Revenue Expectations - NovaBay Pharmaceuticals, Inc. announced preliminary second quarter 2024 net revenue expectations[15] - The company is expected to report significant growth in revenue compared to the previous quarter[15] Business Strategy - NovaBay is focusing on enhancing customer loyalty and satisfaction as part of its business strategy[9] - The company is actively pursuing new revenue sources and market expansion opportunities[9] - NovaBay is engaged in the development of new products and technologies to drive future growth[9] Financial Transparency - The management has indicated that forward-looking statements are subject to risks and uncertainties[9] - The company plans to provide detailed financial results in its upcoming filings[9] - NovaBay is committed to transparency regarding its financial condition and operational results[9] Stakeholder Communication - The press release is intended to inform stakeholders about the company's performance and outlook[15] - The company is classified as an emerging growth company under the Securities Act[14]

NovaBay Pharmaceuticals (NYSEMKT:NBY) stock is falling hard on Thursday after the eyecare and wound care company announced results from its annual shareholder meeting. Included among the proposals in the annual shareholder meeting was a reverse stock split. Traders voted in favor of allowing the company's Board of Directors to enact a reverse split of NBY shares. Following that, NovaBay Pharmaceuticals announced that its Board has approved a one-for-35 reverse stock split for NBY. This will combine 35 share ...

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FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-33678 NOVABAY PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 68-0454536 ...

Financial Data and Key Metrics Changes - Total sales for Q4 2023 increased by 2% to $3.7 million compared to the prior year, driven by higher sales in eye care and wound care products [7][21] - Gross margin on net product revenue was 49% for Q4 2023, slightly up from 48% in Q4 2022 [7] - For the full year 2023, total sales net were $14.7 million, an increase of 2% versus 2022, with eye care and wound care segment sales growing by 9% [23][59] - Net loss attributable to common stockholders for Q4 2023 was $9.2 million, or $1.33 per share, compared to a net loss of $8.2 million, or $4.33 per share in Q4 2022 [58] Business Line Data and Key Metrics Changes - The eye care and wound care segment contributed $2.8 million to Q4 2023 sales, while the skincare segment contributed $0.9 million [21] - Year-over-year sales of the eye care and wound care segment grew 9%, driven by higher Avenova sales through physician dispense and OTC channels [23] - Sales and marketing expenses decreased by 17% in 2023, reflecting reduced digital marketing costs [9][57] Market Data and Key Metrics Changes - Subscription-based sales on Amazon and avanova.com accounted for 24% of all online sales in 2023, up from approximately 14% in 2022 [5] - The company is expanding into the EU market through partnerships with distributors, leveraging its established brand [12] Company Strategy and Development Direction - The company has streamlined its operations by divesting the DERMAdoctor skincare business to focus on higher growth opportunities in the eye care segment [4][60] - A new co-marketing agreement with Eyenovia aims to enhance the marketing of Avenova and leverage the FDA-approved Clobetasol product [6][20] - The strategy for 2024 emphasizes leveraging the physician dispense channel to increase Avenova brand visibility and sales [30][44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainty in the broader economy affecting operations and financial results, emphasizing the need for adaptability [2] - The company is optimistic about the growth potential of Avenova and plans to focus on partnerships for product innovation rather than in-house R&D [32][54] Other Important Information - Cash and cash equivalents stood at $3.1 million as of December 31, 2023, with $1.1 million received from the DERMAdoctor divestiture [24] - Non-cash impairment charges related to the DERMAdoctor business were recorded at $2.6 million for 2023 [9][22] Q&A Session Summary Question: Can you discuss the partnership with Sonoma and EU expansion? - The company is working with Sonoma to expand into the EU by approaching various distributors [12] Question: Will revenue breakdowns by distribution channel be provided? - The company typically does not break out revenues by distribution channel but may provide commentary as sales grow [13] Question: What is the focus for new product launches? - The company will not focus on new product development internally but will seek innovation through partnerships [48] Question: How is the digital marketing strategy changing for 2024? - The strategy has shifted from direct-to-consumer sales to leveraging physician recommendations and partnerships for growth [31][44]

