SCHEDULE: R01 Fund Boosts NovaBay Stake to 45.1% with New Preferred Stock

R01 Fund LP and its affiliates increased their beneficial ownership in NovaBay Pharmaceuticals, Inc. to 45.1% through the conversion of Series D preferred stock and the acquisition of new Series E preferred stock.

Summary

• Reporting persons (R01 Fund LP, R01 Capital LLC, R01 Capital Manager LLC, and Michael Kazley) now beneficially own an aggregate of 56,806,080 shares of NovaBay Pharmaceuticals, Inc. common stock.
• This ownership represents approximately 45.1% of the company's outstanding common stock.
• The beneficial ownership includes 220,663 shares of Series D Non-Voting Convertible Preferred Stock, which is convertible into a maximum of 35,306,080 shares of common stock, following stockholder approval.
• It also includes 134,375 shares of newly issued Series E Non-Voting Convertible Preferred Stock, convertible into a maximum of 21,500,000 shares of common stock.
• The percentage calculation is based on 6,010,749 shares of common stock outstanding as of October 1, 2025, plus 77,000,000 shares and 43,000,000 shares underlying the Series D and Series E preferred stock, respectively.
• The reporting persons also entered into a pre-funded warrant contract on October 15, 2025, to purchase 2,702,703 shares of common stock, which is not exercisable until January 1, 2026, and requires further stockholder approval for full exercise.

Sentiment

Score: 7

Explanation: The significant increase in beneficial ownership by a major investor, coupled with stockholder approval for preferred stock convertibility, suggests a positive long-term view on the company's prospects, despite potential short-term dilution for existing common shareholders.

Positives

• Significant increase in beneficial ownership by R01 Fund LP and its affiliates, indicating strong investor confidence and a long-term commitment to NovaBay Pharmaceuticals, Inc.
• Stockholder approval for the convertibility of Series D preferred stock, facilitating a major equity conversion and simplifying the capital structure related to these shares.

Negatives

• The conversion of preferred stock and potential exercise of warrants could lead to significant dilution for existing common stockholders.
• The pre-funded warrant is not fully exercisable until January 1, 2026, and requires further stockholder approval, introducing a future contingency.

Risks

• Potential future dilution of common stock due to the conversion of Series D and Series E preferred stock and the exercise of pre-funded warrants.
• The full exercise of the pre-funded warrant is contingent on future stockholder approval, which may not be granted or could be delayed.

Future Outlook

The full exercise of the pre-funded warrant for 2,702,703 shares of common stock is anticipated to commence on January 1, 2026, contingent upon future stockholder approval.

Industry Context

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Stakeholder Impact

• Shareholders: Potential dilution from the conversion of preferred stock and exercise of warrants. Increased influence of R01 Fund LP and its affiliates in the company's governance and strategic direction.
• Company (NovaBay Pharmaceuticals, Inc.): Secured significant investment, potentially strengthening its capital structure and providing a strong institutional backing.

Next Steps

• Exercise of the pre-funded warrant contract, commencing January 1, 2026.
• Future stockholder approval required for the full exercise of the pre-funded warrant.

Key Dates

Recommendation

The substantial increase in R01 Fund LP's beneficial ownership to 45.1% signals strong investor confidence and a long-term commitment, which is generally positive. However, the significant potential for dilution from the conversion of preferred stock and future warrant exercise warrants a cautious approach. Investors should hold to assess the impact of this increased ownership on company strategy and future operational performance, and monitor the actual conversion and exercise events, as this filing primarily details an ownership change rather than operational improvements.

Keywords

NovaBay Pharmaceuticals, R01 Fund, Schedule 13D, Preferred Stock, Convertible Securities, Beneficial Ownership, Equity Investment, Pharmaceuticals, Biotech