Annual Meeting in order to satisfy the requirements of Section 713(a) and (b) of the Company Guide requires stockholder approval in connection with any transaction, other than a public offering, involvingto allow for the sale, issuance, conversion and/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)redemption of the Company Guide requires stockholderfull amount of the Debentures into Common Stock and the exercise of the 2023 Warrants into Common Stock. While approval of a transaction, other than a public offering, involvingour stockholders was not required to close 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 20222023 Private Placement, the issuanceapproval of Common Stock underlyingour stockholders is required to authorize the Amended Warrants (30,825,000 sharesfull conversion of Common Stock)the Debentures and the New Reprice Warrants (11,475,000 shares of Common Stock), will collectively represent 148%exercise of the total2023 Warrants as provided in Proposal Three. Our Board recommends unanimously that you vote “FOR” Proposal Three.

Approval of the Adjournment Proposal (Proposal Four)

If NovaBay fails to establish a quorum for the Annual Meeting or receive a sufficient number of shares of Common Stock currently outstanding,votes to approve the proposals at the Annual Meeting, then we are seeking approval under both Sections 713(a) and 713(b)may propose to adjourn or postpone the Annual Meeting. Proposal Four (or the “Adjournment Proposal”) for the vote regarding adjournment or postponement of the Company Guide. Stockholder approval ofAnnual Meeting will be disregarded if there are sufficient votes to approve the proposals at the Annual Meeting. Our Board recommends unanimously that you vote “FOR” Proposal One will constitute stockholder approval for purposes of Sections 713(a) and 713(b) of the Company Guide.Four.

 

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 (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 materially different and adverse from those expressed in or implied by these 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 law.

2000 Powell Street, Suite 1150

Emeryville, California 94608

This proxy statement (“Proxy Statement”), the accompanying Notice of the Special Meeting of Stockholders and proxy card are being furnished in connection with the solicitation of proxies by the Board of Directors of NovaBay Pharmaceuticals, Inc., a Delaware corporation (“NovaBay,” the “Company,” “we,” “our,” or “us”), to be voted at the 2022 Special Meeting of Stockholders to be held on Thursday, November 10, 2022 (the “Special Meeting”), and at any adjournment or postponement of the Special Meeting. This Special Meeting will be held at 11:00 a.m. Pacific Time and will be a virtual meeting of stockholders. You will be able to participate in the 2022 Special Meeting, vote, and submit your questions during the meeting via live webcast by visiting www.virtualshareholdermeeting.com/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 September 30, 2022, to stockholders of record as of 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 Special 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 the opportunity to vote online. This delivery method also helps NovaBay reduce the mailing of paper copies of our proxy materials. By participating in the “notice and access” process, we save printing and mailing expenses and reduce the environmental impact of the Special Meeting. Pursuant to rules adopted by 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, or unless we elect to send them to stockholders.

Beginning on or about September 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 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, 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.

As permitted by Delaware law and our Amended and Restated Bylaws (the “Bylaws”), the Special Meeting will be held solely as a virtual meeting live via the Internet. You will be able to attend the Special Meeting via live webcast by visiting our virtual meeting website (www.virtualshareholdermeeting.com/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 proxy 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 Special 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 Special 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 Special Meeting.

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

The Record Date for determining those stockholders who are entitled to notice of, and to vote at, the Special Meeting has been fixed as 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 SpecialAnnual Meeting and any adjournment or postponement thereof. Each stockholder is entitled to one (1) vote for each share of our Common Stock held by such stockholder as of the Record Date. As of the Record Date, 2,728,824 shares of our Common Stock were outstanding, 11,026 shares of our Series B Non-Voting Convertible Preferred Stock (the “Series B Preferred Stock”) and 1,150 shares of our Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) were outstanding. The holders of the Series B Preferred Stock and/or the Series C Preferred Stock have no voting rights for Proposal One, Proposal Two or Proposal Three,any of the Proposals and therefore will not vote at the SpecialAnnual 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 SpecialAnnual 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 SpecialAnnual Meeting. Stockholders who log on and vote at our virtual meeting of stockholders with their 16-digit control number (which is provided on your 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 ofIf a quorum atis not present, the Special Meeting.Annual Meeting will be adjourned or postponed in order to permit further solicitation of proxies until a quorum is obtained.

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, or elects not to use, its discretionary voting power to vote on that proposal without such discretionary power granted by the beneficial owner or given specific voting instructions from the beneficial owner. Proposal One and Proposal Three described in this Proxy Statement are “non-routine” items for which a broker cannot use its own discretion and must be granted such discretionary power by the beneficial owner or given specific voting instructions from the beneficial owner, and Proposal Two and Proposal Four in this Proxy Statement are “routine” items for which a broker can use its discretion to vote if it does not have either discretionary power granted by the beneficial owner or specific voting instructions from the beneficial owner. If a quorum is not present, the SpecialAnnual 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 SpecialAnnual Meeting, who will separately tabulate affirmative and negative“FOR” votes, “AGAINST” 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.

Votes Generally. Votes will be counted by the inspector of election appointed for the SpecialAnnual 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 deemed to be present or represented for 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 SpecialAnnual Meeting.

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,Three, 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.Three. As a result of having these voting commitment letters, we expect a significant number of shares of Common Stock, up to approximately 33%12% of the outstanding Common Stock as of the Record Date to support Proposal One and Proposal Two;Three; however, such number of shares will not be sufficient to approve these proposals.Proposal Three.

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 Transactions2023 Private Placement (which havehas already been completed) or the issuance of the Amended Warrants andDebentures or the New Reprice2023 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 StockDebentures and the 20222023 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 in person at the Special Meeting,by completing and returning your proxy card, 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”) American 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 without voting instructions from you. Proposal Two (the Reverse Stock Split Proposal) andor Proposal Three, (the Adjournment Proposal) are believed to be “routine” matters. Accordingly, your broker, bank or other nomineebut may vote your shares on such proposals even if you do not give it instructions.Proposal Two and Proposal Four.

If you were a registered stockholder of record on the Record Date, you may vote your shares at the virtual SpecialAnnual Meeting, www.virtualshareholdermeeting.com/NBY2022SM,NBY2023, which contains voting instructions. You may also vote your shares by visiting www.proxyvote.com ortelephone by calling (toll free within the United StatesU.S. 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 September 30, 2022. Internet and telephone voting will close promptly at 11:59 p.m. Eastern Time on Wednesday, November 9, 2022. After that time, you will only be able to vote by attending the Special Meeting via live webcast and voting at the Special Meeting. The meeting starts at 11:00 a.m. Pacific Time. After voting is closed during the Special Meeting, you will no longer have the ability to vote your shares for the specific proposals considered at the Special Meeting.

