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Explanatory Note
This filing is made solely to correct the per share dilution
effects of this offering based on our net tangible book value as of
June 30, 2015 as disclosed on pages S-5 and S-9 as follows: (i) our
as adjusted net tangible book value is changed from $0.10 per share
to $0.08 per share, (ii) the immediate increase in net tangible
book value to existing stockholders is changed from $0.03 per share
to $0.01 per share, and (iii) the immediate dilution in net
tangible book value to new investors purchasing our shares of
common stock in this offering is changed from $0.10 per share to
$0.12 per share. No other changes have been made to the prospectus
supplement or the accompanying base prospectus.
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-180460
PROSPECTUS SUPPLEMENT
12,300,000 Shares of Common Stock Warrants to Purchase
11,070,000 Shares of Common Stock
We are offering 12,300,000 shares of our common stock. Each
investor will also receive a warrant to purchase 0.90 of a share of
our common stock at any time on or before 60 months from the date
of issuance and at an exercise price of $0.20 per share for each
share of common stock purchased. The common stock and warrants will
be issued separately.
Our common stock is listed on the NYSE MKT under the symbol
"NBY." On October 22, 2015, the last reported sale price of our
common stock was $0.32 per share. There is no established public
trading market for the warrants, and we do not expect a market to
develop. In addition, we do not intend to apply for the listing of
the warrants on any national securities exchange or other
nationally recognized trading system.
As of October 20, 2015, the aggregate market value of our
outstanding common stock held by non-affiliates was approximately
$27.2 million, based on 74,717,961 shares of outstanding common
stock, of which approximately 60,509,550 shares are held by
non-affiliates, and a per share price of $0.45, based on the
closing sale price of our common stock on September 11, 2015. As of
the date hereof, excluding the securities to be sold in this
offering, we have sold $1,578,642 of our common stock pursuant to
General Instruction I.B.6 of Form S-3 during the prior 12 calendar
month period that ends on and includes the date hereof.
Investing in our securities involves significant risks. Before
purchasing our common stock and warrants, please review the
information, including information incorporated by reference, under
the heading "Risk Factors" beginning on page
S-5
of this prospectus supplement and page 6 of the accompanying
prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus supplement. Any representation to the contrary is a
criminal offense.
__________________________
The above summary of offering proceeds to us does not give
effect to any exercise of the warrants being issued in this
offering. We estimate the total expenses of this offering payable
by us, excluding the underwriting discounts and commissions, will
be approximately $200,000.
We anticipate that delivery of the shares of our common stock
and warrants will be made against payment therefor on or about
October 27, 2015, subject to customary closing conditions.
Roth Capital Partners
The date of this prospectus supplement is October 23, 2015.
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
You should rely only on the information incorporated by
reference or provided in this prospectus supplement, the
accompanying prospectus and any free writing prospectus that we
have authorized for use in connection with this offering. Neither
we nor the underwriter have authorized anyone to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. This
prospectus supplement and the accompanying prospectus do not
constitute an offer to sell, or a solicitation of an offer to
purchase, the securities offered by this prospectus supplement and
the accompanying prospectus in any jurisdiction where it is
unlawful to make such offer or solicitation. You should assume that
the information contained in this prospectus supplement or the
accompanying prospectus, or any document incorporated by reference
in this prospectus supplement or the accompanying prospectus, and
any free writing prospectus that we have authorized for use in
connection with this offering is accurate only as of the date of
those respective documents. Neither the delivery of this prospectus
supplement nor any distribution of securities pursuant to this
prospectus supplement shall, under any circumstances, create any
implication that there has been no change in the information set
forth or incorporated by reference into this prospectus supplement
or in our affairs since the date of this prospectus supplement. Our
business, financial condition, results of operations and prospects
may have changed since that date.
