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NovaBay Pharmaceuticals, Inc. (NYSE American: NBY), a Delaware-based pharmaceutical company with trailing twelve-month revenue of $13.84M, has finalized settlement agreements with three investment funds, resolving disputes over warrants linked to the company’s common stock. These settlements were reached with Sabby Volatility Warrant Master Fund Ltd., Bigger Capital Fund, LP, and District 2 Capital Fund LP following the expiration of certain buyout rights associated with the warrants. According to InvestingPro data, the company’s stock has declined 7.55% in the past week amid these developments.
On Tuesday, NovaBay entered into a Confidential Settlement and Release Agreement with Sabby. Under this agreement, Sabby committed to exercising warrants for approximately 4.99% of NovaBay’s outstanding common stock and agreed to a subsequent buyout of the remaining unexercised warrants for $1,125,000. The exercise and purchase were completed on Wednesday and Thursday, respectively. InvestingPro analysis reveals the company operates with a moderate debt level, with a debt-to-equity ratio of 1.18 and current ratio of 1.15.
Additionally, Sabby has agreed to retain ownership of the exercised shares until the record date for NovaBay’s upcoming special meeting, where a vote on the company’s proposed dissolution will take place. Sabby also committed to voting in favor of the dissolution and to restrict sales of its shares until the special meeting date. Should Sabby fail to uphold its voting commitment, it will owe NovaBay $425,000 in liquidated damages.
Similar agreements with Bigger and District 2 were also made public on Friday. These funds will exercise their warrants to purchase shares equivalent to 2.49% of NovaBay’s outstanding common stock each, and NovaBay will purchase the remaining unexercised warrants from both entities for a total of approximately $689,848.08. If either fund fails to meet their voting commitments, liquidated damages of $150,000 per fund will be payable to NovaBay.
All three agreements include a "most favored nations" clause, ensuring that if another warrant holder receives a higher buyout amount per warrant, the settlement amounts may be adjusted accordingly. The agreements also contain mutual releases of claims without any admission of liability by either party.
These settlements are part of NovaBay’s broader efforts to resolve disputes as it seeks approval from its stockholders for the liquidation and dissolution of the company, as outlined in a Plan of Complete Liquidation and Dissolution. The information disclosed is based on a press release statement and the details of the settlement agreements filed with the Securities and Exchange Commission. InvestingPro data shows the company has faced significant challenges, with an EBITDA of -$5.4M in the last twelve months and an overall Financial Health score of 1.96, rated as "Fair." Subscribers can access the complete financial analysis and additional insights through InvestingPro’s comprehensive research reports.
In other recent news, NovaBay Pharmaceuticals, Inc. did not secure the necessary shareholder approval to proceed with its proposed liquidation and dissolution. During a reconvened meeting, approximately 49% of shareholders voted in favor, falling short of the required majority. This vote followed the sale of NovaBay’s Avenova brand and related assets to PRN Physician Recommended Nutriceuticals, LLC, a significant divestiture of the company’s primary revenue-generating operations. Despite this setback, the board is contemplating a new special meeting to seek approval for the dissolution plan. In another development, NovaBay has extended the contract of its CEO and General Counsel, Justin M. Hall, through the end of 2025. This extension, formalized in a recent SEC filing, is seen as a move towards stability and continuity in leadership. The filing did not disclose specific compensation terms but confirmed the contractual arrangements. These developments highlight NovaBay’s ongoing strategic and leadership decisions.
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