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BIOLARGO, INC. - Quarter Report: 2023 September (Form 10-Q)

blgo20230930_10q.htm
 

 

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

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 000-19709

 


 

BIOLARGO, INC.

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

65-0159115

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

14921 Chestnut St.

Westminster, CA 92683

(Address of principal executive offices)

 

(888) 400-2863

(Registrants telephone number, including area code)

 


 

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

BLGO

OTC Markets (OTCQB)

 


 

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 (§232.405 of this chapter) 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 emerging growth company. See definition 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 ☐
  
Non-accelerated filer   ☒Smaller reporting company ☒
  
 Emerging growth 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  ☒

 

The number of shares of the Registrant’s Common Stock outstanding as of November 10, 2023 was 289,500,358 shares.  

 

 

 

BIOLARGO, INC.

FORM 10-Q

INDEX

 

PART I

 

 

Item 1

Financial Statements

1
     

Item 2

Management's Discussion and Analysis and Financial Condition and Results of Operations

27
     

Item 4

Controls and Procedures

37

 

PART II

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

39
     

Item 5

Other Information

40
     

Item 6

Exhibits

40
     
 

Signatures

42

 

 

 

 

PART I FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

 

 

BIOLARGO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF September 30, 2023 AND December 31, 2022

(in thousands, except for share and per share data)

 

  

September 30, 2023

  

December 31,

 
  

(unaudited)

  

2022

 

Assets

 

Current assets:

        

Cash and cash equivalents

 $3,042  $1,851 

Accounts receivable, net of allowance

  1,453   1,064 

Prepaid expenses and other current assets

  74   120 

Inventories, net of allowance

  122   118 

Total current assets

  4,691   3,153 
         

Property and equipment, net of depreciation

  599   287 

Other non-current assets

  69   124 

Investment in South Korean joint venture

  15   33 

Right of use, operating lease, net of amortization

  777   867 

Clyra Medical prepaid marketing

  394   394 

Total assets

 $6,545  $4,858 
         

Liabilities and stockholders’ equity

 

Current liabilities:

        

Accounts payable and accrued expenses

 $889  $940 

Clyra Medical accounts payable and accrued expenses

  330   238 

Debt obligations

  66   100 

Clyra Medical debt obligations

  234    

Deferred revenue

  2   17 

Lease liability

  97   97 

Customer deposits

  122   184 

Total current liabilities

  1,740   1,576 
         

Long-term liabilities:

        

Debt obligations, net of current

  293   237 

Lease liability, net of current

  695   773 

Clyra Medical debt obligations

     261 

Total long-term liabilities

  988   1,271 

Total liabilities

  2,728   2,847 
         

COMMITMENTS AND CONTINGENCIES (Note 12)

          
         

STOCKHOLDERS’ EQUITY:

        

Preferred Series A, $0.00067 par value, 50,000,000 shares authorized, -0- shares issued and outstanding, at September 30, 2023 and December 31, 2022

      

Common stock, $0.00067 par value, 550,000,000 shares authorized, 288,626,570 and 278,462,706 shares issued at September 30, 2023 and December 31, 2022, respectively

  193   186 

Additional paid-in capital

  153,406   148,435 

Accumulated deficit

  (146,369)  (143,594)

Accumulated other comprehensive loss

  (161)  (149)

Total BioLargo Inc. and subsidiaries stockholders’ equity

  7,069   4,878 

Non-controlling interest

  (3,252)  (2,867)

Total stockholders’ equity

  3,817   2,011 

Total liabilities and stockholders’ equity

 $6,545  $4,858 

 

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

 

 

 

BIOLARGO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE Three and Nine Months Ended September 30, 2023 AND 2022

(in thousands, except for share and per share data)

(unaudited)

 

   

Three Months

   

Nine Months

 
   

September 30, 2023

   

September 30, 2022

   

September 30, 2023

   

September 30, 2022

 
                                 

Revenues

                               

Product revenue

  $ 2,529     $ 1,216     $ 7,392     $ 2,532  

Service revenue

    143       284       468       1,254  

Total revenue

    2,672       1,500       7,860       3,786  
                                 

Cost of revenue

                               

Cost of goods sold

    (1,170 )     (515 )     (3,533 )     (1,174 )

Cost of service

    (67 )     (233 )     (261 )     (720 )

Gross profit

    1,435       752       4,066       1,892  
                                 

Selling, general and administrative expenses

    2,278       1,424       5,794       4,847  

Research and development

    694       271       1,846       1,018  

Operating loss:

    (1,537 )     (943 )     (3,574 )     (3,973 )

Other (expense) income:

                               

Interest expense

    (12 )     (14 )     (72 )     (42 )

PPP loan forgiveness

                      174  

Tax credit (reversal)

    41       66       (14 )     66  

Grant income

          44       32       51  

Total other expense:

    29       96       (54 )     249  

Net loss

    (1,508 )     (847 )     (3,628 )     (3,724 )
                                 

Net loss attributable to noncontrolling interest

    (308 )     (343 )     (853 )     (340 )

Net loss attributable to common shareholders

  $ (1,200 )   $ (504 )   $ (2,775 )   $ (3,384 )
                                 

Net loss per share attributable to common shareholders:

                               

Loss per share attributable to shareholders – basic and diluted

  $ (0.01 )   $ (0.00 )   $ (0.01 )   $ (0.01 )

Weighted average number of common shares outstanding:

    287,943,346       270,665,820       284,559,487       265,812,188  
                                 

Comprehensive loss:

                               

Net loss

  $ (1,508 )   $ (847 )   $ (3,628 )   $ (3,724 )

Foreign currency translation

    1       (59 )     (12 )     (70 )

Comprehensive loss

    (1,507 )     (906 )     (3,640 )     (3,794 )

Comprehensive loss attributable to noncontrolling interest

    (308 )     (343 )     (853 )     (340 )

Comprehensive loss attributable to common stockholders

  $ (1,199 )   $ (563 )   $ (2,787 )   $ (3,454 )

 

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

 

 

 

BIOLARGO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)

FOR THE Three and Nine Months Ended September 30, 2023 AND 2022

(in thousands, except for share and per share data)

(unaudited)

 

   

Common stock

   

Additional paid-in

   

Accumulated

   

Accumulated other comprehensive

   

Non-controlling

   

Total stockholders’ equity

 
   

Shares

   

Amount

   

capital

   

deficit

   

Loss

   

interest

   

(deficit)

 
                                                         

Balance, December 31, 2022

    278,462,706     $ 186     $ 148,435     $ (143,594 )   $ (149 )   $ (2,867 )   $ 2,011  

Sale of stock for cash

    4,201,402       3       797                         800  

Issuance of common stock for services

    930,490       1       206                         207  

Issuance of common stock in exchange for Clyra shares

    527,983                                      

Stock option compensation expense

                195                         195  

Clyra Medical Technologies, Inc. (Clyra) stock options issued for services

                61                         61  

Warrant issued for interest

                30                         30  

Clyra – sales of Series A Preferred Stock

                                  225       225  

Clyra – Series A Preferred Stock – dividend

                                  (27 )     (27 )

Biolargo Energy Technology Inc. (BETI) offering

                                  550       550  

Noncontrolling interest allocation

                467                   (467 )      

Net loss

                      (247 )           (247 )     (494 )

Foreign currency translation

                            (6 )           (6 )

Balance, March 31, 2023

    284,122,581       190       150,191       (143,841 )     (155 )     (2,833 )     3,552  

Sale of stock for cash

    2,677,169       2       492                         494  

Issuance of common stock for services

    420,911             75                         75  

Stock option compensation expense

                222                         222  

Clyra Medical Technologies, Inc. (Clyra) stock options issued for services

                66                         66  

Clyra – sales of Series A Preferred Stock

                                  1,062       1,062  

Clyra – Series A Preferred Stock – dividend

                                  (45 )     (45 )

Biolargo Energy Technology Inc. (BETI) offering

                                  330       330  

Noncontrolling interest allocation

                1,461                   (1,461 )      

Net loss

                      (1,328 )           (298 )     (1,626 )

Foreign currency translation

                            (7 )           (7 )

Balance, June 30, 2023

    287,220,661       192       152,507       (145,169 )     (162 )     (3,245 )     4,123  

Sale of stock for cash

    1,190,223       1       202                         203  

Issuance of common stock for services

    215,686             37                         37  

Stock option compensation expense

                680                         680  

Clyra Medical Technologies, Inc. (Clyra) stock options issued for services

                45                         45  

Clyra Medical Technologies, Inc. (Clyra) stock option exercise

                3                         3  

Clyra – sales of Series A Preferred Stock

                                  288       288  

Clyra – Series A Preferred Stock – dividend

                                  (80 )     (80 )

Biolargo Energy Technology Inc. (BETI) offering

                                  25       25  

Noncontrolling interest allocation

                (68 )                 68        

Net loss

                      (1,200 )           (308 )     (1,508 )

Foreign currency translation

                            1             1  

Balance, September 30, 2023

    288,626,570     $ 193     $ 153,406     $ (146,369 )   $ (161 )   $ (3,252 )   $ 3,817  

 

- 4 -

 

   

Common stock

   

Additional paid-in

   

Accumulated

   

Accumulated other comprehensive

   

Non-controlling

   

Total stockholders’ equity

 
   

Shares

   

Amount

   

capital

   

deficit

   

Loss

   

interest

   

(deficit)

 
                                                         

Balance, December 31, 2021

    255,893,726     $ 171     $ 143,718     $ (139,121 )   $ (115 )   $ (3,720 )   $ 933  

Sale of stock for cash

    6,703,789       4       1,198                         1,202  

Issuance of common stock for services

    86,752             17                         17  

Stock option compensation expense

                660                         660  

Clyra Medical Technologies, Inc. (Clyra) stock options issued for services

                141                         141  

Noncontrolling interest allocation

                (528 )                 528        

Net loss

                      (1,652 )           108       (1,544 )

Foreign currency translation

                            (8 )           (8 )

Balance, March 31, 2022

    262,684,267       175       145,206       (140,773 )     (123 )     (3,084 )     1,401  

Sale of stock for cash

    5,011,570       4       944                         948  

Issuance of common stock for services

    340,891             59                         59  

Stock option compensation expense

                234                         234  

Clyra Medical Technologies, Inc. (Clyra) stock options issued for services

                82                         82  

Noncontrolling interest allocation

                (103 )                 103        

Net loss

                      (1,228 )           (105 )     (1,333 )

Foreign currency translation

                            (3 )           (3 )

Balance, June 30, 2022

    268,036,728       179       146,422       (142,001 )     (126 )     (3,086 )     1,388  

Sale of stock for cash

    6,207,084       4       1,113                         1,117  

Issuance of common stock for services

    378,828       1       95                         96  

Stock option compensation expense

                253                         253  

Clyra Medical Technologies, Inc. (Clyra) stock options issued for services

                85                         85  

Noncontrolling interest allocation

                (498 )                 498        

Net loss

                      (504 )           (343 )     (847 )

Foreign currency translation

                            (59 )           (59 )

Balance, September 30, 2022

    274,622,640     $ 184     $ 147,470     $ (142,505 )   $ (185 )   $ (2,931 )   $ 2,033  

 

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

 

 

 

BIOLARGO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE Nine Months Ended September 30, 2023 AND 2022

(in thousands, except for share and per share data)

(unaudited)

 

   

September 30, 2023

   

September 30, 2022

 

Cash flows from operating activities

               

Net loss

  $ (3,628 )   $ (3,724 )

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

               

