Product Performance - Avenova, the company's leading product, has shown strong sales performance, becoming the top product by unit sales and net revenue despite a lower average net selling price compared to pharmacy channels [180]. - The launch of over-the-counter Avenova in Q2 2019 significantly expanded the addressable market, allowing consumers to purchase without a prescription, which proved beneficial during the COVID-19 pandemic [178][179]. - Avenova revenue increased by 16% to $5.2 million for the nine months ended September 30, 2021, from $4.5 million for the same period in 2020 [219]. Financial Performance - Product revenue, net, decreased by $0.3 million, or 15%, to $1.8 million for the three months ended September 30, 2021, compared to $2.2 million for the same period in 2020 [206]. - Total sales, net, decreased by $0.3 million, or 15%, to $1.8 million for the three months ended September 30, 2021, from $2.2 million for the same period in 2020 [206]. - Gross profit decreased by $0.3 million, to $1.3 million for the three months ended September 30, 2021, from $1.6 million for the same period in 2020 [210]. - Product revenue, net, decreased by $2.3 million, or 28%, to $5.8 million for the nine months ended September 30, 2021, from $8.0 million for the same period in 2020 [217]. - Operating loss increased by $1.0 million, or 21%, to $5.7 million for the nine months ended September 30, 2021, from $4.7 million for the same period in 2020 [217]. - Net loss and comprehensive loss was $5.7 million for the nine months ended September 30, 2021, compared to $9.3 million for the same period in 2020, a decrease of $3.6 million or 39% [217]. Cost Management - Cost of goods sold decreased by $1.6 million, or 51%, to $1.6 million for the nine months ended September 30, 2021, from $3.2 million for the same period in 2020 [220]. - Research and development expenses decreased by $213 thousand to $36 thousand for the nine months ended September 30, 2021, from $249 thousand for the same period in 2020 [222]. - Sales and marketing expenses increased by $0.6 million, or 14%, to $5.3 million for the nine months ended September 30, 2021, compared to $4.7 million for the same period in 2020 [224]. Cash Flow and Financing - Net cash used in operating activities was $4.9 million for the nine months ended September 30, 2021, consisting primarily of a net loss of $5.7 million [230]. - Cash and cash equivalents decreased to $9.0 million as of September 30, 2021, from $12.0 million as of December 31, 2020 [229]. - Net cash provided by financing activities was $2.0 million for the nine months ended September 30, 2021, primarily from the ATM program [234]. - The Company completed a Private Placement for gross proceeds of $15.0 million on November 2, 2021 [242]. Strategic Focus - The company has shifted focus back to its core eyecare business after experiencing a significant decrease in PPE sales, which were previously significant during Q2 2020 [184]. - The company introduced two complementary products, Warm Eye Compress and i-Chek Illuminated Eye Examination Mirror, to enhance the effectiveness of Avenova and provide a holistic approach to eye care [185]. - The company does not anticipate dedicating future resources toward the sale of KN95 Masks or other PPE, expecting no revenue from these products in 2021 or beyond [218]. Operational Efficiency - The company recorded no reserve for accounts receivable at September 30, 2021, indicating effective management of credit risk [188]. - Inventory adjustments for excess and obsolete inventory were recorded at $0.1 million and $0.2 million as of September 30, 2021, and December 31, 2020, respectively [189]. - Revenue generated through the company's webstores and partner pharmacies is recognized upon fulfillment, ensuring timely revenue recognition [192][195]. Employee Compensation - Stock-based compensation expenses are recognized based on fair values as they are earned, indicating a structured approach to employee incentives [199]. - General and administrative expenses remained consistent for the nine months ended September 30, 2021, and 2020 [225]. Other Financial Information - Other income decreased to $2 thousand for the nine months ended September 30, 2021, from $605 thousand for the same period in 2020 [228]. - The Company had no off-balance sheet arrangements as of September 30, 2021 [237]. - Contractual cash commitments as of September 30, 2021, totaled $202 thousand, primarily for facility and equipment leases [239]. - The acquisition of DERMAdoctor was completed on November 5, 2021, making it a wholly-owned subsidiary [243].