Upon visiting the meeting website or calling the call-in telephone number provided above,line, 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.

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 May 18, 2023. Internet and telephone voting will close promptly at 11:59 p.m. Eastern Time on Thursday, June 8, 2023. After internet and telephone voting closes, you will only be able to vote by attending the Annual Meeting via live webcast and voting at the Annual Meeting. The meeting starts at 11:00 a.m. (Pacific Time). After voting is closed during the Annual Meeting, you will no longer have the ability to vote your shares for the specific proposals considered at the Annual Meeting.

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 Proposal Two, Proposal Three and Proposal Three, asFour 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 SpecialAnnual 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 SpecialAnnual Meeting will be counted),; (ii) attending the SpecialAnnual 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.

WeNovaBay 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 ourthe 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. 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 Solicitation” below.

Other than the proposals described in the 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.

We expect to announce preliminaryPreliminary voting results will be announced at the SpecialAnnual Meeting. In addition, we expect that final voting results will be filed with the SEC onpublished in a Current Reportcurrent report on Form 8-K that we expect to file within four (4) business days after the SpecialAnnual Meeting.

Our Certificate of Incorporation provides for 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 annual meeting. Our Board currently consists of eight (8) directors. At this year’s Annual Meeting, the current term of the Class I directors will expire and our stockholders will vote on the two Class I director nominees identified below.

Upon the recommendation of the Nominating and Corporate Governance (“N&CG”) Committee of the Board, our Board selected and approved Mr. Mijia (Bob) Wu (“Mr. Wu”) and Dr. Yenyou (Jeff) Zheng (“Dr. Jeff Zheng”) as nominees for election as Class I directors at this Annual Meeting to serve for a term of three (3) years, expiring at the 2026 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 any of the nominees will be unable to serve. In the event any 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. Garlikov”) as a Class II director. Also on January 27, 2022, director Xinzhou (Paul) Li (“Mr. Li”), a Class II director, resigned from the Board, and the Board appointed Mr. Yongxiang (Sean) Zheng (“Mr. Sean Zheng”) as a Class II director to fill the vacancy created by the resignation of Mr. Xinzhou (Paul) Li, effective the same day. Dr. Audrey Kunin’s term as a Class I director will expire at the Annual Meeting, and, the Board determined to reduce the size of the Board from eight (8) to seven (7) directors, effective as of the Annual Meeting.

Along with Mr. Sean Zheng, Mr. Justin M. Hall (“Mr. Hall”) and Ms. Garlikov have also been designated as Class II directors whose terms expire at the 2024 Annual Meeting of Stockholders. Further, Dr. Freiman and Ms. Swan Sit (“Ms. Sit”) have been designated as Class III directors whose terms expire at the 2025 Annual Meeting of Stockholders.

The names of our director nominees, their ages and biographical information about them are as follows. Dr. Audrey Kunin’s term as a Class I director will expire at the Annual Meeting.

Matters to bClass I Directors – Terms Expiring at the 2023 Annual Meeting

Since June 2008, Mr. Wu has been the Managing Director of China Kington Investment Co. Ltd. (an affiliated entity of China Kington Asset Management, which has a long-standing relationship with NovaBay). Certain related-party historic transactions between the Company and China Kington are described in the Company’s prior filings with the SEC. Concurrently, he has served as the Managing Director of Shanghai Ceton Investment Management Co. Ltd. Since October 2013 until January 2022, he also served as the Non-Executive Director of China Pioneer Pharmaceutical Holdings Ltd. (“Pioneer”). Previously, he served as a Director of 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. Jeff 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. Dr. Jeff Zheng also currently serves on the Board of Directors of Mars Acquisition Corp. (NASDAQ: MARX), a special purpose acquisition company. Prior to that, Dr. Jeff Zheng served as the Director of Business Development of Spartan Securities Group, Ltd. from 2014 to August 2019. Dr. Jeff 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. Jeff 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. Jeff Zheng received a Ph.D. in physics from Flinders University of South Australia.

A plurality of the votes entitled to be cast at the Annual Meeting is required for approval of each of the director nominees.

Class II Directors – Terms Expiring at the 2024 Annual Meeting

Ms. Garlikov is the Chief Commercial Officer of Sherlock Biosciences, a biotechnology CRISPR diagnostic company. She has served in this position since June 2022. Ms. Garlikov has over 25 years of experience in marketing, which includes serving as the Chief Marketing Officer or Leader at GRAIL, New Age and Shaklee, as well as senior marketing positions at Rodan & Fields, Obagi Medical, Nuvesse Skin Therapies and Allergan. She is a classically trained CPG marketer who gained her consumer experience at Procter & Gamble, Johnson & Johnson and PepsiCo and 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.

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. Sean 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. Sean Zheng has also been a CFA chartered holder since 2006. Mr. Sean 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.

Class III Directors – Terms Expiring at the 2025 Annual Meeting

Since January 2009, Dr. 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. Dr. 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. Dr. 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. Dr. Freiman served as chairman of the board of Neurotrope, Inc. (OTCBB: BLFL) from 2013 until August 2016. Dr. 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. Dr. 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. Dr. 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 Considered 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 at the Special Meeting B.A. in Economics from Harvard University.

There are no family relationships among any of our directors, director nominees or executive officers, except Dr. Audrey Kunin, NovaBay’s Chief Product Officer, 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 “Proposal One: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 Dr. Freiman, Ms. Garlikov, Ms. Sit and Dr. Jeff Zheng satisfies the requirements for “independence” as defined in the NYSE American Company Guide (the “The Company Guide ProposalCompany Guide”). The remaining directors, who are not independent, do not and will not serve on any committees of the Board as long as they are not independent.

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 shows the number of Board and Committee meetings held in 2022.

Directors are expected to attend Board meetings, our annual stockholders’ meeting and the meetings of the committees on which they serve. In 2022, no director attended fewer than 75% of the aggregate number of Board and Committee meetings of the Board and committees on which he or she served. Following all of the regularly scheduled 2022 Board meetings, the independent directors met in an executive session. During 2022, Dr. Freiman served as Chair of the Board.