PART I [Business](index=4&type=section&id=ITEM%201.%20BUSINESS) NovaBay Pharmaceuticals develops and sells eyecare and wound care products, with Avenova® Antimicrobial Lid and Lash Solution as its leading product - The company's core business focuses on scientifically-created eyecare and wound care products, led by **Avenova® Spray**, formulated with a proprietary, stable form of hypochlorous acid[16](index=16&type=chunk) - On March 25, 2024, the company sold its DERMAdoctor skincare subsidiary to streamline the business, reduce cash burn, and focus on its core eyecare business[17](index=17&type=chunk)[28](index=28&type=chunk) - Avenova Spray is marketed directly to consumers through online channels like Amazon.com and Avenova.com, which was the leading sales channel in 2023, and as a prescription product through eyecare professionals and retail pharmacies[22](index=22&type=chunk)[23](index=23&type=chunk) - The company outsources all manufacturing for its Avenova and former DERMAdoctor products to third-party contract manufacturers in the United States[33](index=33&type=chunk) Research and Development Expenses | Year | R&D Expense (in thousands) | | :--- | :--- | | 2023 | $68 | | 2022 | $174 | - The company has raised substantial doubt about its ability to continue as a going concern due to recurring expenses exceeding revenues and the need for additional capital to fund operations[41](index=41&type=chunk) [Risk Factors](index=14&type=section&id=ITEM%201A.RISK%20FACTORS) The company faces significant risks, including substantial doubt about its ability to continue as a going concern, dependence on Avenova Spray, intense competition, reliance on third-party manufacturers, and potential adverse regulatory actions - There is substantial doubt about the company's ability to continue as a going concern, as current cash resources are not sufficient to fund operations beyond the third quarter of 2024[72](index=72&type=chunk) - The company requires additional capital to finance its operations, which may not be available on acceptable terms and could result in significant dilution to existing stockholders[73](index=73&type=chunk) Goodwill and Intangible Asset Impairment Charges (DERMAdoctor) | Year Ended Dec 31 | Impairment Charge (in millions) | | :--- | :--- | | 2023 | $2.6 | | 2022 | $6.7 | - The company faces intense competition in the eyecare market from large, well-resourced companies and other over-the-counter products containing hypochlorous acid[77](index=77&type=chunk) - Avenova Spray is classified as a cleared medical device, not an approved drug, by the FDA, and its marketability could be halted if the FDA changes this classification, materially harming the business[85](index=85&type=chunk)[91](index=91&type=chunk) - Stockholders face significant dilution risk from the conversion of outstanding Series B and Series C Preferred Stock, convertible notes, and the exercise of warrants, which in aggregate represent a substantial increase over the current outstanding common shares[108](index=108&type=chunk)[110](index=110&type=chunk) - The company is at risk of being delisted from the NYSE American if it fails to comply with continued listing requirements, which would impair its ability to raise capital and reduce stock liquidity[103](index=103&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=ITEM%201B.UNRESOLVED%20STAFF%20COMMENTS) The company reports that it has no unresolved staff comments - Not Applicable[123](index=123&type=chunk) [Cybersecurity](index=25&type=section&id=ITEM%201C.CYBERSECURITY) NovaBay relies on established third-party software providers for its cybersecurity needs, with management and the Board overseeing risk, and no material incidents reported to date - The company relies on third-party software providers like Microsoft 365, Salesforce, and ADP for its cybersecurity, as it lacks in-house information technology personnel[124](index=124&type=chunk) - The Board of Directors oversees cybersecurity risk as part of its general risk management function, and management regularly evaluates these risks[125](index=125&type=chunk)[126](index=126&type=chunk) - As of the report date, the company is not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect its business, operations, or financial condition[128](index=128&type=chunk) [Properties](index=25&type=section&id=ITEM%202.%20PROPERTIES) The company's principal executive offices are located in Emeryville, California, under a lease expiring July 31, 2027 - The company leases approximately **7,675 square feet** of office space for its principal executive offices in Emeryville, California, with the lease expiring on July 31, 2027[129](index=129&type=chunk) [Legal Proceedings](index=25&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) As of December 31, 2023, NovaBay reports no legal proceedings expected to have a material adverse effect on its financial position - As of December 31, 2023, the company had no legal matters that management believed would result in a material adverse effect on its financial condition or operations[131](index=131&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's operations - Not Applicable[133](index=133&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) NovaBay's common stock is listed on the NYSE American under "NBY," and the company has never paid cash dividends, retaining earnings for