Summary of NovaBay Pharmaceuticals and DERMAdoctor Acquisition Conference Call Company and Industry Overview - **Company**: NovaBay Pharmaceuticals, Inc. (NYSE:NBY) - **Acquisition Target**: DERMAdoctor - **Industry**: Skincare and Dermatology Key Points and Arguments 1. **Acquisition Details**: NovaBay announced a definitive agreement to acquire all assets of DERMAdoctor for $15 million, consisting of $12 million in cash and $3 million in earnout payments based on financial targets for 2022 and 2023 [10][11] 2. **Expected Financial Impact**: The acquisition is anticipated to be immediately accretive to NovaBay's earnings, with expectations to double NovaBay's sales in 2022, achieving a balanced revenue split between eye care and skincare products [10][24] 3. **Market Growth Potential**: The global market for cosmetic skincare products is projected to grow from over $145 billion in 2020 to $185 billion by 2027, indicating strong consumer demand and growth dynamics [13] 4. **Product Portfolio Expansion**: The acquisition will add more than 30 scientifically formulated DERMAdoctor products to NovaBay's portfolio, enhancing its presence in the skincare market [11][12] 5. **Leadership and Expertise**: Dr. Audrey Kunin, co-founder of DERMAdoctor, will join NovaBay as Chief Product Officer, bringing her expertise in dermatology and product formulation to drive future product development [9][18] 6. **Sales and Marketing Strategy**: NovaBay plans to leverage its digital marketing capabilities to enhance brand awareness and expand DERMAdoctor's customer base, utilizing sophisticated marketing campaigns that have proven successful with Avenova [17][24] 7. **Consumer Engagement**: DERMAdoctor has established a loyalty program (DERMAdollars) and subscription services to encourage repeat purchases, which are expected to be enhanced through NovaBay's marketing strategies [16][37] 8. **International Market Opportunities**: DERMAdoctor has a strong presence in international markets, particularly in the Middle East and Asia, which NovaBay aims to capitalize on for further growth [33][49] Additional Important Insights 1. **Product Development Focus**: There is a commitment to innovation and product development, with plans to introduce new products under the Avenova, CelleRx, and DERMAdoctor brands [12][22] 2. **Synergies and Integration**: The integration of DERMAdoctor is expected to create significant operational synergies, with both companies benefiting from shared expertise and resources [24][54] 3. **Future Growth Plans**: NovaBay is optimistic about future acquisitions but will focus on integrating DERMAdoctor in the near term, maintaining its operations as a subsidiary for at least two years [54][56] 4. **Consumer-Centric Approach**: Both companies emphasize the importance of consumer feedback in product development, aiming to create effective and appealing skincare solutions [22][23] This summary encapsulates the key discussions and insights from the conference call regarding the acquisition of DERMAdoctor by NovaBay Pharmaceuticals, highlighting the strategic importance of this move within the skincare industry.

NovaBay Pharmaceuticals DERMAdoctor Transaction Conference Call Speakers: Justin M. Hall NovaBay CEO Dr. Audrey Kunin DERMAdoctor co-founder & Chief Product Officer September 29, 2021 - DERMAdoctor® ltle Official! We're thrilled to announce that DERMAdoctor NYSE American: NBY | Novabay.com | Avenova.com | Cellerx.com | Dermadoctor.com | Forward-Looking Statements This presentation contains forward-looking statements, within the meaning of applicable U.S. securities laws, which statements can, in some cases, ...