Committee	Committee Function
Audit: Yenyou (Jeff) Zheng, Ph.D., Chair Paul E. Freiman, Ph.D. Swan Sit	Our Board has determined that each member of the Audit Committee is independent, as defined in the Company Guide and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Dr. Jeff Zheng qualifies as an “audit committee financial expert” as that term is defined in the rules and regulations established by the SEC. The functions of this committee include, but are not limited to:
		meeting with our management and our independent registered public accounting firm periodically to consider the adequacy and effectiveness of our disclosure controls and procedures and our internal controls;
		reporting findings regularly to the Board, including any issues that arise with respect to the quality or integrity of our financial statements, our compliance with legal or regulatory requirements, and the performance and independence of our independent registered public accounting firm;
		considering and pre-approving all audit and non-audit services to be rendered by our independent registered public accounting firm;
		appointing, evaluating, engaging and determining the compensation of, overseeing the work of, and, when appropriate, dismissing our independent registered public accounting firm;
		reviewing with management and our independent registered public accounting firm, prior to public release, our financial statements (including annual and quarterly financial statements in periodic reports to be filed with the SEC);
		reviewing with our independent registered public accounting firm all of its significant findings during the year, including the status of previous audit recommendations, and any significant unadjusted audit differences;
		reviewing and discussing with management and our independent registered public accounting firm the accounting policies that may be viewed as critical, and reviewing and discussing any significant changes in our accounting policies and any accounting and financial reporting proposals that may have a significant impact on our financial reports;
		resolving disagreements between management and our independent registered public accounting firm regarding financial reporting;
		inquiring of management, the Chief Financial Officer (“CFO”) and/or the Controller, and our independent registered public accounting firm, about significant risks or exposures and assessing the steps management has taken to minimize such risks; and
		establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls and auditing matters.
	Both our independent registered public accounting firm and internal financial personnel regularly meet privately with the Audit Committee and have unrestricted access to this committee.

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 quarter of 2022, NovaBay donated 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 2022, we continued to monitor and implement COVID-19 protocols for the safety of our employees and other stakeholders.

We value diversity in corporate governance as reflected by the gender and racial profiles of our directors.

Board’s Leadership Structure. Dr. Freiman has served as the Board’s independent Chair since March 2019.

Board’s Role in Risk Oversight. One of the Board’s key functions is informed oversight of NovaBay’s risk management process. The Board does not have a formal risk management committee, but rather administers this oversight function through various standing committees of the Board that address risks inherent in their respective areas 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 concerns 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 Chair. Our Audit Committee monitors the effectiveness 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. We do not have 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 2022, alleight (8) of our directors then serving attended our 2022 Annual Meeting of Stockholders.

Director Selection. The N&CG Committee reviews the appropriate qualities and skills required of directors in the context 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.

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;

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.

The N&CG Committee also considers industry experience or qualifications, such as generic, brand or biotech experience, general management or financial experience, 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 background 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 inclusion in our next proxy statement, as described in the Bylaws and provided that such recommendations are received within 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 stock of the Company which are owned of record and beneficially by such nominee, (4) the date(s) on which such shares were acquired and 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 § 14 of the Exchange Act and 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 of the date of the notice and as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (each, a “Proponent” and collectively, the “Proponents”): (1) the name and address of each Proponent, as they appear on the Company’s books; (2) the class, series and number of shares of the Company that are owned beneficially and of record 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 vote at the meeting and intend to appear in person or by proxy duly authorized at the meeting to nominate the person(s) specified in the notice; (5) a representation as to whether the Proponent(s) intend to deliver a proxy statement 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.

No candidates for director nominations were submitted to the N&CG Committee by any stockholder in connection with the election of directors at the Annual Meeting.Both 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 attention of the Board, any committee of the Board or any individual Board member, care of our Corporate Secretary, Mr. Justin M. Hall, Esq., at 2000 Powell Street, Suite 1150, Emeryville, California 94608. The name of any specific intended Board recipient should be noted in the communication. Our Corporate Secretary will be responsible for collecting, organizing and monitoring communications from stockholders and, where appropriate depending on 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 topic will not be forwarded to the Board.

The Audit Committee of our Board has selected WithumSmith+Brown, PC (“Withum”) as our independent registered public accounting firm for the fiscal year ending December 31, 2023. 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 it performs public company audits. 

We are asking our stockholders to ratify the selection by the Audit Committee of Withum as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2023, and to perform other appropriate services. Stockholder ratification of the selection of Withum as our independent registered public accounting firm is not 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 that 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 presentation to the stockholders if he or she so desires and is expected to be available to respond to appropriate questions from stockholders.

The following table sets forth the fees billed to us for the fiscal years ended December 31, 2022 and 2021 by Withum and its predecessor, OUM & Co. LLC (“OUM”), as applicable, for such years:

(1) Includes fees of OUM, which was acquired by Withum effective on July 15, 2021.

Audit Fees. 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 performance of the audit or review of our consolidated financial statements and internal controls over financial reporting that are not reported in “Audit Fees.”In 2022 and 2021, such audit-related fees were related to out-of-pocket expenses incurred in conjunction with the performance of audits and reviews.

Tax Fees.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 2022 and2021 that meet the above category description.

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

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, 2022 and December 31, 2021.

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

The following is the report of the Audit Committee with respect to the audited consolidated financial statements of NovaBay Pharmaceuticals, Inc. for the fiscal year ended December 31, 2022, included in the Annual Report on Form 10-K for that year.

The Audit Committee has reviewed and discussed the audited financial statements of NovaBay for the fiscal year ended December 31, 2022 with NovaBay’s management. The Audit Committee has discussed with NovaBay’s independent registered public accounting firm, Withum, the matters required to be discussed by Auditing Standard No. 61, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”).

The Audit Committee has received the written disclosures and the letter from Withum required by applicable requirements of the PCAOB regarding Withum’s communications with the Audit Committee concerning independence and has discussed with Withum the independence of Withum.

Based on 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.

At the SpecialAnnual 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 96,468,1147,615,392 shares of Common Stock subject to potential increase in the number of shares due to applicable anti-dilution adjustments, whichthat will be issuable by the Company upon conversion or redemption of the Debentures and the exercise of the 2023 Warrants issued in connection with our Warrant Reprice Transactions (as described below) and, if closed, the 20222023 Private Placement, including any additional shares of Common Stock that become issuable as a result of applicable anti-dilution adjustments or the monthly redemption of the Debentures in shares of Common Stock (as each are defined and described below).