Stock option compensation expense

    1,269       1,455  

Common stock issued for services

    319       172  

Bad debt expense

    101        

Excess and obsolete inventory

    54        

Amortization of right-of-use operating lease assets

    90        

Interest expense related to amortization of the discount on note payable

    3       13  

Fair value of warrant issued for interest

    30        

PPP loan forgiveness

          (174 )

Loss on investment in South Korean joint venture

    18       15  

Depreciation expense

    94       28  

Changes in assets and liabilities:

               

Accounts receivable

    (490 )     (371 )

Inventories

    (58 )     (19 )

Prepaid expenses and other assets

    101       (85 )

Accounts payable and accrued expenses

    (52 )     (40 )

Clyra accounts payable and accrued expenses

    (59 )     (20 )

Deferred revenue

    (15 )     (83 )

Lease liability, net

    (78 )      

Customer deposits

    (62 )     30  

Net cash used in operating activities

    (2,363 )     (2,803 )

Cash flows from investing activities

               

Equipment purchases

    (332 )     (164 )

Net cash used in investing activities

    (332 )     (164 )

Cash flows from financing activities

               

Proceeds from sale of common stock

    1,497       3,267  

Proceeds from sale of BETI common stock

    905        

Repayment of note payable and vehicle loan

    (55 )      

Repayment by Clyra on inventory line of credit

    (27 )     (24 )

Proceeds from sale of Clyra Medical preferred stock

    1,575       100  

Proceeds from Clyra Medical stock option exercise

    3        

Net cash provided by financing activities

    3,898       3,343  

Net effect of foreign currency translation

    (12 )     (70 )

Net change in cash

    1,191       306  

Cash at beginning of year

    1,851       962  

Cash at end of period

  $ 3,042     $ 1,268  

Supplemental disclosures of cash flow information

               

Cash paid during the year for:

               

Interest

  $ 39     $ 11  

Income taxes

  $     $  

Short-term lease payments not included in lease liability

  $ 43     $ 90  

Non-cash investing and financing activities

               

Equipment added using capital lease

  $ 80     $  

Right of use

  $     $ 433  

Allocation of noncontrolling interest

  $ 1,860     $ 1,129  

Preferred Series A dividend

  $ 152     $  

 

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

 
- 6 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 

 

Note 1. Business and Organization

 

Description of Business

 

BioLargo, Inc. (“BioLargo”, or the “Company”) invents, develops, and commercializes innovative platform technologies to solve challenging environmental problems like PFAS contamination (per- and polyfluoroalkyl substances), advanced water and wastewater treatment, industrial odor control, air quality control, infection control, and myriad environmental remediation challenges. Our business strategy is straightforward: we invent or acquire technologies that we believe have the potential to be disruptive in large commercial markets; we develop and validate these technologies to advance and promote their commercial success as we leverage our considerable scientific, engineering, and entrepreneurial talent; we then monetize these technical assets through a variety of business structures that may include licensure, joint venture, sale, spin off, or by deploying direct to market strategies.

 

Organization

 

We are a Delaware corporation formed in 1991. We have six wholly-owned subsidiaries: BioLargo Life Technologies, Inc., organized under the laws of the State of California in 2006; ONM Environmental, Inc., organized under the laws of the State of California in 2009; BioLargo Equipment and Technologies, Inc., organized under the laws of the State of California in 2022; BioLargo Water, Inc. (“Water”), organized under the laws of Canada in 2014; BioLargo Equipment and Solutions Technologies, Inc., organized under the laws of the State of California in 2022; and BioLargo Development Corp., organized under the laws of the State of California in 2016. Additionally, we own 53% of Clyra Medical Technologies, Inc. (“Clyra” or “Clyra Medical”), organized under the laws of the State of California in 2012 (see Note 8), 82% of BioLargo Engineering Science and Technologies, LLC (“BLEST”), organized under the laws of the State of Tennessee in 2017 (see Note 9), and 96% of BioLargo Energy Technologies, Inc. (“BETI”) organized under the laws of the State of California in 2022 (see Note 10). We consolidate the financial statements of our partially owned subsidiaries (see Note 2, subheading “Principles of Consolidation,”).

 

Liquidity / Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of our business. For the nine months ended September 30, 2023, we generated revenues of $7,860,000 through our business segments (see Note 11), had a net loss of $3,628,000, used $2,363,000 cash in operations, and at September 30, 2023, we had working capital of $2,951,000, and current assets of $4,691,000.

 

During the nine months ended September 30, 2023, we sold (i) $502,000 of our common stock to Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 3), (ii) $995,000 of our common stock and warrants to accredited investors (see Notes 3 and 6), (iii) $1,575,000 of Clyra Medical Series A Preferred Stock (see Note 8), and (iv) $905,000 of BETI common stock (see Note 10). Subsequent to September 30, 2023, we continued selling stock to Lincoln Park (see Note 13). As of September 30, 2023, our cash and cash equivalents totaled $3,042,000. Our total liabilities included a $71,000 vehicle loan, $140,000 due in U.S. Small Business Administration (SBA) loans issued pursuant to the Paycheck Protection Program (see Note 4), $148,000 due to the SBA issued pursuant to the Economic Injury Disaster program (see Note 4), and $234,000 owed by Clyra Medical due in 2024 (see Note 8). We have been, and anticipate that we will continue to be, limited in terms of our capital resources, and expect to continue to need further investment capital to fund operations. 

 

If we are unable to rely on our current arrangement with Lincoln Park to fund our working capital requirements, we will have to rely on other forms of financing, and there is no assurance that we will be able to do so, or if we do so, it will be on favorable terms.

 

- 7 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

The foregoing factors raise substantial doubt about our ability to continue as a going concern, unless we are able to continue to raise funds through stock sales to Lincoln Park or other private financings, or attain a reasonable threshold of operating efficiencies and achieve profitable operations. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

 

 
 

Note 2. Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and partially owned subsidiaries BETI, BLEST and Clyra Medical. All intercompany accounts and transactions have been eliminated.

 

Foreign Currency

 

The Company has designated the functional currency of BioLargo Water, Inc., our Canadian subsidiary, to be the Canadian dollar. Therefore, translation gains and losses resulting from differences in exchange rates are recorded in accumulated other comprehensive income.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less when acquired to be cash equivalents. Substantially all cash equivalents are held in short-term money market accounts at one of the largest financial institutions in the United States, Bank of America. From time to time, our cash account balances are greater than the Federal Deposit Insurance Corporation insurance limit of $250,000 per owner per bank, and during such times, we are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the financial institution. We do not anticipate non-performance by our financial institution.

 

As of September 30, 2023, and December 31, 2022, our cash balances were made up of the following (in thousands):

 

  

September 30, 2023

  

December 31, 2022

 

BioLargo, Inc. and subsidiaries

 $2,280  $1,681 

Clyra Medical Technologies, Inc.

  762   170 

Total

 $3,042  $1,851 

 

Accounts Receivable

 

In June 2016, the FASB issued ASU 2016-13, which sets out the principles for the recognition of measurement of credit losses on financial instruments, including trade receivables. The standard eliminates the probable initial recognition threshold and requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. The new standard was effective for the Company beginning January 1, 2023 and primarily impacted trade accounts receivable. 

 

Accounts receivable are customer obligations that are unconditional. Accounts receivable are presented net of an allowance for doubtful accounts for expected credit losses, which represents an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and, if necessary, provides an allowance for doubtful accounts and expected credit losses. A provision to the allowances for doubtful accounts for expected credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment, and the Company’s historical experience. Provisions to the allowances for doubtful accounts for expected credit losses are recorded to general and administrative expenses. The Company writes off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues collection of the receivable. The Company does not have any off-balance-sheet credit exposure related to customers. As of September 30, 2023, and December 31, 2022, the allowance for doubtful accounts for expected credit losses was $113,000 and $12,000, respectively.

 

- 8 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Credit Concentration

 

We have a limited number of customers that account for significant portions of our revenue. During the three and nine months ended September 30, 2023 and 2022, the following customers accounted for more than 10% of consolidated revenues:

 

  

Three Months

  

Nine Months

 
  

September 30, 2023

  

September 30, 2022

  

September 30, 2023

  

September 30, 2022

 
                 

Customer A

  74%   4%   76%   44% 

Customer B

 

<10%

  

<10%

  

<10%

   14% 

Customer C

 

<10%

  

<10%

  

<10%

  

<10%

 

 

At September 30, 2023, one customer accounted for more than 10% of consolidated accounts receivable, and at December 31, 2022, three customers accounted for more than 10% of consolidated accounts receivable:

 

  

September 30, 2023

  

December 31, 2022

 

Customer A

  67%  11%

Customer B

 

<10%

   31%

Customer D

 

<10%

   15%

 

Inventory

 

Inventories are stated at the lower of cost or net realizable value using the average cost method. The allowance for obsolete inventory as of  September 30, 2023, and December 31, 2022, was $212,000 and $158,000, respectively. Inventories consisted of (in thousands):

 

  

September 30, 2023

  

December 31, 2022

 

Raw material

 $78  $46 

Finished goods

  44   74 

Total

 $122  $120 

 

- 9 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Other Non-Current Assets

 

Other non-current assets consisted of (i) security deposits related to our business offices, (ii) three patents acquired on  October 22, 2021, for $34,000, and (iii) tax credit receivables from the Canadian government related to a research and development credit from our Canadian subsidiary for which we’ve applied for and received in prior periods.

 

  

September 30, 2023

  

December 31, 2022

 

Patents

 $34  $34 

Security deposits

  35   35 

Tax credit receivable

     55 

Total

 $69  $124 

 

Equity Method of Accounting

 

On March 20, 2020, we invested $100,000 into a South Korean entity (Odin Co. Ltd., “Odin”) pursuant to a Joint Venture agreement we had entered into with BKT Co. Ltd. and its U.S. based subsidiary, Tomorrow Water. We received a 40% non-dilutive equity interest, and BKT and Tomorrow Water each received 30% equity interests for an aggregate $150,000 investment.

 

We account for our investment in the joint venture under the equity method of accounting. We have determined that while we have significant influence over the joint venture through our technology license and our position on the Board of Directors, we do not control the joint venture or are otherwise involved in managing the entity and we own less than a majority of the equity. Therefore, we record the asset on our consolidated balance sheet and record an increase or decrease of the recorded balance by our percentage ownership of the profits or losses in the joint venture. The joint venture has incurred a loss since inception and our 40% ownership share reduced our investment interest. For the three and nine months ended September 30, 2023, the reduction of our investment interest totaled $6,000 and $18,000, respectively, and for the same periods in 2022, reduced our investment interest $15,000 and $23,000, respectively.

 

Impairment

 

Long-lived and definite lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  If the sum of the expected future undiscounted cash flows from the use of the asset and its eventual disposition is less than the carrying amount of the asset, then an impairment loss is recognized.  The impairment loss is measured based on the fair value of the asset.  Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. There were no impairment losses related to intangible assets during the three or nine months ended September 30, 2023 or 2022.

 

Earnings (Loss) Per Share

 

We report basic and diluted earnings (loss) per share (“EPS”) for common and common share equivalents. Basic EPS is computed by dividing reported earnings by the weighted average shares outstanding. Diluted EPS is computed by adding to the weighted average shares the dilutive effect if convertible notes payable, stock options and warrants were exercised into common stock. For the three and nine months ended September 30, 2023, and 2022, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the Company’s net loss which creates an anti-dilutive effect of the convertible notes payable, warrants and stock options.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ from those estimates. Estimates are used when accounting for stock-based transactions, debt transactions, derivative liabilities, allowance for bad debt, asset depreciation and amortization, impairment expense, among others.

