10-Q 1 nby20230930_10q.htm FORM 10-Q nby20230930_10q.htm
0001389545 NOVABAY PHARMACEUTICALS, INC. false --12-31 Q3 2023 3 19 556 499 0.01 0.01 5,000 5,000 6 6 12 12 1 1 2 2 0.01 0.01 150,000 150,000 6,529 6,529 2,035 2,035 5 7 3 5 5 7 0 0 0 0 0 0 0 0 0 0 0 0 0 1,757 148 7,382 13,111 0 0 0 0 2 173 173 6.30 12.5 6.30 159 10 10 5 4 0 0 0 0 0 0 0 0 0.4 0.2 After giving retroactive effect to a 1-for-35 reverse stock split that became effective November 15, 2022. 00013895452023-01-012023-09-30 xbrli:shares 00013895452023-11-06 thunderdome:item iso4217:USD 00013895452023-09-30 00013895452022-12-31 iso4217:USDxbrli:shares 0001389545us-gaap:SeriesBPreferredStockMember2023-09-30 0001389545us-gaap:SeriesBPreferredStockMember2022-12-31 0001389545us-gaap:SeriesCPreferredStockMember2023-09-30 0001389545us-gaap:SeriesCPreferredStockMember2022-12-31 0001389545us-gaap:ProductMember2023-07-012023-09-30 0001389545us-gaap:ProductMember2022-07-012022-09-30 0001389545us-gaap:ProductMember2023-01-012023-09-30 0001389545us-gaap:ProductMember2022-01-012022-09-30 0001389545us-gaap:ProductAndServiceOtherMember2023-07-012023-09-30 0001389545us-gaap:ProductAndServiceOtherMember2022-07-012022-09-30 0001389545us-gaap:ProductAndServiceOtherMember2023-01-012023-09-30 0001389545us-gaap:ProductAndServiceOtherMember2022-01-012022-09-30 00013895452023-07-012023-09-30 00013895452022-07-012022-09-30 00013895452022-01-012022-09-30 0001389545us-gaap:PreferredStockMember2022-12-31 0001389545us-gaap:CommonStockMember2022-12-31 0001389545us-gaap:AdditionalPaidInCapitalMember2022-12-31 0001389545us-gaap:RetainedEarningsMember2022-12-31 0001389545us-gaap:PreferredStockMember2023-01-012023-03-31 0001389545us-gaap:CommonStockMember2023-01-012023-03-31 0001389545us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-31 0001389545us-gaap:RetainedEarningsMember2023-01-012023-03-31 00013895452023-01-012023-03-31 0001389545us-gaap:PreferredStockMember2023-03-31 0001389545us-gaap:CommonStockMember2023-03-31 0001389545us-gaap:AdditionalPaidInCapitalMember2023-03-31 0001389545us-gaap:RetainedEarningsMember2023-03-31 00013895452023-03-31 0001389545us-gaap:PreferredStockMember2023-04-012023-06-30 0001389545us-gaap:CommonStockMember2023-04-012023-06-30 0001389545us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-30 0001389545us-gaap:RetainedEarningsMember2023-04-012023-06-30 00013895452023-04-012023-06-30 0001389545nby:ConversionOfSeriesBPreferredStockToCommonStockMemberus-gaap:PreferredStockMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesBPreferredStockToCommonStockMemberus-gaap:CommonStockMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesBPreferredStockToCommonStockMemberus-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesBPreferredStockToCommonStockMemberus-gaap:RetainedEarningsMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesBPreferredStockToCommonStockMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesCPreferredStockToCommonStockMemberus-gaap:PreferredStockMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesCPreferredStockToCommonStockMemberus-gaap:CommonStockMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesCPreferredStockToCommonStockMemberus-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesCPreferredStockToCommonStockMemberus-gaap:RetainedEarningsMember2023-04-012023-06-30 0001389545nby:ConversionOfSeriesCPreferredStockToCommonStockMember2023-04-012023-06-30 0001389545us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2023-04-012023-06-30 0001389545us-gaap:SeriesBPreferredStockMemberus-gaap:CommonStockMember2023-04-012023-06-30 0001389545us-gaap:SeriesBPreferredStockMemberus-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-30 0001389545us-gaap:SeriesBPreferredStockMemberus-gaap:RetainedEarningsMember2023-04-012023-06-30 0001389545us-gaap:SeriesBPreferredStockMember2023-04-012023-06-30 0001389545us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2023-04-012023-06-30 0001389545us-gaap:SeriesCPreferredStockMemberus-gaap:CommonStockMember2023-04-012023-06-30 0001389545us-gaap:SeriesCPreferredStockMemberus-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-30 0001389545us-gaap:SeriesCPreferredStockMemberus-gaap:RetainedEarningsMember2023-04-012023-06-30 0001389545us-gaap:SeriesCPreferredStockMember2023-04-012023-06-30 0001389545us-gaap:PreferredStockMember2023-06-30 0001389545us-gaap:CommonStockMember2023-06-30 0001389545us-gaap:AdditionalPaidInCapitalMember2023-06-30 0001389545us-gaap:RetainedEarningsMember2023-06-30 00013895452023-06-30 0001389545us-gaap:PreferredStockMember2023-07-012023-09-30 0001389545us-gaap:CommonStockMember2023-07-012023-09-30 0001389545us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-30 0001389545us-gaap:RetainedEarningsMember2023-07-012023-09-30 0001389545us-gaap:PreferredStockMember2023-09-30 0001389545us-gaap:CommonStockMember2023-09-30 0001389545us-gaap:AdditionalPaidInCapitalMember2023-09-30 0001389545us-gaap:RetainedEarningsMember2023-09-30 0001389545us-gaap:PreferredStockMember2021-12-31 0001389545us-gaap:CommonStockMember2021-12-31 0001389545us-gaap:AdditionalPaidInCapitalMember2021-12-31 0001389545us-gaap:RetainedEarningsMember2021-12-31 00013895452021-12-31 0001389545us-gaap:RetainedEarningsMember2022-01-012022-03-31 00013895452022-01-012022-03-31 0001389545us-gaap:PreferredStockMember2022-01-012022-03-31 0001389545us-gaap:CommonStockMember2022-01-012022-03-31 0001389545us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-31 0001389545us-gaap:PreferredStockMember2022-03-31 0001389545us-gaap:CommonStockMember2022-03-31 0001389545us-gaap:AdditionalPaidInCapitalMember2022-03-31 0001389545us-gaap:RetainedEarningsMember2022-03-31 00013895452022-03-31 0001389545us-gaap:PreferredStockMember2022-04-012022-06-30 0001389545us-gaap:CommonStockMember2022-04-012022-06-30 0001389545us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-30 0001389545us-gaap:RetainedEarningsMember2022-04-012022-06-30 00013895452022-04-012022-06-30 0001389545us-gaap:PreferredStockMember2022-06-30 0001389545us-gaap:CommonStockMember2022-06-30 0001389545us-gaap:AdditionalPaidInCapitalMember2022-06-30 0001389545us-gaap:RetainedEarningsMember2022-06-30 00013895452022-06-30 0001389545us-gaap:PreferredStockMember2022-07-012022-09-30 0001389545us-gaap:CommonStockMember2022-07-012022-09-30 0001389545us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-30 0001389545us-gaap:RetainedEarningsMember2022-07-012022-09-30 0001389545us-gaap:PreferredStockMember2022-09-30 0001389545us-gaap:CommonStockMember2022-09-30 0001389545us-gaap:AdditionalPaidInCapitalMember2022-09-30 0001389545us-gaap:RetainedEarningsMember2022-09-30 00013895452022-09-30 0001389545nby:EmployeesAndDirectorsMember2023-01-012023-09-30 0001389545nby:EmployeesAndDirectorsMember2022-01-012022-09-30 0001389545nby:WarrantLiabilityMember2023-01-012023-09-30 0001389545nby:WarrantLiabilityMember2022-01-012022-09-30 0001389545nby:ConversionOfSeriesBPreferredStockToCommonStockMember2023-01-012023-09-30 0001389545nby:ConversionOfSeriesBPreferredStockToCommonStockMember2022-01-012022-09-30 0001389545nby:ConversionOfSeriesCPreferredStockToCommonStockMember2023-01-012023-09-30 0001389545nby:ConversionOfSeriesCPreferredStockToCommonStockMember2022-01-012022-09-30 0001389545us-gaap:SeriesBPreferredStockMember2023-01-012023-09-30 0001389545us-gaap:SeriesBPreferredStockMember2022-01-012022-09-30 0001389545us-gaap:SeriesCPreferredStockMember2023-01-012023-09-30 0001389545us-gaap:SeriesCPreferredStockMember2022-01-012022-09-30 xbrli:pure 0001389545nby:ReverseStockSplitMember2022-11-152022-11-15 0001389545nby:AvenovaSprayMember2023-07-012023-09-30 0001389545nby:AvenovaSprayMember2022-07-012022-09-30 0001389545nby:AvenovaSprayMember2023-01-012023-09-30 0001389545nby:AvenovaSprayMember2022-01-012022-09-30 0001389545nby:DermadoctorMember2023-07-012023-09-30 0001389545nby:DermadoctorMember2022-07-012022-09-30 0001389545nby:DermadoctorMember2023-01-012023-09-30 0001389545nby:DermadoctorMember2022-01-012022-09-30 0001389545nby:NeutrophaseMember2023-07-012023-09-30 0001389545nby:NeutrophaseMember2022-07-012022-09-30 0001389545nby:NeutrophaseMember2023-01-012023-09-30 0001389545nby:NeutrophaseMember2022-01-012022-09-30 0001389545nby:OtherProductsMember2023-07-012023-09-30 0001389545nby:OtherProductsMember2022-07-012022-09-30 0001389545nby:OtherProductsMember2023-01-012023-09-30 0001389545nby:OtherProductsMember2022-01-012022-09-30 0001389545nby:TotalProductRevenueMember2023-07-012023-09-30 0001389545nby:TotalProductRevenueMember2022-07-012022-09-30 0001389545nby:TotalProductRevenueMember2023-01-012023-09-30 0001389545nby:TotalProductRevenueMember2022-01-012022-09-30 0001389545us-gaap:RevenueFromContractWithCustomerMembernby:DistributorConcentrationRiskMembernby:AvenovaSprayMember2023-07-012023-09-30 0001389545us-gaap:RevenueFromContractWithCustomerMembernby:DistributorConcentrationRiskMembernby:AvenovaSprayMember2022-07-012022-09-30 0001389545us-gaap:RevenueFromContractWithCustomerMembernby:DistributorConcentrationRiskMembernby:AvenovaSprayMember2023-01-012023-09-30 0001389545us-gaap:RevenueFromContractWithCustomerMembernby:DistributorConcentrationRiskMembernby:AvenovaSprayMember2022-01-012022-09-30 0001389545us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMembernby:MajorUSRetailerAMember2023-01-012023-09-30 0001389545us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMembernby:DistributorAMember2023-01-012023-09-30 0001389545us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMembernby:DistributorAMember2022-01-012022-12-31 0001389545us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMembernby:MajorInternationalRetailerAMember2023-01-012023-09-30 0001389545us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMembernby:DistributorBMember2022-01-012022-12-31 0001389545us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMembernby:MajorUSRetailerBMember2022-01-012022-12-31 utr:Y 0001389545us-gaap:EquipmentMembersrt:MinimumMember2023-09-30 0001389545us-gaap:EquipmentMembersrt:MaximumMember2023-09-30 0001389545nby:ComputerEquipmentAndSoftwareMembersrt:MinimumMember2023-09-30 0001389545nby:ComputerEquipmentAndSoftwareMembersrt:MaximumMember2023-09-30 0001389545us-gaap:FurnitureAndFixturesMembersrt:MinimumMember2023-09-30 0001389545us-gaap:FurnitureAndFixturesMembersrt:MaximumMember2023-09-30 utr:D 0001389545us-gaap:SeriesBPreferredStockMember2023-07-012023-09-30 0001389545us-gaap:SeriesBPreferredStockMember2022-07-012022-09-30 0001389545us-gaap:SeriesCPreferredStockMember2023-07-012023-09-30 0001389545us-gaap:SeriesCPreferredStockMember2022-07-012022-09-30 00013895452022-11-152022-11-15 0001389545us-gaap:SeriesBPreferredStockMember2023-01-012023-09-30 0001389545us-gaap:SeriesBPreferredStockMember2022-01-012022-09-30 0001389545us-gaap:SeriesCPreferredStockMember2023-01-012023-09-30 0001389545us-gaap:SeriesCPreferredStockMember2022-01-012022-09-30 0001389545us-gaap:EmployeeStockOptionMember2023-01-012023-09-30 0001389545us-gaap:EmployeeStockOptionMember2022-01-012022-09-30 0001389545us-gaap:WarrantMember2023-01-012023-09-30 0001389545us-gaap:WarrantMember2022-01-012022-09-30 0001389545us-gaap:FairValueMeasurementsRecurringMember2023-09-30 0001389545us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-30 0001389545us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-30 0001389545us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-30 0001389545us-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001389545us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001389545us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001389545us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001389545nby:OfficeAndLaboratoryEquipmentMember2023-09-30 0001389545nby:OfficeAndLaboratoryEquipmentMember2022-12-31 0001389545us-gaap:FurnitureAndFixturesMember2023-09-30 0001389545us-gaap:FurnitureAndFixturesMember2022-12-31 0001389545nby:ComputerEquipmentAndSoftwareMember2023-09-30 0001389545nby:ComputerEquipmentAndSoftwareMember2022-12-31 0001389545us-gaap:LeaseholdImprovementsMember2023-09-30 0001389545us-gaap:LeaseholdImprovementsMember2022-12-31 0001389545us-gaap:TradeNamesMember2023-09-30 0001389545us-gaap:CustomerRelationshipsMember2023-09-30 0001389545us-gaap:TradeSecretsMember2023-09-30 0001389545us-gaap:TradeNamesMember2022-12-31 0001389545us-gaap:CustomerRelationshipsMember2022-12-31 0001389545us-gaap:TradeSecretsMember2022-12-31 0001389545nby:GoodwillAndIntangibleAssetImpairmentMembernby:DermadoctorMember2022-10-012022-12-31 0001389545nby:OriginalIssueDiscountSeniorSecuredConvertibleDebenturesMember2023-04-27 0001389545nby:OriginalIssueDiscountSeniorSecuredConvertibleDebenturesMember2023-04-272023-04-27 0001389545nby:SeriesB1WarrantMember2023-04-27 0001389545nby:SeriesB2WarrantMember2023-04-27 00013895452023-04-272023-04-27 0001389545nby:LadenburgThalmannAndCoIncMember2023-04-272023-04-27 0001389545nby:The2023PrivatePlacementMember2023-04-272023-04-27 0001389545us-gaap:MeasurementInputSharePriceMember2023-04-27 