Investors have agreed to purchase 10,893,648 units consisting of one share of NovaBay common stock and a warrant to purchase an additional one-half share of common stock. The cost per unit is $0.63. The warrants, totaling rights to 5,446,824 shares, exercisable beginning on the date six months after the date of issuance, entitle the holders to purchase one share of common stock at a price of $0.78 per share, and include a provision for forced conversion if the common stock trades at or above $1.00 for 10 out of 20 consecutive trading days. This warrant will expire, unless exercised, 18 months following the date of issuance. If fully exercised, these warrants would bring approximately $4.2 million of gross proceeds to NovaBay. The closing of the private placement is subject to the satisfaction of customary closing conditions. The offering is expected to close on or about May 22, 2015, subject to customary closing conditions.

China Kington Investment Co Ltd acted as the sole placement agent of the offering, with Maxim Group LLC acting as financial advisor to NovaBay. Eric Wu, Executive Director of China Kington Investment, commented on the private placement by affirming his company’s support for NovaBay. “We are optimistic about NovaBay’s future prospects through its ability to establish a large sales network and grow its market share in the global eye care market. We also believe that NovaBay has the potential to become a leading pharmaceutical company in Asia with its partner China Pioneer Pharma. We plan to be the company’s long-term financial partner to support these goals.”

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

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

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

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