NovaBay Announces $4.9 Million Private Placement

By March 4, 2015

NovaBay® Pharmaceuticals, Inc. (NYSE MKT: NBY), a biopharmaceutical company developing and commercializing non-antibiotic anti-infective products focused on the global eye care market,(“NovaBay”), today announced that it has entered into a securities purchase agreement for the sale of approximately $4.9 million of its common stock and warrants to purchase common stock in a private placement.

Investors have agreed to purchase 9,273,333 units consisting of one share of NovaBay common stock and two warrants to purchase an additional one and three-quarters share of common stock. The cost per unit is $0.50. As required by NYSE MKT regulations, NovaBay’s largest shareholder, China Pioneer Pharma will purchase the units at market cost of $0.60. In addition, NovaBay’s CEO Ron Najafi, PhD and Board Member, Mark Sieczkarek will also purchase units at $0.60.  Participation from these three investors totals $1,754,000.

The first warrant, totaling rights to 9,273,333 shares, which is exercisable beginning on the date six months after the date of issuance, entitles the holder to purchase one share of common stock at a price of $0.60 per share, and includes a provision for forced conversion if the common stock trades at or above $1.10 for 10 out of 20 consecutive trading days.  This warrant will expire, unless exercised, 15 months following the date of issuance. If fully exercised, these warrants would bring $5.6 million of gross proceeds to NovaBay. The second warrant, totaling rights to 6,955,000 shares, entitles the holder to purchase three-quarters of one share of common stock at a price of $0.65 per share, and is exercisable beginning on the date six months after the date of issuance.  This warrant expires five and one half years from closing, unless exercised.  If fully exercised, these warrants would provide $4.5 million of gross proceeds to NovaBay. The closing of the private placement is subject to the satisfaction of customary closing conditions.

The net proceeds from the sale of the shares and the related warrants, after deducting the underwriters’ discounts and other estimated offering expenses payable by NovaBay, will be approximately $4.6 million, which does not include any potential proceeds from the cash exercise of any warrants. The offering is expected to close on or about March 6, 2015, subject to customary closing conditions.

Maxim Group LLC acted as the sole placement agent of the offering, with Ascendiant Capital acting as financial advisor to NovaBay.

NovaBay intends to use the net proceeds from this offering for working capital and general corporate purposes, including research and development, clinical trials and selling, and general and administrative expenses, including sales and marketing expenses related to launching its Avenova™ product across the U.S.

The foregoing securities were offered in the private placement and have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws. Accordingly, these securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.  As part of the transaction, NovaBay has agreed to file a registration statement with the Securities and Exchange Commission for purposes of registering the resale of (i) the shares of common stock sold to the investors, and (ii) the common stock issuable upon the exercise of the warrants.

This notice is issued pursuant to Rule 135c under the Securities Act and does not constitute an offer to sell or the solicitation of an offer to buy the securities, nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state. Any offering of the securities under the resale registration statement will only be by means of a prospectus.

About NovaBay Pharmaceuticals, Inc.: Going Beyond Antibiotics®
NovaBay Pharmaceuticals is a biopharmaceutical company focusing on the development and commercialization of its non-antibiotic anti-infective products to address the unmet therapeutic needs of the global, topical anti-infective market with its two distinct product categories: FDA-cleared NEUTROX™ Family of Products: AVENOVA™ for the eye care market, NEUTROPHASE® for wound care and CELLERX™ for the dermatology market; and its AGANOCIDE® compounds, led by AURICLOSENE™.

NovaBay is partnered in the U.S. and around the globe with: PBE, Inc. (U.S.), IHT, Inc. (U.S.), Galderma (France), Virbac (France), China Pioneer Pharma (China and Southeast Asia), Shin Poong Pharmaceuticals (Korea), and Biopharm Group (North African and Middle East).

Forward-looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the proposed private placement. The offering is subject to various conditions, and there can be no assurance as to whether or when the offering will close. These forward-looking statements are subject to risks and uncertainties, including the company’s ability to satisfy the closing conditions of the offering, to file the required registration statement, and the other risks detailed from time to time in our filings with the Securities and Exchange Commission, and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements.

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For NovaBay Avenova purchasing information, please contact:
Email us
Call us: 1-800-890-0329
www.avenova.com

At the Company:
Thomas J. Paulson
Chief Financial Officer
510-899-8809
Contact T. Paulson

Investor Contact:
LHA
Jody Cain
310-691-7100
jcain@lhai.com

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