0001389545us-gaap:MeasurementInputPriceVolatilityMember2023-04-27 0001389545us-gaap:MeasurementInputRiskFreeInterestRateMember2023-04-27 0001389545us-gaap:MeasurementInputExpectedDividendRateMember2023-04-27 0001389545us-gaap:MeasurementInputExpectedTermMember2023-04-27 0001389545nby:OriginalIssueDiscountSeniorSecuredConvertibleDebenturesMember2023-06-09 0001389545us-gaap:MeasurementInputSharePriceMember2023-09-30 0001389545us-gaap:MeasurementInputPriceVolatilityMember2023-09-30 0001389545us-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-30 0001389545us-gaap:MeasurementInputExpectedTermMember2023-09-30 0001389545nby:OriginalIssueDiscountSeniorSecuredConvertibleDebenturesMember2023-01-012023-09-30 0001389545nby:OriginalIssueDiscountSeniorSecuredConvertibleDebenturesMember2023-09-30 0001389545nby:OriginalIssueDiscountSeniorSecuredConvertibleDebenturesMember2023-07-012023-09-30 utr:sqft 0001389545nby:RiversideMissouriMember2023-09-30 0001389545nby:May2023WarrantsMember2023-05-01 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputSharePriceMember2023-05-01 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputSharePriceMember2023-05-01 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputPriceVolatilityMember2023-05-01 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputPriceVolatilityMember2023-05-01 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputExpectedTermMember2023-05-01 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputExpectedTermMember2023-05-01 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-05-01 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-05-01 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-05-01 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-05-01 0001389545nby:SeriesB1WarrantMembernby:WarrantFairValueMember2023-05-01 0001389545nby:SeriesB2WarrantMembernby:WarrantFairValueMember2023-05-01 0001389545nby:May2023WarrantsMember2023-09-30 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputSharePriceMember2022-06-09 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputSharePriceMember2022-06-09 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputPriceVolatilityMember2022-06-09 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputPriceVolatilityMember2022-06-09 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputExpectedTermMember2022-06-09 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputExpectedTermMember2022-06-09 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-06-09 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-06-09 0001389545nby:SeriesB1WarrantMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-06-09 0001389545nby:SeriesB2WarrantMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-06-09 0001389545nby:SeriesB1WarrantMembernby:WarrantFairValueMember2022-06-09 0001389545nby:SeriesB2WarrantMembernby:WarrantFairValueMember2022-06-09 0001389545nby:May2023WarrantsMember2023-01-012023-09-30 0001389545nby:September2022WarrantsMember2022-09-09 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-09-09 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-09-09 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-09-09 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-09-09 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-09-09 0001389545nby:September2022WarrantsMember2022-11-10 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-11-10 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-11-10 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-11-10 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-11-10 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-11-10 0001389545nby:TheNovember2021WarrantsMember2021-12-31 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2021-11-02 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2021-11-02 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2021-11-02 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2021-11-02 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputSharePriceMember2021-11-02 0001389545nby:TheNovember2021WarrantsMember2022-01-31 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-01-31 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-01-31 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-01-31 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-01-31 0001389545nby:The2021WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-01-31 0001389545nby:TheAmendedNovember2021WarrantsMember2022-09-09 0001389545nby:TheAmendedNovember2021WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-09-09 0001389545nby:TheAmendedNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-09-09 0001389545nby:TheAmendedNovember2021WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-09-09 0001389545nby:TheAmendedNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-09-09 0001389545nby:TheAmendedNovember2021WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-09-09 0001389545nby:TheNovember2021WarrantsMember2022-11-10 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-11-10 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-11-10 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-11-10 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-11-10 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-11-10 0001389545nby:AmendedJuly2020WarrantsMember2022-09-09 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-09-09 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-09-09 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-09-09 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-09-09 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-09-09 0001389545nby:AmendedJuly2020WarrantsMember2022-11-10 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-11-10 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-11-10 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-11-10 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-11-10 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-11-10 0001389545nby:CertainPreviouslyIssuedWarrantsMember2023-04-30 0001389545nby:CertainPreviouslyIssuedWarrantsMember2023-05-01 0001389545nby:AmendedNovember2021WarrantsExercisableFor150Member2023-05-01 0001389545nby:AmendedNovember2021WarrantsExercisableFor650Member2023-05-01 0001389545nby:TheAmendedJuly2020WarrantsMember2023-05-01 0001389545nby:TheJuly2020AndNovember2021WarrantsMember2023-05-012023-05-01 0001389545nby:TheJuly2020AndNovember2021WarrantsMember2023-04-30 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-09-08 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-09-08 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-09-08 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-09-08 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-09-08 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-09-08 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-09-08 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-09-08 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-09-08 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-09-08 0001389545nby:TheJuly2020AndNovember2021WarrantsMember2023-05-01 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2022-09-09 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2022-09-09 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-09-09 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2022-09-09 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputSharePriceMember2022-09-09 0001389545nby:September2022WarrantsMember2023-01-012023-09-30 0001389545nby:September2022WarrantsMember2023-04-26 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-04-26 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-04-26 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-04-26 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-04-26 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-04-26 0001389545nby:September2022WarrantsMembernby:WeightedAverageFairValueMember2023-04-26 0001389545nby:September2022WarrantsMember2023-09-30 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-09-30 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-09-30 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-09-30 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-30 0001389545nby:September2022WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-09-30 0001389545nby:September2022WarrantsMembernby:WeightedAverageFairValueMember2023-09-30 0001389545nby:TheNovember2021WarrantsMember2023-01-012023-09-30 0001389545nby:TheNovember2021WarrantsMember2023-04-26 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-04-27 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-04-27 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-04-27 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-04-27 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-04-27 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-04-27 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-04-27 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-04-27 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-04-27 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-04-27 0001389545nby:TheNovember2021WarrantsMembernby:WeightedAverageFairValueMember2023-04-27 0001389545nby:AmendedJuly2020WarrantsMembernby:WeightedAverageFairValueMember2023-04-27 0001389545nby:TheNovember2021WarrantsMember2023-09-30 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-09-30 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-09-30 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-09-30 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-09-30 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-09-30 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-09-30 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-30 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-30 0001389545nby:TheNovember2021WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-09-30 0001389545nby:AmendedJuly2020WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-09-30 0001389545nby:TheNovember2021WarrantsMembernby:WeightedAverageFairValueMember2023-09-30 0001389545nby:AmendedJuly2020WarrantsMembernby:WeightedAverageFairValueMember2023-09-30 0001389545nby:AmendedJuly2020WarrantsMember2023-09-30 0001389545nby:September2022WarrantsExercisableFor150Member2023-05-01 0001389545nby:September2022WarrantsExercisableFor650Member2023-05-01 0001389545nby:The2022WarrantRepriceTransactionMember2022-09-092022-09-09 0001389545nby:TheNovember2021WarrantsMember2022-09-092022-09-09 0001389545nby:AmendedJuly2020WarrantsMember2022-09-092022-09-09 0001389545nby:The2022WarrantRepriceTransactionMembernby:LadenburgThalmannAndCoIncMember2022-09-09 0001389545us-gaap:SeriesCPreferredStockMembernby:The2022PrivatePlacementMember2022-09-092022-09-09 0001389545nby:ConversionOfSeriesCPreferredStockToCommonStockMembernby:The2022PrivatePlacementMember2022-09-09 0001389545nby:The2022PrivatePlacementShortTermWarrantsMember2022-09-09 0001389545nby:The2022PrivatePlacementLongTermWarrantsMember2022-09-09 0001389545nby:The2022PrivatePlacementMember2022-09-092022-09-09 0001389545nby:The2022PrivatePlacementLongTermWarrantsExercisableFor150Member2023-05-01 0001389545nby:The2022PrivatePlacementLongTermWarrantsExercisableFor650Member2023-05-01 0001389545us-gaap:SeriesCPreferredStockMembernby:The2022PrivatePlacementMember2022-09-09 0001389545nby:May2023WarrantsMember2023-04-27 0001389545us-gaap:SeriesCPreferredStockMember2023-04-27 0001389545us-gaap:SeriesCPreferredStockMembernby:The2023PrivatePlacementMember2023-04-27 0001389545us-gaap:SeriesCPreferredStockMembernby:The2023PrivatePlacementMember2023-04-272023-04-27 0001389545us-gaap:SeriesCPreferredStockMembernby:The2023PrivatePlacementMember2023-04-26 0001389545us-gaap:MeasurementInputSharePriceMemberus-gaap:SeriesCPreferredStockMember2023-04-27 0001389545us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:SeriesCPreferredStockMember2023-04-27 0001389545us-gaap:MeasurementInputExpectedTermMemberus-gaap:SeriesCPreferredStockMember2023-04-27 0001389545us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:SeriesCPreferredStockMember2023-04-27 0001389545us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:SeriesCPreferredStockMember2023-04-27 0001389545nby:WeightedAverageFairValueMemberus-gaap:SeriesCPreferredStockMember2023-04-27 0001389545us-gaap:SeriesCPreferredStockMembernby:The2023PrivatePlacementMember2023-09-30 0001389545us-gaap:MeasurementInputSharePriceMemberus-gaap:SeriesCPreferredStockMember2023-09-30 0001389545us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:SeriesCPreferredStockMember2023-09-30 0001389545us-gaap:MeasurementInputExpectedTermMemberus-gaap:SeriesCPreferredStockMember2023-09-30 0001389545us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:SeriesCPreferredStockMember2023-09-30 0001389545us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:SeriesCPreferredStockMember2023-09-30 