NYSE: SDEV

Our approach anticipates that we may:

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Hold digital assets, including SKY, for extended periods as long-term positions intended to participate in protocol-level economics and potential capital appreciation;

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Periodically monetize a portion of holdings for general corporate purposes, including to manage tax positions in accordance with applicable law;

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Evaluate opportunities to generate liquidity or financing that reference or are collateralized by assets held by the Company, including SKY; and

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Continue to invest in internal capabilities and third-party relationships necessary to transact, settle, account for, and safeguard SKY.

The execution and scope of this strategy are subject to prevailing market conditions, risk limits established by our Digital Asset Strategy Advisory Committee, the availability of suitable commercial opportunities, and regulatory, legal and tax considerations.

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Initial Digital Asset Holdings - SKY

Our Digital Asset Strategy Advisory Committee has set a primary strategic objective to use all available cash to strategically acquire SKY. As of the closing of the Private Placement, we held an aggregate of approximately 943.6 million SKY. SKY can be acquired, transferred, and held through digital wallets that rely on public/private key pairs, and it may be exchanged on trading venues that support SKY pairs against fiat currencies or other digital assets. The Sky network (also referred to herein as the “Sky Protocol”) is a decentralized protocol developed around the USDS stablecoin that is managed by Sky ecosystem governance. It is a non-custodial, blockchain-based software protocol consisting of open-source, self-executing, autonomous smart contracts that are currently deployed on the Ethereum blockchain. There are two tokens that are native to the Sky Protocol. The first is the USDS stablecoin, which is a collateral-backed token designed to maintain a soft-peg to the US dollar. The second is the SKY token, which is the protocol token of the decentralized Sky ecosystem.

SKY is the initial and sole digital asset approved by the Digital Asset Strategy Advisory Committee as of the date of this filing; however, the Company’s strategy contemplates evaluating additional digital assets over time that meet similar economic and risk criteria. Changes to the investment strategy to acquire new assets or to pursue other growth strategies will require the completion of the following process. Our Digital Asset Strategy Advisory Committee, consisting of Michael Kazley and at least one other advisor, must first approve and the investors in the Private Placement must consent to such change. The Digital Asset Strategy Advisory Committee will then recommend to the Board of Directors the change in strategy for its approval.

The price of SKY is determined in network-based markets by supply and demand among market participants, including individuals, institutions, market makers, and custodial service providers. Liquidity, spreads, and volumes vary by venue and geography. Prices may be volatile due to factors including protocol changes, market sentiment, macroeconomic conditions, third-party platform events, and broader digital asset market dynamics.

Unlike many digital assets that rely on inflationary issuance to incentivize participation, SKY derives its economic characteristics from protocol-generated revenues associated with stablecoin issuance, collateralized lending, and other on-chain financial services. Protocol surplus may be allocated to SKY holders through mechanisms such as staking distributions and systematic token buybacks, subject to governance-approved parameters and network conditions.

Industry Participants and Ecosystem

The SKY ecosystem includes open-source developers, node operators, wallet providers, custodians, trading venues, market makers, data and analytics providers, payment facilitators, and software and hardware vendors. The breadth, maturity, and reliability of third-party services may affect liquidity, price discovery, and operational resilience. As adoption evolves, we expect service availability to change, including execution, clearing arrangements, and enterprise-grade integration tools.

Custody and Safeguarding of SKY

Overview of Custodial Arrangements

We hold substantially all of our SKY in custody accounts with U.S.-based service providers that have demonstrated records of regulatory compliance and information security. Our current custodial and infrastructure service providers currently are Fireblocks, Inc. (“Fireblocks”) and Payward Financial, Inc. (“Kraken”).

Fireblocks is a Delaware corporation that provides us with a software-as-a-service platform that gives us the ability to securely store, manage and administer our digital assets through one or more administrative "workspaces" that we control directly on various blockchains. Fireblocks provides wallet infrastructure and key management technology but does not act as a custodian or hold our digital assets in trust. Kraken is a Wyoming Special Purpose Depository Institution (“SPDI”) that provides institutional digital asset custody services. We have established custody capabilities with Kraken under our Prime Broker Agreement with the Payward entities, which permits Kraken to hold digital assets in trust for our benefit pursuant to Wyoming law.

