SCHEDULE: NovaBay Secures Key Shareholder Voting Pact for Strategic Initiatives

NovaBay Pharmaceuticals has entered into a voting agreement with a significant shareholder group, facilitating a potential capital raise and a special cash dividend.

Summary

• NovaBay Pharmaceuticals, Inc. (the Company) signed a Voting Agreement with Mr. David Elliot Lazar and a group of stockholders (Poplar Point Capital Management LLC, Poplar Point Capital Partners LP, Poplar Point Capital GP LLC, and Mr. Jad Fakhry) on August 19, 2025.
• The agreement is in connection with a contemplated Securities Purchase Agreement (SPA) between the Company and Lazar, which will involve the sale and issuance of newly designated preferred stock convertible into common stock.
• The Stockholders, holding 1,020,300 shares of Common Stock (representing 17.52% of outstanding shares as of August 12, 2025), grant the Company an irrevocable proxy to vote their shares for two years from the Proxy Effective Date.
• The proxy covers key matters including a reverse stock split, increasing authorized shares, electing new directors nominated by Lazar, and approving the issuance/conversion of preferred stock, potentially exceeding 19.99% of common stock.
• In consideration, Lazar and the Company commit to commercially reasonable efforts to execute the SPA and cause a special dividend of $0.80 per share to be paid to common stockholders by September 30, 2025, following the SPA's execution.
• Based on 5,823,497 common shares outstanding as of August 12, 2025, the total special dividend would be $4,658,797.60.
• The Stockholders are subject to a two-year standstill provision, restricting further acquisitions, proxy solicitations, or attempts to control management, with exceptions for confidential proposals to the Board and open market share disposal after SPA approval.

Sentiment

Score: 7

Explanation: The agreement outlines a clear path for a capital raise and a significant special dividend for shareholders, which are positive. However, the potential for dilution from convertible preferred stock and shifts in governance introduce some uncertainty, balancing the overall sentiment to moderately positive.

Positives

• Commitment to a special cash dividend of $0.80 per share, totaling approximately $4.66 million for existing common stockholders.
• Potential for a significant capital infusion into the Company through the contemplated Securities Purchase Agreement with David Elliot Lazar.
• Strategic alignment with a major shareholder group (Poplar Point Capital) to support key corporate actions, including potential capital structure adjustments and board changes.
• The standstill agreement provides stability by preventing the shareholder group from initiating hostile actions for two years.

Negatives

• The issuance and conversion of preferred stock into common stock could lead to significant dilution for existing common shareholders.
• The agreement grants an irrevocable proxy to the Company over 17.52% of outstanding shares, centralizing voting power for specific strategic initiatives.
• The potential election of new directors nominated by Lazar could shift board composition and control.
• The special dividend is contingent upon the execution of the Securities Purchase Agreement, which is not yet finalized.

Risks

• Dilution Risk: The issuance and conversion of preferred stock into common stock, potentially exceeding 19.99% of outstanding shares, could dilute the ownership percentage and value of existing common stock.
• Execution Risk: The special dividend and other strategic actions are contingent on the successful execution and effectiveness of the Securities Purchase Agreement between the Company and Lazar.
• Governance Risk: The irrevocable proxy granted to the Company and the potential for Lazar to nominate new directors could alter corporate governance and decision-making dynamics.
• Market Reaction Risk: Share price could be negatively impacted by perceived dilution or changes in control, despite the special dividend.

Future Outlook

The Company anticipates executing a Securities Purchase Agreement with David Elliot Lazar, which will involve a capital raise through the issuance of convertible preferred stock. This is expected to be followed by a special cash dividend of $0.80 per share to common stockholders by September 30, 2025, and potential corporate actions such as a reverse stock split, an increase in authorized shares, and changes to the Board of Directors.

Management Comments

• The Company is contemplating entering into a Securities Purchase Agreement that will provide for the sale and issuance of shares of newly designated series of Company preferred stock.
• Lazar and the Company shall use all commercially reasonable efforts to execute the Securities Purchase Agreement and undertake the actions contemplated therein, including the investment by Lazar in the Company.
• Lazar and the Company shall cause a special dividend per share at $0.80 (eighty cents per share), or more, to be paid at the first available opportunity but no later than September 30, 2025.

Industry Context

This type of voting agreement and capital raise structure is common for smaller public companies seeking to strengthen their balance sheet, fund strategic initiatives, or address listing requirements (e.g., through a reverse stock split). Such agreements often involve significant shareholders or new strategic investors who gain influence in exchange for capital, while existing shareholders may receive a dividend or face dilution.

Comparison to Industry Standards

• This filing primarily details a corporate governance and financing agreement rather than operational or financial performance results. Therefore, direct comparisons to specific industry benchmarks for company performance, projects, or results are not applicable based solely on the content provided.
• The structure of the voting agreement and the proposed capital raise are standard mechanisms used by companies to secure shareholder support for strategic initiatives and attract investment.

Management Changes

Corporate Governance

Related Party Transactions

• The Voting Agreement itself is a transaction between the Company, David Elliot Lazar, and a significant shareholder group (Poplar Point Capital entities and Jad Fakhry).
• The contemplated Securities Purchase Agreement involves an investment by David Elliot Lazar, who may also nominate new members to the Company's Board of Directors, potentially creating a related party relationship.

Stakeholder Impact

• Shareholders: Will receive a special cash dividend of $0.80 per share if the Securities Purchase Agreement is executed. Face potential dilution from the conversion of new preferred stock. Their voting rights for 17.52% of shares are transferred via an irrevocable proxy for two years.
• Management: Gains strategic flexibility and secured shareholder support for key corporate actions, including capital structure changes and potential board adjustments.
• Creditors: A capital raise could strengthen the company's financial position, potentially improving creditworthiness.
• Employees: No direct impact mentioned, but a stronger financial position could provide more stability.

Next Steps

• Complete execution and effectiveness of the Securities Purchase Agreement between NovaBay Pharmaceuticals and David Elliot Lazar.
• Payment of a special dividend of $0.80 per share to common stockholders by September 30, 2025, following the SPA execution.
• Stockholder vote on proposals recommended by the Board of Directors, including a reverse stock split, an increase in authorized shares, and the election of new directors nominated by Lazar.
• Approval of the issuance and/or conversion of preferred stock into common stock, potentially exceeding 19.99% of outstanding shares.

Key Dates

Recommendation

The filing presents a mixed bag of potential outcomes. The special dividend is a clear positive for existing shareholders, and the capital raise could strengthen the company's financial position. However, the potential for significant dilution from the convertible preferred stock and the shift in governance dynamics, including an irrevocable proxy and new board nominations, introduce uncertainty. Investors should hold to observe the execution of the Securities Purchase Agreement, the actual terms of the capital raise, and the long-term impact of these strategic changes on the company's valuation and future performance.

Keywords

NovaBay Pharmaceuticals, Voting Agreement, SEC Filing, Preferred Stock, Common Stock, Special Dividend, Capital Raise, Shareholder Agreement, Corporate Governance, Reverse Stock Split, NYSE American, Poplar Point Capital, David Elliot Lazar, Dilution, Standstill Agreement