 

The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results of our financial statements.

 

- 10 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Share-Based Compensation Expense

 

We recognize compensation expense for stock option awards on a straight-line basis over the applicable service period of the award, which is the vesting period. Fair value is determined on the grant date. Share-based compensation expense is based on the grant date fair value estimated using the Black-Scholes Option Pricing Model.

 

For stock and stock options issued to consultants and other non-employees for services, the Company measures and records an expense as of the earlier of the date at which either: a commitment for performance by the non-employee has been reached or the non-employee’s performance is complete. The equity instruments are measured at the current fair value, and for stock options, the instruments are measured at fair value using the Black Scholes option model.

 

The following methodology and assumptions were used to calculate share-based compensation for the nine months ended September 30, 2023, and 2022:

 

  

2023

  

2022

 
  

Non Plan

  

2018 Plan

  

Non Plan

  

2018 Plan

 

Risk free interest rate

  4.15%  3.48 - 4.15%  2.32 - 3.83%  2.32 - 3.83%

Expected volatility

  112%  112 - 114%  115 - 117%  115 - 117%

Expected dividend yield

            

Forfeiture rate

            

Life in years

  10   10   10   10 

 

Expected price volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. The expected volatility is derived from the historical daily change in the market price of our common stock, as we believe that historical volatility is the best indicator of future volatility.

 

The risk-free interest rate used in the Black-Scholes calculation is based on the prevailing U.S. Treasury yield as determined by the U.S. Federal Reserve. We have never paid any cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future.

 

Warrants

 

Warrants issued with our convertible and non-convertible debt instruments are accounted for under the fair value and relative fair value method. The warrant is first analyzed per its terms as to whether it has derivative features or not. If the warrant is determined to be a derivative and not qualify for equity treatment, then it is measured at fair value using the Black Scholes option model and recorded as a liability on the balance sheet. The warrant is re-measured at its then current fair value at each subsequent reporting date (it is “marked-to-market”). If the warrant is determined to not have derivative features, it is recorded into equity at its fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the convertible note. Convertible debt instruments are recorded at fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant. The warrant relative fair values are also recorded as a discount to the convertible promissory notes.

 

- 11 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Non-Cash Transactions

 

We determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock based on the market price of our common stock issued as consideration, at the date of the agreement of each transaction or when the service is rendered or product is received.

 

Revenue Recognition

 

We account for revenue in accordance with ASC 606, “Revenue from Contacts with Customers”. The guidance focuses on the core principle for revenue recognition, which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the guidance provides that an entity should apply the following steps:

 

Step 1: Identify the contract(s) with a customer.

 

Step 2: Identify the performance obligations in the contract.

 

Step 3: Determine the transaction price.

 

Step 4: Allocate the transaction price to the performance obligations in the contract.

 

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

 

The Company’s products are sold through a contract with the customer and a written purchase order, in which the details of the contract are defined including the transaction price and method of shipment. The only performance obligation is to create and ship the product, and each product has separate pricing. Revenue is recognized at a point in time when the goods are shipped if the agreement is FOB manufacturer, and when goods are delivered if FOB destination. Revenue is recognized with a reduction for sales discounts, as appropriate and negotiated in the customer’s purchase order.

 

Service contracts are performed through a written contract, which specifies the performance obligations and the rate at which the services will be billed, typically by time and materials. Each service is separately negotiated and priced. Revenue is recognized as services are performed and completed, or, for services related to product installations, at the completion of the installation. A few contracts have called for milestone or fixed cost payments, where we invoice an agreed-to amount per month for the life of the contract. In these instances, completed work, billed hourly, is recognized as revenue. If the billing amount is greater or lesser than the completed work, a receivable or payable is created. These accounts are adjusted upon additional billings as the work is completed. To date, there have been no discounts or other financing terms for the contracts.

 

The Company has outstanding contract liability obligations of $2,000 as of September 30, 2023, recorded as deferred revenue. We recognized $15,000 in revenue and reduced the deferred revenue balance by the same amount as performance obligations were satisfied in the nine months ended September 30, 2023. The outstanding balance will be recognized over the remaining life of the contracts. Our Canadian subsidiary had a customer deposit outstanding at September 30, 2023, totaling $111,000, that was awarded as part of a grant for a particular project that has been delayed.

 

As we generate revenues from royalties or license fees from our intellectual property, a licensee will pay a license fee in one or more installments and ongoing royalties based on their sales of products incorporating or using our licensed intellectual property. We have entered into a licensing agreement for the CupriDyne Clean product, and we recognize royalty and license fees on a quarterly basis as the product is sold through to third parties and reported to us.

 

Government Grants

 

We have been awarded multiple research grants from the private and public Canadian research programs. The income we receive directly from grants is recorded as other income. We have been awarded over 80 grants since our first in 2015. Some of the funds from these grants are given directly to third parties (such as the University of Alberta or a third-party research scientist) to support research on our technology. The grants have terms generally ranging between six and eighteen months and support a majority, but not all, of the related research budget costs. This cooperative research allows us to utilize (i) a depth of resources and talent to accomplish highly skilled work, (ii) financial aid to support research and development costs, (iii) independent and credible validation of our technical claims.

 

- 12 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

The grants typically provide for (i) recurring monthly amounts, (ii) reimbursement of costs for research talent for which we invoice to request payment, and (iii) ancillary cost reimbursement for research talent travel related costs. All awarded grants have specific requirements on how the money is spent, typically to employ researchers. None of the funds may be used for general administrative expenses or overhead in the United States. These grants have substantially increased our level of research and development activities in Canada. We continue to apply for Canadian government and agency grants to fund research and development activities. Not all of our grant applications have been awarded, and no assurance can be made that any pending grant application, or any future grant applications, will be awarded.

 

Income Taxes

 

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of asset and liabilities. Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax asset and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

We account for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by generally accepted accounting principles (“GAAP”). Under GAAP, the tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. Management believes there are no unrecognized tax benefits or uncertain tax positions as of September 30, 2023, and December 31, 2022.

 

The Company assessed its earnings history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of September 30, 2023, and December 31, 2022. Accordingly, a 100% valuation allowance was recorded against the net deferred tax asset.

 

The Company recognizes interest and penalties on income taxes as a component of income tax expense, should such an expense be realized.

 

Fair Value of Financial Instruments

 

Management believes the carrying amounts of the Company’s financial instruments as of September 30, 2023, and December 31, 2022 approximate their respective fair values because of the short-term nature of these instruments. Such instruments consist of cash, accounts receivable, prepaid assets, accounts payable, line of credit, and other assets and liabilities. The carrying amount of debt instruments are believed to approximate fair value as the stated interest rates are reflective of the prevailing market rates.

 

Tax Credits

 

Our research and development activities in Canada may entitle our Canadian subsidiary to claim benefits under the “Scientific Research and Experimental Development Program”, a Canadian federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada. Benefits under the program include credits to taxable income. If our Canadian subsidiary does not have taxable income in a reporting period, we instead receive a tax refund from the Canadian Revenue Authority. Those refunds are classified in Other Income on our Consolidated Statement of Operations and Comprehensive Loss.

 

During the three months ended  September 30, 2023, our subsidiary, Clyra, received $41,000 of Employ Retention Tax Credits.

 

- 13 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Leases

 

At inception of a lease contract, we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period of the contract, and (3) whether we have the right to direct the use of the asset during such time period. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases are classified as either finance leases or operating leases. A lease must be classified as a finance lease if any of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any of these criteria. We have no leases classified as finance leases. As of September 30, 2023, the weighted average remaining lease term for our operating leases was nine years.  For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, management estimates the incremental borrowing rate, which currently is estimated to be 18%. Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease components are included in the measurement of the initial lease liability. Additional payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability. Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of short-term leases on our right-of-use asset and lease liability was not material.

 

As of September 30, 2023, the right-of-use assets totaled $777,000 and the lease liability totaled $792,000 on our balance sheet related to our operating leases.

 

Property and Equipment

 

Property and equipment includes machinery and leasehold improvements and is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 3 - 5 years or the remaining lease term. Newly built leaseholds, additions, renewals, and betterments that significantly extend the life of the asset are capitalized. The Company is currently constructing a facility and purchasing equipment for producing sodium sulfur batteries. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts, and any related gain or loss is reflected in income for the period.

 

Recent Accounting Pronouncements

 

Currently there are no recently released pronouncements that are considered applicable to the Company’s financial statements.

 

- 14 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
 

Note 3. Sale of Stock for Cash

 

Lincoln Park Financing

 

On December 13, 2022, we entered into a stock purchase agreement (the “2022 LPC Purchase Agreement”) with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us at our request up to an aggregate of $10,000,000 of our common stock (subject to certain limitations) from time to time over a period of three years. The agreement allows us, at our sole discretion, to direct Lincoln Park to purchase shares of our common stock, subject to limitations in both volume and dollar amount. The purchase price of the shares that may be sold to Lincoln Park under the agreement is the lower of (i) the lowest sale price on the date of purchase, or (ii) the average of the three lowest closing prices in the prior 12 business days. There are no restrictions on future financings, rights of first refusal, participation rights, penalties, or liquidated damages other than a prohibition on entering into a “Variable Rate Transaction,” as defined in the agreement. Concurrently with the 2022 LPC Purchase Agreement, we entered into a Registration Rights Agreement, pursuant to which we filed a registration statement on Form S-1 with the SEC on December 23, 2022. This registration statement was declared effective on January 19, 2023.

 

During the three and nine months ended September 30, 2023, we sold 1,190,223 and 2,833,846 shares of our common stock to Lincoln Park, and received $203,000 and $502,000, respectively, in gross and net proceeds.

 

During the three and nine months ended September 30, 2022, pursuant to a prior (similar) arrangement, we sold 2,440,958 and 4,353,919 shares of our common stock to Lincoln Park, and received $485,000 and $903,000, respectively, in gross and net proceeds.

 

Unit Offerings

 

We did not sell any shares in our Unit Offerings during the three months ended September 30, 2023. During the nine months ended September 30, 2023, we sold 5,234,948 shares of our common stock and received $995,000 in gross and net proceeds from accredited investors. In addition to the shares, we issued each investor a six-month and a five-year warrant to purchase additional shares. (See Note 6, “Warrants Issued in Unit Offering”.)

 

During the three and nine months ended  September 30, 2022, pursuant to our unit offerings, we sold 3,766,126 and 13,568,524 shares of our common stock and received $632,000 and $2,364,000 in gross and net proceeds from thirty accredited investors.  In addition to the shares, we issued each investor a six-month and a five-year warrant to purchase additional shares. (See Note 6, “Warrants Issued in Unit Offering”.)

 

 

Note 4. Debt Obligations

 

The following table summarizes our debt obligations outstanding as of September 30, 2023, and December 31, 2022 (in thousands). The table does not include debt obligations of our partially owned subsidiary Clyra Medical (see Note 8, “Debt Obligations of Clyra Medical”).

 

  

September 30, 2023

  

December 31, 2022

 

Current portion of debt:

        

SBA Paycheck Protection Program loan

 $43  $43 

Vehicle loan, current portion

  13    

Convertible note payable, matures March 1, 2023

     50 

SBA EIDL Loan, matures July 2050, current portion

  10   10 

Debt discount, net of amortization

     (3)

Total current portion of debt

 $66  $100 
         

Long-term debt:

        

SBA Paycheck Protection Program loans, matures May 2025

 $97  $97 

Vehicle loan, matures March 2029

  58    

SBA EIDL Loan, matures July 2050

  138   140 

Total long-term debt, net of current

 $293  $237 
         

Total

 $359  $337 

 

- 15 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

For the three and nine months ended September 30, 2023, we recorded $12,000 and $72,000, respectively, of interest expense related to the amortization of discounts on convertible notes payable and coupon interest from our convertible notes and lines of credit.