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is part of a registration statement
(No. 333-180460) that we filed with the Securities and Exchange
Commission, or the SEC, using a "shelf" registration process. Under
the registration statement, we registered the offering by us of
common stock, preferred stock, debt securities and warrants for
sale from time to time in one or more offerings. This prospectus
supplement provides specific information about the offering by us
of our common stock and accompanying warrants under the shelf
registration statement. This document is in two parts. The first
part is the prospectus supplement, which adds to and updates
information contained in the accompanying prospectus. The second
part, the prospectus, provides more general information, some of
which may not apply to this offering. Generally, when we refer to
this prospectus, we are referring to both parts of this document
combined. To the extent there is a conflict between the information
contained in this prospectus supplement, on the one hand, and the
information contained in the accompanying prospectus, on the other
hand, you should rely on the information in this prospectus
supplement.
Before purchasing any securities, you should carefully read both
this prospectus supplement and the accompanying prospectus,
together with the documents incorporated by reference herein as
described under the heading "Incorporation of Certain Information
by Reference" and the additional information described under the
heading, "Where You Can Find More Information" in this prospectus
supplement, as well as any free writing prospectus prepared by or
on behalf of us or to which we have referred you.
We are offering to sell, and are seeking offers to buy, the
shares and warrants only in jurisdictions where such offers and
sales are permitted. The distribution of this prospectus supplement
and the accompanying prospectus and the offering of the shares and
warrants in certain jurisdictions or to certain persons within such
jurisdictions may be restricted by law. Persons outside the United
States who come into possession of this prospectus supplement and
the accompanying prospectus must inform themselves about and
observe any restrictions relating to the offering of the shares and
warrants and the distribution of this prospectus supplement and the
accompanying prospectus outside the United States. This prospectus
supplement and the accompanying prospectus do not constitute, and
may not be used in connection with, an offer to sell, or a
solicitation of an offer to buy, any securities offered by this
prospectus supplement and the accompanying prospectus by any person
in any jurisdiction in which it is unlawful for such person to make
such an offer or solicitation.
Unless the context requires otherwise, all references in this
report to "we," "our," "us," the "Company," "NovaBay" and "NovaBay
Pharmaceuticals" refer to NovaBay Pharmaceuticals, Inc. and its
subsidiaries, and with respect to NovaBay Pharmaceuticals, Inc.
refer to the California corporation prior to the date of the
Reincorporation (as defined herein), and to the Delaware
corporation on and after the date of the Reincorporation.
This prospectus supplement and the accompanying prospectus,
including the information incorporated by reference into this
prospectus supplement and the accompanying prospectus, include
trademarks, service marks and trade names owned by us or other
companies. All trademarks, service marks and trade names included
or incorporated by reference into this prospectus supplement and
the accompanying prospectus, or any related free writing
prospectus, are the property of their respective owners.
RISK FACTORS
Any investment in our securities involves a high degree of risk,
including the risks described below and in the section titled "Risk
Factors" contained in both our Annual Report on Form 10-K filed
with the SEC on March 26, 2015, and our Quarterly Reports on Form
10-Q filed with the SEC on May 14, 2015 and August 13, 2015, which
are incorporated by reference herein. Before purchasing our common
stock and the accompanying warrants, you should carefully consider
the risk factors set forth below and in our Annual Report and
Quarterly Reports as well as all other information contained or
incorporated by reference in this prospectus supplement and the
accompanying prospectus, including our consolidated financial
statements in our Annual Report and any free writing prospectus
that we have authorized for use in connection with this offering.
The risks and uncertainties described below and in our Annual
Report and Quarterly Reports are not the only risks and
uncertainties we face. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also
impair our business operations. If any of the risks described below
or in our Annual Report and Quarterly Reports actually occur, our
business, financial condition and results of operations could
suffer. As a result, the trading price of our stock could decline,
perhaps significantly, and you could lose all or part of your
investment. The risks discussed below and in our Annual Report and
Quarterly Reports also include forward-looking statements and our
actual results may differ substantially from those discussed in
these forward-looking statements. See the section entitled
"Forward-Looking Information."