business operations - The company's common stock is listed on the NYSE American under the trading symbol **"NBY"**[136](index=136&type=chunk) - NovaBay has never paid cash dividends and does not plan to in the foreseeable future, instead retaining earnings for business operations[137](index=137&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management's discussion highlights a 2% increase in net sales for 2023, driven by Avenova and wound care products, partially offset by a decline in DERMAdoctor sales, with a significant reduction in operating loss but continued substantial doubt about going concern - In March 2024, the company divested its DERMAdoctor subsidiary for **$1.07 million** to streamline its business and focus on growth opportunities aligned with its core eyecare business[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - The company raised approximately **$3.6 million** in gross proceeds during 2023 through a private placement of secured convertible notes and a warrant reprice transaction to address its liquidity needs[42](index=42&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) Goodwill and Asset Impairment of DERMAdoctor Business | Year Ended Dec 31 | Impairment Charge (in millions) | | :--- | :--- | | 2023 | $2.6 | | 2022 | $6.8 | - The company has sustained operating losses and expects expenses to exceed revenues in 2024, raising substantial doubt about its ability to continue as a going concern[179](index=179&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) For 2023, net product revenue increased by 2% to $14.7 million, driven by Avenova and wound care products, while total operating expenses decreased by 30% to $15.5 million, leading to a narrowed operating loss of $7.6 million Comparison of Operations (in thousands) | Statement of Operations | 2023 | 2022 | Dollar Change | Percent Change | | :--- | :--- | :--- | :--- | :--- | | Total sales, net | $14,726 | $14,404 | $322 | 2% | | Gross profit | $7,895 | $7,781 | $114 | 1% | | Total operating expenses | $15,491 | $22,198 | ($6,707) | (30%) | | Operating loss | ($7,596) | ($14,417) | $6,821 | (47%) | | Net loss | ($9,640) | ($10,608) | $968 | (9%) | - Product revenue increased by **$0.3 million (2%)** year-over-year, primarily due to a **$0.2 million** increase in Avenova Spray revenue and a **$0.5 million** increase in wound care products, partially offset by a **$0.6 million** decrease in DERMAdoctor skincare product revenue[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - Sales and marketing expenses decreased by **$1.3 million (17%)** due to lower digital advertising and consulting costs[168](index=168&type=chunk) - General and administrative expenses decreased by **$1.2 million (15%)** reflecting lower average headcount, reduced corporate fees, and lower depreciation and amortization costs following asset impairments in 2022[169](index=169&type=chunk) - The company recorded a goodwill and intangible asset impairment charge of **$2.6 million** in 2023, compared to **$6.7 million** in 2022, related to the DERMAdoctor business, which was fully impaired as of December 31, 2023[171](index=171&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=34&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) As of December 31, 2023, cash and cash equivalents decreased to $3.1 million, leading to substantial doubt about the company's ability to continue as a going concern, with net cash used in operating activities at $4.1 million Cash and Cash Equivalents | Date | Amount (in millions) | | :--- | :--- | | Dec 31, 2023 | $3.1 | | Dec 31, 2022 | $5.4 | - Management has determined that existing cash and projected cash flows will only be sufficient to fund operations into the third quarter of 2024, raising substantial doubt about the company's ability to continue as a going concern[178](index=178&type=chunk)[179](index=179&type=chunk) Cash Flow Summary (Year Ended Dec 31, 2023) | Cash Flow Activity | Amount (in millions) | | :--- | :--- | | Net cash used in operating activities | ($4.1) | | Net cash used in investing activities | ($0.019) | | Net cash provided by financing activities | $1.9 | - The company is evaluating various strategies to fund operations, including raising additional capital, reducing spending, out-licensing products, or divesting assets, as exemplified by the recent DERMAdoctor sale[180](index=180&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=ITEM%207A.QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate sensitivity on its cash and cash equivalents, which is considered minimal due to the short-term nature of its investments - The company's principal market risk is interest rate risk on its cash and cash equivalents, but due to the short-term nature of its investments, this risk is considered minimal[195](index=195&type=chunk)[196](index=196&type=chunk) - The company has not had any material exposure to foreign currency rate fluctuations due to its focus on the domestic U.S. market[197](index=197&type=chunk) [Financial Statements and Supplementary Data](index=40&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section includes the company's audited consolidated financial