 

For the three and nine months ended September 30, 2022, we recorded $14,000 and $42,000, respectively, of interest expense related to the amortization of discounts on convertible notes payable and coupon interest from our convertible notes and lines of credit.

 

Vehicle loan

 

On February 7, 2023, we entered a loan agreement with Bank of America for the purchase of a vehicle used in operations totaling $80,000, at 5.29% annual interest which matures March 7, 2029. The loan agreement requires monthly payments of $1,000.

 

Convertible note payable, matures March 1, 2023

 

On March 6, 2023, we entered into an agreement with the holder of a $50,000 note to convert that note into common stock of BETI (see note 10). As payment for interest, a warrant to purchase 200,000 shares of BioLargo common stock at $0.21 was issued to the investor, expiring five years from the grant date. (See Note 6).

 

SBA Program Loans

 

On  February 7, 2022, we received notice that the SBA had forgiven $174,000 of the ONM Environmental $217,000 Paycheck Protection Program (PPP) loan. As of September 30, 2023, the outstanding balance on this loan totals $43,000. The partial forgiveness decision has been appealed, and during such time, loan payments are deferred.

 

On May 12, 2022, we received notice that the SBA had denied the forgiveness application of BLEST’s $97,000 PPP loan. We have appealed that decision. During the period upon which a forgiveness decision is on appeal, loan payments are deferred. The maturity date of the BLEST PPP loan was officially extended on our request to May 2025. 

 

In July 2020, ONM Environmental received an Economic Injury Disaster Loan from the SBA in the amount of $150,000. The note has a 3.75% annual interest rate, requires monthly payments of $731, and matures July 2050.

 

 

Note 5. Share-Based Compensation

 

Issuance of Common Stock in exchange for Services

 

Payment of Officer Salaries

 

On September 30, 2023, two officers agreed to convert an aggregate $12,000 of accrued and unpaid salary into 69,563 shares of our common stock at $0.17 per share. On June 30, 2023, an officer agreed to convert an aggregate $12,000 of accrued and unpaid salary into 68,541 shares of our common stock at $0.18 per share.  On March 31, 2023, an officer agreed to convert an aggregate $6,000 of accrued and unpaid salary into 30,747 shares of our common stock at $0.20 per share.

 

On  September 30, 2022, we issued 167,781 shares of our common stock at $0.27 per share in lieu of $72,000 of accrued and unpaid salary to our officers.

 

Shares issued to Officers are unvested at the date of grant and subject to a lock-up agreement restricting vesting and sale until the earlier of (i) the consummation of a sale (in a single transaction or in a series of related transactions) of BioLargo by means of a sale of (a) a majority of the then outstanding common stock of BioLargo (whether by merger, consolidation, sale or transfer of common stock, reorganization, recapitalization or otherwise) or (b) all or substantially all of the assets of BioLargo; and (ii) the successful commercialization of BioLargo’s products or technologies as demonstrated by its receipt of at least $3,000,000 in cash, or the recognition of $3,000,000 in revenue, over a 12-month period from the sale of products and/or the license of technology; and (iii) the Company’s breach of the employment agreement between the Company and Officer and resulting in Officer’s termination.

 

- 16 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Payment of Consultant and Vendor Fees

 

On  September 30, 2023, we issued 146,123 shares of our common stock at $0.17 per share in lieu of $25,000 of accrued and unpaid obligations to consultants and vendors. On  June 30, 2023, we issued 352,370 shares of our common stock at $0.18 per share in lieu of $63,000 of accrued and unpaid obligations to consultants and vendors. On  March 31, 2023, we issued 899,743 shares of our common stock at $0.20 per share in lieu of $201,000 of accrued and unpaid obligations to consultants and vendors.

 

On  September 30, 2022, we issued 211,047 shares of our common stock at $0.27 per share in lieu of $24,000 of accrued and unpaid obligations to consultants. On  June 30, 2022, we issued 76,996 shares of our common stock at $0.18 per share in lieu of $60,000 of accrued and unpaid obligations to consultants. On  March 31, 2022, we issued 86,752 shares of our common stock at $0.23 per share in lieu of $31,000 of accrued and unpaid obligations to consultants.

 

All of these offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and/or Regulation D promulgated thereunder as not involving a public offering of securities.

 

Stock Option Expense

 

During the three and nine months ended September 30, 2023, we recorded an aggregate $725,000 and $1,269,000, and during the three and nine months ended September 30, 2022, we recorded an aggregate $338,000 and $1,455,000, in selling general and administrative expense related to the issuance of stock options. We issued options through our 2018 Equity Incentive Plan, and outside of this plan. Included in these totals is option expense related to issuances by our subsidiary, Clyra Medical, totaling $45,000 and $172,000 in the three and nine months ended September 30, 2023, and $85,000 and $308,000 in the three and nine months ended September 30, 2022. (See Note 8.)

 

2018 Equity Incentive Plan

 

On June 22, 2018, our stockholders adopted the BioLargo 2018 Equity Incentive Plan (“2018 Plan”) as a means of providing our directors, key employees, and consultants additional incentive to provide services. Both stock options and stock grants may be made under this plan for a period of 10 years. It is set to expire on its terms on June 22, 2028. Our Board of Director’s Compensation Committee administers this plan. As plan administrator, the Compensation Committee has sole discretion to set the price of the options. The plan authorizes the following types of awards: (i) incentive and non-qualified stock options, (ii) restricted stock awards, (iii) stock bonus awards, (iv) stock appreciation rights, (v) restricted stock units, and (vi) performance awards. The total number of shares reserved and available for awards pursuant to this Plan as of the date of adoption of this 2018 Plan by the Board is 40 million shares. The number of shares available to be issued under the 2018 Plan increases automatically each January 1st by the lesser of (a) 2 million shares, or (b) such number of shares determined by our Board. As of September 30, 2023, 50,000,000 shares are authorized under the plan.

 

Activity for our stock options under the 2018 Plan during the nine months ended September 30, 2023, and 2022, is as follows:

 

  

Options Outstanding

  

Exercise Price per share

  

Weighted Average Price per share

  

Aggregate intrinsic Value(1)

 

Balance, December 31, 2022

  28,484,549  $0.12 – 0.43  $0.19     

Granted

  8,219,920   0.17 – 0.20  $0.18     

Balance, September 30, 2023

  36,704,469   0.12 – 0.43  $0.19     

Unvested

  (4,648,922)  0.12 – 0.27  $0.15     

Vested, September 30, 2023

  32,055,547   0.12 – 0.43  $0.19  $278,000 
                 

Balance, December 31, 2021

  23,186,142   0.16 – 0.43  $0.19     

Granted

  4,748,212   0.18 – 0.27  $0.22     

Balance, September 30, 2022

  27,934,354   0.12 – 0.43  $0.19     

 

(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2023.

 

- 17 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

The options granted to purchase 8,219,920 shares during the nine months ended September 30, 2023 with an aggregate fair value of $1,370,000 were issued to an officer, board of directors, employees and a consultant. The exercise price for all options were issued on their respective grant date of March 31, 2023 ($0.20 per share) and June 30, 2023 ($0.18 per share) and September 30, 2023 ($0.17 per share): (i) we issued options to purchase 1,565,858 shares of our common stock to members of our board of directors for services performed, in lieu of cash; the fair value of these options totaled $266,000; (ii) we issued options to purchase 1,784,140 shares of our common stock to employees as part of an employee retention plan; the fair value of employee retention plan options totaled $306,000 and will vest quarterly over four years as long as they are retained as employees; (iii) we issued options to purchase 4,069,922 shares of our common stock to consultants in lieu of cash and for expiring options totaling $657,000, and (iv) we issued 800,000 options to our Chief Financial Officer with a fair value of $141,000 (see “Chief Financial Officer Contract Extension” immediately below). Of the 800,000 issued to the CFO, 500,000 were issued for expiring options. All stock option expense is recorded on our consolidated statement of operations as selling, general and administrative expense.

 

The options granted to purchase 4,748,212 shares during the nine months ended  September 30, 2022 were issued to officers, board of directors, employees and consultants: (i) we issued options to purchase 290,135 shares of our common stock at an exercise price on the respective grant date of $0.22 and $0.23 per share to our CFO and President to replace options that had expired; (ii) we issued options to purchase 1,134,356 shares of our common stock at an exercise price on the respective grant date ranging between $0.18 – $0.27 per share to members of our board of directors for services performed, in lieu of cash; the fair value of these options totaled $246,000; (iii) we issued options to purchase 2,340,730 shares of our common stock to employees as part of an employee retention plan at an exercise price on the respective date ranging between $0.18 – $0.27 per share; the fair value of employee retention plan options totaled $492,000 and will vest quarterly over four years as long as they are retained as employees; (iv) we issued options to purchase 682,991 shares of our common stock to consultants in lieu of cash for expiring options and per agreement totaling $145,000, and (v) we issued options to our Chief Financial Officer (see “Chief Financial Officer Contract Extension” immediately below). All stock option expense is recorded on our consolidated statement of operations as selling, general and administrative expense.

 

Chief Financial Officer Contract Extension

 

On March 21, 2023, we and our Chief Financial Officer Charles K. Dargan, II formally agreed to extend the engagement agreement dated February 1, 2008 (the “Engagement Agreement”, which had been previously extended multiple times), pursuant to which Mr. Dargan has been and continues to serve as the Company’s Chief Financial Officer. The Engagement Extension Agreement dated as of March 21, 2023 (the “Engagement Extension Agreement”) provides for an additional one-year term to expire January 31, 2024 (the “Extended Term”), at which time Mr. Dargan will continue to serve as CFO, unless and until either party terminates the agreement.

 

As the sole compensation for the Extended Term, Mr. Dargan was issued an option (“Option”) to purchase 25,000 shares of the Company’s common stock for each month during the Extended Term (thus, an option to purchase 300,000 shares reflecting an extended term of 12 months). The Option vests over the period of the Extended Term, with 25,000 shares having vested as of March 21, 2023, and the remaining shares to vest 25,000 shares monthly beginning March 31, 2023, and each month thereafter, so long as the agreement is in full force and effect. The Option is exercisable at $0.20 per share, the closing price of BioLargo’s common stock on the March 21, 2023, grant date, expires ten years from the grant date, and was issued pursuant to the Company’s 2018 Equity Incentive Plan.

 

The Option is Mr. Dargan’s sole compensation for the Extended Term. As was the case in all prior terms of his engagement, there is no cash component of his compensation for the Extended Term. Mr. Dargan is eligible to be reimbursed for business expenses he incurs in connection with the performance of his services as the Company’s Chief Financial Officer (although he has made no such requests for reimbursement in the past). All other provisions of the Engagement Agreement not expressly amended pursuant to the Engagement Extension Agreement remain the same, including provisions regarding indemnification and arbitration of disputes.

 

 

 

- 18 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

2007 Equity Incentive Plan

 

On September 7, 2007, and as amended April 29, 2011, the BioLargo, Inc. 2007 Equity Incentive Plan (“2007 Plan”) was adopted as a means of providing our directors, key employees and consultants additional incentive to provide services. Both stock options and stock grants may be made under this plan for a period of 10 years, which expired on September 7, 2017. The Board’s Compensation Committee administers this plan. As plan administrator, the Compensation Committee has sole discretion to set the price of the options. As of September 2017, the Plan was closed to further stock option grants.