Risks Relating to our Common Stock and this Offering
Management will have broad discretion as to the use of the
proceeds from this offering, and we may not use the proceeds
effectively.
Our management will have broad discretion in the application of
the net proceeds from this offering and could spend the proceeds in
ways that do not improve our results of operations or enhance the
value of our common stock. You will be relying on the judgment of
our management with regard to the use of these net proceeds, and
you will not have the opportunity, as part of your investment
decision, to assess whether the net proceeds are being used
appropriately. It is possible that the net proceeds will be
invested in a way that does not yield a favorable, or any, return
for us. Our failure to apply these funds effectively could have a
material adverse effect on our business or the commercialization of
our product candidates and cause the price of our common stock to
decline.
You will experience immediate and substantial dilution in the
net tangible book value per share of the common stock you
purchase.
Since the price per share of our common stock being offered is
substantially higher than the net tangible book value per share of
our common stock, you will suffer substantial dilution in the net
tangible book value of the common stock you purchase in this
offering. Based on the sale of 12,300,000 shares of common stock in
this offering and warrants to purchase 11,070,000 shares of common
stock and the public offering price of $0.20 per share and
accompanying warrant, if you purchase shares of common stock in
this offering, you will suffer immediate and substantial dilution
of $0.12 per share in the net tangible book value of the common
stock. See the section entitled "Dilution" below for a more
detailed discussion of the dilution you will incur if you purchase
common stock and accompanying warrants in this offering.
We will require additional capital funding, and as a result you
may experience future dilution as a result of future equity
offerings.
We will require that significant additional capital in the
future to continue our planned operations and comply with NYSE MKT
listing requirements. To raise additional capital, we may in the
future offer additional shares of our common stock or other
securities convertible into or exchangeable for our common stock.
We cannot assure you that additional capital will be available when
needed or that we will be able to sell shares or other securities
in any other offering at a price per share that is equal to or
greater than the price per share paid by investors in this
offering, and investors purchasing shares or other securities in
the future could have rights, preferences and priviledges superior
to existing stockholders. The price per share at which we sell
additional shares of our common stock or other securities
convertible into or exchangeable for our common stock in future
transactions may be higher or lower than the price per share in
this offering.
Additionally, you may incur dilution as a result of grants of
equity awards under our equity incentive plans, or upon exercise of
options or warrants currently outstanding with exercise prices at
or below the public offering price of our common stock in this
offering. See the section entitled "Dilution" below for a more
detailed discussion of the dilution you will incur if you purchase
common stock and accompanying warrants in this offering. In
connection with this offering, the Company agreed to amend
previously issued long-term warrants from the March 2015 offering
that are exercisable for an aggregate of 6,954,998 shares of common
stock, short-term warrants from the March 2015 offering that are
exercisable for an aggregate of 9,273,332 shares of common stock
and warrants from the July 2011 offering that are exercisable for
an aggregate of 3,465,505 shares of common stock, which amendments
include lowering the exercise price of those warrants that were
previously $0.65 per share, $0.60 per share and $1.33 per share,
respectively, to an amount equal to the closing price per share of
our common stock NYSE MKT on the date of commencement of this
offering and the extension of the exercise period of certain of
these warrants. See the section entitled "Description of Securities
We Are Offering - Waiver and Amendment of Certain Securityholders'
Rights in Connection with this Offering."
The price of our common stock may fluctuate substantially, which
may result in losses to our stockholders.
The stock prices of many companies in the pharmaceutical and
biotechnology industry have generally experienced wide
fluctuations, which are often unrelated to the operating
performance of those companies. The market price of our common
stock is likely to be volatile and could fluctuate in response to,
among other things:
A substantial number of shares of our common stock may be sold
in this offering, which could cause the price of our common stock
to decline.
