SCHEDULE: Framework Ventures Acquires 16.2% Stake in NovaBay

Framework Ventures IV L.P. and R01 Fund LP have acquired a significant stake in NovaBay Pharmaceuticals, Inc., injecting $2.15 million into the company as part of a plan to address NYSE listing deficiencies.

Summary

• Framework Ventures IV L.P. and its affiliated entities and individuals (the "Reporting Persons") beneficially own 1,164,117 shares of NovaBay Pharmaceuticals, Inc. Common Stock, representing approximately 16.2% of the outstanding shares.
• This beneficial ownership is derived from 220,663 shares of Series D Non-Voting Convertible Preferred Stock, convertible into a maximum of 1,164,117 shares of Common Stock.
• On October 9, 2025, Framework Ventures IV L.P. and R01 Fund LP (together, the "Purchasers") entered into a Securities Purchase Agreement with David Lazar, NovaBay's former CEO and director.
• The Purchasers agreed to acquire 441,325 shares of Series D Preferred Stock for $9,850,000 and the rights to purchase 268,750 shares of Series E Non-Voting Convertible Preferred Stock for an additional $2,150,000, payable directly to NovaBay Pharmaceuticals, Inc.
• The total purchase price for this new acquisition is $12,000,000.
• The closing of this transaction is contingent upon NovaBay's stockholders approving proposals 5 and 9 at the 2025 Annual Meeting of Stockholders, scheduled for October 16, 2025, and other customary conditions.
• Each share of Preferred Stock is convertible into 160 shares of Common Stock upon stockholder approval, but conversion is limited to an aggregate of 19.99% of outstanding Common Stock until such approval is obtained.
• David Lazar has submitted a resignation letter agreement from his role as a director and Chief Executive Officer of NovaBay, effective upon the release of escrow funds to him.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While NovaBay faces significant challenges, particularly NYSE non-compliance, the substantial investment and strategic partnership provide a crucial lifeline and a clear path towards addressing these issues. The change in leadership also contributes to a sense of potential positive transformation, though execution risk remains.

Positives

• Framework Ventures IV L.P. and R01 Fund LP are making a significant investment, totaling $12,000,000, into NovaBay Pharmaceuticals, Inc.
• A portion of the investment, $2,150,000, will be paid directly to NovaBay for Series E Preferred Stock, providing a capital injection.
• The NYSE approved the funding plan set forth in the Preferred Stock SPA as a way for NovaBay to regain compliance with listing standards.
• The involvement of new strategic investors (Framework Ventures and R01 Fund LP) aims to pursue strategic opportunities and drive value for stockholders.
• The resignation of David Lazar as CEO and director may signal a fresh start or a change in strategic direction for the company.

Negatives

• NovaBay Pharmaceuticals, Inc. is currently not in compliance with NYSE American listing standards, specifically Sections 1003(a)(i), 1003(a)(ii), and 1003(a)(iii) related to stockholders' equity.
• There is a risk of delisting from the NYSE if NovaBay does not regain compliance by October 18, 2025, or fails to make progress consistent with its plan.
• The closing of the new investment is subject to stockholder approval of specific proposals, introducing a contingency.

Risks

• NovaBay faces potential delisting from the NYSE American if it does not regain compliance with stockholders' equity requirements by October 18, 2025.
• The conversion of Preferred Stock into Common Stock is limited to 19.99% of outstanding shares until stockholder approval is obtained, potentially restricting the full impact of the investment.
• General economic conditions and regulatory matters could impact the Issuer's financial position and the value of the investment.

Future Outlook

The Reporting Persons intend to collaborate with NovaBay Pharmaceuticals, Inc. to explore strategic opportunities aimed at enhancing stockholder value. They will continuously assess their investment, engage in discussions with management and the Board regarding business, operations, governance, strategy, and capitalization, and may adjust their holdings or engage in hedging activities based on market conditions and company performance. The investment is part of NovaBay's plan to regain compliance with NYSE listing standards.

Management Comments

• David Lazar, NovaBay's Chief Executive Officer and a director, has submitted a resignation letter agreement from his roles, effective upon the release of escrow funds to him.

Industry Context

This filing primarily details a significant investment and a change in major ownership for NovaBay Pharmaceuticals, Inc., a company facing NYSE listing compliance issues. While the filing does not explicitly discuss broader industry trends, the investment by Framework Ventures and R01 Fund LP suggests a belief in NovaBay's underlying business or a strategic opportunity within its specific market segment, despite the current corporate governance and financial challenges.

Management Changes

Corporate Governance

Related Party Transactions

• David Lazar, who was the Chief Executive Officer and a director of NovaBay Pharmaceuticals, Inc., is the seller of the Series D Preferred Stock and Series E Rights to Framework Ventures IV L.P. and R01 Fund LP.

Stakeholder Impact

• Shareholders: Potential for value creation through strategic investment, but also potential dilution from future conversions of preferred stock. The investment provides a pathway to address NYSE delisting risk, which could stabilize share price.
• Employees: The continued employment of a 'Key Employee' on substantially similar terms is a condition for closing, indicating stability for certain personnel.
• Creditors: The capital injection of $2.15 million directly to NovaBay could improve the company's financial health and ability to meet obligations.

Next Steps

• NovaBay's stockholders must approve proposals 5 and 9 at the 2025 Annual Meeting of Stockholders on October 16, 2025.
• The closing of the Securities Purchase Agreement is expected to occur as soon as practicable after the satisfaction of closing conditions, not to exceed two business days after October 18, 2025.
• NovaBay must continue to make progress consistent with its plan to regain compliance with NYSE listing standards by October 18, 2025, to avoid delisting proceedings.
• The Preferred Stock will be convertible into Common Stock at a rate of 160 shares per preferred share, subject to stockholder approval and a 19.99% conversion limitation until such approval.

Key Dates

Recommendation

The significant investment by Framework Ventures and R01 Fund LP, including a direct capital injection into NovaBay, provides a crucial lifeline for the company, particularly in addressing its NYSE listing compliance issues. The NYSE's approval of the funding plan and the change in CEO are positive developments that mitigate immediate downside risks. However, the investment is contingent on stockholder approval, and the company still faces the challenge of regaining full compliance by the October 18, 2025 deadline. For a seasoned investor, this situation warrants a 'Hold' as the positive steps offer a path to stability, but the underlying risks and uncertainties surrounding execution and future performance remain considerable.

Keywords

NovaBay Pharmaceuticals, Framework Ventures, R01 Fund, SEC filing, Schedule 13D, preferred stock, convertible stock, investment, corporate governance, NYSE compliance, delisting risk, David Lazar, stockholder approval