 

Activity for our stock options under the 2007 Plan for the nine months ended September 30, 2023 and 2022 is as follows:

 

  

Options Outstanding

  

Exercise price per share

  

Weighted Average Price per share

  

Aggregate intrinsic Value(1)

 

Balance, December 31, 2022

  1,904,085  $0.28 – 0.69  $0.56     

Expired

  (340,000)  0.28 - 0.30   0.30     

Balance, September 30, 2023

  1,564,085   0.28 – 0.69  $0.61  $ 
                 

Balance, December 31, 2021

  2,879,246   0.23 – 0.94  $0.49     

Expired

  (975,161)  0.28 - 0.35   0.36     

Balance, September 30, 2022

  1,904,085  $0.24 – 0.94  $0.56     

 

(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2023.

 

Non-Plan Options

 

Activity of our non-plan stock options issued for the nine months ended September 30, 2023 and 2022 is as follows:

 

  

Non-plan Options outstanding

  

Exercise price per share

  

Weighted averageprice per share

  

Aggregate intrinsic Value(1)

 

Balance, December 31, 2022

  19,023,829  $0.12 – 0.83  $0.39     

Granted

  60,040   0.18 – 0.20   0.20     

Expired

  (1,205,550)  0.30   0.30     

Balance, September 30, 2023

  17,878,319  $0.12 – 0.83  $0.39     

Unvested

  (507,500)  0.45   0.45     

Vested, September 30, 2023

  17,370,819  $0.12 – 0.83  $0.39  $28,000 
                 

Balance, December 31, 2021

  20,119,207  $0.17 – 1.00  $0.41     

Granted

  105,797   0.23 - 0.27   0.26     

Balance, September 30, 2022

  20,225,004  $0.17 – 1.00  $0.39     

 

(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2023.

 

- 19 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

During the nine months ended September 30, 2023, we issued options to purchase an aggregate 60,040 shares of our common stock at prices on the grant date ranging $0.18 – $0.20 per share to vendors for fees for services. The fair value of the options issued totaled an aggregate $11,000 and is recorded in our selling, general and administrative expense.

 

During the nine months ended  September 30, 2022, we issued options to purchase 105,797 shares of our common stock at prices on the grant date ranging $0.23 – $0.27 per share to a vendor for services. The fair value of these options total $36,000 and is recorded in our selling, general and administrative expense.

 

 

Note 6. Warrants

 

We have certain warrants outstanding to purchase our common stock, at various prices, as described in the following table:

 

  

Warrants outstanding

  

Exercise price per share

  

Weighted average price per share

  

Aggregate intrinsic value(1)

 

Balance, December 31, 2022

  49,023,398  $0.13 – 1.00  $0.26     

Granted

  10,669,896   0.21 – 0.29   0.26     

Expired

  (11,313,584)  0.10 - 0.48   0.23     

Balance, September 30, 2023

  48,379,710  $0.13 – 1.00  $0.27  $18,000 
                 

Balance, December 31, 2021

  36,765,502  $0.16 – 1.00  $0.27     

Granted

  27,137,048   0.20 – 0.29   0.23     

Expired

  (10,273,722)  0.19 – 0.48   0.25     

Balance, September 30, 2022

  53,628,828  $0.14 – 1.00  $0.26     

 

(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2023.

 

Warrants issued in Unit Offerings

 

During the nine months ended September 30, 2023, pursuant to our Unit Offerings (see Note 3), we issued six-month stock purchase warrants to purchase an aggregate 5,234,948 shares of our common stock at $0.23 per share, and five-year stock purchase warrants to purchase an aggregate 5,234,948 shares of our common stock at $0.29 per share. The fair value of these warrants totaled $913,000.

 

During the nine months ended  September 30, 2022, pursuant to our Unit Offerings (see Note 3), we issued nine-month stock purchase warrants to purchase an aggregate 13,568,524 shares of our common stock at $0.19 - $0.23 per share, and five-year stock purchase warrants to purchase an aggregate 13,568,524 shares of our common stock at $0.24 - $0.33 per share. The fair value of these warrants totaled $2,898,000.

 

Warrant issued in conjunction with amendment to note payable

 

On March 6, 2023, we entered into an agreement with the holder of a $50,000 note (see Note 4, “Convertible note payable, matures March 1, 2023”) to convert that note into common stock of BETI. As payment for interest, a warrant to purchase 200,000 shares of BioLargo common stock at $0.21 was issued to the investor, expiring five years from the grant date. The fair value of this warrant totaled $30,000 and was recorded as interest expense on our statement of operations.

 

- 20 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Fair Value Interest Expense

 

To determine interest expense related to our outstanding warrants issued in conjunction with debt offerings, the fair value of each award grant is estimated on the date of grant using the Black-Scholes option pricing model and the relative fair values are amortized over the life of the warrant. For the determination of expense of warrants issued for services, extinguishment of debt and settlement management also uses the option-pricing model. The principal assumptions we used in applying this model were as follows:

 

  

2023

  

2022

 

Risk free interest rate

  3.88 – 4.27%  3.69 – 3.88%

Expected volatility

  40 – 95%  40%

Expected dividend yield

      

Forfeiture rate

      

Expected life in years

  .5 – 5   3 

 

The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are based on historical volatility of our common stock. The expected life in years is based on the contract term of the warrant.

 

 

Note 7. Accounts Payable and Accrued Expenses

 

As of September 30, 2023, accounts payable and accrued expenses included the following (in thousands):

 

Category

 

BioLargo

  

ONM

  

BLEST

  

Water

  

BETI

  

Intercompany amounts

  

Totals

 

Accounts payable

 $208  $417  $5  $91  $31  $(82) $670 

Accrued payroll

  40   85   69            194 

Accrued interest

  25                  25 

Total

                         $889 

 

As of December 31, 2022, accounts payable and accrued expenses included the following (in thousands):

 

Category

 

BioLargo

  

ONM

  

BLEST

  

Water

  

Intercompany amounts

  

Totals

 

Accounts payable

 $187  $486  $7  $119  $(82) $717 

Accrued payroll

  20   58   120         198 

Accrued interest

  25               25 

Total

                     $940 

 

See Note 8, “Accounts Payable and Accrued Expenses”, for the accounts payable and accrued expenses of Clyra Medical.

 

 

Note 8. Noncontrolling Interest Clyra Medical

 

As discussed in Note 2 above, we consolidate the operations of our partially owned subsidiary Clyra Medical.

 

Debt Obligations of Clyra Medical

 

Promissory Note

 

On  April 8, 2022, Clyra Medical issued a promissory note in the principal amount of $100,000 to an individual investor, payable  April 8, 2024, and bearing 8% annual interest. The note  may be converted by its holder at any time prior to the maturity date, and automatically converts to stock upon (i) Clyra’s sale of $5,000,000 or more of its common or preferred stock, or (ii) the maturity date, at a conversion price equal to 70% of the lowest price-per-share of shares sold to a future investor prior to the maturity date.

 

- 21 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Line of Credit

 

On June 30, 2020, Clyra Medical entered into a Revolving Line of Credit Agreement whereby Vernal Bay Capital Group, LLC committed to provide a $1,000,000 inventory line of credit. Since inception, Clyra Medical received $260,000 in draws and made repayments totaling $126,000. Clyra issued Vernal Bay 322 shares of its common stock as a commitment fee for the line of credit, valued at $70,000. A security agreement of the same date grants Vernal Bay a security interest in Clyra’s inventory, as that term is defined in the Uniform Commercial Code. Clyra may prepay the note at any time.

 

On December 13, 2022, Clyra Medical entered into an amendment of the Revolving Line of Credit Agreement whereby the maturity date of the line of credit was extended to September 30, 2024, and the payment terms were modified such that amounts of principal due in each month are capped at a maximum of 15% of the principal amount then due under the note. Additionally, BioLargo agreed to allow Vernal Bay to elect to convert, any time prior to the note’s maturity date, the 322 shares of Clyra common stock it received as consideration for the line of credit into shares of Biolargo common stock at the then market price of BioLargo’s common stock. On January 9, 2023, Vernal Bay elected to convert Clyra shares to 527,983 BioLargo shares of common stock.

 

As of September 30, 2023, the balance outstanding on this line of credit totals $134,000. As of December 31, 2022, the balance outstanding on this line of credit totaled $161,000.

 

Equity Transactions

 

As of September 30, 2023, Clyra had 99,501 shares issued and outstanding, of which 92,035 were common shares, and 7,466 were preferred shares. As of December 31, 2022, Clyra had 91,145 shares issued and outstanding, of which 89,070 were common shares, and 2,075 were preferred shares. As of September 30, 2023, of the outstanding amount, BioLargo owned 51,571 common shares and 1,660 Series A Preferred shares.  As of December 31, 2022, of the outstanding amount, BioLargo owned 51,571 common shares and 1,352 Series A Preferred shares.

 

BioLargo Conversion of Intercompany Balances

 

In July 2023, BioLargo converted $96,000 owed to it by Clyra into 308 shares of Clyra Series A preferred shares.  On March 2, 2022, BioLargo converted $633,000 owed to it by Clyra into 2,042 shares of Clyra common stock.

 

Sales of Series A Preferred Stock

 

During the three months ended September 30, 2023, Clyra sold 928 shares of its Series A Preferred Stock, and in exchange received $288,000 in gross and net proceeds from seven accredited investors. During the nine months ended September 30, 2023, Clyra sold 5,081 shares of its Series A Preferred Stock, and in exchange received $1,575,000 in gross and net proceeds from 35 accredited investors. Purchasers of the Series A Preferred Stock also received a 3-year warrant to purchase the same number of additional shares of common stock for $372 per share. The fair value of the warrants issued totaled $410,000 and is limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the Series A Preferred Stock. Shares of Series A Preferred Stock earn a dividend of 15% each year, compounding annually; the company is under no obligation to pay such dividends in cash, and such dividends automatically convert to common stock upon conversion of the Series A Preferred Stock to common stock. Each share of Series A Preferred stock can be converted by the holder at any time for one share of common stock, and automatically convert upon the completion of a public offering of shares in which at least $5,000,000 of gross proceeds is received by the company. Accrued dividends may be converted to common stock at a conversion rate of $310 per share.

 

Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its Series A Preferred stock, plus accrued dividends, into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 30 prior trading days. Elections may made beginning January 1, 2025, and ending on June 30, 2026. 

 

- 22 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

Clyra Stock Options

 

  

Clyra Options Outstanding

  Exercise price per share  

Weighted average price per share

 
             

Balance, December 31, 2022

  15,833  $1.00 – 310  $5.53 

Exercised

  (2,964) $1.00  $1.00 

Granted

  1,215   1.00 – 271   171.99 

Balance, September 30, 2023

  14,084  $1.00 – 310  $20.85 
             

Balance, December 31, 2021

  14,004  $1.00  $1.00 

Granted

  1,403   1.00   1.00 

Balance, September 30, 2022

  15,407  $1.00  $1.00 

 

Clyra issues options to its employees and consultants in lieu of compensation owed on a regular basis.  The fair value of the options issued totaled $45,000 and $172,000 in the three and nine months ended September 30, 2023, and $85,000 and $308,000 in the three and nine months ended September 30, 2022. The Black-Scholes model is used to calculate the initial fair value, assuming a stock price on date of grant of $271 per share. Because Clyra is a private company with no secondary market for its common stock, the resulting fair value was discounted by 30%.