0001389545nby:WeightedAverageFairValueMemberus-gaap:SeriesCPreferredStockMember2023-09-30 0001389545nby:SeriesA1WarrantsMember2023-09-30 0001389545nby:SeriesA2WarrantsMember2023-09-30 0001389545us-gaap:SeriesCPreferredStockMembernby:The2023PrivatePlacementMember2023-04-282023-09-30 0001389545nby:SeriesA1WarrantsAndSeriesA2WarrantsMember2023-01-012023-09-30 0001389545nby:SeriesA1WarrantsAndSeriesA2WarrantsMember2023-04-26 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-04-27 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-04-27 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-04-27 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-04-27 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-04-27 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-04-27 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-04-27 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-04-27 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-04-27 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-04-27 0001389545nby:SeriesA1WarrantsMembernby:WeightedAverageFairValueMember2023-04-27 0001389545nby:SeriesA2WarrantsMembernby:WeightedAverageFairValueMember2023-04-27 0001389545nby:SeriesA1WarrantsAndSeriesA2WarrantsMember2023-09-30 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-09-30 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputSharePriceMember2023-09-30 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-09-30 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-09-30 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-09-30 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-09-30 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-30 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-30 0001389545nby:SeriesA1WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-09-30 0001389545nby:SeriesA2WarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-09-30 0001389545nby:SeriesA1WarrantsMembernby:WeightedAverageFairValueMember2023-09-30 0001389545nby:SeriesA2WarrantsMembernby:WeightedAverageFairValueMember2023-09-30 0001389545us-gaap:SeriesBPreferredStockMembernby:The2021PrivatePlacementProgramMember2021-10-292021-10-29 0001389545nby:ConversionOfSeriesBPreferredStockToCommonStockMembernby:StockRestatementFromReverseStockSplitMembernby:The2021PrivatePlacementProgramMember2021-10-29 0001389545nby:The2021WarrantsMembernby:StockRestatementFromReverseStockSplitMember2021-10-29 0001389545us-gaap:SeriesBPreferredStockMembernby:The2021PrivatePlacementProgramMember2021-10-29 0001389545us-gaap:SeriesBPreferredStockMember2022-09-08 0001389545us-gaap:SeriesBPreferredStockMember2022-09-09 0001389545us-gaap:SeriesBPreferredStockMember2022-09-092022-09-09 0001389545us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:SeriesBPreferredStockMember2022-09-08 0001389545us-gaap:MeasurementInputExpectedTermMemberus-gaap:SeriesBPreferredStockMember2022-09-08 0001389545us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:SeriesBPreferredStockMember2022-09-08 0001389545us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:SeriesBPreferredStockMember2022-09-08 0001389545us-gaap:MeasurementInputSharePriceMemberus-gaap:SeriesBPreferredStockMember2022-09-08 0001389545us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:SeriesBPreferredStockMember2022-09-09 0001389545us-gaap:MeasurementInputExpectedTermMemberus-gaap:SeriesBPreferredStockMember2022-09-09 0001389545us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:SeriesBPreferredStockMember2022-09-09 0001389545us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:SeriesBPreferredStockMember2022-09-09 0001389545us-gaap:MeasurementInputSharePriceMemberus-gaap:SeriesBPreferredStockMember2022-09-09 0001389545us-gaap:SeriesBPreferredStockMember2022-11-15 0001389545us-gaap:SeriesBPreferredStockMember2023-04-27 0001389545us-gaap:SeriesBPreferredStockMembernby:The2023PrivatePlacementMember2023-04-27 0001389545us-gaap:SeriesBPreferredStockMembernby:The2023PrivatePlacementMember2023-04-272023-04-27 0001389545us-gaap:SeriesBPreferredStockMembernby:The2023PrivatePlacementMember2023-04-26 0001389545us-gaap:MeasurementInputSharePriceMemberus-gaap:SeriesBPreferredStockMember2023-04-26 0001389545us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:SeriesBPreferredStockMember2023-04-26 0001389545us-gaap:MeasurementInputExpectedTermMemberus-gaap:SeriesBPreferredStockMember2023-04-26 0001389545us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:SeriesBPreferredStockMember2023-04-26 0001389545us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:SeriesBPreferredStockMember2023-04-26 0001389545nby:WeightedAverageFairValueMemberus-gaap:SeriesBPreferredStockMember2023-04-26 0001389545us-gaap:SeriesBPreferredStockMembernby:The2023PrivatePlacementMember2023-06-30 0001389545us-gaap:MeasurementInputSharePriceMemberus-gaap:SeriesBPreferredStockMember2023-04-27 0001389545us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:SeriesBPreferredStockMember2023-04-27 0001389545us-gaap:MeasurementInputExpectedTermMemberus-gaap:SeriesBPreferredStockMember2023-04-27 0001389545us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:SeriesBPreferredStockMember2023-04-27 0001389545us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:SeriesBPreferredStockMember2023-04-27 0001389545nby:WeightedAverageFairValueMemberus-gaap:SeriesBPreferredStockMember2023-04-27 0001389545us-gaap:SeriesBPreferredStockMembernby:The2023PrivatePlacementMember2023-04-282023-09-30 0001389545us-gaap:SeriesBPreferredStockMembernby:The2023PrivatePlacementMember2023-09-30 0001389545nby:TheNovember2021WarrantsMembernby:StockRestatementFromReverseStockSplitMember2022-09-09 0001389545nby:The2019LadenburgWarrantsMembernby:StockRestatementFromReverseStockSplitMember2019-01-012019-12-31 0001389545nby:The2019LadenburgWarrantsMembernby:StockRestatementFromReverseStockSplitMember2020-09-30 0001389545nby:TheJuly2020WarrantsMember2020-07-31 0001389545nby:TheJuly2020WarrantsMember2023-09-30 0001389545nby:TlfBioInnovation2021WarrantsMember2021-01-15 0001389545nby:IncentiveStockOptionsISOMembernby:The2007OmnibusIncentivePlanMembersrt:MaximumMember2007-10-012007-10-31 0001389545nby:The2017OmnibusIncentivePlanMember2017-03-31 0001389545nby:The2017OmnibusIncentivePlanMember2023-03-312023-03-31 0001389545nby:The2017OmnibusIncentivePlanMember2023-09-30 0001389545nby:The2017OmnibusIncentivePlanMembersrt:MinimumMember2017-03-012017-03-31 0001389545nby:IncentiveStockOptionsISOMembernby:The2017OmnibusIncentivePlanMember2017-03-012017-03-31 0001389545nby:IncentiveStockOptionsISOMembernby:ShareholderOfMoreThan10PercentMembernby:The2017OmnibusIncentivePlanMembersrt:MinimumMember2017-03-012017-03-31 0001389545nby:The2017OmnibusIncentivePlanMembersrt:MaximumMember2017-03-012017-03-31 0001389545nby:IncentiveStockOptionsISOMembernby:ShareholderOfMoreThan10PercentMembernby:The2017OmnibusIncentivePlanMembersrt:MaximumMember2017-03-012017-03-31 0001389545us-gaap:EmployeeStockOptionMembernby:The2017OmnibusIncentivePlanMember2017-03-012017-03-31 00013895452022-01-012022-12-31 0001389545us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-30 0001389545us-gaap:RestrictedStockMembernby:EmployeesAndDirectorsMember2023-01-012023-09-30 0001389545us-gaap:RestrictedStockMembernby:EmployeesAndDirectorsMember2022-01-012022-09-30 0001389545nby:EmployeesAndDirectorsMember2023-07-012023-09-30 0001389545nby:EmployeesAndDirectorsMember2022-07-012022-09-30 0001389545us-gaap:ShareBasedPaymentArrangementNonemployeeMember2023-01-012023-09-30 0001389545us-gaap:ShareBasedPaymentArrangementNonemployeeMember2022-01-012022-09-30 0001389545us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMember2023-07-012023-09-30 0001389545us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMember2022-07-012022-09-30 0001389545us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMember2023-01-012023-09-30 0001389545us-gaap:RestrictedStockMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMember2023-01-012023-09-30 0001389545us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-30 0001389545us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-30 0001389545us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-30 0001389545us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-30 0001389545us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-30 0001389545us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-30 0001389545us-gaap:SellingAndMarketingExpenseMember2023-01-012023-09-30 0001389545us-gaap:SellingAndMarketingExpenseMember2022-01-012022-09-30 0001389545us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-30 0001389545us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-30 0001389545us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-30 0001389545us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-30 0001389545nby:ChargebacksDiscountsForPromptPaymentAndOtherMember2022-12-31 0001389545nby:OtherCustomerFeesMember2022-12-31 0001389545nby:RebatesMember2022-12-31 0001389545nby:VariableConsiderationMember2022-12-31 0001389545nby:ChargebacksDiscountsForPromptPaymentAndOtherMember2023-01-012023-09-30 0001389545nby:OtherCustomerFeesMember2023-01-012023-09-30 0001389545nby:RebatesMember2023-01-012023-09-30 0001389545nby:VariableConsiderationMember2023-01-012023-09-30 0001389545nby:ChargebacksDiscountsForPromptPaymentAndOtherMember2023-09-30 0001389545nby:OtherCustomerFeesMember2023-09-30 0001389545nby:RebatesMember2023-09-30 0001389545nby:VariableConsiderationMember2023-09-30 0001389545nby:McKessonCorporationMembernby:AvenovaProductMember2023-07-012023-09-30 0001389545nby:McKessonCorporationMembernby:AvenovaProductMember2022-07-012022-09-30 0001389545nby:McKessonCorporationMembernby:AvenovaProductMember2023-01-012023-09-30 0001389545nby:McKessonCorporationMembernby:AvenovaProductMember2022-01-012022-09-30 0001389545us-gaap:AccountsPayableAndAccruedLiabilitiesMembernby:McKessonCorporationMembernby:AvenovaProductMember2023-09-30 0001389545us-gaap:AccountsPayableAndAccruedLiabilitiesMembernby:McKessonCorporationMembernby:AvenovaProductMember2022-12-31 0001389545us-gaap:PrepaidExpensesAndOtherCurrentAssetsMembernby:McKessonCorporationMembernby:AvenovaProductMember2023-09-30 0001389545us-gaap:PrepaidExpensesAndOtherCurrentAssetsMembernby:McKessonCorporationMembernby:AvenovaProductMember2022-12-31 0001389545nby:AvenovaDirectMember2023-07-012023-09-30 0001389545nby:AvenovaDirectMember2023-01-012023-09-30 0001389545nby:AvenovaDirectMember2022-07-012022-09-30 0001389545nby:AvenovaDirectMember2022-01-012022-09-30 0001389545nby:CostcoAndOthersMembernby:DermadoctorMember2023-07-012023-09-30 0001389545nby:CostcoAndOthersMembernby:DermadoctorMember2023-01-012023-09-30 0001389545nby:CostcoAndOthersMembernby:DermadoctorMember2022-07-012022-09-30 0001389545nby:CostcoAndOthersMembernby:DermadoctorMember2022-01-012022-09-30 0001389545nby:CostcoAndOthersMembernby:DermadoctorMember2023-09-30 0001389545nby:CostcoAndOthersMembernby:DermadoctorMember2022-12-31 0001389545nby:The401kPlanContributionLevelOneMember2022-01-012022-01-01 0001389545nby:The401kPlanContributionLevelTwoMember2022-01-012022-01-01 0001389545nby:The401KPlanMember2023-07-012023-09-30 0001389545nby:The401KPlanMember2023-01-012023-09-30 0001389545nby:The401KPlanMember2022-07-012022-09-30 0001389545nby:The401KPlanMember2022-01-012022-09-30 0001389545nby:NeutrophaseMemberus-gaap:RelatedPartyMember2023-07-012023-09-30 0001389545nby:NeutrophaseMemberus-gaap:RelatedPartyMember2022-07-012022-09-30 0001389545nby:NeutrophaseMemberus-gaap:RelatedPartyMember2023-01-012023-09-30 0001389545nby:NeutrophaseMemberus-gaap:RelatedPartyMember2022-01-012022-09-30 0001389545us-gaap:RelatedPartyMember2023-07-012023-09-30 0001389545us-gaap:RelatedPartyMember2022-07-012022-09-30 0001389545us-gaap:RelatedPartyMember2023-01-012023-09-30 0001389545us-gaap:RelatedPartyMember2022-01-012022-09-30 0001389545us-gaap:RelatedPartyMember2022-12-31 0001389545us-gaap:RelatedPartyMember2023-09-30 0001389545nby:OpticalAndWoundCareMember2023-07-012023-09-30 0001389545us-gaap:ProductMembernby:OpticalAndWoundCareMember2023-07-012023-09-30 0001389545nby:OpticalAndWoundCareMember2022-07-012022-09-30 0001389545us-gaap:ProductMembernby:OpticalAndWoundCareMember2022-07-012022-09-30 0001389545nby:SkinCareMember2023-07-012023-09-30 0001389545us-gaap:ProductMembernby:SkinCareMember2023-07-012023-09-30 0001389545nby:SkinCareMember2022-07-012022-09-30 0001389545us-gaap:ProductMembernby:SkinCareMember2022-07-012022-09-30 0001389545nby:OpticalAndWoundCareMember2023-01-012023-09-30 0001389545us-gaap:ProductMembernby:OpticalAndWoundCareMember2023-01-012023-09-30 0001389545nby:OpticalAndWoundCareMember2022-01-012022-09-30 0001389545us-gaap:ProductMembernby:OpticalAndWoundCareMember2022-01-012022-09-30 0001389545nby:SkinCareMember2023-01-012023-09-30 0001389545us-gaap:ProductMembernby:SkinCareMember2023-01-012023-09-30 0001389545nby:SkinCareMember2022-01-012022-09-30 0001389545us-gaap:ProductMembernby:SkinCareMember2022-01-012022-09-30
 