Financial Data and Key Metrics Changes - Avenova product revenue for Q2 2021 was $1.9 million, up 65% year-over-year, with total net sales of $2.1 million for the quarter [27] - Gross margin for Q2 2021 was 71%, significantly up from 49% in the prior year [29] - Net loss for Q2 2021 was $1.9 million or $0.04 per share, an improvement from a net loss of $4.5 million or $0.15 per share in the previous year [33] - Year-to-date Avenova revenue for the first six months of 2021 was $3.5 million, representing a 29% increase over the prior year [34] Business Line Data and Key Metrics Changes - Avenova OTC sales reached a record $1.3 million in Q2 2021, up 117% from the prior year [28] - Total operating expenses for Q2 2021 were $3.4 million, compared to $3.0 million for the same period last year [29] - Sales and marketing expenses increased to $1.8 million in Q2 2021 from $1.4 million in Q2 2020, primarily due to higher spending on marketing programs for Avenova and CelleRx [30] Market Data and Key Metrics Changes - Avenova is now available in over half of CVS's 10,000 stores nationwide, enhancing consumer access [40] - The partnership with ImprimisRx is expected to significantly impact Avenova's market presence, particularly in the prescription channel [41] Company Strategy and Development Direction - The company is focusing on expanding its DTC channel, which is seen as the highest growth potential for Avenova [10] - NovaBay plans to launch complementary eye care products and is negotiating opportunities to broaden its product portfolio through acquisitions or licensing [25][42] - The company aims to leverage its established presence and strong balance sheet to pursue strategic transactions for profitable growth [43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future growth and profitability prospects, citing successful digital marketing campaigns and strong brand loyalty [39] - The company is confident in its ability to execute on initiatives to drive adoption of Avenova and CelleRx, with sufficient funds to meet operating needs into 2022 [37] Other Important Information - The company has eliminated warrant liabilities, which positively impacted the financial results for Q2 2021 [32] - Avenova is positioned as the number one physician-recommended antimicrobial lid and lash spray, with a patented pharmaceutical-grade formulation [20] Q&A Session Summary Question: Can you quantify the opportunity with ImprimisRx? - Management indicated that it is hard to quantify the opportunity but emphasized the importance of having a nationwide pharmacy partner to streamline availability [48][49] Question: What are your marketing strategies for new and repeat customers? - Management stated that they constantly change marketing messages and platforms to engage both new and returning customers effectively [52][53] Question: Where is Avenova located in CVS stores? - Avenova is located in the ophthalmic section with other eye drops, typically right outside the pharmacy [58] Question: Are there alternative channels for CelleRx? - Management expressed interest in exploring brick-and-mortar opportunities but emphasized the importance of market research before expanding [60][61] Question: What other products are being considered for expansion? - Management hinted at upcoming announcements regarding new products and emphasized the importance of complementary products to Avenova [64][66]

Product Performance - Avenova, the company's leading product, has achieved record unit sales quarter over quarter, with a significant increase in consumer usage [176]. - The launch of over-the-counter Avenova in Q2 2019 expanded the addressable market, allowing consumers to purchase without a prescription, contributing to its strong sales performance [177]. - Avenova is now the leading product by unit sales and net revenue, despite a lower average net selling price compared to prescription Avenova [180]. - Avenova revenue increased by 65% to $1.9 million for the three months ended June 30, 2021, driven by a higher number of overall units sold, particularly over-the-counter units [209]. - Avenova revenue increased by 29% to $3.5 million for the six months ended June 30, 2021, reflecting continued growth in unit sales [222]. Financial Performance - Product revenue, net decreased by $1.9 million, or 47%, to $2.1 million for the three months ended June 30, 2021, primarily due to the absence of KN95 Masks sales which generated $2.8 million in the same period of 2020 [208]. - For the six months ended June 30, 2021, product revenue, net decreased by $1.9 million, or 33%, to $3.9 million, again due to the absence of KN95 Masks sales [221]. - Gross profit decreased by $0.4 million to $1.5 million for the three months ended June 30, 2021, mainly due to the lack of KN95 Masks sales in 2021 [213]. - Gross profit for the six months ended June 30, 2021, decreased by $0.4 million to $2.9 million, primarily due to the discontinuation of KN95 Masks sales [224]. - Operating loss for the three months ended June 30, 2021, was $1.9 million, an increase of 74% compared to the prior year [207]. Expenses and Cash Flow - Total operating expenses increased by $0.4 million, or 12%, to $3.4 million for the three months ended June 30, 2021, primarily due to higher sales and marketing expenses [207]. - Sales and marketing expenses increased by $0.5 million, or 16%, to $3.5 million for the six months ended June 30, 2021, from $3.0 million for the same period in 2020 [227]. - Net cash used in operating activities was $3.4 million for the six months ended June 30, 2021, compared to $1.9 million for the same period in 2020 [233][234]. - Net cash provided by financing activities was $1.8 million for the six months ended June 30, 2021, compared to $3.7 million for the same period in 2020 [236][237]. - As of June 30, 2021, cash and cash equivalents were $10.3 million, down from $12.0 million as of December 31, 2020 [232]. Inventory and Allowances - The company recorded an allowance for excess and obsolete inventory of $0.2 million as of June 30, 2021 [190]. - The balance of product revenue allowances was $902,000 as of June 30, 2021, reflecting various discounts, rebates, and returns [197]. Strategic Initiatives - The company introduced two complementary products, Warm Eye Compress and i-Chek Illuminated Eye Examination Mirror, to enhance the Avenova user experience [185]. - The company continues to focus on digital marketing and public relations initiatives to promote Avenova directly to consumers [180]. - The rebranded CelleRx® Clinical Reset™ was launched into the beauty industry, leveraging new consumer-focused messaging [182]. Other Financial Information - The company had no off-balance sheet arrangements as of June 30, 2021 [239]. - Contractual cash commitments as of June 30, 2021 totaled $317 thousand, with $295 thousand for facility leases and $22 thousand for equipment leases [241][242]. - The company recognized other income of $2 thousand for the six months ended June 30, 2021, down from $176 thousand for the same period in 2020 [231]. - The company may consider raising additional capital through debt and equity financings due to changing circumstances affecting cash flow [232]. - The company does not expect inflation to have a material impact on its business in the near future [238].