 

During the three months ended September 30, 2023, two option holders elected to exercise their stock options; Clyra received $2,964 and issued 2,964 shares of its common stock.

 

  

September 30, 2023

  

December 31, 2022

 

Risk free interest rate

  3.48 – 4.15%  2%

Expected volatility

  40 – 49%  40%

Expected dividend yield

      

Forfeiture rate

      

Expected life in years

  10   10 

 

Accounts Payable and Accrued Expenses

 

At September 30, 2023, and December 31, 2022, Clyra had the following accounts payable and accrued expenses (in thousands):

 

Category

 

2023

  

2022

 

Accounts payable

 $158  $186 

Accrued payroll

  12   45 

Accrued interest

  8   7 

Accrued dividend

  152    

Total

 $330  $238 

 

 

Note 9. BioLargo Engineering, Science and Technologies, LLC

 

In September 2017, we commenced a full-service environmental engineering firm and formed a Tennessee entity named BioLargo Engineering, Science & Technologies, LLC (“BLEST”). In conjunction with the start of this subsidiary we entered into employment agreements with six scientists and engineers. (See Note 11 “Business Segment Information”.) BLEST was capitalized with two classes of membership units: Class A, 100% owned by BioLargo, and Class B, held by management of BLEST, and which initially have no “profit interest,” as that term is defined in Tennessee law. However, over the succeeding five years, the Class B members can earn up to a 30% profit interest. They also have been granted options to purchase up to an aggregate 1,750,000 shares of BioLargo, Inc. common stock. The profit interest and option shares are subject to a five year vesting schedule tied to the performance of the subsidiary, including gross revenue targets that increase over time, obtaining positive cash flow by March 31, 2018 (which was not met), collecting 90% of its account receivables, obtaining a profit of 10% in its first year (and increasing in subsequent years) (which was not met), making progress in the scale-up and commercialization of our AOS system, and using BioLargo research scientists (such as our Canadian team) for billable work on client projects. These criteria are to be evaluated annually by BLEST’s compensation committee (which includes BioLargo’s president, CFO, and BLEST’s president), beginning September 2018. Given the significant performance criteria, the Class B units and the stock options will only be recognized in compensation expense if or when the criteria are satisfied.

 

- 23 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

The BLEST Compensation Committee has met regularly since the subsidiary commenced operations. In 2018, it reviewed the operating performance and determined that the performance metrics were not met and as a result, did not award any Class B units or stock options. As of December 31, 2021, BLEST employees had earned 13% in profits interests and had earned (vested) 455,000 option shares. In January 2022, the committee again reviewed the operating performance and determined that a portion of the performance metrics were met. It was agreed that an additional one-half and one-quarter of the eligible profits interests would be vested (11% in the aggregate), and therefore an additional half of the option interests would be vested (525,000 options shares in the aggregate). The vesting of option shares resulted in a fair value totaling $65,000, recorded on our consolidated statement of operations as selling, general and administrative expense for the year ended December 31, 2021.  In December 2022, the committee again reviewed the operating performance and determined that a portion of the performance metrics were met. It was agreed that an additional one-half and one-quarter of the eligible profits interests would be vested (18% in the aggregate), and therefore an additional half of the option interests would be vested (1,242,500 options shares in the aggregate).  The vesting of option shares resulted in a fair value totaling $135,000 and is recorded on our consolidated statement of operations as selling, general and administrative expense for the year ended December 31, 2022.

 

Note 10. BioLargo Energy Technologies, Inc.

 

BioLargo Energy Technologies, Inc. (“BETI”) was formed for the purpose of commercializing a sodium-sulfur battery technology. BioLargo purchased 9,000,000 shares of its common stock upon its formation, and was its sole stockholder.

 

During the three months ended September 30, 2023, BETI sold 10,000 shares of its common stock to one accredited investor and received $25,000 in gross and net proceeds. During the nine months ended September 30, 2023, BETI sold 467,000 shares of its common stock to 16 accredited investors, and in exchange received gross and net proceeds totaling $1,005,000. Of that amount, $100,000 in shares were purchased by BioLargo. Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its shares of BETI common stock into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 20 trading days prior to the election to exchange. Elections must be made during calendar year 2024.

 

As of September 30, 2023, BETI had 9,467,000 issued and outstanding shares, of which BioLargo holds 9,050,000.

 

 

Note 11. Business Segment Information

 

BioLargo has five operating business segments, plus its corporate entity which is responsible for general corporate operations, including administrative functions, finance, human resources, marketing, legal, etc. The operational business segments are:

 

 

1.

ONM Environmental -- which sells odor and volatile organic control products and services (located in Westminster, California);

 

 

2.

Clyra Medical Technologies (“Clyra Medical”) -- which develops and sells medical products based on our technologies;

 

 

3.

BLEST -- which provides professional engineering services on a time and materials basis for outside clients and supports our internal operations as needed (located in Oak Ridge, Tennessee);

 

- 24 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
 

4.

BioLargo Water (“Water”) – our research, development and innovation group operating out of the University of Alberta, Edmonton, Canada; and

 

 

5.

BioLargo Energy Technologies, Inc. (“BETI”) – formed to commercialize our sodium-sulfur battery technology.

 

Other than ONM Environmental, during the last three quarterly periods none of our operating business units have operated at a profit, and therefore each required additional cash to meet its monthly expenses, funded through BioLargo’s sales of debt or equity, research grants, and tax credits. BETI and Clyra Medical have also been funded by third party investors who invest directly in exchange for equity ownership in that entity.

 

The segment information for the three and nine months ended September 30, 2023, and 2022, is as follows (in thousands):

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Revenue

                

BioLargo corporate

 $  $2  $  $4 

ONM Environmental

  2,513   1,199   7,374   2,499 

BLEST

  843   401   1,742   1,613 

BETI

            

Water

  22   1   31   1 

Clyra Medical

  14   17   20   34 

Intersegment revenue

  (720)  (120)  (1,307)  (365)

Total

 $2,672  $1,500  $7,860  $3,786 
                 

Research and development expense

                

BioLargo corporate

 $(234) $(140) $(665) $(570)

ONM Environmental

  (14)     (14)   

BLEST

  (433)  (100)  (971)  (288)

BETI

  (537)     (840)   

Water

  (128)  (119)  (401)  (446)

Clyra Medical

  (68)  (31)  (262)  (73)

Intersegment R&D

  720   119   1,307   359 

Total

 $(694) $(271) $(1,846) $(1,018)
                 

Operating income (loss)

                

BioLargo corporate

 $(797) $(783) $(2,230) $(2,925)

ONM Environmental

  969   400   2,786   418 

BLEST

  (568)  (179)  (1,388)  (158)

BETI

  (559)     (943)   

Water

  (155)  (141)  (549)  (572)

Clyra Medical

  (427)  (240)  (1,250)  (736)

Total

 $(1,537) $(943) $(3,574) $(3,973)
                 

Interest income (expense)

                

BioLargo corporate

 $(3) $(6) $(43) $(18)

ONM Environmental

  (1)     (5)   

Clyra Medical

  (8)  (8)  (25)  (24)

Water

        1    

Total

 $(12) $(14) $(72) $(42)

 

- 25 -

BIOLARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 

As of September 30, 2023

 

BioLargo

  

ONM

  

Clyra

  

BLEST

  

Water

  

BETI

  

Elimination

  

Total

 

Tangible assets

 $579  $3,300  $1,202  $480  $89  $144  $(41) $5,753 

Right of use leased asset

  72         705            777 

Investment in South Korean joint venture

  15                     15 

Total

 $666  $3,300  $1,202  $1,185  $89  $144  $(41) $6,545 

 

As of December 31, 2022

 

BioLargo

  

ONM

  

Clyra

  

BLEST

  

Water

  

Elimination

  

Total

 

Tangible assets

 $669  $2,064  $631  $441  $194  $(41) $3,958 

Right of use

  136         731         867 

Investment in South Korean joint venture

  33                  33 

Total

 $838  $2,064  $631  $1,172  $194  $(41) $4,858 

 

 

Note 12. Commitments and Contingencies

 

Office Leases

 

We have long-term operating leases for office, industrial and laboratory space in Westminster, California, Oak Ridge, Tennessee, and Alberta, Canada. Payments made under operating leases are charged to the Consolidated Statement of Operations and Comprehensive Loss on a straight-line basis over the term of the operating lease agreement. Short-term leases less than one-year are not included in our analysis. For the three and nine months ended September 30, 2023, rental expense was $88,000 and $254,000; for the three and nine months ended September 30, 2022, rental expense was $59,000 and $228,000. The lease of our Westminster facility expires August 2024. Management has not yet determined whether it will exercise its option to extend the lease four years; therefore the four-year extension is not included in the analysis. In September 2022, the lease of our Oak Ridge, Tennessee facility was extended for ten years. The lease of our Canadian facility is less than one year. None of our leases have additional terms related to the payments or mechanics of the lease. The leases have no additional payment terms such as common area maintenance payments, tax sharing payments or other allocable expenses. Likewise, the leases do not contain other terms and conditions of use, such as variable lease payments, residual value guaranties or other restrictive financial terms. Since there is no explicit interest rate in our leases, management used its incremental borrowing rate, which is estimated to be 18% to determine lease liability.

 

 

Note 13. Subsequent Events.

 

Management has evaluated subsequent events through the date of the filing of this quarterly report and management noted the following for disclosure.

 

Lincoln Park Capital Purchase of Shares

 

From October 1, 2023, through November 13, 2023, we sold 873,788 shares of common stock to Lincoln Park pursuant to the 2022 LPC Purchase Agreement (see Note 3) and received $142,000 in gross and net proceeds. These sales were registered with the SEC on Form S-1 (file number 333-268973).

 

 

 

 

 

- 26 -

 
 

Item 2.              Managements Discussion and Analysis of Financial Condition and Results of Operations

 

This quarterly report on Form 10-Q contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding BioLargo’s capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding BioLargo’s ability to carry out its planned development and production of products. Forward-looking statements are made, without limitation, in relation to BioLargo’s operating plans, BioLargo’s liquidity and financial condition, availability of funds, operating and exploration costs and the market in which BioLargo competes. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in our Form most recent annual report on Form 10-K, and, from time to time, in other reports BioLargo files with the SEC. These factors may cause BioLargo’s actual results to differ materially from any forward-looking statement. BioLargo disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

Unless otherwise expressly stated herein, all statements, including forward-looking statements, set forth in this Form 10-Q are as of September 30, 2023, unless expressly stated otherwise, and we undertake no duty to update this information.

 

As used in this report, “we” and “Company” refers to (i) BioLargo, Inc., a Delaware corporation; and (ii) its partially or wholly-owned subsidiaries BioLargo Life Technologies, Inc., a California corporation which holds our registered patents, ONM Environmental, Inc., a California corporation which manufactures, markets, sells and distributes our odor and volatile organic compound control products, BioLargo Water Investment Group, Inc., a California corporation (which wholly owns BioLargo Water, Inc., a Canadian corporation), BioLargo Development Corp., a California corporation which employs and provides benefits to our employees, BioLargo Engineering, Science & Technologies, LLC, a Tennessee limited liability company (“BLEST”) that provides professional engineering services out of Oak Ridge Tennessee, BioLargo Energy Technologies, Inc., a California corporation (“BETI”) formed to commercialize our proprietary battery technology, BioLargo Equipment Solutions & Technologies, Inc., a California corporation, and Clyra Medical Technologies, Inc., a California corporation (“Clyra Medical”) which commercializes our technologies in the medical and dental fields. All subsidiaries are wholly owned, except for BETI, BLEST and Clyra Medical.