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

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 stockCommon Stock or securities convertible into common stock,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 stockCommon Stock (or securities convertible into or exercisable for common stock)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 (18,057,000Debentures (2,538,464 shares of Common Stock) and the 20222023 Warrants (36,111,114(5,076,928 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%approximately 280% of the total number of shares of Common Stock currently outstanding as of the Record Date, we are seeking approval of stockholders under both Sections 713(a) and 713(b) of the Company Guide. Stockholder approval of this Proposal OneThree will constitute stockholder approval for purposes of Sections 713(a) and 713(b) of the Company Guide.

In addition, as a material condition of the Warrant Reprice Transactions and the 20222023 Private Placement, we agreed to submit and recommend this Proposal One and, as described below, Proposal TwoThree to our stockholders. If we do not obtain stockholder approval of this Proposal One and Proposal Twothe Company Guide Approval at the SpecialAnnual Meeting, we have agreed to call a meeting of stockholders every fourtwo 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.requirement. Approval of this Proposal One and Proposal TwoThree will result in the restrictions on conversion of the Debentures and exercise underof the Amended Warrants and the New Reprice2023 Warrants no longer being effective. The Board approved the Warrant Reprice Transactions and the 20222023 Private Placement and believes that satisfying our contractual obligations in those transactions by submitting this Proposal OneThree to stockholders for their approval at this SpecialAnnual 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 Transactions2023 Private Placement (which havehas already been completed) or the issuance of the Amended Warrants andDebentures or the New Reprice2023 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 StockDebentures and the 20222023 Warrants.

In our Annual Report on Form 10-K for the year ended December 31, 2022, we reported that based primarily on the funds available as of December 31, 2022 that we expected our expenses will continue to exceed our revenues, as we continue to invest in both Avenova and DERMAdoctor commercialization efforts. Further, based on the amount of capital and liquidity that we had available at such time, we determined that our planned operations raised substantial doubt about our ability to continue as a going concern. Additionally, we 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. To help address our need for liquidity and capital to fund our planned operations, we completed the 2023 Private Placement as discussed below.

We previously disclosed thatOn April 27, 2023, we issued (i) Common Stock purchase warrants toentered into a limited numberSecurities Purchase Agreement (the “Purchase Agreement”) with certain of our existing accredited institutional investors (the “2020 InvestorsPurchasers”) that provides for the issuance and sale in connection with our prior warrant reprice transaction that closed on July 23, 2020a private placement (the “20202023 Private Placement”) of (i) $3.3 million aggregate principal amount of Original Issue Discount Senior Secured Convertible Debentures Due November 1, 2024 (the “Debentures”), (ii) new long-term Series B-1 warrants to purchase Common Stock exercisable for a five-year period, as further described below (“Long-Term Warrants”), and (ii) Common Stock purchase(iii) new short-term Series B-2 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 ofpurchase Common Stock exercisable at $1.65 per share, and the 2021 Originalfor a two-year period, as further described below (“Short-Term 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,Long-Term Warrants, the “Participants2023 Warrants”) entered into separate letter agreements. In connection with the closing of the 2023 Private Placement, Common Stock purchase warrants that the Company previously issued to the Purchasers and to other existing investors in prior private placements and warrant reprice transactions were amended to lower the exercise price of the previously issued warrants exercisable for an aggregate of 1,724,455 shares of Common Stock from $6.30 to $1.50 per share, as further described below.

The conversion of the Debentures by the holders into shares of Common Stock is currently limited to a holder’s pro rata share of 19.99% of the Company’s outstanding shares of Common Stock, or into an aggregate of 438,669 shares (the “2021 Reprice Letter AgreementsIssuable Maximum” and, together), with the 2020 Reprice Letter Agreements,remaining amount of the Debentures being convertible by the holders convertible into Common Stock only if stockholder approval of the issuance of the underlying shares of Common Stock upon conversion (2,538,464 shares of Common Stock) is obtained. The 2023 Warrants are not currently exercisable and will not be exercisable unless and until stockholder approval is obtained for the issuance of the underlying shares of Common Stock upon exercise (5,076,928 shares of Common Stock).

The 2023 Private Placement closed on May 1, 2023 (the “Reprice Letter AgreementsPrivate Placement Closing”) that provided. We received aggregate gross proceeds from the issuance and sale of the Debentures and the 2023 Warrants to the Purchasers of $3.0 million, before deducting placement agent fees and other offering expenses. The Company intends to use the net proceeds from the 2023 Private Placement for their respective warrantsworking capital and general corporate purposes, and has agreed not to be amended to reduce their exercise price to $0.18 (“Reduced Exercise Price”) and,use such proceeds for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the caseordinary course of the 2021 Original Warrants, extendCompany’s business and prior practices, or payments made on the termDebentures), for the redemption of those warrants. The Amended Warrants also provideany Common Stock, for a new restriction on exercise until the latersettlement 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 Priceany outstanding litigation, or in violation of the Amended WarrantsForeign Corrupt Practices Act of 1977, as amended, or the regulations promulgated by the Office of Foreign Assets Control of the U.S. Treasury Department.

Purchase Agreement

The Purchase Agreement contains representations, warranties, and covenants of the Company and each of the Purchasers, as well as indemnification rights of the Purchasers and other obligations of the parties. Under the terms of the Purchase Agreement, the Company agreed to reserve and maintain a sufficient number of shares of Common Stock underlyingupon the Amendedfuture conversion of the Debentures and exercise of the 2023 Warrants in accordance with their terms. Additionally, we agreed to obtain stockholder approval in accordance with Rule 713(a) and Rule 713(b) of the Company Guide at a meeting of stockholders within sixty (60) days of the Private Placement Closing, which approval is being sought by this Proposal Three.To the extent that the Company Guide Approval is not obtained, then we will be adjustedrequired to reflectcall a meeting of stockholders every two (2) months until such stockholder approval is obtained or the Reverse Stock Split if Proposal Two is approved and becomes effective.Debentures are no longer outstanding.