In this offering we will sell 12,300,000 shares, or
approximately 16.5% of our outstanding common stock as of October
20, 2015, together with warrants to purchase 11,070,000 shares, or
approximately 14.8% of our outstanding common stock as of October
20, 2015. This sale and any future sales of a substantial number of
shares of our common stock in the public market, or the perception
that such sales may occur, could adversely affect the price of our
common stock. We cannot predict the effect, if any, that market
sales of those shares of common stock or the availability of those
shares of common stock for sale will have on the market price of
our common stock.
There is no public market for the warrants to purchase shares of
common stock being offered in this offering.
There is no established public trading market for the warrants
being offered in this offering, and we do not expect a market to
develop. In addition, we do not intend to apply to list the
warrants on any national securities exchange or other nationally
recognized trading system, including the NYSE MKT. Without an
active market, the liquidity of the warrants will be limited. The
warrants in this offering will be issued in physical form.
The warrants are speculative in nature.
The warrants do not confer any rights of common stock ownership
on its holders, such as voting rights or the right to receive
dividends, but rather merely represent the right to acquire shares
of common stock at a fixed price for a limited period of time.
Specifically, commencing on the date of issuance, holders of the
warrants may exercise their right to acquire the common stock and
pay an exercise price of $0.20 per share, subject to certain
adjustments, prior to 60 months from the date of issuance, after
which date any unexercised warrants will expire and have no further
value. Moreover, following this offering, the market value of the
warrants is uncertain and there can be no assurance that the market
value of the warrants will equal or exceed their public offering
price. The warrants will not be listed or quoted for trading on any
market or exchange. There can be no assurance that the market price
of the common stock will ever equal or exceed the exercise price of
the warrants, and consequently, whether it will ever be profitable
for holders of the warrants to exercise the warrants.
The volume of trading of our common stock may be low, leaving
our common stock open to the risk of high volatility.
The number of shares of our common stock being traded may be
very low. Any stockholder wishing to sell his/her stock may cause a
significant fluctuation in the price of our stock. In addition, low
trading volume of a stock increases the possibility that, despite
rules against such activity, the price of the stock may be
manipulated by persons acting in their own self-interest. We may
not have adequate market makers and market making activity to
prevent manipulation.
Our limited operating history may make it difficult for you to
evaluate our business and to assess our future viability.
Our operations to date have been limited to organizing and
staffing our company, developing our technology, researching and
developing our compounds, conducting clinical trials, and building
the foundation of a commercial organization. We have not
demonstrated the long term ability to succeed in achieving clinical
endpoints, obtain regulatory approvals, formulate and manufacture
products on a commercial scale or conduct sales and marketing
activities. Consequently, any predictions you make about our future
success or viability are unlikely to be as accurate as they could
be if we had a longer operating history.
Our amended and restated certificate of incorporation and bylaws
and Delaware law, contain provisions that could discourage a third
party from making a takeover offer that is beneficial to our
stockholders.
Anti-takeover provisions of our amended and restated certificate
of incorporation, amended and restated bylaws and Delaware law may
have the effect of deterring or delaying attempts by our
stockholders to remove or replace management, engage in proxy
contests and effect changes in control. The provisions of our
charter documents include:
In addition, as a Delaware corporation, we are subject to the
Delaware General Corporation Law, which includes provisions that
may have the effect of deterring hostile takeovers or delaying or
preventing changes in control or management of our company.
Provisions of the Delaware General Corporation Law could make it
more difficult for a third party to acquire a majority of our
outstanding voting stock by discouraging a hostile bid, or
delaying, preventing or deterring a merger, acquisition or tender
offer in which our stockholders could receive a premium for their
shares, or effect a proxy contest for control of NovaBay or other
changes in our management.
We have not paid dividends in the past and do not expect to pay
dividends in the future, and any return on investment may be
limited to the value of our stock.
We have never paid cash dividends on our common stock and do not
anticipate paying cash dividends on our common stock in the
foreseeable future. The payment of dividends on our common stock
will depend on our earnings, financial condition and other business
and economic factors affecting us at such time as our Board of
Directors may consider relevant. If we do not pay dividends, you
will experience a return on your investment in our shares only if
our stock price appreciates. We cannot assure you that you will
receive a return on your investment when you do sell your shares or
that you will not lose the entire amount of your investment.