As of the date of this filing, our SKY tokens are maintained in wallets administered through the Fireblocks platform. However, we maintain the ability to custody digital assets with Kraken and may reallocate assets among service providers from time to time.

The primary counterparty risk we are exposed to with respect to our SKY relates to these service providers’ performance of their obligations under our custody and platform agreements. We hold our SKY across multiple service providers to diversify our exposure to any single provider. Our contracts do not restrict our ability to reallocate SKY among providers, and our SKY holdings may be concentrated with a single provider from time to time.

Given the significant amount of SKY we hold, we continually evaluate and seek to engage additional digital asset custodians and infrastructure providers to further diversify risk. We may also, in the future, discontinue or change the use of one or more third-party service providers or utilize alternative custody arrangements, including self-custody. Under our agreements, each of Kraken and Fireblocks may engage third-party service providers, affiliates, or subcontractors to assist in performing their respective obligations. None of our service providers are related parties of the Company.

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In addition to these custodial arrangements, the Company may utilize non-custodial or third-party Web3 wallets and infrastructure, including institutional-grade transaction and security platforms, to facilitate protocol participation, staking, governance, or other interactions with decentralized applications. Assets held in such wallets are generally limited to amounts necessary for operational or transactional purposes and are subject to internal controls, segregation of duties, and risk management policies designed to mitigate loss.

Custodian Selection, Security Practices and Liability Limitations

We carefully select our service providers through a due diligence process designed to assess their operational capabilities, security

controls and regulatory posture. In evaluating service providers, we consider whether they can demonstrate, among other things:

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Segregation of our assets on-chain or in omnibus arrangements with books-and-records sub-accounting;

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Secure private key management, including vault-based custody, multi-party computation (“MPC”) or proprietary cryptography and hardware-based storage, multi-factor authorization, and role-based access controls;

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Contractual liability provisions for failure to safeguard assets, subject to negotiated limitations;

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Information security and operational safeguards; and

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Rights to review or obtain third-party control attestations and to perform additional diligence as market conditions warrant.

Our custodial and platform agreements employ distinct approaches to key management. Under our agreement with Kraken, all supported digital assets are stored using proprietary cryptography and hardware storage. Under our agreement with Fireblocks, digital assets are managed through a vault system in which cryptographic key shares are split between our devices and Fireblocks' infrastructure, and we have engaged a third-party disaster recovery service provider, Station70, to facilitate key recovery in the event of loss or compromise. Both approaches are intended to mitigate risks associated with internet connectivity, including unauthorized access and cyberattacks.

We negotiate contractual liability provisions with each of our service providers, the key terms of which differ as described below.

Under our agreement with Kraken, the Prime Broker is required to use reasonable care to keep in safe custody all custodied digital assets for the benefit of and on behalf of the Company. Except in the case of gross negligence, willful misconduct or fraud, the total aggregate liability of Kraken for custodial services is capped at the greater of (A) the fair market value of the custodied digital assets at the time the events giving rise to the liability occurred and (B) the fair market value of the custodied digital assets at the time the Company has actual knowledge of the events giving rise to the liability. Kraken will not be liable for indirect, incidental, special or consequential damages, except in the case of willful misconduct or fraud.

Under our agreement with Fireblocks, Fireblocks warrants that the platform will perform materially in accordance with applicable documentation and that it will use commercially reasonable efforts to ensure the platform does not introduce malicious code into our systems. Fireblocks' maximum aggregate liability is capped at the total fees paid to Fireblocks under the applicable order form in the twelve (12) months immediately preceding the event giving rise to the claim, except for our misappropriation or other violation of Fireblocks' intellectual property rights. Neither party is liable for indirect, incidental, special, punitive or consequential damages, or any loss of revenue, reputation, or profits, data, or data use, except in the case of our misappropriation of Fireblocks' intellectual property.