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                     to                  

 

Commission file number 001-33678

 

NOVABAY PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

68-0454536

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

2000 Powell Street, Suite 1150, Emeryville, California 94608

(Address of principal executive offices) (Zip Code)

 

Registrants Telephone Number, Including Area Code: (510) 899-8800

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbol(s)

Name of Each Exchange On Which Registered

Common Stock, par value $0.01 per share

NBY

NYSE American

 

Securities Registered Pursuant to Section 12(g) of the Act: None.

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer 

Accelerated filer 

Emerging growth company

Non-accelerated filer 

Smaller reporting company 

  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No ☒

 

As of November 6, 2023, there were 6,529,302 shares of the registrant’s common stock outstanding.

 

 

 

NOVABAY PHARMACEUTICALS, INC.

 

TABLE OF CONTENTS

 

PART I

FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

3

     
 

Condensed Consolidated Balance Sheets: September 30, 2023 (unaudited) and December 31, 2022

3

     
 

Condensed Consolidated Statements of Operations: Three and nine months ended September 30, 2023 and 2022 (unaudited)

4

     
 

Condensed Consolidated Statements of Stockholders Equity: Three and nine months ended September 30, 2023 and 2022 (unaudited)

5

     
 

Condensed Consolidated Statements of Cash Flows: Nine months ended September 30, 2023 and 2022 (unaudited)

7

     
 

Notes to Condensed Consolidated Financial Statements (unaudited)

8

     

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

36

     

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

     

Item 4.

Controls and Procedures

44

     

PART II

OTHER INFORMATION

     

Item 1.

Legal Proceedings

45

     

Item 1A.

Risk Factors

45

     

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

45

     

Item 3.

Defaults Upon Senior Securities

45

     

Item 4.

Mine Safety Disclosures

45

     

Item 5.

Other Information

45

     

Item 6.

Exhibits

46

     

SIGNATURES

47

 

 

Unless the context requires otherwise, all references in this report to “we,” “our,” “us,” the “Company” and “NovaBay” refer to NovaBay Pharmaceuticals, Inc., a Delaware corporation, and its wholly-owned subsidiary, DERMAdoctor, LLC, a Missouri limited liability company.

 

The Company owns over 40 live trademark registrations in the U.S., as well as trademark registrations and pending applications in many other countries internationally, with our primary trademarks including “Avenova®”, “CelleRx®”, “PhaseOne®”, “NeutroPhase®”, “DERMAdoctor®”, “Kakadu C®”, “AIN’T Misbehavin’®”, “KP Duty®”, and the Company licenses depictions of Dr. Audrey Kunin, some of which are held directly by NovaBay and others by our wholly-owned subsidiary DERMAdoctor.