NovaBay Pharmaceuticals, Inc. (NYSE:NBY) Q1 2021 Earnings Conference Call May 6, 2021 4:30 PM ET Company Participants Jody Cain - Investor Relations-LHA Justin Hall - President and Chief Executive Officer Andy Jones - Chief Financial Officer Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann Ed Woo - Ascendiant Capital Operator Hello and welcome to the NovaBay Pharmaceuticals First Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instruct ...

PART I FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company presents its unaudited condensed consolidated financial statements for the period ending March 31, 2021 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $14.07 million, driven by a reduction in cash and an increase in total liabilities Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $13,146 | $14,242 | | **Total Assets** | **$14,072** | **$15,238** | | **Total Current Liabilities** | $3,080 | $2,833 | | **Total Liabilities** | **$3,089** | **$2,920** | | **Total Stockholders' Equity** | **$10,983** | **$12,318** | | **Total Liabilities and Stockholders' Equity** | **$14,072** | **$15,238** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net sales decreased by 4% to $1.81 million, while the net loss slightly improved to $1.52 million for the quarter Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Total sales, net** | $1,807 | $1,892 | | **Gross profit** | $1,352 | $1,311 | | **Total operating expenses** | $2,872 | $2,846 | | **Operating loss** | ($1,520) | ($1,535) | | **Net loss and comprehensive loss** | **($1,518)** | **($1,582)** | | **Net loss per share (basic and diluted)** | **($0.04)** | **($0.06)** | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) Total stockholders' equity decreased by $1.34 million during Q1 2021, primarily due to the period's net loss - The company's total stockholders' equity **decreased by $1.34 million** during the first quarter of 2021, mainly driven by the net loss for the period[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to $1.42 million, leading to a $1.44 million decrease in total cash Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($1,419) | ($865) | | **Net cash used in investing activities** | ($25) | $0 | | **Net cash used in financing activities** | $0 | ($364) | | **Net decrease in cash, cash equivalents, and restricted cash** | ($1,444) | ($1,229) | | **Cash, cash equivalents and restricted cash, end of period** | $10,983 | $6,183 | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Notes detail accounting policies, the focus on Avenova, and confirm cash sufficiency through May 2022 - The company is primarily focused on its eye care product, **Avenova®**, which is sold through multiple channels including direct-to-consumer online, retail pharmacies, and physician offices[20](index=20&type=chunk)[21](index=21&type=chunk) - Management believes **existing cash and cash equivalents will be sufficient** to meet planned operating expenses at least through May 6, 2022[29](index=29&type=chunk) - The company received a **$0.9 million PPP loan** on May 6, 2020, which it expects to be forgiven in whole[163](index=163&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes a 4% decrease in net sales, a 3% increase in gross profit, and confirms sufficient liquidity - The company's primary focus is on its eye care product, **Avenova**, which is distributed through four main channels: direct-to-consumer, retail pharmacies, a Partner Pharmacy Program, and physician dispensing[167](index=167&type=chunk)[168](index=168&type=chunk) - The company has shifted its focus back to its core eyecare business and **does not expect significant future revenue from PPE sales**, which were a factor in 2020[176](index=176&type=chunk) Results of Operations Comparison (in thousands) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Dollar Change | Percent Change | | :--- | :--- | :--- | :--- | :--- | | **Total sales, net** | $1,807 | $1,892 | ($85) | (4%) | | **Gross profit** | $1,352 | $1,311 | $41 | 3% | | **Operating loss** | ($1,520) | ($1,535) | $15 | (1%) | | **Net loss** | ($1,518) | ($1,582) | $64 | (4%) | - **Avenova revenue increased by 2% to $1.6 million** in Q1 2021, driven by higher over-the-counter unit sales, though this was partially offset by a lower average net selling price[201](index=201&type=chunk) - **Sales and marketing expenses increased by 8% to $1.7 million** due to increased digital advertising for Avenova and CelleRx[204](index=204&type=chunk) - As of March 31, 2021, the company had **$10.5 million in cash and cash equivalents** and believes this is sufficient to fund operations at least through May 6, 2022[209](index=209&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on cash equivalents, with no material foreign currency exposure - The company's main market risk is **interest