AlsoPursuant to the Purchase Agreement, we agreed to certain other covenants after the Private Placement Closing that are currently applicable to us, which include:

The consummation and closing of the 2023 Private Placement was subject to the satisfaction or waiver of, among other customary closing conditions, the accuracy of the representations and warranties in the Purchase Agreement, compliance by the parties with the covenants in the Purchase Agreement, no material adverse effect occurring with respect to the Company, no suspension in the trading of the Common Stock, and the execution and delivery of the Security Agreement, the Subsidiary Guarantee, the Warrant Amendments, the Voting Commitments and the Registration Rights Agreement, as described and defined below.

Description of the Debentures

Aggregate Principal Amount and Term. The aggregate principal amount of the Debentures issued in the 2023 Private Placement is $3.3 million (the “Aggregate Principal Amount”). The Debenture was issued at a 10% discount to the Purchasers in the 2023 Private Placement resulting in gross proceeds received by the Company of $3.0 million. The Debentures have a term of 18 months from the Private Placement Closing with a maturity date of November 1, 2024.

Secured Obligations. In connection with the 2023 Private Placement, the Company and DERMAdoctor entered into a Security Agreement (“Security Agreement”) that granted the holders of the Debentures a security interest, a lien upon and a right of set-off against all of the Company’s and DERMAdoctor’s assets as collateral security for the complete, timely payment, performance and discharge in full of all of the Company’s obligations under the Debentures. To further secure the Company’s obligations under the Debentures, DERMAdoctor also executed a Subsidiary Guarantee (the “Subsidiary Guarantee”), pursuant to which DERMAdoctor is a guarantor of the Reprice Letter Agreements,Company’s obligations owed to the Debenture holders. We are subject to continued compliance with certain representations, warranties and covenants under the terms of the Security Agreement and the Subsidiary Guarantee. The Security Agreement and the Subsidiary Guarantee are currently effective and will remain in effect until the Company’s obligations under the Debentures have been fully satisfied.

Conversion. Since issuance, the Debentures are convertible by the holders, in whole or in part, into shares of Common Stock at a conversion price equal to $1.30 per share (“Conversion Price”), subject to limitations upon conversion, including the Issuable Maximum, the beneficial ownership limitations described below and until the Company Guide Approval is obtained by the Company. Based on the current Conversion Price, the aggregate number of shares of Common Stock issuable upon conversion is 2,538,464 shares of Common Stock, which number of shares are subject to reduction for conversions and redemptions of the Debentures and to customary antidilution adjustments (the “Conversion Shares”). Until Company Guide Approval occurs, the Debenture holders may convert their Debentures only up to their pro rata share of the Issuable Maximum (an aggregate of 438,669 shares of Common Stock), which is 19.99% of outstanding shares of Common Stock immediately prior to the Private Placement Closing. The Debentures are subject to another limitation upon conversion into shares of Common Stock to the extent that, after giving effect to such conversion, the holder of a Debenture (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.

Dilution Protection. In the event the Company, at any time after the date of the Private Placement Closing and the Debentures are outstanding: (i) pays a dividend or otherwise makes 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 Debenture); (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 shall be adjusted as provided in the Debenture. Any adjustment made shall become effective immediately after the effective date of the applicable event described in subsections (i) through (iv) above. The Debentures are subject to other customary anti-dilution protections as more fully described in the Debentures, which include protections relating to the Company issuing “Purchase Rights”, making “Distributions” and/or entering into a “Fundamental Transaction” (as each is defined in the Debenture).

Redemption. The terms of the Debentures require that the Company make a monthly redemption of the Debentures (“Monthly Redemption”) beginning on June 1, 2023 of 1/18th of the Aggregate Principal Amount multiplied by 1.05 (the “Monthly Redemption Amount”) in cash; however, the Monthly Redemption, at the election of the Company can be made in shares of Common Stock at a conversion rate equal to the lower of (i) the 2020 Participants hadConversion Price or (ii) 90% of the opportunity (but were not required)Company’s average VWAP (as defined in the Debenture) over 10 trading days. The Debentures provide the Company with the option to electredeem the then outstanding principal amount of the Debentures for cash, subject to makethe Company satisfying the Equity Conditions (as defined in the Debentures) on each trading day between the date notice of redemption is provided by the Company to the holders of the Debentures and the date such redemption occurs. The Debentures also provide for a cash exercisemandatory redemption by the Company of a portion of their Amended 2020 Warrantsthe outstanding principal amount of the Debentures upon the Company completing a capital raise transaction after the Private Placement Closing. This mandatory redemption amount shall equal at least 20% of the gross proceeds received by the Company in any such capital raise transaction.

Event of Default. If any Event of Default (as defined in the Debentures) occurs, the outstanding principal amount of the Debentures, plus accrued but unpaid interest, liquidated damages and other amounts owing through the date of acceleration, shall become, at the Reduced Exercise Price, which resultedholder’s election, immediately due and payable in cash. Commencing five days after the occurrence of any Event of Default that results in the eventual acceleration of the Debentures, the interest rate on the Debentures shall accrue at an interest rate equal to the lesser of 18% per annum and the maximum rate permitted under applicable law.

Restrictive Covenants. Under the terms of the Debentures, the Company and its subsidiaries will be subject to financial and other restrictive covenants for as long as any portion of the Debentures remain outstanding, unless the holders of at least 67% of the then outstanding principal amount of the Debentures shall have otherwise given prior written consent. These restrictive covenants provide that the Company and its subsidiary shall not, directly or indirectly: (i) incur indebtedness or borrowed money, including a guarantee, other than Permitted Indebtedness (as defined in the Debentures), (ii) enter into, incur or create any lien of any kind, other than Permitted Liens (as defined in the Debentures), (iii) amend its charter documents in a manner that materially and adversely affects the rights of any holder of the Debentures; (iv) repay or repurchase or otherwise acquire shares of Common Stock or Common Stock Equivalents or any Indebtedness (as defined in the Debentures), subject to limited exceptions; (v) pay cash dividends of distributions; or (vi) enter into a transaction with an affiliate that would be required to be disclosed in a public filing with the SEC, unless an arm’s length transaction approved by a majority of disinterested directors of the Board.