statements for 2023 and 2022, with the auditor's report expressing substantial doubt about the company's ability to continue as a going concern - The report from the independent registered public accounting firm includes an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern[206](index=206&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $7,154 | $11,332 | | Total Assets | $9,034 | $16,399 | | Total Liabilities | $5,720 | $5,845 | | Total Stockholders' Equity | $3,314 | $10,554 | Consolidated Statement of Operations Highlights (in thousands) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Total sales, net | $14,726 | $14,404 | | Operating loss | ($7,596) | ($14,417) | | Net loss | ($9,640) | ($10,608) | | Net loss per share | ($3.96) | ($10.10) | Consolidated Cash Flow Highlights (in thousands) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,131) | ($6,654) | | Net cash provided by financing activities | $1,910 | $4,633 | | Net decrease in cash | ($2,240) | ($2,133) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=93&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[431](index=431&type=chunk) [Controls and Procedures](index=93&type=section&id=ITEM%209A.CONTROLS%20AND%20PROCEDURES) As of December 31, 2023, the company's CEO and Interim CFO concluded that its disclosure controls and procedures and internal control over financial reporting were effective - Management, including the CEO and Interim CFO, concluded that as of December 31, 2023, the company's disclosure controls and procedures were effective at a reasonable assurance level[433](index=433&type=chunk) - Management concluded that as of December 31, 2023, the company's internal control over financial reporting was effective[434](index=434&type=chunk) [Other Information](index=93&type=section&id=ITEM%209B.OTHER%20INFORMATION) During the fourth quarter of 2023, no directors or Section 16 officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or Section 16 officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the fourth quarter of 2023[436](index=436&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=94&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section provides biographical information for the company's seven directors and two executive officers, confirms the adoption of a Code of Ethics, and discloses late Section 16(a) filings for several directors - The Board is comprised of **seven directors**, and the executive officers are Justin M. Hall (CEO, General Counsel) and Tommy Law (Interim CFO)[439](index=439&type=chunk)[449](index=449&type=chunk) - The company has adopted a Code of Ethics and Business Conduct applicable to all directors, officers, and employees[451](index=451&type=chunk) - Several directors filed late Form 4s related to the vesting and granting of restricted stock units during the fiscal year ended December 31, 2023[453](index=453&type=chunk) [Executive Compensation](index=97&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) This section details executive compensation for 2023, with CEO Justin M. Hall's total compensation at $364,146, and notes no bonuses or equity awards were granted to most NEOs 2023 Summary Executive Compensation | Name | Position | Salary ($) | Total Compensation ($) | | :--- | :--- | :--- | :--- | | Justin M. Hall, Esq. | CEO, GC and Chief Compliance Officer | 350,000 | 364,146 | | Tommy Law | Interim Chief Financial Officer | 148,750 | 155,484 | | Andrew Jones (Former) | Former Chief Financial Officer | 77,883 | 216,961 | | Audrey Kunin, M.D. (Former) | Chief Product Officer | 170,513 | 175,513 | - No bonuses were awarded to NEOs for fiscal year 2023 performance, except for a **$42,500** bonus paid to Interim CFO Tommy Law[461](index=461&type=chunk) - No equity awards were granted to any of the NEOs during the 2023 fiscal year[462](index=462&type=chunk) - Non-employee director compensation for 2023 consisted of annual cash retainers and an annual grant of **858 restricted stock units**[493](index=493&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=107&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section details beneficial ownership, noting that all directors and executive officers as a group own less than one percent of outstanding common stock, and no person beneficially owns more than five percent - As of December 31, 2023, **124,897 securities** were to be issued upon exercise of outstanding options and rights under equity compensation plans, with **171,424 securities** remaining available for future issuance[498](index=498&type=chunk) - As of March 21, 2024, all directors and executive officers as a group beneficially owned **35,145 shares**, representing **less than 1%** of the class[501](index=501&type=chunk) - The company is not aware of any beneficial owner of more than **5%** of its securities as of March 21, 2024[499](index=499&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=108&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The company discloses related party transactions, including the DERMAdoctor acquisition, and confirms that four of its seven directors are independent according to NYSE American standards - The 2021 