rate risk** on its cash and cash equivalents[225](index=225&type=chunk) - There is **no material exposure to foreign currency rate fluctuations** as the primary focus is on the U.S. domestic market[225](index=225&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the reporting period[228](index=228&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter ended March 31, 2021, that materially affected, or are reasonably likely to materially affect, internal controls[229](index=229&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) An arbitration with a former officer was settled, resulting in a $0.3 million insurance reimbursement in Q1 2021 - An arbitration with the company's former Interim President & CEO was **settled in December 2020**[85](index=85&type=chunk) - In Q1 2021, the company's insurance carrier determined it was entitled to a **$0.3 million reimbursement** for litigation costs related to the settled arbitration[86](index=86&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors disclosed in the company's 2020 Annual Report on Form 10-K - For information on risk factors, the report refers to the company's **Annual Report on Form 10-K** for the year ended December 31, 2020[232](index=232&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[234](index=234&type=chunk) [Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[235](index=235&type=chunk) [Mine Safety Disclosure](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This section is not applicable to the company's operations - Not Applicable[236](index=236&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) The Compensation Committee approved increases to executive and director compensation, including salaries, bonuses, and RSU grants - Based on a compensation survey, the Compensation Committee approved **increases to executive compensation** to better align with peer group medians[238](index=238&type=chunk)[239](index=239&type=chunk) Executive Compensation Adjustments (Effective May 1, 2021) | Executive | Previous Base Salary | New Base Salary | Previous Target Bonus | New Target Bonus | | :--- | :--- | :--- | :--- | :--- | | Justin Hall (CEO) | $286,000 | $350,000 | 40% | 50% | | Andrew Jones (CFO) | $275,000 | $300,000 | 30% | 35% | - The CEO and CFO were granted **500,000 and 250,000 Performance RSUs**, respectively, which vest over a three-year period based on revenue, cash flow, and market capitalization goals[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) - The 2021 Non-Employee Director Compensation Plan was revised (effective July 1, 2021) to **increase annual cash retainers** and to grant 30,000 restricted stock units instead of stock options[246](index=246&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including compensation agreements and SEC certifications - The report includes exhibits such as **Performance RSU Award Agreements** for the CEO and CFO, the 2021 Non-Employee Director Compensation Plan, and officer certifications[251](index=251&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2020, total net product revenue was $1.9 million, a 10% increase from $1.7 million in Q4 2019 [20] - Avenova product revenue for Q4 2020 was $1.5 million, down from $1.7 million in Q4 2019, impacted by a $400,000 increase in reserves for potential future product returns [21] - The net loss attributable to common stockholders for Q4 2020 was $1.8 million or $0.04 per share, an improvement from a net loss of $3.5 million or $0.13 per share in Q4 2019 [26] - For the full year 2020, net product revenue increased 51% to $9.9 million from $6.6 million in 2019 [27] - The net loss attributable to common stockholders for 2020 was $11 million or $0.31 per share, compared to a net loss of $10.5 million or $0.48 per share in 2019 [30] Business Line Data and Key Metrics Changes - Avenova unit sales reached an all-time record high in 2020, with online sales up over 200% compared to the previous year [10] - The physician dispensed channel saw a 17% year-over-year growth in unit sales, with two-thirds of total unit sales occurring in the second half of 2020 [13] - The introduction of the Subscribe & Save feature on Amazon.com and Avenova.com has increased repeat customers and recurring revenue [12] Market Data and Key Metrics Changes - Avenova accounted for more than 50% of total revenue in 2020 and over 60% in Q4 2020, primarily through online sales channels [6] - The company expanded consumer access by making Avenova available through CVS and Walmart.com, enhancing its market presence [6][13] Company Strategy and Development Direction - The company plans to focus on driving Avenova consumer sales through CVS brick-and-mortar stores and online channels [33] - New digital media campaigns will be launched to attract new customers and encourage repeat usage of Avenova [34] - The company is evaluating