EX-99.1 2 ex_682007.htm EXHIBIT 99.1 ex_682007.htm

Exhibit 99.1

 

Unaudited Pro Forma Condensed Consolidated Financial Information

 

On March 25, 2024, NovaBay Pharmaceuticals, Inc. (the “Company” or “NovaBay”) completed the sale of its wholly-owned subsidiary, DERMAdoctor, LLC, a Missouri limited liability company (“DERMAdoctor”) (the “DERMAdoctor Divestiture”).

 

The following unaudited pro forma condensed consolidated financial information has been derived from the Company’s historical consolidated financial statements and gives effect to the DERMAdoctor Divestiture. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2024 reflects the Company’s actual financial position as of March 31, 2024, as the DERMAdoctor Divestiture was effective prior to that date, on March 25, 2024. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2023 reflects the Company’s financial position as if the DERMAdoctor Divestiture had occurred on December 31, 2023. The unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2024 and the year ended December 31, 2023 reflect the Company’s operating results as if the DERMAdoctor Divestiture had occurred immediately prior to January 1, 2023. In public filings, beginning with the Company’s Quarterly Report on Form 10-Q for the three-months ended March 31, 2024, filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 9, 2024 (the “March 2024 Form 10-Q”), the Company began reporting the historical financial results of DERMAdoctor in the Company’s consolidated financial statements as discontinued operations under U.S. generally accepted accounting principles (“GAAP”) for all periods presented.

 

The “Historical NovaBay” column of the unaudited pro forma condensed consolidated balance sheet as of December 31, 2023 and the unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2024 reflect DERMAdoctor as discontinued operations as reported in the March 2024 Form 10-Q. The “Historical NovaBay” column in the remaining unaudited pro forma condensed consolidated financial information reflects our historical condensed consolidated financial statements as of and for each of the periods presented and does not reflect any adjustments related to the DERMAdoctor Divestiture.

 

The unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the March 2024 Form 10-Q and the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 26, 2024, as amended on March 29, 2024.

 

The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and has been prepared based upon currently available information and management estimates and is subject to the assumptions and adjustments outlined herein. The unaudited pro forma financial information is not intended to be a complete presentation of the Company’s financial position or results of operations had the DERMAdoctor Divestiture occurred as of and for the periods presented. In addition, the unaudited pro forma condensed consolidated financial information is not necessarily indicative of the Company’s future results of operations or financial condition. The Company’s actual financial position and results of operations may differ materially from the pro forma amounts reflected herein due to a variety of factors. Management believes these assumptions and adjustments used are reasonable, given the information available at the filing date.

 

Effective May 30, 2024, the Company effected a 1-for-35 reverse split of its outstanding common stock ("Reverse Stock Split”). The unaudited pro forma condensed consolidated financial information has been adjusted, on a retroactive basis, to reflect the Reverse Stock Split.

 

 
 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET 

AS OF MARCH 31, 2024 

(in thousands) 

 

   

Historical

NovaBay

    

DERMAdoctor

Discontinued

Operations
(Note 2 (a))

    

Other Pro Forma

Adjustments

  

Note 2

  

Pro Forma

NovaBay

  

ASSETS

                                  

Current assets:

                                  

Cash and cash equivalents

   $ 1,823     $ -     $ -       $ 1,823  

Accounts receivable, net of allowance

     734       -       -         734  

Inventory, net of allowance

     663       -       -         663  

Prepaid expenses and other current assets

     371       -       -         371  

Total current assets

     3,591       -       -         3,591  

Operating lease right-of-use assets

     1,212       -       -         1,212  

Property and equipment, net

     77       -       -         77  

Other assets

     477       -       -         477  

TOTAL ASSETS

   $ 5,357     $ -     $ -       $ 5,357  
                                   

LIABILITIES AND STOCKHOLDERS' EQUITY

                                  

Liabilities:

                                  

Current liabilities:

                                  

Accounts payable

   $ 1,117     $ -     $ -       $ 1,117  

Accrued liabilities

     1,266       -       -         1,266  

Secured Convertible Notes, net of discounts

     973       -       -         973  

Unsecured Convertible Notes, net of discounts

     34       -       -         34  

Embedded derivative liability

     159       -       -         159  

Operating lease liabilities

     375       -       -         375  

Total current liabilities

     3,924       -       -         3,924  

Warrant liabilities

     232       -       -         232  

Operating lease liabilities- non-current

     1,041       -       -         1,041  

Total liabilities

     5,197       -       -         5,197  

Stockholders' equity:

                                  

Preferred stock

                                  