Ongoing Monitoring

We conduct ongoing monitoring of our service providers throughout each engagement, which includes:

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obtaining and reviewing available third-party certifications and audit reports, including Services Organization Controls (“SOC”) Type 2 and ISO 27001 reports maintained by Fireblocks and records maintained by Kraken;

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exercising contractual rights to review relevant internal controls, including through audit rights; and

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performing supplemental due diligence reviews annually or more often when warranted by market conditions or other circumstances.

Insolvency and Legal Protections

Based on existing law and the terms and conditions of our contractual arrangements with our service providers, we believe that our SKY would not be considered part of a service provider's bankruptcy estate were one or more of our service providers to enter bankruptcy, receivership, or similar insolvency proceedings. However, legal precedent regarding the treatment of digital assets in insolvency proceedings remains limited and evolving, and no assurance can be provided that a court would reach a conclusion consistent with our belief.

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We also utilize affiliated or vetted third-party execution providers for SKY acquisitions and dispositions, leveraging custodian connectivity and settlement rails. Notwithstanding these controls, risks of loss due to cyber incidents, operational failures, insolvency, or legal uncertainty remain. See “Risk Factors—Risks Related to Our Blockchain-Based Strategy” below.

Considerations of Holding SKY

We believe that long-term ownership of digital assets, including SKY, can provide exposure to blockchain-based financial infrastructure that enables peer-to-peer settlement and programmability without reliance on a central operator. We also believe that such exposure can offer participation in protocol-level economics if adoption of the Sky Protocol, tooling, and ecosystem services expands. However, this strategy also contains risk, and we will continue to monitor and adjust our strategy for the impact of volatility, technology, operational, and governance risks inherent to open-source networks, market structure risks, and evolving and overlapping regulatory frameworks across jurisdictions that may affect trading venues, custodians, and enterprise access to services. We weigh these factors against our liquidity needs, risk appetite, and regulatory obligations in determining the scope and cadence of any future acquisitions or dispositions.

2025 Financing Transactions

2025 Preferred Stock Purchase Agreement

On August 19, 2025, the Company entered into a preferred stock purchase agreement (the “2025 Preferred Stock Purchase Agreement”) with David E. Lazar, that provides for the Company to sell in a private placement (i) an aggregate of 481,250 shares of Series D Preferred Stock convertible into an aggregate of 15.4 million shares of Common Stock for $3.85 million and (ii) an aggregate of 268,750 shares of Series E Preferred Stock convertible into an aggregate of 8.6 million shares of Common Stock for an additional $2.15 million.

Simultaneous to entering into the 2025 Preferred Stock Purchase Agreement on August 19, 2025, Mr. Lazar completed the Initial Series D Preferred Purchase. The 2025 Preferred Stock Purchase Agreement provided for the ability of Mr. Lazar to assign, transfer and/or sell his shares of Series D Preferred Stock, Series E Preferred Stock, the shares of Common Stock underlying the Transferred Stock and/or his right to acquire such securities. On October 9, 2025, Mr. Lazar tendered his resignation as Chief Executive Officer and a director of NovaBay and entered into a securities purchase agreement with R01 Fund LP (“R01”) and Framework Ventures IV L.P. (“Framework” and, together with R01, the “Lazar Purchasers”) to effect such transfer. Pursuant to the agreement, Mr. Lazar agreed to assign to the Lazar Purchasers all of Mr. Lazar’s right, title and interest in (i) 441,326 outstanding shares of Series D Preferred Stock and (ii) the rights and obligations to purchase the Transferred Stock and the transactions contemplated by the Lazar sale, each of which were purchased from the Company by Mr. Lazar pursuant to the 2025 Preferred Stock Purchase Agreement.