Description of 2023 Warrants

The 2023 Warrants issued in the 2023 Private Placement have an exercise price equal to $1.30, subject to customary anti-dilution adjustments as provided in the 2023 Warrants. The 2023 Warrants, however, will not be exercisable into the Warrant Shares unless and until the Company Guide Approval is obtained (the “Initial Exercise Date”). After the Initial Exercise Date, the Long-Term Warrants will be exercisable for a period of five (5) years thereafter and the Short-Term Warrants will be exercisable for a period of two (2) years thereafter. The 2023 Warrants will be exercisable for an aggregate of 2,100,0005,076,928 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 ExerciseWarrant Shares”). The Company received $2,065,500 in aggregate gross proceeds from2023 Warrants prohibit 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 term 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 Repricesuch 2023 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 2023 Warrant (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 New Reprice2023 Warrants do not have any preemptive rights or a preference upon any liquidation, dissolution or winding-up of the Company.

Warrant Amendments

As a condition to the closing of the 2023 Private Placement, each Purchaser and the Company entered into a Warrant Amendment Agreement (the “Warrant Amendment Agreement”), that provided for the amendment of the Common Stock purchase warrants issued by the Company to the Purchasers in the Company’s private placements that closed in November 2022 and November 2021, and that were issued to the Purchasers in the Company’s warrant reprice transaction that closed in September 2022 (collectively, the “Purchaser Outstanding Warrants”), effective as of the Private Placement Closing. The amendment to each of the Purchaser Outstanding Warrants lowered the exercise price from $6.30 to $1.50 per share. In addition, the Company entered into additional Warrant Amendment Agreements with one other existing investor that hold previously issued Common Stock purchase warrants, which was a condition for Mr. Fu and Pioneer Pharma (Hong Kong) Company Ltd. to enteringenter into the Reprice Letter Agreements, each Participant also signed and delivered a Participantdeliver their Voting Commitment (as described below) to the Company.

Voting Commitments

As a condition to the closing of the 2023 Private Placement, we receive voting commitments from the Company’s executive officers, directors, more than 10% stockholders, Mr. Fu and Pioneer Pharma (Hong Kong) Company Ltd. to support the vote to obtain the Company Guide Approval (the “Voting Commitments”). These Voting Commitments are currently effective and represent approximately 12% of the outstanding Common Stock as of the Record Date to support approving this Proposal Three; however, such number of shares will not be sufficient 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.Three.

Other Post-Closing Obligations and Anti-Dilution Adjustment of Series B Preferred Stock and Series C Preferred Stock

Resale Registration. Pursuant toIn connection with the Reprice Letter Agreements, we are required2023 Private Placement, the Company entered into a registration rights agreement, dated April 27, 2023 (the “Registration Rights Agreement”) that requires the Company to prepare and file a registration statement with the SEC that will cover the resale of all of the Common Stock underlyingConversion Shares and the New Reprice Warrants withinWarrant Shares no later than 30 days ofafter the Stockholder Approval Date.

Voting Commitments. Each ofPrivate Placement Closing and to use best efforts to have the warrant holders that participatedregistration statement declared effective as promptly as practical thereafter, and in any event no later than sixty (60) days (or ninety (90) days in certain circumstances) after the Private Placement Closing. The Company’s failure to satisfy certain conditions and deadlines described in the Warrant Reprice Transactions signed and delivered a Participant Voting Commitment that provides for such participating warrant holderRegistration Rights Agreement may subject it to vote its sharespayment 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.liquidated damages.

Anti-Dilution Adjustment to Series B Preferred Stock and Series C 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”) and the Certificate of Designation of Preferences, Rights and Limitations for the Company’s outstanding Series C Non-Voting Convertible Preferred Stock (the “Series C Certificate of Designation”) provides for anti-dilution protections in the event that the Company grants any right to reprice any Company security or issue a new 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 and the Series C Preferred Stock, which is referred to as “full-ratchet” anti-dilution protection. As a result of the consummation of the Warrant Reprice Transactions, which2023 Private Placement that resulted in the Amendedissuance of the Debentures that are convertible into shares of Common Stock at a conversion price of $1.30 as well as the 2023 Warrants being exercisable at the Reduced Exercise Price and the issuancean exercise price of New Reprice Warrants at the same Reduced Exercise Price,$1.30 per share, this anti-dilution protection in the Series B Certificate of Designation and the Series C Certificate of Designation was triggered. Accordingly, the conversion price of each share of Series B Preferred Stock and each share of Series C Preferred Stock, which was $0.40were each $6.30 convertible into 2,500159 shares of Common Stock, washave both automatically adjusted downward and isto now $0.18be $1.30 convertible into 5,556770 shares of Common Stock. The adjusted conversion price of the Series B Preferred Stock and the Series C Preferred Stock is the same as the Reduced ExerciseConversion Price of the Amended WarrantsConversion Shares for the Debentures and the exercise price of the New Reprice2023 Warrants. Therefore, based on the 11,620 shares of Series B Preferred Stock and Series C Preferred Stock currently outstanding, there are an additional 35,510,7207,863,570 shares of Common Stock that are issuable upon conversion as a result of the reduction in exercise price.

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 closing of the 2022 Private Placement is conditioned upon the Company obtaining stockholder approval of this Proposal One and Proposal Two, in addition to satisfaction other customary closing conditions set forth in in the Securities Purchase Agreement. The Securities Purchase Agreement also provides for customary termination rights, including the right of the Company or any Purchaser to terminate the Securities Purchase Agreement if the consummation of the 2022 Private Placement has not occurred on or before the fifth trading day following the date of the Stockholder Approval Date. Accordingly, the Units (including the Series C Preferred Stock and the 2022 Warrants) will not be issued unless and until both this Proposal One and Proposal Two are approved and become effective. If Proposal One and Proposal Two are approved by stockholders at the Special Meeting, we expect to close the 2022 Private Placement after the Stockholder Approval Date. We intend to use the net proceeds from the 2022 Private Placement for working capital and general corporate purposes.conversion.

Description

Dilutive Effect of Series C PreferredIssuances of Common Stock

The Series C Preferred Stock will be a newly-created seriesIf stockholder approval of stock that will havethis Proposal Three is received and it becomes effective, then (i) 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 Series 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 manner that adversely affects any rights of the holders of the Series C Preferred Stock, to increase the number of authorized shares of Series C Preferred Stock, and to enter into any agreement with respect to any of the foregoing. The holders of the Series C Preferred Stock will be entitled to receive, and the Company will be required to pay, dividends on shares of the Series C Preferred Stock equal (on an as if converted to Common Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. The Series C Preferred Stock will not be entitled 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 StockDebentures will be convertible at a current conversion priceinto an aggregate of $0.18 into 5,556up to 2,538,464 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(ii) the Reverse Stock Split if Proposal Two is approved and becomes effective). Pursuant to the 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 20222023 Warrants will be exercisable for an aggregate of 36,111,1145,076,928 shares of Common Stock. The exercise price for the 2022 Warrants and the numberAccordingly, an aggregate of 7,615,392 shares of Common Stock, underlying the 2022 Warrants will be adjusted at the time of issuance to reflect the Reverse Stock Split.