 

The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the related notes to the consolidated financial statements included elsewhere in this report.

 

Our Business - Innovator and Solution Provider

 

BioLargo is in the business of creating new cleantech technologies to solve tough problems. We invent, develop, then commercialize disruptive technologies to tackle global challenges in air quality, water, environmental engineering, long duration energy storage, and advanced antimicrobial medical device platforms. Our model is to invent new technologies that solve specific problems, prove them out and develop them, then commercialize them with purpose-suited subsidiaries, identify and secure the right partnerships to increase their commercial reach, and potentially sell them or spin them out later.

 

Why do we do this work? Every member of our team – including PhD scientists, engineers, and entrepreneurs – has a passion for seeking new, never-before-seen innovations that can make life better around the world. We care about safeguarding the environment and human health for future generations. We care about making technologies that are affordable and flexible enough to be accessed around the world. And we care about being the best at what we do – creating best-in-class technologies to solve big, tough cleantech challenges.

 

- 27 -

 

Some of our areas of focus include environmental problems like PFAS contamination (per- and polyfluoroalkyl substances), water pollution by pharmaceuticals and micropollutants, air pollution by VOCs, hard-to-treat odors from landfills and sewage plants, and infection and wound healing.

 

Below you’ll read about the cleantech ventures and projects we are most excited about. Behind those, however, is a pipeline of other cleantech innovations in various stages of development associated with our expansive array of issued and pending patents, and having been funded in part by over 90 government grants.

 

We operate our business in distinct business segments:

 

 

Odor and VOC control products, including consumer products, such as the Pooph branded pet-odor control product, and our flagship industrial odor control product, CupriDyne Clean, sold by our subsidiary ONM Environmental, Inc.;

 

 

Water treatment equipment and solutions, including our PFAS removal system the AEC, our co-developed minimal liquid discharge water treatment system the AROS, and our micro-pollutant treatment solution, the AOS, all sold by our subsidiary BioLargo Equipment Solutions & Technologies, Inc.;

 

 

Long-duration energy storage (LDES) battery solutions, being developed by our subsidiary BioLargo Energy Technologies, Inc. (97% owned by BioLargo, Inc.);

 

 

Medical products based on our technologies, including the FDA-cleared Bioclynse surgical wound irrigation solution sold by our partially owned subsidiary Clyra Medical Technologies, Inc.; and

 

 

Our professional engineering services division, which, in addition to serving outside clients on a fee for service basis, supports our internal business units, through our partially owned subsidiary BioLargo Engineering, Science & Technologies, LLC ("BLEST").

 

In addition to the foregoing, we have scientists working in a research and support facility on campus at the University of Alberta, Edmonton, Canada, and corporate offices in Westminster, California that support the operating segments with legal, accounting, human resources, and other services.

 

Odor Control (Consumer and Industrial)

 

Pooph - Consumer Private-Label Products 

 

We sell the Pooph branded pet odor-control product to Ikigai Marketing Works, LLC, ("Ikigai") pursuant to license and manufacturing agreements. Ikigai advertises and sells Pooph to consumers and major retailers, including Walmart, Amazon, and Chewy.com, and is currently expanding to more than a dozen large retailers. Our agreement with Ikigai grants them an exclusive license to sell the Pooph pet odor-control product, and requires, in addition to purchasing product from us at an agreed-upon manufacturing margin, they pay us six percent of their sales.

 

During the nine months ended September 30, 2023, revenue from Ikigai comprised 77% of our company-wide revenue. 

 

Ikigai management informs us that they are shifting focus in their advertising from direct-to-consumer to driving sales to national retailers, and that they expect to secure contracts for more than 20,000 retail stores by the end of 2023, representing an approximately ten times increase in the number of stores carrying the product as were at June 30, 2023.

 

 

Industrial Odor and VOC Solutions

 

ONM Environmental, Inc. is BioLargo’s subsidiary that delivers robust and comprehensive products and services to control and mitigate odor and volatile organic compounds (“VOCs”) emitted from a variety of industrial activities, including landfills and other waste handling facilities. Its flagship product – CupriDyne® Clean – is delivered through misting systems, sprayers, water trucks and similar water delivery systems designed, manufactured and installed by ONM. We believe the product is the number-one performing odor-control product in the market, and that it offers substantial savings to our customers compared with competing products. ONM Environmental holds General Engineering, Electrical, Plumbing and Low Voltage contractor licenses issued by the California Contractors State License Board, and offers a menu of services to landfills, transfer stations, wastewater treatment facilities as well as facilities in non-waste related industries. These services include engineering design, construction, installation, ongoing maintenance and on-site support services to assist our clients in the implementation and continued use of the various systems that deliver our liquid products in the field (such as misting systems).

 

We have been and expect to continue selling product to the largest solid waste handling companies in the country, with a portion of chemistry product sales resulting from national purchasing agreements (NPAs), and are also serving municipalities. ONM Environmental continues to focus on securing more contracts with existing customers, and developing new business. ONM also onboarded two new wastewater treatment plant customers, as well as one more manufacturing facility customer, representing encouraging advancements in expanding into non-solid-waste markets.

 

In addition to its goal to keep growing its revenues organically through the sale of odor and VOC control chemistry and air quality control systems to its primary market segment (municipal solid waste handling in California), ONM Environmental aims to accelerate its growth through development of new sales and distribution channels without being limited by our own sales and distribution infrastructure, such as through our partnership with Ikigai Marketing Works, LLC (see “Pooph - Consumer Private-Label Products” above).  

 

South Korean Joint Venture

 

We are partners with a leading wastewater treatment solution provider based in South Korea in a joint venture to commercialize our CupriDyne® Clean products in South Korea. We own 40% of the joint venture. Although the joint venture established manufacturing and is marketing the product, the COVID-19 pandemic significantly impacted the expected growth of the company. While the local management team continues to market the product to industrial clients, their efforts have struggled to gain a foothold. We are not obligated to contribute additional funds to the venture, and cannot predict its future success.

 

Innovative Water Treatment Solutions

 

Over the years, we have developed multiple innovative technologies and equipment platforms that focus on challenging issues in the water treatment industry, including the AOS developed to remove micro-pollutants, the AEC developed to remove per- and polyfluoroalkyl substances (PFAS), and along with Garratt-Callahan, the AROS to allow for minimal water discharge. As a result of increase in interest from potential customers for our PFAS solutions, we believe we will be better able to serve this market with a uniform identity and operating unit called BioLargo Equipment Solutions & Technologies, Inc. (“BEST”), which will manage the sales and distribution of our water treatment products and related services. As we transition this venture from incubation to commercialization, we are focusing staff and resources we believe necessary for success. Ultimately, BEST will be reflected as a new operating segment in our consolidated financial statements. Although BEST is primarily focused on AEC, AROS and AOS, discussed below, it will offer comprehensive water treatment solutions, related equipment, and services.

 

AEC, a solution for the PFAS Forever-Chemicals crisis and more

 

One of the most significant and timely innovations in our portfolio is our per- and polyfluoroalkyl substances (PFAS) removal and collection/disposal solution we call the Aqueous Electrostatic Concentrator (AEC), a novel water treatment system that removes PFAS from water at a lower operating cost and while generating only a fraction of the PFAS-laden waste of the most common currently used solutions (carbon filtration, ion exchange, and reverse osmosis). PFAS chemicals have been linked to cancer, immune disorders, liver dysfunction, and many other human health problems, and are contained in a vast range of manufactured goods, common household products (e.g., cleaning products, cookware), and electronics, and contaminate drinking water in unsafe levels all over the globe.

 

 

PFAS is often referred to as the “contaminant of the decade.” The EPA proposed new drinking water standards on March 14, 2023, limiting certain PFAS chemicals to four parts per trillion – a standard our AEC can meet. We believe these proposed rules will continue to push the market to find and adopt commercially viable solutions to remove PFAS chemicals from water. Additionally, some emerging regulations on PFAS in the U.S. are expected to skew the market toward seeking treatment technologies that produce as little PFAS-laden solid waste as possible, a favorable trend for our AEC that generates very little PFAS-laden waste. Detection of unsafe levels of PFAS around the world has given rise to a number of market opportunities, including in drinking water, industrial wastewater, municipal wastewater, solid waste, organic foods and more.

 

We have successfully validated the AEC as an effective system to selectively extract and collect PFAS chemicals from contaminated water including performance testing that shows “non-detect” levels of removal, which meets new EPA standards. We have demonstrated more than 10,000 hours of continuous operation showing no materially significant degradation of the AEC system’s components or performance over time. As a modular system, we believe the AEC is scalable to small portable commercial units as well as very large commercial operations, and we believe that our engineering team has the experience to deliver systems to meet the needs of any sized commercial installation. In order to provide a full turn-key solution for our customers, we have developed an expanded offering whereby we can bundle a service package with each customer project that includes a membrane exchange program, the collection of PFAS, and transport and destruction of the PFAS.  

 

Our strategy to market our PFAS treatment technology and related engineering services is as follows: 1) focus on demonstrating our technology’s efficacy in first demonstration projects, trials, and early customer deployments with the understanding that this early success can be leveraged to secure larger and more numerous subsequent projects, 2) market our PFAS expertise and our technology by presenting at industry events and conferences around the country, cultivating our status as “thought leaders” in the space, 3) use our network of manufacturer’s representatives and channel selling partners to maximize the number of potential opportunities with early adopters, and 4) engage in discussions with credible distribution partners at established water treatment technology companies.

 

The AEC’s commercial roll-out is being executed with the help of a network of sales representative organizations whose role will be to market and sell the treatment system, related equipment, and the Company’s engineering services to municipal and industrial customers across the country. We have secured channel partner agreements with several sales representative organizations ensuring coverage for most of the continental United States. We are currently in negotiations with multiple prospective industrial and municipal customers to treat PFAS contaminated water. These opportunities include small to medium sized municipalities, waste facilities, Air Force bases, remediation sites, and industrial sites. We have recently commenced work on a project to remove PFAS from a municipal drinking water supply in New Jersey using our AEC technology. 

 

AROS Minimal Liquid Discharge Water Treatment

 

In association with Garratt-Callahan, a national industrial water treatment company, our engineers developed a “minimal liquid discharge” wastewater treatment system, called AROS, based on Garratt-Callahan’s patented technology that is able to reduce industrial wastewater discharge and therefore reduce wastewater discharge fees for customers. Garratt-Callahan is currently marketing the AROS system to its customers. BLEST will serve as the manufacturing partner and Garratt-Callahan will serve as the selling distributor to leverage their national sales force and over one hundred years of providing services and products to customers. Garratt-Callahan has identified multiple customer prospects, as has BioLargo, through its own marketing efforts. We remain confident that this innovation and partnership will find commercial success, as we are in contract negotiations with prospective customers.

 

 

Advanced Oxidation System (AOS)

 

The Advanced Oxidation water treatment system (AOS) is our patented water treatment device that generates highly oxidative and energetic species of iodine and other molecules which allow it to eliminate pathogenic organisms and organic contaminants rapidly and effectively as water passes through the device. The key value proposition of the AOS is its ability to reduce or eliminate a wide variety of waterborne contaminants with high performance, including the normally hard-to-treat class of recalcitrant water contaminants called “micropollutants”, while using very little electricity and input chemicals.