Since the Common Stock is currently listed on the NYSE American, LLC (“NYSE American”), the Company is subject to the requirements of that exchange. Among these requirements are Section 713(a) and (b) of the Company Guide (the “Company Guide”). Section 713(a) of the Company Guide requires stockholder approval in connection with any transaction, other than a public offering, involving the sale, issuance, or potential issuance, of common stock or securities convertible into common stock, equal to 20.0% or more of presently outstanding stock for less than the greater of book or market value. Section 713(b) of the Company Guide requires stockholder approval of a transaction, other than a public offering, involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into, or exercisable for, common stock) when the issuance or potential issuance of additional shares may result in a change of control of the issuer. As a result of the significant number of shares of Common Stock that may be issued upon the future conversion of the Series D Preferred Stock and Series E Preferred Stock compared to the currently issued and outstanding shares of Common Stock as provided above, the Company was required to obtain stockholder approval in accordance with the Company Guide Rule 713(a) and Rule 713(b) for conversion approval. Conversion approval was obtained on October 16, 2025.

On October 16, 2025, subsequent to the conversion approval, each share of Series D Preferred Stock automatically converted into 32 shares of Common Stock or an aggregate of 15.4 million shares of Common Stock. As of December 31, 2025, no shares of Series D Preferred Stock remained outstanding.

On October 16, 2025, subsequent to the conversion approval, pursuant to the 2025 Preferred Stock Purchase Agreement, the Company filed the certificate of designations relating to the 2025 Preferred Stock Issuance and completed the sale of 268,750 shares of Series E Preferred Stock at a price of $8.00 per share for aggregate gross proceeds of $2.15 million. On October 21, 2025, at the option of the Purchasers, all 268,750 shares of Series E Preferred Stock were converted into 8.6 million shares of Common Stock. As of December 31, 2025, no shares of Series E Preferred Stock remained outstanding.

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2025 Warrant Exchange and Issuance of Series F Preferred Stock

On August 19, 2025, simultaneous with the signing of the 2025 Preferred Stock Purchase Agreement, the Company entered into warrant exchange agreements (the “Series F Agreements”) with each of Anson Investments Master Fund LP, Hudson Bay Capital Management LP and Armistice Capital, LLC (collectively, the “Series F Holders”). The Series F Agreements provide for the irrevocable surrender and cancellation of all warrants beneficially owned by the Series F Holders, in exchange for the Company issuing (i) an aggregate of 1,986,568 shares of Series F Preferred Stock and (ii) an aggregate cash payment of $525 thousand to the Series F Holders. Warrants exercisable for an aggregate of 397,657 shares of Common Stock were surrendered and cancelled in conjunction with the Series F Agreements. The Series F Agreements also include a “most favored nations” provision that would increase the amount paid to the Series F Holders if, after the effective date of the Series F Agreements, another holder of the Company’s Common Stock purchase warrants receives a higher amount per underlying warrant; except that this provision shall not apply to (i) settlements with retail investor warrant holders that (1) individually is less than or equal to six and thirty hundredths percent (6.30%) of a Series F Holder’s total warrants outstanding or (2) in the aggregate is less than or equal to twelve and seventy hundredths percent (12.70%) of a Series F Holder’s total warrants outstanding or (ii) prior warrant settlements by the Company.

Because the carrying value of the Common Stock warrants cancelled in conjunction with the Series F Agreements exceeded the total cash payment made and book value of the Series F Preferred Stock issued, the Company recorded a deemed capital contribution of $433 thousand upon entering the Series F Agreements.

October 2025 Pre-Funded Warrant Transactions

On October 16, 2025, the Company issued and sold pre-funded warrants (the “October 2025 Pre-Funded Warrants”) to purchase an aggregate of 1,081,082 shares of Common Stock, to R01 and Framework in two transactions for aggregate net proceeds of approximately $5.9 million. The purchase price was $5.50 per October 2025 Pre-Funded Warrant, representing 110% of the closing price of the Common Stock on the day before the issuance, less the $0.05 exercise price for each such October 2025 Pre-Funded Warrant. The October 2025 Pre-Funded Warrants are freely exercisable for shares of Common Stock upon the receipt of stockholder approval at the March 12, 2026 special meeting of stockholders.