Series B Preferred Stock

     44       -       -         44  

Series C Preferred Stock

     1,441       -       -         1,441  

Common stock

     320       -       (311 )

(b)

     9  

Additional paid-in capital

     176,798       -       311  

(b)

     177,109  

Accumulated deficit

     (178,443 )     -       -         (178,443 )

Total stockholders' equity

     160       -       -         160  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

   $ 5,357     $ -     $ -       $ 5,357  

 

 
 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 

FOR THE THREE MONTHS ENDED MARCH 31, 2024 

(in thousands, except per share amounts) 

 

   

Historical

NovaBay

    

DERMAdoctor

Discontinued

Operations
(Note 2 (a))

    

Other Pro Forma

Adjustments

  

Note 2

  

Pro Forma

NovaBay

  

Sales:

                                  

Product revenue, net

   $ 2,624     $ -     $ -       $ 2,624  

Other revenue, net

     7       -       -         7  

Total sales, net

     2,631       -       -         2,631  
                                   

Cost of goods sold

     837       -       -         837  

Gross Profit

     1,794       -       -         1,794  

Operating expenses:

                                  

Research and development

     19       -       -         19  

Sales and marketing

     1,055       -       -         1,055  

General and administrative

     2,291       -       -         2,291  

Loss on divestiture of subsidiary

     865       -       (865 )

(c)

     -  

Total operating expenses

     4,230       -       (865 )       3,365  

Operating loss

     (2,436 )     -       865         (1,571 )
                                   

Non-cash gain on changes in fair value of warrant liability

     194       -       -         194  

Non-cash gain on change in fair value of embedded derivative liability

     65       -       -         65  

Accretion of interest and amortization of discounts on convertible notes

     (433 )     -       -         (433 )

Other expense, net

     (480 )     -       (54 )

(d)

     (534 )

Net loss from continuing operations

     (3,090 )     -       811         (2,279 )
                                   

Net loss from discontinued operations

     (124 )     124       -         -  

Net loss

     (3,214 )     124       811         (2,279 )

Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion price

     380       -       -         380  

Net loss attributable to common stockholders

   $ (3,594 )   $ 124     $ 811       $ (2,659 )
                                   

Basic and diluted net loss per share

                                  

Net loss per share per share from continuing operations

   $ (0.14 )                          

Net loss per share per share from discontinued operations

     (0.01 )                          

Net loss per share attributable to common stockholders (basic and diluted)

   $ (0.15 )                     $ (3.77 )

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock (basic and diluted)

     24,672               (23,967 )

(b)

     705  

 

 
 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET 

AS OF DECEMBER 31, 2023 

(in thousands) 

 

   

Historical NovaBay

    

DERMAdoctor Discontinued Operations
(Note 2 (a))

    

Other Pro Forma Adjustments

  

Note 2

  

Pro Forma NovaBay

  

ASSETS

                                  

Current assets:

                                  

Cash and cash equivalents

   $ 2,924     $ -     $ 1,070  

(e)

   $ 3,994  

Accounts receivable, net of allowance

     680       -       -         680  

Inventory, net of allowance

     564       -       -         564  

Prepaid expenses and other current assets

     256       -       -         256  

Current assets, discontinued operations

     2,730       (2,730 )     -         -  

Total current assets

     7,154       (2,730 )     1,070         5,494  

Operating lease right-of-use assets

     1,296       -       -         1,296  

Property and equipment, net

     87       -       -         87  

Other assets

     478       -       -         478  

Other assets, discontinued operations

     19       (19 )     -         -  

TOTAL ASSETS

   $ 9,034     $ (2,749 )   $ 1,070       $ 7,355  
                                   

LIABILITIES AND STOCKHOLDERS' EQUITY

                                  

Liabilities:

                                  

Current liabilities:

                                  

Accounts payable

   $ 906     $ -     $ -       $ 906  

Accrued liabilities

     1,169       -       525  

(e)

     1,694  

Secured Convertible Notes, net of discounts

     1,137       -       -         1,137  

Unsecured Convertible Notes, net of discounts

     -       -       34  

(e)

     34  

Embedded derivative liabilities

     -       -       224  

(e)

     224  

Operating lease liabilities

     368       -       -         368  

Current liabilities, discontinued operations

     698       (698 )     -         -  

Total current liabilities

     4,278       (698 )     783         4,363  

Warrant liabilities

     334       -       92  

(e)

     426  

Operating lease liabilities- non-current

     1,108       -       -         1,108  

Total liabilities

     5,720       (698 )     875         5,897  

Stockholders' equity:

                                  

Net book value of DERMAdoctor as of December 31, 2023

     -       (2,051 )     2,051  

(e)

     -  

Preferred stock

                                  

Series B Preferred Stock

     275       -       -         275  

Series C Preferred Stock

     1,675       -       -         1,675  

Common stock

     112       -       (109 )

(b)

     3  

Additional paid-in capital

     176,101       -       109  

(b)

     176,210  

Accumulated deficit

     (174,849 )     -       (1,856 )

(e)

     (176,705 )

Total stockholders' equity

     3,314       (2,051 )     195         1,458  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

   $ 9,034     $ (2,749 )   $ 1,070       $ 7,355  

 

 
 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 

FOR THE YEAR ENDED DECEMBER 31, 2023 

(in thousands, except per share amounts) 

 

   

Historical

NovaBay

    

DERMAdoctor

Discontinued

Operations
(Note 2 (a))

    

Other Pro Forma

Adjustments

  

Note 2

  

Pro Forma

NovaBay

  

Sales:

                                  

Product revenue, net

   $ 14,687     $ (3,552 )   $ -       $ 11,135  

Other revenue, net

     39       -       -         39  

Total sales, net

     14,726       (3,552 )     -         11,174  
                                   

Cost of goods sold

     6,831       (2,335 )     -         4,496  

Gross Profit

     7,895       (1,217 )     -         6,678  

Operating expenses

                                  

Research and development

     68       (34 )     -         34  

Sales and marketing

     6,500       (1,795 )     -         4,705  

General and administrative

     6,330       (742 )     -         5,588  

Goodwill, intangible and other asset impairment

     2,593       (2,593 )     -         -  

Total operating expenses

     15,491       (5,164 )     -         10,327  

Operating loss

     (7,596 )     3,947       -         (3,649 )
                                   

Non-cash gain on changes in fair value of warrant liability

     272       -       -         272  

Non-cash gain on changes in fair value of embedded derivative liability

     40       -       -         40  

Non-cash loss on modification of common stock warrants

     (292 )     -       -         (292 )

Other expense, net

     (2,064 )     1       (100 )

(d)

     (2,163 )
                                   

Net loss

     (9,640 )     3,948       (100 )       (5,792 )
                                   

Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion prices

     7,057       -       -         7,057  

Net loss attributable to common stockholders

   $ (16,697 )   $ 3,948     $ (100 )     $ (12,849 )
                                   

Net loss per share attributable to common stockholders (basic and diluted)

   $ (3.96 )                     $ (107.08 )

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock (basic and diluted)

     4,215               (4,095 )

(b)

     120  

 

 
 

 

Note 1. Basis of Presentation

 

The unaudited pro forma condensed consolidated financial information has been prepared based on NovaBay’s historical consolidated financial statements and in accordance with Article 11 of SEC Regulation S-X, Pro Forma Financial Information.

 

Note 2. Pro Forma Adjustments and Assumptions

 

(a)

Column gives effect to the DERMAdoctor Divestiture and has been prepared in accordance with the guidance for discontinued operations, ASC 205-20 Presentation of Financial Statements – Discontinued Operations, under U.S. Generally Accepted Accounting Principles.

 

(b)

Reflects the estimated retroactive effect of the Reverse Stock Split.

 

(c)

Offsets the actual loss recognized on the DERMAdoctor Divestiture.

 

(d)

Reflects the net impact on interest expense as if the Unsecured Convertible Notes and March 2024 Warrant (both as defined in the March 2024 Form 10-Q) were issued immediately prior to January 1, 2023, rather than March 25, 2024. The Unsecured Convertible Notes and March 2024 Warrant were issued to obtain the consent of Secured Convertible Note (as defined in the March 2024 Form 10-Q) holders and was required in order to close the DERMAdoctor Divestiture.

 

(e)

Reflects the impacts of the DERMAdoctor Divestiture as if it occurred on December 31, 2023 as shown in the table below (in thousands):

 

Cash purchase price

   $ 1,070  

Less: DERMAdoctor net book value as of December 31, 2023

     (2,051 )

Pro forma loss on divestiture of subsidiary as of December 31, 2023

     (981 )
         

Less: Cash transaction expenses incurred subsequent to December 31, 2023

     395  
         

Less: Cost incurred to obtain note holder consent subsequent to December 31, 2023:

        

Unsecured convertible notes, net, issued

     34  

Embedded derivative liabilities issued

     224  

Warrants issued

     92  

Issuance costs incurred

     130  

Total

     480  
         

Net impact to Accumulated deficit

   $ (1,856 )