 

On November 15, 2022, the Company effected a 1-for-35 reverse stock split of its common stock (the “Reverse Stock Split”). The accompanying financial statements and related notes give retroactive effect to this reverse stock split.

 

 

 

 

PART I

FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

 

 

NOVABAY PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amounts)

 

  

September 30,

2023

  

December 31,

2022

 
  

(Unaudited)

     
         

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $3,472  $5,362 

Accounts receivable, net of allowance for credit losses ($3 and $19 at September 30, 2023 and December 31, 2022, respectively)

  916   1,973 

Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments ($556 and $499 at September 30, 2023 and December 31, 2022, respectively)

  3,493   3,437 

Prepaid expenses and other current assets

  333   560 

Total current assets

  8,214   11,332 

Operating lease right-of-use assets

  1,526   1,831 

Property and equipment, net

  97   119 

Goodwill

  348   348 

Other intangible assets, net

  2,166   2,280 

Other assets

  501   489 

TOTAL ASSETS

 $12,852  $16,399 
         

LIABILITIES AND STOCKHOLDERS EQUITY

        

Liabilities:

        

Current liabilities:

        

Accounts payable

 $947  $1,080 

Accrued liabilities

  1,869   2,724 

Convertible Notes, net

  1,270    

Operating lease liabilities

  485   453 

Total current liabilities

  4,571   4,257 

Operating lease liabilities-non-current

  1,244   1,588 

Total liabilities

  5,815   5,845 

Commitments & contingencies (Note 10)

          

Stockholders’ equity:

        

Preferred stock, $0.01 par value; 5,000 shares authorized;

        

Series B Preferred Stock; 6 and 12 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

  302   570 

Series C Preferred Stock; 1 and 2 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

  1,675   2,403 

Common stock, $0.01 par value; 150,000 shares authorized, 6,529 and 2,035 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively*

  65   20 

Additional paid-in capital*

  170,675   165,713 

Accumulated deficit

  (165,680

)

  (158,152

)

Total stockholders’ equity

  7,037   10,554 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 $12,852  $16,399 

 

 

*

After giving retroactive effect to a 1-for-35 reverse stock split that became effective November 15, 2022.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

NOVABAY PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

 

   

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
   

2023

   

2022

   

2023

   

2022

 

Sales:

                               

Product revenue, net

  $ 3,255     $ 3,816     $ 10,971     $ 10,743  

Other revenue, net

    10       10       28       18  

Total sales, net

    3,265       3,826       10,999       10,761  
                                 

Product cost of goods sold

    1,427       1,451       4,919       4,735  

Gross profit

    1,838       2,375       6,080       6,026  

Operating expenses:

                               

Research and development

    11       41       64       108  

Sales and marketing

    1,715       1,835       5,086       5,860  

General and administrative

    1,228       956       5,135       5,049  

Total operating expenses

    2,954       2,832       10,285       11,017  

Operating loss

    (1,116

)

    (457

)

    (4,205

)

    (4,991

)

                                 
                                 

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

          2,414       216       4,470  

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

                40        

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

                      219  

Non-cash loss on modification of common stock warrants

          (1,922

)

    (285

)

    (1,922

)

Other expense, net

    (641

)

    (171

)

    (1,298

)

    (178

)

                                 

Net loss

    (1,757

)

    (136

)

    (5,532

)

    (2,402

)

                                 

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

          (5,657 )     (1,802

)

    (5,657 )

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

         

 

    (194 )    

 

Net loss attributable to common stockholders

  $ (1,757

)

  $ (5,793

)

  $ (7,528

)

  $ (8,059

)

                                 

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

  $ (0.37

)

  $ (3.61

)

  $ (2.27

)

  $ (5.32

)

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

    4,692       1,604       3,311       1,514  

 

 

*

After giving retroactive effect to a 1-for-35 reverse stock split that became effective November 15, 2022.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

NOVABAY PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands)

 

  

Preferred Stock

  

Common Stock

  

Additional

Paid-

in
  

Accumulated

  

Total

Stockholders

 
  

Shares

  

Amount

  

Shares*

  

Amount*

  

Capital*

  

Deficit

  

Equity

 

Balance at December 31, 2022

  14  $2,973   2,035  $20  $165,713  $(158,152

)

 $10,554 
                             

Net Loss

  -   -   -   -   -   (1,739

)

  (1,739

)

Stock-based compensation expense related to employee and director stock awards

  -   -   -   -   75   -   75 
                             

Balance at March 31, 2023

  14  $2,973   2,035  $20  $165,788  $(159,891

)

 $8,890 
                             

Net Loss

  -   -   -   -   -   (2,036

)

  (2,036

)

Conversion of Series B Preferred Stock to common stock

  (3

)

  (121

)

  1,897   19   102   -   - 

Conversion of Series C Preferred Stock to common stock

  (1

)

  (728

)

  277   2   726   -   - 

Modification of common stock warrants

  -   -   -   -   285   -   285 
Adjustment of Series B Preferred Stock conversion price  -   -   -   -   1,802   (1,802

)

  - 
Adjustment of Series C Preferred Stock conversion price  -   -   -   -   194   (194)  - 

Reclassification of May 2023 Warrants

  -   -   -   -   1,360   -   1,360 

Stock-based compensation expense related to employee and director stock awards

  -   -   -   -   64   -   64 

Vesting of director restricted stock awards

  -   -   5   -   -   -   - 
                             

Balance at June 30, 2023

  10  $2,124   4,214  $41  $170,321  $(163,923

)

 $8,563 

Net Loss

  -   -   -   -   -   (1,757

)

  (1,757

)

Conversion of Series B Preferred Stock to common stock

  (3

)

  (147

)

  2,315   24   123   -   - 

Reclassification of derivative liability

  -   -   -   -   169   -   169 

Stock-based compensation expense related to employee and director stock awards

  -   -   -   -   62   -   62 
                             

Balance at September 30, 2023

  7  $1,977   6,529  $65  $170,675  $(165,680

)

 $7,037 

 

 

  

Preferred Stock

  

Common Stock

  

Additional

Paid-

in
  

Accumulated

  

Total

Stockholders

 
  

Shares

  

Amount

  

Shares*

  

Amount*

  

Capital*

  

Deficit

  

Equity

 

Balance at December 31, 2021

  14  $680   1,365  $13  $151,365  $(141,887

)

 $10,171 
                             

Net Loss

  -   -   -   -   -   (111

)

  (111

)

Reclassification of November 2021 Warrants

  -   -   -   -   7,502   -   7,502 

Conversion of Series B Preferred Stock to common stock

  (1

)

  (71

)

  104   1   70   -   - 

Stock-based compensation expense related to employee and director stock awards

  -   -   -   -   184   -   184 
                             

Balance at March 31, 2022

  13  $609   1,469  $14  $159,121  $(141,998

)

 $17,746 
                             

Net Loss

  -   -   -   -   -   (2,155

)

  (2,155

)

Conversion of Series B Preferred Stock to common stock

  (1

)

  (39

)

  57   1   38   -   - 

Vesting of director restricted stock awards

  -   -   3   -   -   -   - 

Stock-based compensation expense related to employee and director stock awards

  -   -   -   -   154   -   154 
                             

Balance at June 30, 2022

  12  $570   1,529  $15  $159,313  $(144,153

)

 $15,745 
                             

Net Loss

  -   -   -   -   -   (136

)

  (136

)

Modification of common stock warrants

  -   -   -   -   1,922   -   1,922 

Exercise of warrants, net of offering costs

  -   -   328   3   283   -   286 

Reclassification of common stock warrants to liability

  -   -   -   -   (3,825

)

  -   (3,825

)

Adjustment of Series B Preferred Stock conversion price

  -   -   -   -   5,657   (5,657

)

  - 

Stock-based compensation expense related to employee and director stock awards

  -   -   -   -   (208

)

  -   (208

)

                             

Balance at September 30, 2022

  12  $570   1,857  $18  $163,142  $(149,946

)

 $13,784 

 

 

*

After giving retroactive effect to a 1-for-35 reverse stock split that became effective November 15, 2022.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

NOVABAY PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

(In thousands)

 

  

Nine Months Ended September 30

 
  

2023

  

2022

 
         

Operating activities:

        

Net loss

 $(5,532

)

 $(2,402

)

Adjustments to reconcile net loss to net cash used in operating activities:

        

Depreciation of property and equipment

  39   88 

Amortization of intangible assets

  114   272 

Stock-based compensation expense related to employee and director stock awards

  201   130 

Non-cash loss on modification of common stock warrants

  285   1,922 

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

  (216

)

  (4,470

)

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

  (40

)

   

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

     (219

)

Accretion of interest and amortization of debt discounts on convertible notes

  1,119    

Changes in operating assets and liabilities:

        

Accounts receivable

  1,057   (465

)

Inventory

  (56

)

  (848

)

Prepaid expenses and other current assets

  227   234 

Operating lease right-of-use assets

  305   (1,526

)

Other assets

  (20

)

  (1

)

Accounts payable and accrued liabilities

  (988

)

  128 

Operating lease liabilities

  (312

)

  1,712 

Net cash used in operating activities

  (3,817

)

  (5,445

)

         

Investing activities:

        

Purchases of property and equipment

  (17

)

  (112

)

Net cash used in investing activities

  (17

)

  (112

)

         

Financing activities:

        

Proceeds from convertible notes and warrant issuances, net of discount

  3,000    

Payment on the convertible notes

  (770

)

   

Debt issuance cost

  (294

)

   

Proceeds from the exercise of warrants

     1,703 

Payment on the line of credit

     (105

)

Net cash provided by financing activities

  1,936   1,598 

Net change in cash, cash equivalents, and restricted cash

  (1,898

)

  (3,959

)

Cash, cash equivalents and restricted cash, beginning of year

  5,846   7,979 

Cash, cash equivalents and restricted cash, end of period

 $3,948  $4,020 

 

 

   

Nine Months Ended September 30,

 
   

2023

   

2022

 

Supplemental disclosure of cash flow information:

               

Interest paid

  $ 189     $ 12  

 