Recent Developments

January 2026 Private Placement

On January 16, 2026, the Company entered into a Securities Purchase Agreement (the “SPA”) with each of R01, Framework, Tether Investments, S.A. de C.V. (“Tether”) and Sky Frontier Foundation (“Sky Frontier Foundation” and together with R01, Framework and Tether, the “Purchasers”). Pursuant to the SPA, the Company issued and sold pre-funded warrants (the “2026 Pre-Funded Warrants”) to purchase an aggregate of 167,539,227 shares of Common Stock for aggregate gross proceeds of approximately $137.4 million, reflecting the agreed-upon value of the consideration used to determine the number of pre-funded warrants issued under the SPA. The purchase price was $0.85 per 2026 Pre-Funded Warrant, and the 2026 Pre-Funded Warrants are exercisable for shares of Common Stock at an exercise price of $0.05 per underlying share of Common Stock, on a tiered basis, with 20% of the 2026 Pre-Funded Warrants becoming exercisable 6 months after execution of the SPA, 30% of the 2026 Pre-Funded Warrants becoming exercisable 9 months after execution of the SPA and the remaining 50% of the 2026 Pre-Funded Warrants becoming exercisable 12 months after execution of the SPA, upon the receipt of stockholder approval at the March 12, 2026 special meeting of stockholders.

The consideration received consisted of $25.0 million in cash, 35.0 million USDT and 16.0 million USDS stablecoins (with an aggregate value of approximately $51.0 million), and 943,599,690 SKY tokens (with an aggregate value of approximately $61.4 million). The aggregate value of the stablecoins and SKY tokens was determined based on their approximate respective fair values as of the closing date of the placement. The aggregate fair value of the consideration received at closing exceeded the stated gross proceeds under the SPA by approximately $3.4 million.

The SPA grants to each of the Purchasers a consent right over any material amendment, modification, addition, revocation, or change to the Company’s Digital Asset Strategy for a period of twenty-four (24) months from the date the SPA was executed, as long as a Purchaser holds at least fifty percent (50%) of the aggregate number of 2026 Pre-Funded Warrants and/or shares of Common Stock as originally purchased by such Purchaser pursuant to the SPA.

In connection with the SPA, on January 16, 2026, the Company and the Purchasers entered into an Investors’ Rights Agreement (the “IRA”), pursuant to which, among other things, the Company agreed to provide the Purchasers with customary demand rights for their shares of Common Stock underlying the Pre-Funded Warrants and customary piggyback registration rights, as well as certain nomination rights for R01, Framework and Sky Frontier Foundation.

The IRA grants to each of R01, Framework and Sky Frontier Foundation the right to nominate one (1) individual for election to the Board of Directors (the “Nomination Rights”). If any of the parties receiving Nomination Rights cease to beneficially own at least five percent (5%) of the outstanding shares of the Company’s Common Stock, their individual Nomination Rights will terminate.

At-The-Market Offering

On January 20, 2026, the Company entered into an ATM Sales Agreement (the “Sales Agreement”) with Virtu Americas LLC (“Virtu”), pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $100.0 million from time to time through or to Virtu as its sales agent or principal. Sales of Common Stock through Virtu, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, including without limitation, sales made directly on the New York Stock Exchange or any other existing trading market for the Common Stock. Virtu will use commercially reasonable efforts to sell Common Stock from time to time, based upon instructions from the Company (including any price, time or size limits or other parameters or conditions the Company may impose). The Company will pay Virtu a commission of up to 2.0% of the gross proceeds from any sale of Common Stock sold through Virtu under the Sales Agreement. The Company has also provided Virtu with customary indemnification rights.

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The Company is not obligated to make any sales of Common Stock under the Sales Agreement. The Sales Agreement may be terminated by either party under specified circumstances, including material adverse changes affecting the Company or the financial markets, suspension of trading, or by notice from either party.