If our stockholder equity does not meet the minimum standards of
the NYSE MKT, we may be subject to delisting procedures.
On April 28, 2015, we received a letter from the NYSE MKT
notifying us that our stockholders' equity as of December 31, 2014
was below the minimum requirements of Sections 1003(a) (ii) and
(iii) of the NYSE MKT Company Guide. In order to maintain our
listing, we submitted a plan of compliance, addressing how we
intend to regain compliance with the Company Guide within 18
months, or by November 28, 2016. We continue our listing but will
be subject to periodic reviews by the exchange. If we do not make
progress consistent with the plan, the exchange will initiate
delisting procedures, as appropriate. We are pursuing options to
address the deficiency as indicated in our plan; however, we cannot
guarantee that we will either meet and/or be able to maintain the
listing requirements, and therefore our common stock may be subject
to delisting. If our common stock is delisted, this could, among
other things, substantially impair our ability to raise additional
funds; result in a loss of institutional investor interest and
fewer financing opportunities for us; and/or result in potential
breaches of representations or covenants of our warrants,
subscription agreements or other agreements pursuant to which we
made representations or covenants relating to our compliance with
applicable listing requirements. Claims related to any such
breaches, with or without merit, could result in costly litigation,
significant liabilities and diversion of our management's time and
attention and could have a material adverse effect on our financial
condition, business and results of operations.
FORWARD-LOOKING INFORMATION
Certain statements contained in this prospectus supplement and
the accompanying prospectus, including the documents incorporated
by reference therein, related to the anticipated size of clinical
trials, the anticipated timing of initiation of clinical trials,
the expected availability of clinical trial results, the
sufficiency of our cash resources, the estimated costs of clinical
trials and the amounts of certain revenues and certain costs in
comparison to prior years, or that otherwise relate to future
periods, are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of
1934, as amended, or the Exchange Act. The words "believe," "may,"
"estimate," "continue," "anticipate," "intend," "expect,"
"predict," "potential" and similar expressions are intended to
identify forward-looking statements. These statements are based on
assumptions that may not prove accurate. Actual results could
differ materially from those anticipated due to certain risks
inherent in the biotechnology industry and for companies engaged in
the development of new products in a regulated market. Among other
things: we will need to raise additional capital, and we may not be
able to do so on acceptable terms or at all; we are an early stage
company with a history of losses and expect to incur net losses for
the foreseeable future; we only have four marketable products in
the USA, and if we are unable to develop and obtain regulatory
approval for other products we may never generate significant
product revenues; our marketable products have yet to generate any
substantial revenue and may fail to achieve the market acceptance
necessary to do so; we will require substantial funds to continue
development which may not be available; if our therapeutic product
candidates do not receive regulatory approval, neither our
third-party collaborators, our contract manufacturers nor we will
be able to manufacture and market them; and we have limited
experience in developing drugs and medical devices, and we may be
unable to commercialize any of the new products we develop. These
and other risks, including those related to current economic and
financial market conditions, are described in more detail in "Risk
Factors" above and the additional risk factors contained in our
most recent Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q. We undertake no obligation to publicly update
any forward-looking statements, regardless of any new information,
future events or other occurrences. We advise you, however, to
consult any additional disclosures we make in our reports to the
SEC on Forms 10-K, 10-Q and 8-K.
USE OF PROCEEDS
We estimate the net proceeds from this offering will be
approximately $2.1 million, excluding the proceeds, if any, from
the exercise of the warrants, after deducting underwriting
discounts and commissions and our estimated offering expenses. We
cannot predict when or if the warrants will be exercised, and it is
possible that the warrants may expire and never be exercised.