 

   

Nine Months Ended September 30,

 
   

2023

   

2022

 

Supplemental disclosure of non-cash information:

               

Warrant liability transferred to equity

  $ 1,360     $ 7,502  

Conversion of Series B Preferred Stock to common stock

    268       110  

Conversion of Series C Preferred Stock to common stock

    728        

Derivative liability transferred to equity

    169        

Adjustment of Series B Preferred Stock conversion price

    1,802       5,657  
Adjustment of Series C Preferred Stock conversion price     194        

Equity transferred to warrant liability

          3,825  

Addition of operating lease, right-of-use asset

          2,039  

Reassessment of operating lease, right-of-use asset

          164  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

NOTE 1. ORGANIZATION

 

NovaBay Pharmaceuticals, Inc. (the “Company”) develops and sells scientifically-created and clinically-proven eyecare, skincare and wound care products. Our leading product, Avenova® Antimicrobial Lid and Lash Solution, or Avenova Spray, is proven in laboratory testing to have broad antimicrobial properties as it removes foreign material including microorganisms and debris from the skin around the eye, including the eyelid. Avenova Spray is formulated with our proprietary, stable and pure form of hypochlorous acid and is cleared by the Food and Drug Administration (the “FDA”) for sale in the United States. Avenova Spray is available direct to consumers primarily through online distribution channels and is also available by prescription and dispensed by eyecare professionals for blepharitis and dry-eye disease. Because dry eye is a complex condition, we offer a complementary portfolio of scientifically developed products for each step of the standard at home treatment regimen, including the Avenova Eye Health Support antioxidant-rich oral supplement, Avenova Lubricating Eye Drops for instant relief, NovaWipes by Avenova, Avenova Warm Eye Compress to soothe the eyes, and the i-Chek by Avenova to monitor physical eyelid health.

 

Through our subsidiary DERMAdoctor, LLC (“DERMAdoctor”), the Company offers over 30 dermatologist-developed products targeting common skin concerns, ranging from aging and blemishes to dry skin, perspiration and keratosis pilaris. DERMAdoctor branded products are marketed and sold through the DERMAdoctor website, well-known traditional and digital beauty retailers, and a network of international distributors. We acquired DERMAdoctor in November 2021 (the “DERMAdoctor Acquisition”), and since completing this transaction we have been working to integrate and expand the DERMAdoctor business in order to achieve strategic objectives contemplated by the acquisition, including revenue growth, cost reductions and overall profitability.

 

We also manufacture and sell our proprietary form of hypochlorous acid for the wound care market through our NeutroPhase and PhaseOne branded products. NeutroPhase and PhaseOne are used for the cleansing and irrigation as part of surgical procedures, as well as treating certain wounds, burns, ulcers and other injuries. The Company currently sells these products through distributors.

 

The Company was incorporated under the laws of the State of California on January 19, 2000, as NovaCal Pharmaceuticals, Inc. It had no operations until July 1, 2002, on which date it acquired all of the operating assets of NovaCal Pharmaceuticals, LLC, a California limited liability company. In February 2007, the Company changed its name from NovaCal Pharmaceuticals, Inc. to NovaBay Pharmaceuticals, Inc. In June 2010, the Company changed the state in which it was incorporated (the “Reincorporation”) and is now incorporated under the laws of the State of Delaware. All references to “the Company” herein refer to the California corporation prior to the date of the Reincorporation and to the Delaware corporation on and after the date of the Reincorporation. The Company is managed as two reportable segments: (1) Eyecare and Wound Care and (2) Skincare.

 

Effective November 15, 2022, the Company effected a 1-for-35 reverse split of our outstanding common stock (“Reverse Stock Split”) (See Note 12, “Stockholders’ Equity” for further details). Except as otherwise specifically noted, all share numbers, share prices, exercise/conversion prices and per share amounts have been adjusted, on a retroactive basis, to reflect this 1-for-35 reverse stock split.

 

Liquidity and Going Concern

 

Based primarily on the funds available on September 30, 2023 and the 2023 Private Placement, the Company believes that the Company’s existing cash and cash equivalents and cash flows generated from product sales will be sufficient to fund its existing operations, meet its planned operating expenses and to meet the Monthly Redemptions of the Convertible Notes (both as defined below) into at least the second quarter of 2024. The Company has sustained operating losses for the majority of its corporate history and expects that its 2023 expenses will exceed its 2023 revenues, as the Company continues to invest in both its Avenova and DERMAdoctor commercialization efforts. Additionally, the Company expects to continue incurring operating losses and negative cash flows until revenues reach a level sufficient to support ongoing growth and operations. Accordingly, the Company has determined that its planned operations raise substantial doubt about its ability to continue as a going concern for at least one year from the date this Quarterly Report on Form 10-Q is filed with the Securities and Exchange Commission (“SEC”). Additionally, changing circumstances may cause the Company to expend cash significantly faster than currently anticipated, and the Company may need to spend more cash than currently expected because of circumstances beyond its control that impact the broader economy such as periods of inflation and supply chain issues.

 

The Company’s long-term liquidity needs will be largely determined by the success of commercialization efforts. To address the Company’s current liquidity and capital needs, the Company has and continues to evaluate different plans and strategic transactions to fund operations, including: (1) raising additional capital through debt and equity financings or from other sources; (2) reducing spending on operations, including reducing spending on one or more of its sales and marketing programs or restructuring operations to change its overhead structure; (3) out-licensing rights to certain of its products or product candidates, pursuant to which the Company would receive cash milestones or an upfront fee; and/or (4) entering into license agreements to sell new products. The Company may issue securities, including common stock, preferred stock, convertible debt securities and warrants through additional private placement transactions or registered public offerings, which may require the filing of a Form S-1 or Form S-3 registration statement with the Securities and Exchange Commission (“SEC”). While the Company believes that the proceeds from the 2023 Private Placement (as defined below) improved the Company’s liquidity in the near term, there is no assurance that the Company will be successful in executing additional capital raising strategies at levels necessary to address the Company’s ongoing and future cash flow and liquidity needs. Accordingly, the Company continues to evaluate different plans and strategies to address the Company’s capital and liquidity needs, as well as evaluating potential other strategic alternatives and transactions. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that may result from uncertainty related to its ability to continue as a going concern. 

 

- 8-

 
 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and are expressed in U.S. dollars. In management’s opinion, the unaudited condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s financial position and operating results.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of NovaBay Pharmaceuticals, Inc. and its wholly-owned subsidiary, DERMAdoctor, LLC. All intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, contract liabilities related to product sales such as product returns, assumptions for valuing warrants, assumptions for valuing derivative liabilities, the fair value of contingent consideration, intangible assets, goodwill, stock-based compensation, income taxes and other contingencies.

 

These estimates are based on management’s best estimates and judgment. Actual results may differ from these estimates. Estimates, judgments, and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions, judgments and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

 

Unaudited Condensed Consolidated Interim Financial Information

 

The accompanying unaudited condensed consolidated financial statements and related disclosures have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only recurring adjustments, necessary for a fair presentation.

 

The year-end condensed consolidated balance sheet data was derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. The unaudited condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

 

The condensed consolidated financial statements and notes included herein should be read in conjunction with the annual consolidated financial statements and notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 31, 2023, as amended by Amendment No. 1 to the Annual Report on Form 10-K, which was filed with the SEC on April 28, 2023 (collectively, the “Annual Report”).

 

Change in Accounting and Revision of Prior Period Financial Statements

 

During the third quarter of 2022, the Company made an accounting policy change election related to fulfillment fees paid to third-party online retailers such as Amazon. The Company began expensing these fees as incurred as product cost of goods sold in the Company’s condensed consolidated statements of operations. The Company previously recorded revenue net of these fees. The Company believes that making this change is appropriate and preferable as it is more consistent with the practices of comparable companies as the Company increasingly focuses on commercial growth in its direct to consumer on-line channels. Changes to prior period amounts presented in this report have been made to conform to the current period presentation. See additional information under “Revenue Recognition” below. The changes had no impact on operating loss, net loss or net loss per share in the Company’s unaudited condensed consolidated statements of operations in the periods presented in this report or in previously issued annual and quarterly financial statements. The changes also did not impact cash or ending cash balances in the Company’s unaudited condensed consolidated balance sheets in the periods presented in this report or in previously issued annual and quarterly financial statements.

 

While reviewing its accounting policy for fulfillment fees during the third quarter of 2022, the Company identified an error in its previously issued financial statements whereby the Company had been incorrectly presenting revenue net of selling commissions paid to third-party online retailers. During the third quarter of 2022, the Company concluded that these commissions relate to sales activity and began expensing them as incurred as sales and marketing expenses within the Company’s unaudited condensed consolidated statements of operations. The identified error impacted the Company’s previously issued 2022 first and second quarter condensed consolidated financial statements. Management believes that the impact of these adjustments to correct such error is immaterial to the previously issued consolidated financial statements, based on an evaluation of both quantitative and qualitative factors. However, revisions to prior period amounts presented in this report have been made to conform to the current period presentation. See additional information under “Revenue Recognition” below. The revisions had no impact on operating loss, net loss or net loss per share in the Company’s unaudited condensed consolidated statements of operations in the periods presented in this report or in previously issued annual consolidated financial statements. The changes also did not impact cash or ending cash balances in the Company’s condensed consolidated balance sheets in the periods presented in this report or in previously issued annual consolidated financial statements.

 

 

- 9-

 

Cash, Cash Equivalents, and Restricted Cash

 

The Company considers all highly-liquid instruments with a stated maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. As of September 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents were held in a major financial institution in the United States.

 

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash reported in the condensed consolidated balance sheets (in thousands):

 

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Cash and cash equivalents

 $3,472  $5,362 

Restricted cash included in other assets

  476   484 

Total cash, cash equivalents, and restricted cash in the condensed consolidated statements of cash flows

 $3,948  $5,846 

 

The restricted cash amount included in other assets on the condensed consolidated balance sheets represents amounts held as certificates of deposit for long-term financing and lease arrangements as contractually required by our financial institution and landlord.

 

Concentrations of Credit Risk and Major Partners

 

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. The Company maintains deposits of cash, cash equivalents and restricted cash with a major financial institution in the United States. 