See also Notes 7, “Financing Activities;” 9, “Common Stock Warrants and Warrant Liabilities,” 10, “Stockholders’ Deficit,” and 17, “Subsequent Events” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.

Legacy Wound Care and Eyecare Business

Prior to adopting our digital asset treasury strategy, the Company operated as a pharmaceutical company focused on eyecare and wound care products.

Avenova Asset Divestiture

On January 17, 2025, we completed the sale of our eyecare products sold under the Avenova brand and related assets (the “Avenova Assets”) to PRN Physician Recommended Nutriceuticals, LLC (“PRN”), which constituted the sale of substantially all of our then revenue-generating and operating assets (the “Avenova Asset Divestiture”). The Avenova Asset Divestiture was consummated pursuant to the Asset Purchase Agreement, dated September 19, 2024, as amended. The final purchase price received by the Company was approximately $10.6 million, net of adjustments. For additional information regarding the Avenova Asset Divestiture, please see Note 13, “Avenova Asset Divestiture and Bridge Loan” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.

PhaseOne Divestiture

On January 8, 2025, we completed the sale of our wound care product trademarks, including NeutroPhase, PhaseOne and OmniPhase, and related inventory to Phase One Health LLC (the “PhaseOne Divestiture”). Following the PhaseOne Divestiture, our legacy wound care business has been significantly reduced.

Exit of the China NeutroPhase Product Line

Following the PhaseOne Divestiture, the Company continued to manufacture wound care products domestically in the United States for export to China through its distribution relationship with Chongqing Pioneer Pharma Holdings Limited (“Pioneer”). In October 2025, as part of our strategic shift to operate as a digital asset treasury company, we made a decision to exit our involvement in the China NeutroPhase product line, which represented our remaining legacy wound care activity. We may continue limited production and sales to Pioneer during a transition period as we wind down this activity.

The Company is incorporated under the laws of the State of Delaware.

Discontinued Operations

The historical financial results of the divested businesses outlined above are reflected as discontinued operations in the Consolidated Financial Statements included in this annual report. See Notes 13, “Avenova Asset Divestiture and Bridge Loan,” 14 “PhaseOne Divestiture”, 15, “DERMAdoctor Divestiture” and 16, “Summary of Discontinued Operations” to the Consolidated Financial Statements in Part II, Item 8 of this annual report for additional details.

Customers, Manufacturing and Suppliers

In connection with the Avenova Asset Divestiture, the PhaseOne Divestiture and the DERMAdoctor Divestiture, the Company disposed of its primary commercial operations. Information for customers, manufacturing and suppliers associated with the Company’s former businesses can be found in our prior filings with the SEC.

Intellectual Property

In connection with the Avenova Asset Divestiture, the PhaseOne Divestiture and the DERMAdoctor Divestiture, the Company disposed of its primary trademarks, trade secrets and know-how. Prior to completing each of these transactions, we sought to protect our intellectual property rights by a variety of means, including obtaining patents, maintaining trade secrets and proprietary know-how and technological innovation to operate, without infringing on the proprietary rights of others and to prevent others from infringing on our proprietary rights. We relied on and used reasonable business activities to protect trade secrets, such as confidentiality/invention rights agreements with employees, confidentiality agreements with manufacturers, proprietary expertise and product formulations, continuing innovation efforts and techniques, and other know-how to develop and maintain a competitive position.

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Research and Development

The completion of the Avenova Asset Divestiture, the PhaseOne Divestiture and the DERMAdoctor Divestiture have all had a substantial impact on our Research and Development, as our business and operations have been significantly reduced. As a result, we are currently not conducting research and development. A majority of previous research and development activities were focused on compliance with ongoing regulatory and maintenance requirements related to our former products.

Seasonality

In connection with the Avenova Asset Divestiture, the PhaseOne Divestiture and the DERMAdoctor Divestiture, the Company disposed of its primary commercial operations.Additional information about these and our former Avenova Asset, PhaseOne and DERMAdoctor customers, product manufacturing and suppliers can be found in our prior filings with the SEC.