opportunities for growth through acquisition or licensing in the ophthalmic and skincare markets [34] Management's Comments on Operating Environment and Future Outlook - Management highlighted the transformative year of 2020, with a significant increase in product revenue and a focus on online sales strategies [5] - The ongoing COVID-19 pandemic has created uncertainty, but the company is optimistic about the future growth potential of Avenova [3][5] Other Important Information - The company raised over $12 million in net cash proceeds during 2020, which is expected to support operations into 2022 [31] - Operating expenses for 2020 were $12.4 million, down from $14.3 million in 2019, indicating improved cost management [28] Q&A Session Summary Question: Changes in marketing strategies and key performance indicators - Management expressed excitement about new marketing initiatives for Avenova and CelleRx, emphasizing the importance of online marketing for future growth [40][41] Question: Demographics and branding for Avenova - Management discussed the creation of a brand story around Avenova and the potential to target new demographics, particularly in the beauty market [42][44] Question: Recurrence of NeutroPhase revenue - Management indicated that NeutroPhase revenue is episodic and expects a few more orders throughout the year [46] Question: Materiality of new product launches - Management stated that new ancillary products are intended to augment Avenova sales but are not expected to be significant revenue drivers [50][51]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 (Sta ...

Financial Data and Key Metrics Changes - Net product revenue for Q3 2020 increased by 34% to $2.2 million, up from $1.6 million in the prior-year quarter [20] - Avenova revenue for the quarter increased by 14% to $1.8 million from $1.6 million a year ago, reflecting a record number of quarterly units sold [20][21] - The net loss for Q3 2020 was $3.2 million or $0.08 per share, compared to a net loss of $282,000 or $0.01 per share basic in Q3 2019 [28] Business Line Data and Key Metrics Changes - Avenova's revenue increase was attributed to strong online sales, confirming the effectiveness of the direct-to-consumer channel [11][20] - The introduction of PhaseOne contributed approximately $225,000 to net product revenue in Q3 2020, with no comparable revenue in the prior-year period [22] - Operating expenses for Q3 2020 were $3.7 million, up from $2.9 million in the prior-year period, primarily due to increased sales and marketing expenses [23] Market Data and Key Metrics Changes - Avenova's online sales are expected to be the fastest-growing sales channel, with a successful subscription feature on Amazon [12] - Sales in major metropolitan markets like New York and San Francisco saw a significant recovery in Q3 as these areas reopened [43] Company Strategy and Development Direction - The company is launching CelleRx Clinical Reset, targeting the beauty market and leveraging its hypochlorous acid technology [4][5] - Plans to broaden the distribution channel for Clinical Reset and seek additional products in skincare and beauty markets [32] - Focus on enhancing online sales for Avenova, which holds the greatest growth opportunity [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty surrounding the COVID-19 pandemic and its potential impact on operations and financial results [2] - The company has regained compliance with NYSE American listing standards and believes it has sufficient funds to support operations through at least the end of 2021 [14][29] Other Important Information - The company is awaiting FDA review for Emergency Use Authorization for a COVID-19 antibody test, which has been a dynamic process [15] - Avenova is promoted as an antimicrobial spray for bacterial dry eye, with a focus on its unique formulation and manufacturing in the USA [17][18] Q&A Session Summary Question: Current marketing strategies for Avenova post-COVID claims removal - Management reverted to pre-pandemic messaging and noted no significant impact on sales after removing COVID-related claims [39] Question: Bulk orders in Q3 and expectations for Q4 - Management mentioned bulk orders were harder to chase down but indicated new distribution channels for Avenova and CelleRx are being pursued [41] Question: Trends in optometrist office reopenings - Sales trends closely followed broader market reopenings, with major metropolitan areas recovering in Q3 [43] Question: Marketing investments for CelleRx launch - Management indicated that while an aggressive marketing campaign is planned, it will be manageable within current resources [48] Question: Plans for launching CelleRx on e-commerce sites - Initially, CelleRx will be available only on cellerx.com, with potential partnerships for exclusive online sales [49]