We currently intend to use the net proceeds from this offering
for working capital and general corporate purposes, including
research and development, clinical trials and selling, general and
administrative expenses. As a result, our management will retain
broad discretion in the allocation and use of the net proceeds of
this offering, and investors will be relying on the judgment of our
management with regard to the use of these net proceeds. Pending
application of the net proceeds for the purposes as described
above, we expect to invest the net proceeds in short-term,
interest-bearing securities, investment grade securities,
certificates of deposit or direct or guaranteed obligations of the
U.S. government.
DILUTION
Our net tangible book value as of June 30, 2015, was
approximately $4.9 million, or $0.07 per share of common stock. Net
tangible book value per share is determined by dividing our total
tangible assets, less total liabilities, by the number of our
shares of common stock outstanding as of June 30, 2015. Dilution in
net tangible book value per share represents the difference between
the amount per share paid by purchasers of common stock in this
offering and the net tangible book value per share of our common
stock immediately after this offering.
After giving effect to the sale of 12,300,000 shares of common
stock and accompanying warrants in this offering at the public
offering price of $0.20 per share and accompanying warrant, and
after deducting the underwriting discounts and commissions and
estimated offering expenses payable by us, and excluding the
proceeds, if any, from the exercise of the warrants issued pursuant
to this offering, our as adjusted net tangible book value as of
June 30, 2015, would have been approximately $7.0 million, or $0.08
per share. This represents an immediate increase in net tangible
book value of $0.01 per share to existing stockholders and
immediate dilution in net tangible book value of $0.12 per share to
new investors purchasing our shares of common stock in this
offering. The following table illustrates this dilution on a per
share basis:
The foregoing table does not take into account further dilution
to new investors that could occur upon the exercise of outstanding
options and warrants having a per share exercise price less than
the per share offering price to the public in this offering or upon
the vesting of outstanding restricted stock units.
The above discussion and table are based on 73,641,978 shares of
common stock issued and outstanding as of June 30, 2015, and
excludes the following:
We expect that significant additional capital will be needed in
the future to continue our planned operations and comply with NYSE
MKT listing requirements. In addition, we may choose to raise
additional capital due to market conditions or strategic
considerations even if we believe we have sufficient funds for our
current or future operating plans. To the extent that additional
capital is raised through the sale of equity or convertible debt
securities, the issuance of these securities could result in
further dilution to our stockholders.
DESCRIPTION OF SECURITIES WE ARE OFFERING
We are offering 12,300,000 shares of our common stock and
warrants to purchase 11,070,000 shares of our common stock (and the
shares of our common stock issuable from time to time upon exercise
of the offered warrants). The common stock and warrants will be
issued separately. The common stock offered by this prospectus
supplement and the accompanying prospectus is described in the
accompanying prospectus under the heading "Description of Capital
Stock." The warrants offered by this prospectus supplement and the
accompanying prospectus are described immediately below.
Common Stock
A description of the securities we are offering pursuant to this
prospectus supplement is set forth hereunder and under the heading
"The Securities We May Offer" starting on page 3 of the
accompanying prospectus. As of October 20, 2015, we had 74,717,961
shares of common stock outstanding.
Warrants
The following is a brief summary of certain terms and conditions
of the warrants and is subject in all respects to the provisions
contained in the warrants.
Form.The warrants will be issued as individual warrant
agreements to the investors. The form of warrant is attached as
Annex A to this Prospectus Supplement.
Exercisability.The warrants are exercisable at any time
after the date of issuance and until the date that is five years
from the date of issuance, at which time any unexercised warrants
will expire and cease to be exercisable. The warrants will be
exercisable, at the option of each holder, in whole or in part by
delivering to us a duly executed exercise notice and by payment in
full in immediately available funds for the number of shares of
common stock purchased upon such exercise. If a registration
statement registering the issuance of the shares of common stock
underlying the warrants under the Securities Act is not then
effective or available, the holder may exercise the warrant through
a cashless exercise, in whole or in part, in which case the holder
would receive upon such exercise the net number of...
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