acquisition of DERMAdoctor involved potential earn-out payments conditioned on the continued employment of its founders, Dr. Audrey Kunin and Dr. Jeff Kunin, though these targets were not met for 2022 or 2023[503](index=503&type=chunk)[505](index=505&type=chunk) - The Board has determined that **four of its directors** (Dr. Freiman, Ms. Garlikov, Ms. Sit, and Dr. Jeff Zheng) are independent under NYSE American listing standards[507](index=507&type=chunk) [Principal Accountant Fees and Services](index=110&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This section details fees paid to WithumSmith+Brown, PC, totaling $384,800 in 2023, primarily for audit services, a decrease from $451,588 in 2022 Fees Paid to Independent Registered Public Accounting Firm (Withum) | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | Audit Fees | $370,000 | $443,875 | | Audit-Related Fees | $14,800 | $7,713 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | **Total Fees** | **$384,800** | **$451,588** | - All services provided by the independent auditor for fiscal years 2023 and 2022 were pre-approved by the Audit Committee[511](index=511&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=111&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the documents filed as part of the Form 10-K report, including financial statements and various exhibits - This section contains a list of all financial statements and exhibits filed with the annual report, including material agreements, bylaws, and certifications[513](index=513&type=chunk)

Exhibit 2.1 EXECUTION VERSION MEMBERSHIP UNIT PURCHASE AGREEMENT BY AND AMONG NEW AGE INVESTMENTS LLC, DERMADOCTOR, LLC, AND NOVABAY PHARMACEUTICALS, INC. March 12, 2024 Ta b l e o f C o n t e n t s | A | r | t | i | c | l | e | 1 | D | e | fi | n | i | t | i | o | n | s | 1 | A | r | t | i | c | l | e | 2 | M | e | m | b | e | r | s | h | i | p | U | n | i | t | s | t | o | b | e | P | u | r | c | h | a | s | e | d | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-33678 NOVABAY PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 68-045 ...

Financial Data and Key Metrics Changes - Net product revenue for Q2 2023 was $4.6 million, a 26% increase from the prior year quarter, driven by record sales of wound care products [16][28] - Operating loss for the quarter was $1.4 million, a 37% improvement from the prior year [17] - Gross margin on net product revenue remained consistent at 50% for both Q2 2023 and Q2 2022 [16] - Cash and cash equivalents were reported at $4.4 million as of June 30, 2023, including proceeds from a $3 million private placement [18] Business Line Data and Key Metrics Changes - Avenova branded product sales amounted to $2.2 million, while DERMAdoctor product sales reached $1.1 million, and branded wound care products generated $1.3 million in sales [16] - Sales of DERMAdoctor products increased to $1.1 million for the quarter, up more than 40% versus the prior year, with notable contributions from international markets [7] Market Data and Key Metrics Changes - Avenova products achieved record sales during Amazon Prime Day, with a 22% increase over Prime Day 2022 and a 43% increase over Prime Day 2021 [30] - The physician dispense channel showed momentum, representing a win-win for the company and eye care specialists [29] Company Strategy and Development Direction - The company is shifting its focus in the DERMAdoctor line away from new product development to increasing sales of top-selling products through efficient sales channels [12] - The strategy aims for profitability by managing expenses and extending cash runway while focusing on proven products [20][32] Management's Comments on Operating Environment and Future Outlook - Management anticipates incremental growth in the eye care segment for the remainder of 2023, particularly through online sales channels [31] - The company is leveraging its digital marketing expertise to effectively promote products while managing expenditures [38] Other Important Information - Total operating expenses for Q2 2023 decreased by 8% over the prior year, including a 16% reduction in sales and marketing expenses [36] - The gross margin on net product sales increased to 55% for the first half of 2023 compared to 53% for the first half of 2022 [37] Q&A Session Summary Question: What was the actual cash loss for the second quarter? - The actual cash loss for the second quarter was about $1 million [22] Question: Can you discuss the wound business, specifically channels and SKUs? - The wound care segment consists of only two products, PhaseOne and NeutroPhase, with two sizes each [22] Question: What are the DERMAdoctor channels besides the direct website and Amazon? - The main sales channels include Amazon, dermadoctor.com, Costco, and international markets like the Middle East and China [23] Question: Any insights on margin expectations for the back half of the year? - Margins are expected to be around 55%, with slight increases due to the lower margin of wound care products [40]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-33678 NOVABAY PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 68-0454536 ...