Form 4: Framework Ventures Boosts NovaBay Pharmaceuticals Stake

Framework Ventures IV L.P. acquired significant convertible preferred stock in NovaBay Pharmaceuticals, Inc., increasing its beneficial ownership.

Summary

• Framework Ventures IV L.P. (Framework LP) purchased 220,663 shares of NovaBay Pharmaceuticals, Inc.'s Series D Non-Voting Convertible Preferred Stock and the rights to purchase 134,375 shares of Series E Non-Voting Convertible Preferred Stock from David Lazar.
• The Series D Preferred Stock is convertible into 160 shares of common stock per preferred share, totaling 35,306,080 common shares.
• The Series E Preferred Stock is convertible into 160 shares of common stock per preferred share, totaling 21,500,000 common shares.
• The conversions are contingent upon stockholder approvals of proposals 5 and 9, as outlined in NovaBay's Definitive Proxy Statement on Schedule 14A filed on September 23, 2025.
• Following approval, Series D Preferred Stock will automatically convert within three business days of the October 16, 2025 annual meeting, and Series E Preferred Stock will convert within thirty business days of the meeting.
• Framework Ventures IV L.P., Framework Ventures Management LLC, Framework Ventures IV GP LLC, Vance Spencer, and Michael Ernest Anderson are reporting persons, identified as 10% owners and having director relationships with NovaBay Pharmaceuticals, Inc.

Sentiment

Score: 5

Explanation: The filing is a factual report of a planned insider transaction. While it indicates increased institutional commitment, the potential for significant dilution upon conversion presents a mixed sentiment for existing common shareholders, leading to a neutral score.

Positives

• Increased beneficial ownership by Framework Ventures, an existing 10% owner and investor, may signal continued confidence in NovaBay Pharmaceuticals, Inc.'s long-term prospects.
• The transaction consolidates a significant block of preferred shares under a single institutional investor, potentially streamlining future corporate actions.

Negatives

• The conversion of 35,306,080 Series D and 21,500,000 Series E preferred shares into common stock will result in substantial dilution for existing common shareholders.
• The transaction involves the acquisition of shares from a seller (David Lazar) rather than a direct capital infusion into NovaBay, meaning no new capital was raised by the company through this specific transaction.

Risks

• The conversion of both Series D and Series E Preferred Stock is contingent on stockholder approvals of proposals 5 and 9 at the annual meeting, introducing a condition to the full realization of the common stock equivalents.
• Significant dilution from the conversion could negatively impact the per-share value and earnings of existing common stock.

Future Outlook

The primary future outlook involves the conversion of the acquired Series D and Series E Non-Voting Convertible Preferred Stock into NovaBay common stock, contingent on shareholder approvals. This will significantly increase Framework Ventures' direct common stock ownership and influence.

Management Comments

• Framework Ventures GP IV LLC, Framework Ventures Management LLC, Vance Spencer, and Michael Ernest Anderson disclaim beneficial ownership of these shares, except to the extent of their pecuniary interest in such shares, if any.

Industry Context

This transaction represents a significant stake increase by an existing institutional investor in a pharmaceutical company, a common occurrence where investors deepen their commitment to companies they believe have growth potential, often through convertible securities to manage initial risk and gain future equity upside.

Corporate Governance

Related Party Transactions

• Framework Ventures IV L.P., Framework Ventures Management LLC, Framework Ventures IV GP LLC, Vance Spencer, and Michael Ernest Anderson are reporting persons who are 10% owners and have director relationships with NovaBay Pharmaceuticals, Inc., making this an insider transaction.

Stakeholder Impact

• Shareholders: Potential significant dilution of common stock upon conversion of preferred shares, which could impact per-share metrics and stock price.
• Company: Increased influence and commitment from a major institutional investor (Framework Ventures) could lead to strategic benefits or shifts in corporate direction.

Next Steps

• Stockholder approvals of proposals 5 and 9 at NovaBay's annual meeting on October 16, 2025.
• Automatic conversion of Series D Preferred Stock into common stock within three business days following the annual meeting, assuming approvals.
• Automatic conversion of Series E Preferred Stock into common stock within thirty business days following the annual meeting, assuming approvals.

Key Dates

Recommendation

The filing details a significant increase in beneficial ownership by an existing 10% owner and director group through convertible preferred stock. While this signals continued institutional confidence, the substantial potential dilution from the conversion of over 56 million common shares could exert downward pressure on the stock price. Without further context on NovaBay's operational performance or the strategic implications of this ownership shift, a 'hold' recommendation is prudent, advising investors to monitor the conversion process and its impact on the company's capital structure and market valuation.

Keywords

NovaBay Pharmaceuticals, NBY, Framework Ventures, Convertible Preferred Stock, Beneficial Ownership, SEC Form 4, Insider Transaction, Equity Investment, Dilution