 

The Company has a significant amount of its cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

 

During the three and nine months ended September 30, 2023 and 2022, revenues were derived primarily from sales of Avenova and DERMAdoctor branded products, directly to consumers through Amazon.com, Avenova.com and DERMAdoctor.com.

 

During the three and nine months ended September 30, 2023 and 2022, revenues from significant product categories were as follows (in thousands):

 

  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Avenova Spray

 $2,064  $1,939  $5,759  $5,778 

DERMAdoctor

  784   1,319   2,645   3,115 

NeutroPhase

        1,043   657 

Other products

  407   558   1,524   1,193 

Total product revenue, net

  3,255   3,816   10,971   10,743 

Other revenue, net

  10   10   28   18 

Total sales, net

 $3,265  $3,826  $10,999  $10,761 

 

During the three months ended September 30, 2023 and 2022, sales of Avenova Spray via Amazon comprised 66% and 70% of total Avenova Spray net revenue, respectively. During the nine months ended September 30, 2023 and 2022, sales of Avenova Spray via Amazon comprised 68% and 73% of total Avenova Spray net revenue, respectively. No other individual distributor comprised greater than 10% of total Avenova Spray net revenue during the three and nine months ended September 30, 2023 or 2022.

 

As of September 30, 2023 and December 31, 2022, accounts receivable from our major distribution partners and major retailers greater than 10% were as follows:

 

  

September 30,

  

December 31,

 

Major distribution partner

 

2023

  

2022

 

Major U.S. Retailer A

  26

%

  *

%

Avenova Spray Pharmacy Distributor A

  20

%

  11

%

Major International Retailer A

  10

%

  *

%

Avenova Spray Pharmacy Distributor B

  *

%

  30

%

Major U.S. Retailer B

  *

%

  15

%

 

* Less than 10%

 

- 10-

 

The Company relies on seven contract manufacturers to produce its products. The Company does not own any manufacturing facilities and intends to continue to rely on third parties for the supply of finished goods. Contract manufacturers may or may not be able to meet the Company’s needs with respect to timing, quantity or quality. In particular, it is possible that the Company may suffer from unexpected delays in light of the global supply chain issues.

 

Fair Value of Financial Assets and Liabilities

 

The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, convertible notes, derivative liabilities, warrant liabilities, and contingent consideration. The Company’s cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments.

 

The Convertible Notes (as defined below) entered into on April 27, 2023 are carried at proceeds, net of discounts, which management believes approximates fair value. Additionally, the derivative liability related to certain embedded features contained within the Convertible Notes, restricted cash, warrant liabilities, and contingent consideration were carried at fair value.

 

The Company follows ASC 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at fair value on a recurring basis and nonrecurring basis. Under this standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. There are three levels of inputs that may be used to measure fair value:

 

Level 1 – quoted prices in active markets for identical assets or liabilities;

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable; and

Level 3 – inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

 

Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

Allowance for Credit Losses

 

The Company maintains an allowance for estimated losses resulting from the inability of its customers to meet their financial obligations to the Company. The Company recognizes an allowance for credit losses based on factors such as historical experience, contract terms and general and market business conditions. The Company’s future collection experience can differ significantly from historical collection trends due to such factors as changing customer circumstances and uncertain economic and industry trends. Management recorded a reserve for allowance for credit losses of $3 thousand and $19 thousand as of September 30, 2023 and December 31, 2022, respectively.

 

Inventory

 

Inventory is comprised of (1) raw materials and supplies, such as bottles, packaging materials, labels, boxes and pumps; (2) goods in progress, which are normally filled but unlabeled bottles; and (3) finished goods. The Company utilizes contract manufacturers to produce our products and the price paid to these manufacturers is included in inventory. Inventory is stated at the lower of cost or estimated net realizable value determined by the first-in, first-out method. At September 30, 2023 and December 31, 2022, management had recorded an allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments of $556 thousand and $499 thousand, respectively.

 

 

Property and Equipment, net

 

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets of five to seven years for office and laboratory equipment, three to five years for computer equipment and software, and five to seven years for furniture and fixtures. Leasehold improvements are amortized over the lease term.

 

The costs of normal maintenance, repairs, and minor replacements are expensed as incurred.

 

 

- 11-

 

Goodwill and Indefinite-Lived Intangible Assets

 

Goodwill represents the excess of the consideration transferred over the estimated fair value of assets acquired and liabilities assumed in a business combination. Intangible assets are measured at their respective fair values as of the acquisition date and may be subject to adjustment within the measurement period, which may be up to one year from the acquisition date. Goodwill and indefinite-lived intangible assets are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the assets are impaired.

 

The Company did not record any goodwill or indefinite-lived asset impairment charges during the three and nine months ended September 30, 2023 or 2022.

 

Valuation of Contingent Consideration Resulting from a Business Combination

 

In connection with certain acquisitions, including the DERMAdoctor Acquisition, the Company may be required to pay future consideration that is contingent upon the achievement of specified milestone events. The Company records contingent consideration resulting from a business combination at its fair value on the acquisition date. Each quarter thereafter, the Company revalues these obligations and records increases or decreases in the fair value within the consolidated statement of operations until such time as the specified milestone achievement period is complete.

 

Increases or decreases in fair value of the contingent consideration liabilities can result from updates to assumptions such as the expected timing or probability of achieving the specified milestones. Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Updates to assumptions could have a significant impact on the Company’s results of operations in any given period. Actual results may differ from estimates.

 

DERMAdoctor Acquisition milestone events consist of financial targets for calendar years 2022 and 2023. The financial target was not met for the calendar year 2022. Additionally, we do not expect the financial target to be met for the calendar year 2023. As a result, the liability recorded for potential earn out payments in the Company’s condensed consolidated balance sheets was zero as of September 30, 2023 and December 31, 2022. This amount is subject to change in the event that there are changes to our expectations and related valuation assumptions, which are valued using Level 3 fair value inputs.

 

Long-Lived Assets 

 

The Company’s intangible assets that do not have indefinite lives (primarily trade secrets / product formulations) are amortized over their estimated useful lives. All of the Company’s intangible assets subject to amortization and other long-lived assets, are reviewed for impairment in accordance with ASC 360, Property, Plant and Equipment, which requires that companies consider whether events or changes in facts and circumstances, both internally and externally, may indicate that an impairment of long-lived assets held for use are present. The Company reviews long-lived assets for impairment at least annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the asset, the assets are written down to their estimated fair values and the loss is recognized in the consolidated statements of operations.

 

The Company did not record any long-lived asset impairments during the three and nine months ended September 30, 2023 or 2022.

 

Leases

 

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use assets may be required for items such as initial direct costs paid or incentives received.

 

The Company has elected to combine lease and non-lease components as a single component for all leases in which it is a lessee or a lessor. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the condensed consolidated balance sheet as right-of-use assets, operating lease liabilities current and operating lease liabilities non-current.

 

- 12-

 

Revenue Recognition

 

Revenue is recognized from the sale of goods in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue when or as the Company’s performance obligations are satisfied by transferring control of the promised goods to customers in an amount that reflects the consideration which the Company expects to receive. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps as prescribed by ASC 606:

 

 

i.

identify the contract(s) with a customer;

 

 

ii.

identify the performance obligations in the contract;

 

 

iii.

determine the transaction price;

 

 

iv.

allocate the transaction price to the performance obligations in the contract; and

 

 

v.

recognize revenue when (or as) the entity satisfies performance obligations.

 

Revenue is generated through the Company’s webstores, Avenova.com and DERMAdoctor.com, for Avenova and DERMAdoctor products. Such direct to consumer sales are recognized upon fulfillment, which generally occurs upon delivery of the related products to a third-party carrier. Shipping and handling costs are expensed as incurred and included in product cost of goods sold in the consolidated statements of operations. The Company presents revenue net of sales taxes and refunds. 

 

Revenue generated through third-party online retailers, including Amazon, is recognized when control of the goods is transferred to the customer, which generally occurs upon delivery of the products to a third-party carrier.

 

The Company pays third-party online retailers advertising & promotion fees, selling commissions and fulfillment fees. Advertising & promotion fees are expensed as incurred as sales and marketing expenses within operating expenses in the consolidated statements of operations. Prior to the third quarter of 2022, the Company recorded revenue net of selling commissions and fulfillment fees. Beginning in the third quarter of 2022, as further described below, the Company began expensing selling commissions as sales and marketing expenses in the consolidated statements of operations and fulfillment fees as product cost of goods sold in the consolidated statements of operations.

 

Prior to the third quarter of 2022, to determine its accounting for fulfillment fees, the Company evaluated principal versus agent considerations with respect to the obligation to ship its product to the customer. The Company assessed whether the nature of the Company’s obligation is as a principal in providing the fulfillment service or as an agent in promising to arrange for a third party to provide the fulfillment service. The Company concluded that it is an agent with respect to the shipping service as the Company does not control the service itself and, therefore, its obligation is that of a promise to arrange for the service. This determination involved significant judgement. In accordance with this conclusion, prior to the third quarter of 2022, the Company recorded revenue net of fulfillment fees. Beginning in the third quarter of 2022, the Company made an accounting policy change election, as a practical expedient, to account for the shipping fees as a fulfillment activity and began expensing them as incurred within product cost of goods sold in the Company’s consolidated statements of operations. Management believes the resulting accounting changes are preferable as they conform the Company’s practice to a majority of comparable filers and other similar sales channels. Changes to amounts presented for prior periods have been made to conform to these changes. These changes did not impact operating loss, net loss or loss per share in the Company’s condensed consolidated statements of operations in the periods presented in this report or in previously issued annual consolidated financial statements. The changes also did not impact cash or ending cash balances in the Company’s condensed consolidated balance sheets in the periods presented in this report or in previously issued annual consolidated financial statements.

 

Prior to the third quarter of 2022, the Company also recorded revenue net of selling commissions. During the third quarter of 2022, the Company concluded that these commissions relate to a sales activity and began expensing them as incurred as sales and marketing expenses within the Company’s consolidated statements of operations. The Company determined that its treatment prior to the third quarter of 2022 was an error. The identified error impacted the Company's previously issued 2022 and 2021 quarterly, and 2021 and 2020 annual consolidated financial statements. Management believes that the impact of this error is immaterial to the previously issued consolidated financial statements, based on an evaluation of both quantitative and qualitative factors. The changes also did not impact cash or ending cash balances in the Company’s condensed consolidated balance sheets in the periods presented in this report or in previously issued annual consolidated financial statements.