The 2022 Warrants are subject to a provision prohibiting the exercise of such 2022 Warrants to the extent that, after giving effect to such exercise, the holder of such 2022 Warrant (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 2022 Warrants will not have any preemptive rights or a preference upon any liquidation, dissolution or winding-up of the 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%280% of the total number of shares of Common Stock currently outstanding we are seeking approval under both Sections 713(a) and 713(b)as 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 ApprovalRecord 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 StockDebentures and the 20222023 Warrants, subject to adjustment to account for the Reverseadditional shares of Common Stock Split andthat become issuable as a result of any applicable anti-dilution adjustments.adjustments or the monthly redemption of the Debentures in shares of Common Stock. If the Amended WarrantsDebentures become fully convertible and New Repricethe 2023 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 TwoThree is approved (but not both)approved, a condition to closing the 20222023 Private Placement will not be satisfied and the Amended WarrantsDebentures will not be fully convertible and the New Reprice2023 Warrants will not be exercisable. In addition, the terms of the Securities Purchase Agreement will require us to continue to seek stockholder approval every fourtwo months until both such proposals areproposal is approved, and we will be restricted in our ability to raise capital using Common Stock and Common Stock equivalents or to incur indebtedness.

Rights of Purchasers

If stockholder approval of this Proposal One and Proposal TwoThree is received and they becomeit becomes effective, then the shares of Common Stock issuable upon the conversion of the Debentures and the 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 20222023 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

This Proposal Three provides a description of the 2023 Private Placement and the material terms of the Purchase Agreement, the Debentures, the 2023 Warrants, the Security Agreement, the Subsidiary Guarantee, the Warrant Amendments, the Voting Commitments and the Registration Rights Agreement for consideration by stockholders. Disclosure of the 2023 Private Placement and related transactions as well as forms of the Purchase Agreement, the Debentures, the 2023 Warrants, the Security Agreement, the Subsidiary Guarantee, the Warrant Amendments, the Voting Commitments and the Registration Rights Agreement can be found as exhibits to our Current Report on Form 8-K as filed with the Securities Purchase Agreement, we will enter into a registration rights agreement with the 2022 Purchasers at the closingSEC on April 27, 2023. See "Where You Can Find More Information" below.

The affirmative vote 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 fileholders of a registration statement providing for the resale bymajority of the shares of Common Stock underlyingpresent or represented and entitled to vote at the AmendedAnnual Meeting is required for approval of this Proposal Three. It is important to understand that we are not seeking stockholder approval of, and you are not being asked to vote on, the 2023 Private Placement (which has already been completed) or the issuance of the Debentures or the 2023 Warrants and the New Reprice Warrants.(which have already been issued).

A proposal will be submitted to the stockholders at the Annual Meeting to approve the adjournment of the Annual Meeting to establish a quorum or to solicit additional proxies in the event that there are not sufficient votes at the time of the Annual Meeting to approve the proposals. Any adjournment of the Annual Meeting may be made without notice, other than by an announcement made at the Annual Meeting. Any adjournment of the Annual Meeting for the purpose of establishing a quorum or 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.

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 One.Four.

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.

For the reasons described in this Proxy Statement, the Board unanimously recommends that you vote “FOR”

Our Board recommends unanimously that you vote “FOR” the approval of the issuance of an aggregate of 96,468,114 shares of Common Stock upon exercise of the Amended Warrants and the 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 accordance with Sections 713(a) and 713(b) of the Company Guide.

Proposal Two:

The Reverse Stock Split Proposal

The Board 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 case 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 Reverse 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 the NYSE American’s continued listing requirements under the Company Guide and for the other 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 Company’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 the part of stockholders will be required to either implement or abandon the Reverse Stock Split.

If this Proposal Two is approved by stockholders and if the Reverse Stock Split is made effective, 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, 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.

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 would 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 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 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. In determining the specific Reverse Stock Split ratio, the Board may consider, among other things, factors such as:

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.

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.

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.

Required Pursuant to Our Financing 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 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 30-day average closing price, as well as the Company’s absolute closing price before the end of the six-month period, to determine whether the Company is below the NYSE American compliance standards. While the NYSE American will evaluate the totality of the circumstances, there is a potential that the NYSE American could initiate delisting procedures against the Company.

We expect 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. 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 the 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 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 order to permit the issuance of shares of Common Stock upon the exercise of the Amended Warrants and the New 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 additional shares of Common Stock that may be issued in any future offerings or potential strategic transactions that we may pursue.

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 discussed elsewhere in this Proxy Statement, we intend to close the 2022 Private Placement as soon as possible after the effectiveness of the Reverse 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 2022 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 low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher.

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

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

On September 16, 2022, the 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 the reduction in the number of shares of Common Stock outstanding before the Reverse 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 splits for other companies is varied, particularly since some investors may view a reverse stock split negatively. In many cases, the market price of a 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 market price based on the ratio of the 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.

Even if we implement the Reverse Stock Split, the per share trading price of our Common Stock may decrease due to factors unrelated to the Reverse Stock Split. Other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the per share trading price of our Common Stock. As a result, we cannot assure you that the Reverse Stock Split, if completed, will result in the benefits that we anticipate, that the per share trading price of our Common Stock will increase following the Reverse Stock Split or that the per share trading price of our Common Stock will not decrease in the future.

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

The 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 such 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 could 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 exchange on which our Common Stock is listed. The issuance of additional shares of Common Stock may have a dilutive effect on the ownership of existing stockholders.

Common Stock and Preferred Stock. If Proposal Two is approved by the stockholders at the Special 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 treatment of fractional shares as described below, 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. 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 holders of Series B Non-Voting Preferred Stock, which are convertible into shares of Common Stock, uniformly.