Our Capital Requirements

To help address our needs for liquidity and capital to fund our operations in 2025, we completed a series of financing transactions in 2025, as described above in “2025 Financing Transactions,” which resulted in our Company raising approximately $12.0 million in gross proceeds. Subsequently, the Company completed an additional financing transaction in January 2026, in which it raised approximately $137.4 million and which is described in the section entitled “Recent Developments” above.

As a result of the completion of the Avenova Asset Divestiture, the PhaseOne Divestiture and the DERMAdoctor Divestiture, our business and operating expenses have significantly changed. Accordingly, based on funds available as of December 31, 2025, aggregate gross cash proceeds of approximately $25.0 million from the January 2026 Private Placement, net cash generated from the conversion of all of the stablecoins received in the January 2026 Private Placement into U.S. dollars, and $13.5 million in gross cash proceeds from issuances under the 2026 ATM Program between January 20, 2026 and March 16, 2026, management believes that the Company’s existing cash and cash equivalents will be sufficient to fund its planned operating expenses at least through March 19, 2027.

All the stablecoins received in the January 2026 Private Placement were converted into U.S. dollars to support operating liquidity, and a significant portion was deployed to acquire additional SKY tokens. Subsequent to the January 2026 Private Placement and through March 16, 2026, the Company deployed approximately $70.7 million in cash to acquire approximately 1.1 billion SKY tokens.

Governmental, Regulatory, and Accounting Considerations

The legal and regulatory landscape applicable to blockchain-based networks and network-native units like SKY continues to evolve in the United States and internationally. Multiple regulators have asserted jurisdiction over aspects of digital asset markets, including anti-money laundering compliance, market integrity and manipulation, consumer protection, tax reporting, commodities and derivatives regulation, and sanctions. Regulatory actions affecting trading venues, custodians, or other service providers could impair access, liquidity, or pricing for SKY. We monitor developments and adjust our counterparties, controls, and policies accordingly.

Digital assets held by the Company will be subject to evolving accounting standards, and changes in market value and protocol participation may result in volatility in the Company’s financial results.

The completion of the Avenova Asset Divestiture, the PhaseOne Divestiture and the DERMAdoctor Divestiture and our decision to exit our involvement in the China NeutroPhase product line have had and will continue to have a substantial impact on the government regulations that we are subject to. We were previously subject to extensive government regulation, principally by the FDA and state and local authorities in the United States and by comparable agencies in foreign countries prior to these transactions. As a result of our significantly reduced business and operations, which primarily consist of the manufacture and supply of our wound care products to fulfill a contractual obligation that has since been completed, as well as limited manufacturing on an as-needed basis for a short period for our distribution partner in China, we are subject to substantially less government regulation. Additional information about these regulations can be found in our prior filings with the SEC.

Human Capital

As of December 31, 2025, on a consolidated basis, we had a total of 4 employees, 2 of whom were full-time employees and 2 who were part-time employees. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.

Facilities

Our principal executive office is located in Emeryville, California. We are party to an Office Lease (the “Lease”), dated August 24, 2016, as subsequently amended on January 24, 2022, pursuant to which we lease approximately 7,675 rentable square feet of real property located on the eleventh floor (Suite 1150) at 2000 Powell Street, Emeryville, California 94608 from KBSIII Towers at Emeryville, LLC (the “Landlord”), for our principal executive offices. The expiration date of the Lease is July 31, 2027, unless terminated earlier pursuant to the provisions of the Lease. Prior to completing the Avenova Asset Divestiture, our office and administration facilities were suitable and adequate for our then current operations and purpose. As a result of our significantly reduced business and operations, we are currently exploring options to reduce the costs of the Lease, which will include subleasing the office space that will be subject to the Landlord’s approval.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our corporate website, located at www.novabay.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our website is not part of this annual report on Form 10-K. The SEC also maintains an Internet site that contains reports, proxy, information statements and other information regarding issuers at http://www.sec.gov.

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