 

- 13-

 

The Company also generates Avenova Spray revenue through major pharmacy distribution partners. Product supply of Avenova Spray is the only performance obligation contained in these arrangements, and the Company recognizes product revenue upon transfer of control to its major distribution partners at the amount of consideration that the Company expects to be entitled to, generally upon delivery to the distributor on a “sell-in” basis. Upon recognition of product sales, contract liabilities are recorded for invoiced amounts that are subject to reversal, including product revenue allowances for cash consideration paid to customers for services, discounts, rebate programs, and product returns. The Company derives its rate of return and other contract liabilities from historical data and updates its assumptions quarterly. Payment for product supply is typically due 30 days after control transfers to the distributor.

 

Revenue for products sales to Costco is recognized upon transfer of control at the amount of consideration that the Company expects to be entitled to, generally upon delivery to Costco. Upon recognition of product sales, contract liabilities are recorded for invoiced amounts that are subject to reversal, including discounts and product returns. The Company derives its rate of return from historical data and updates its return rate assumption quarterly. Payment for product supply is typically due 30 days after control transfers to Costco.

 

Revenue generated through the Company’s partner pharmacies is recognized when control of the product transfers to the end customer.

 

Revenue for product sales to other retailers is generally recognized upon transfer of control to the retailer, which generally occurs upon delivery of the products to a third-party carrier, net of estimated future product returns.

 

The Company may be required to defer recognition of revenue for upfront payments until it performs its obligations under these arrangements, and such amounts are recorded as deferred revenue upon receipt. Deferred revenue was $103 thousand and $4 thousand as of September 30, 2023 and December 31, 2022, respectively, which is recorded within Accrued liabilities on the Company’s unaudited condensed consolidated balance sheets.

 

Cost of Goods Sold

 

Cost of goods sold includes third-party manufacturing costs, shipping and handling costs, third-party fulfillment fees, and other costs associated with products sold. Cost of goods sold also includes any necessary allowance for excess and obsolete inventory along with lower of cost and estimated net realizable value.

 

Research and Development Costs

 

The Company charges research and development costs to expense as incurred. These costs include all costs associated with research, development and regulatory activities, including submissions to the FDA.

 

Patent Costs

 

Patent costs, including legal expenses, are expensed in the period in which they are incurred. Patent expenses are included in general and administrative expenses in the condensed consolidated statements of operations.

 

Advertising Costs

 

Advertising costs are expensed in the period in which the costs are incurred. Advertising costs are included in sales and marketing expenses in the condensed consolidated statements of operations. Advertising expenses were $0.3 million and $0.5 million for the three months ended September 30, 2023 and 2022, respectively. Advertising expenses were $0.9 million and $1.6 million for the nine months ended September 30, 2023 and 2022, respectively.

 

Stock-Based Compensation

 

The Company’s stock-based compensation includes grants of stock options and RSUs to employees, consultants and non-employee directors. The expense associated with these grants is recognized in the Company’s unaudited condensed consolidated statements of operations based on their fair values as they are earned under the applicable vesting terms. For stock options granted, the fair value of the stock options is estimated using a Black-Scholes option pricing model. See Note 13, “Equity-Based Compensation” for further information regarding stock-based compensation expense and the assumptions used in estimating that expense. The Company accounts for RSUs issued to employees and non-employees (directors, consultants and advisory board members) based on the fair market value of the Company’s common stock as of the date of issuance.

 

- 14-

 

Income Taxes

 

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or the entire deferred tax asset will not be recognized.

 

Common Stock Warrants

 

The Company accounts for common stock purchase warrants issued in connection with its equity offerings in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging.

 

The Company classifies as equity any contracts that (i) require physical share settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement (physical share settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement, (ii) give the counterparty a choice of net-cash physical settlement or net-share settlement or (iii) do not become exercisable until the occurrence of a contingent event.

 

For warrants that are classified as liabilities, the Company records the fair value of the warrants at each balance sheet date and records changes in the estimated fair value as a non-cash gain or loss in the condensed consolidated statements of operations. The fair values of these warrants are determined using the Black-Scholes option pricing model. These values are subject to a significant degree of management’s judgment.

 

Net Loss per Share

 

The Company computes net loss per share by presenting both basic and diluted earnings (loss) per share (“EPS”).

 

Basic EPS is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period, including stock options and warrants, using the treasury stock method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options or warrants. Potentially dilutive common share equivalents are excluded from the diluted EPS computation in net loss periods if their effect would be anti-dilutive.

 

The following table sets forth the calculation of basic EPS and diluted EPS (in thousands, except per share amounts):

 

  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 

Numerator

 

2023

  

2022*

  

2023

  

2022*

 

Net loss

 $(1,757

)

 $(136

)

 $(5,532

)

 $(2,402

)

Less: Increase in accumulated deficit due to Series B Preferred Stock conversion price

     (5,657)  (1,802

)

  (5,657)

Less: Increase in accumulated deficit due to Series C Preferred Stock conversion price

     

 

  (194)  

 

Net loss attributable to common stockholders (basic and diluted)

 $(1,757

)

 $(5,793

)

 $(7,528

)

 $(8,059

)

                 

Denominator

                

Weighted average shares of common stock outstanding (basic and diluted)

  4,692   1,604   3,311   1,514 

Net loss per share (basic and diluted)

 $(0.37

)

 $(3.61

)

 $(2.27

)

 $(5.32

)

 

 

*

After giving retroactive effect to a 1-for-35 reverse stock split that became effective November 15, 2022.

 

For the three and nine months ended September 30, 2023 and 2022, Series B Non-Voting Convertible Preferred Stock (the “Series B Preferred Stock”) and the Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) were excluded from the computation of diluted net loss per share as their inclusion on an “if converted” basis would have been anti-dilutive. The Series B Preferred Stock and Series C Preferred Stock were considered anti-dilutive because such securities did not have a contractual obligation to participate in losses of the Company.

 

The following outstanding preferred stock, stock options and stock warrants were excluded from the diluted EPS computation as their effect would have been anti-dilutive (in thousands):

 

  

As of September 30,

 
  

2023

  

2022

 

Series B Preferred Stock

  4,736   1,845 

Series C Preferred Stock

  845    

Stock options

  148   136 

Stock warrants

  7,382   65 
   13,111   2,046 

 

- 15-

 

Recent Accounting Pronouncements

 

For information regarding recent accounting pronouncements that could affect our business, results of operations, financial condition, and liquidity, see Note 2, “Summary of Significant Accounting Policies” included in the Annual Report. The Company continues to evaluate the potential impact of adopting the new accounting guidance on its consolidated financial position, results of operations and cash flows.

 

In June 2016, the FASB issued ASU 2016-13, Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The amendments in ASU 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. ASU 2016-13 is effective for the Company for annual and interim reporting periods beginning January 1, 2023. The Company adopted the new standard effective January 1, 2023, and the adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

 

 

 

NOTE 3. FAIR VALUE MEASUREMENTS 

 

The Company’s cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of investments that are generally classified within Level 1 of the fair value hierarchy include money market securities and certificates of deposit.

 

As a result of certain call and put options within the Convertible Notes entered into in April 2023, the Company recorded a combined embedded derivative liability on its consolidated balance sheet with a corresponding debt discount which is netted against the face value of the Convertible Notes. The fair value of the embedded derivative liability was classified within Level 2 of the fair value hierarchy because the stock price used in the related Black Sholes valuation model is adjusted for the dilutive effect of the 2023 Private Placement. This price was also used in the fair value models used by the Company to value the 2023 Warrants issued in conjunction with the 2023 Private Placement as well as in accounting for the warrant amendment and preferred stock conversion price adjustments that resulted from the 2023 Private Placement. This price is based on observable inputs but is not a quoted price in an active market and involves uncertainties. If factors or assumptions utilized in determining this price change, the estimated fair values for which it was used could be materially different. See Notes 9, “Convertible Note”; 11, “Warrant Liability”; and Note 12, “Stockholder’s Equity” for further discussion of related fair value calculations.

 

The following table presents the Company’s financial instruments measured at fair value on a recurring basis as of September 30, 2023 (in thousands):

 

      

Fair Value Measurements Using

 
      

Quoted

         
      

Prices in

         
      

Active

  

Significant

     
      

Markets

  

Other

  

Significant

 
  

Balance at

  

for Identical

  

Observable

  

Unobservable

 
  

September 30,

  

Items

  

Inputs

  

Inputs

 
  

2023

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

Assets

                

Restricted cash held as a certificate of deposit

 $324  $324  $  $ 

Deposit held as a certificate of deposit

  152   152       

Total assets

 $476  $476  $  $ 

 

The following table presents the Company’s cash equivalent assets measured at fair value on a recurring basis as of December 31, 2022 (in thousands):

 

      

Fair Value Measurements Using

 
      

Quoted

         
      

Prices in

         
      

Active

  

Significant

     
      

Markets

  

Other

  

Significant

 
  

Balance at

  

for Identical

  

Observable

  

Unobservable

 
  

December 31,

  

Items

  

Inputs

  

Inputs

 
  

2022

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

Assets

                

Restricted cash held as a certificate of deposit

 $332  $332  $  $ 

Deposit held as a certificate of deposit

  152   152       

Total assets

 $484  $484  $  $ 

 

- 16-

 
 

NOTE 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

Prepaid expenses and other current assets consisted of the following (in thousands):

 

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Prepaid inventory

 $93  $211 

Prepaid insurance

  73   146 

Prepaid dues and subscriptions

  65   43 

Prepaid marketing costs

  26   24 

Prepaid patents

  4   12 

Tenant allowance

     11 

Other

  72   113 

Total prepaid expenses and other current assets

 $333  $560 

 

 

 

 

NOTE 5. INVENTORY

 

Inventory consisted of the following (in thousands):

 

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Raw materials and supplies

 $1,031  $1,273 

Finished goods

  3,018   2,663 

Less: Reserve for excess and obsolete inventory

  (