Voting 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 preferences of existing stockholders nor affect any stockholder’s proportionate equity interest in the Company. For example, a holder of 2% 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 the number of stockholders of record will also remain unaffected by the Reverse Stock Split.

Stock-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 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.

Listing. 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”.

“Public Company” Status. Our Common Stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we are subject to the “public company” periodic reporting and other 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 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 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 to 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 available 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 of these purposes, the aggregate ownership interest of our current stockholders, and the interest of each such existing stockholder, would be diluted, possibly substantially.

The additional shares of Common Stock that would become available for issuance upon an effective Reverse Stock Split could also be used by us to oppose a hostile takeover attempt or delay or prevent a change of control or changes in, or removal of, our management, including any transaction that may be favored by a majority 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 not being proposed in order to respond to a hostile takeover attempt or to an attempt to obtain control of our Company.

After stockholder approval, the Reverse Stock Split will be effected, if at all, only upon a determination by the Board that 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, that the Reverse Stock Split is no longer in the best interests of the Company and its stockholders.

We will not 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 result of the Reverse Stock Split, we will instead issue one whole share of Common Stock to all holders that would otherwise receive a fractional share of Common Stock.

Under Delaware law, our stockholders will not be entitled to dissenters’ rights or rights of appraisal in connection with the implementation of the Reverse Stock Split, and we will not independently provide our stockholders with any such rights.

The following is a summary of 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 special 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 straddle or conversion transaction for tax purposes or (h) a person whose functional currency for tax purposes is not the U.S. dollar. The discussion is based on the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), its 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 guidance are subject to change, possibly on a retroactive basis. We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service regarding the United States federal income tax consequences of a reverse stock split.

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.

Tax Consequences

Unless otherwise indicated, all per share numbers have been retroactively adjusted to United States Holders of Common Stock. A United States holder, as used herein, is a stockholder who or that is,account for United States federal income tax purposes: (a) a citizen or individual resident of the United 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 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.1-for-35 Reverse Stock Split, effective November 15, 2022.         

The Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposestable below sets forth certain information regarding our executive officers. Our executive officers are elected by, and therefore, a reorganization withinserve at the meaningdiscretion of, Section 368(a)(1)(E)our Board of Directors. The following provides the biographical information regarding our Interim Chief Financial Officer and Treasurer, Chief Product Officer and the President of DERMAdoctor. Information concerning the business experience of the Internal Revenue Code.Company’s Chief Executive Officer is provided in “Class II Directors” above.

Effective February 16, 2023, the Board appointed Tommy Law as the Company’s Interim Chief Financial Officer and Treasurer. The Company’s former Chief Financial Officer and Treasurer, Mr. Andrew Jones (“Mr. Jones”) resigned effective February 15, 2023.

Tommy Law (“Mr. Law”) currently serves as the Company’s Interim Chief Financial Officer and Treasurer since January 2023. Prior to that, he has served the Company since December 2019 in a variety of positions, most recently as the Corporate Controller since September 2022. As the Corporate Controller, Mr. Law was responsible for quarterly filings with the SEC, as well as managing the periodic financial close process. Prior to serving as the Corporate Controller, Mr. Law served the Company as an Assistant Controller (April 2022 to September 2022), Accounting Manager (June 2020 to April 2022) and Senior Accountant (December 2019 to June 2020). Prior to joining the Company, Mr. Law was a result,Senior Accountant at KP LLC, a stockholder should not recognize gain or loss uponmarketing solutions company, from January 2017 to December 2019. Previously, he served as Accounting Manager at Hitachi Solutions America, Ltd., an information technology company, from 2012 to 2015. Mr. Law received his B.S. in Business Administration, Accounting from the Reverse Stock Split. A stockholder’s aggregate tax basisSan Jose State University.

Dr. Audrey Kunin is the Chief Product Officer 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 sharesMedical College of Common StockOhio in June 1985. She received pursuant toher postgraduate training in Dermatology at the Reverse Stock Split (including any whole share receivedMedical College of Virginia after serving as Chief Resident in exchange forJuly 1989. She is a fractional share) will equal the aggregate tax basisfellow of the sharesAmerican Academy of Common Stock surrendered. The stockholder’s holding period inDermatology and formerly served as an Assistant Clinical Instructor of Dermatology at the sharesUniversity of Kansas School of Medicine.

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 common stock received (including any whole share receivedDepartment of Radiology at Saint Luke’s Hospital in exchange forKansas City from 2007 to 2017. He graduated college with a fractional share) will include the holding periodB.S. degree in the shares of Common Stock surrendered. Treasury regulations promulgated under the Internal Revenue Code provide detailed rules for allocating the tax basisBiochemistry and holding period of the shares of Common Stock surrendered to the shares 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 tax basis and holding period of such shares.

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 Reverse Stock Split.

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 resultingCell Biology from the Reverse Stock Split. All options, warrantsUniversity of California, San Diego. He then graduated medical school 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 the exchange agent for purposes of exchanging stock certificates subsequent to the Reverse 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 Reverse Stock Split will continue to bear 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 issued until such stockholder has surrendered any outstanding certificates, together with the properly 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 Reverse Stock Split.

Any stockholder whose stock certificates are lost, destroyed or stolen will be entitled to a new certificate or certificates representing post-reverse stock split shares upon compliance with the requirements that we and our 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 letter of instructionsearned his M.D. from the exchange agent.

UponUniversity of Texas Medical Branch in Galveston, Texas. After medical school, he completed a residency in diagnostic radiology at the Reverse Stock Split, we intend to treat stockholders holding Common StockMedical College of Virginia and Henry Ford Hospital. Subsequently, he completed a fellowship in “street name,” through a broker, bank, or other nominee,body imaging at the University of Michigan Hospitals. Dr. Jeff Kunin received his MBA degree from Washington University in the same manner as registered stockholders whose shares are registered in their names. Brokers, banks, and other nominees will be instructed to effect the 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 Reverse 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 contact your broker, bank, or nominee.St. Louis Olin School of Business.

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.

The following table shows information regarding the compensation earned during the fiscal years ended December 31, 2022 and December 31, 2021 by (1) our Chief Executive Officer, General Counsel and Chief Compliance Officer, (2) our Chief Product Officer, and (3) our former Chief Financial Officer (who served for the entire fiscal year ended December 31, 2022 and then until February 15, 2023) (collectively, the “NEOs”). Mr. Law was not a named executive officer during 2022 and, as such, is not reflected in the below information.