 

Our proof-of-concept studies and on-site pilot projects have generated results that project the AOS will be more cost- and energy-efficient than commonly used advanced water treatment technologies such as UV, electro-chlorination, and ozonation. Furthermore, our technology has been proven capable of removing hard-to-treat organic micropollutants such as pharmaceuticals from water more quickly and energy-efficiently than other technologies. Together, these characteristics make the AOS an economical and versatile tool to enable wastewater treatment and reuse in the face of emerging water contaminants and increasing regulatory scrutiny on industrial wastewater discharge.

 

Our current sales and marketing efforts for the AOS focus on: 1) domestic water and wastewater treatment markets in agriculture, pharmaceutical, and small municipal where the technology’s claims of low energy usage and proven pharmaceutical/micropollutant removal is especially valuable, and 2) opportunities to treat drinking water in Europe, where pharmaceuticals/micropollutants in water and wastewater are currently regulated in many countries, focusing on cultivating partnerships with established European organizations.

 

The AOS has been included as a component of treatment train (comprehensive system) for a number of projects being scoped and budgeted through our engineering subsidiary.  In addition, it has been included in the catalog of offerings being sold through our independent representatives as well as channel partners. 

 

BioLargo Energy Technologies, Inc.

 

BioLargo acquired a proprietary sodium-sulfur battery technology and has formed and secured initial seed capital for a subsidiary – BioLargo Energy Technologies, Inc. (“BETI”) – designed to address the ongoing shift toward renewable energy production and the growth in global electricity demand, and the consequent drastic expansion in energy storage capacity in the US and world-wide that will be needed to accommodate increased demand and the intermittent nature of renewable energy sources like wind and solar.

 

During the nine months ended September 30, 2023, BETI raised $1,005,000 from the sale of its stock (including $100,000 from BioLargo).  The capital is being used to build a pilot-scale production facility located in our Oak Ridge Tennessee engineering facility in order to construct prototype batteries. Construction is progressing as planned, and we believe the facility will be operational and producing batteries prior to year end. Prototype batteries will be tested to confirm energy efficiency, useful life expectancy, energy density, safety profile, number of charge/discharge cycles, and other technical claims that may differentiate the battery from incumbent technologies. Batteries built based on the underlying technology a decade ago demonstrated features that far surpass comparable lithium-ion batteries, the dominant incumbent technology in the market, including:

 

 

This sodium-sulfur battery technology demonstrates increased safety, no runaway fire risks, and a more sustainable design – with no rare-earth elements – that is capable of being manufactured completely from the domestic supply chain.

 

 

Unlike lithium-ion batteries, BioLargo’s battery can charge and discharge completely, with no degradation of performance, ensuring virtually unlimited charge/discharge cycles, without self-discharge.

 

 

BioLargo’s battery technology also demonstrates increased energy efficiency and energy density in comparison to lithium-ion batteries, and a longer useful life expectancy of at least 10 years.

 

The BioLargo battery uses common, inexpensive, domestically available materials, and through its unique design and manufacturing process, creates an energy storage solution that has higher energy density than lithium virtually unlimited charge/discharge cycles, stable and secure supply chain management, and which is far safer than lithium-ion batteries, the current dominant energy storage technology. While the concept of sodium-sulfur salt batteries is not new (a concept conceived more than 80 years ago), we are not aware of any known ‘salt’ battery that can match the performance metrics of our battery.

 

 

Our battery technology operates at higher temperatures, and its casing and materials when combined, are heavier than lithium-ion, making it more suitable for stationary energy storage applications like grid-scale energy storage, electric vehicle charging stations, and commercial and residential energy storage, and believed to be less suitable for placement into electric vehicles or portable electronics.

 

Clyra Medical Technologies, Inc. - Bioclynse Wound Irrigation Solution

 

Clyra Medical Technologies, Inc. is our partially owned subsidiary creating medical products based on our technologies. Its primary product is a surgical wound irrigation solution, called Bioclynse, that can help manage patient care and outcomes. The first target market for this product is orthopedics, including hip and knee replacement surgeries. Management believes Bioclynse outperforms competing products as it has proven performance in biofilm disruption and inhibition, is non-toxic and non-cytotoxic, is non-sensitizing to tissue, and unlike competing products, does not require it to be rinsed and/or removed from a surgical cavity.

 

Clyra has secured manufacturing with independent third parties, has a robust quality control system for FDA compliance, has a national director of sales, has secured independent manufacturer’s representatives and is actively expanding these efforts to build out a national rep network. Simultaneously, Clyra is focused on developing partnerships with large, well-established distributors who can help rapidly accelerate the product’s access to clinicians and surgeons in hospitals around the country.

 

During the nine months ended September 30, 2023, Clyra sold $1,575,000 in preferred stock to support these efforts.

 

Full Service Environmental Engineering

 

BioLargo Engineering, Science & Technologies, LLC (“BLEST”) offers full service environmental engineering to third parties and provides engineering support services to our internal teams to accelerate the commercialization of our technologies.

 

BLEST focuses its efforts in three areas:

 

 

providing engineering services to third-party clients as well as affiliated BioLargo entities;

 

 

supporting internal product development; and       

 

 

advancing their own technical innovations such as the AEC PFAS treatment technology and the battery energy storage system.

 

BLEST operates out of an engineering facility in Oak Ridge (a suburb of Knoxville), Tennessee), and employs a group of scientists and engineers, many of whom are owners of the entity (BioLargo owns 82%). The team is led by Randall Moore, who served as Manager of Operations for Consulting and Engineering for the Knoxville office of CB&I Environmental & Infrastructure and was formerly a leader at The Shaw Group, Inc., a Fortune 500 global engineering firm. Many of the other team members are also former employees of CB&I and Shaw, with the exception of more recent staff hires. The team is highly experienced across multiple industries and we believe are considered experts in their respective fields, including: chemical engineering, wastewater treatment (including design, operations, data gathering and data evaluation), process safety, energy efficiency, air pollution, design and control, technology evaluation, technology integration, air quality management & testing, engineering management, permitting, industrial hygiene, applied research and development, air testing, environmental permitting, HAZOP review, chemical processing, thermal design, computational fluid dynamics, mechanical engineering, mechanical design, NEPDES permitting, RCRA/TSCA compliance and permitting, project management, storm water design & permitting, computer assisted design (CAD), bench chemistry, continuous emission monitoring system operator, data handling and evaluation and decommissioning and decontamination of radiological and chemical contaminated facilities. The team has decades of high-level experience in the energy industry. The engineering team has also developed an extended network of trusted engineering subcontractors that assist in serving specific client projects as needed.

 

BLEST engineers generate revenue through services to third party clients, as well as for internal BioLargo projects such as the AEC and battery (revenues from internal projects are eliminated in the consolidation of our financial statements and are designed “intersegment revenue”). Third party contracts include ongoing work at U.S. Air Force bases for air quality control. Efforts to expand this work as well as with other clients are consistently ongoing.

 

 

Results of Operations

 

Our revenues increased 78% and 107% in the three and nine months ended September 30, 2023, as compared with the same periods in 2022. Revenues from the sale of products for the nine months ended September 30, 2023, were $7,392,000, a 192% increase over the same period of 2022, primarily due to sales of a pet odor product (under the brand name “Pooph”) to our consumer-packaged goods partners at Ikigai Marketing Works, which comprised 74% and 76% of our company-wide revenues in the three and nine months ended September 30, 2023. 

 

ONM Environmental

 

Our wholly-owned subsidiary ONM Environmental generates revenues through (i) sales of our flagship product CupriDyne Clean, including related design, installation, and maintenance services on the systems that deliver CupriDyne Clean at its clients’ facilities, and (ii) sale of private-label products to third parties, including the Pooph branded pet odor product.

 

Revenue (ONM Environmental)

 

ONM Environmental’s revenues increased 110% (to $2,513,000) and 195% (to $7,374,000) in the three and nine months ended September 30, 2023, compared with the same periods in the prior year. The increase in revenues was almost entirely due to an increase in the volume of sales of private label odor-control products, specifically the Pooph branded pet-odor product, sold to Ikigai, which comprised 81% of ONM Environmental’s total revenues for the three and nine months ended September 30, 2023. As Ikigai shifts its business model from primarily direct-to-consumer (primarily through their website and Amazon), to retailers like Walmart, we expect both continued overall growth in sales and fluctuations in the amount of product ordered from quarter-to-quarter. Although Ikigai management has expressed confidence in the continued increase of the number of retail stores nationwide carrying the Pooph product, we have no control over those efforts and cannot predict their ultimate success. Any downturn in purchases of the Pooph product from Ikigai will affect our results of operations, as it did so for the second quarter of 2023. (See also our risk factor titled “A significant portion of our revenue is concentrated with one customer” set forth in our Form 10-Q filed May 16, 2023.)

 

Cost of Goods Sold (ONM Environmental)

 

ONM Environmental’s cost of goods sold includes costs of raw materials, contract manufacturing, and portions of depreciation, salaries and expenses related to the manufacturing and installation of its products. As a percentage of revenue, ONM Environmental’s costs of goods for the three and nine months ended September 30, 2023, were 47%, an increase of 5% and 2%, compared to the same periods in 2022. The fluctuation in cost of goods is due an increase raw material costs.

 

Selling, General and Administrative Expense (ONM Environmental)

 

ONM Environmental’s selling, general and administrative expenses increased by 19% and 14% during the three and nine months ended September 30, 2023, as compared with the same period in 2022. These expenses increased due to an increase of sales and support staff. If revenues continue to increase, we expect a need to increase support staff.

 

 

Operating Income (ONM Environmental)

 

ONM Environmental generated operating income of $969,000 and $2,786,000 in the three and nine months ended September 30, 2023, compared to operating income of $400,000 and $418,000 for the three and nine months ended September 30, 2022. The generation of operating income for the three and nine months ended September 30, 2023, was entirely dependent on sale of Pooph branded products to Ikigai.

 

BLEST (engineering division)

 

Revenue (BLEST)

 

Our engineering segment's (BLEST's) revenues decreased 49% (to $145,000) and 63% (to $466,000), net of intersegment revenue, in the three and nine months ended September 30, 2023. Revenues decreased due to an increase in activities supporting internal BioLargo projects such as the AEC PFAS treatment system and the buildout of manufacturing facilities for the battery prototype. These services are billed internally, are considered intersegment revenue, are eliminated in the consolidation of our financial statements, and have prevent BLEST from scaling up operations serving third party clients. In the three and nine months ended September 30, 2023, intersegment revenue for BLEST totaled $698,000 and $1,276,000 and for the three and nine months ended September 30, 2022, intersegment revenue for BLEST totaled $118,000 and $359,000. The decrease in BLEST’s revenue net of intersegment revenue is due to a decrease in the number of client contracts, and its focus on supporting internal projects.

 

Cost of Services Sold (BLEST)

 

BLEST’s cost of services includes employee labor as well as subcontracted costs. In the three and nine months ended September 30, 2023, cost of services were 46% and 58% of its revenues, versus 84% and 61% in the same period in 2022. These fluctuations are due to our ability to estimate the costs to perform fixed-fee service contracts.  In 2023, BLEST has been able to perform per the estimates and there were no unforeseen costs that increase the costs of services. 

 

Selling, General and Administrative Expense (BLEST)

 

BLEST’s SG&A expenses were $213,000 and $612,000, in the three and nine months ended September 30, 2023, compared to $123,000 and $363,000, in the three and nine months ended September 30, 2022, primarily due to increased rent, insurance and an additional employee.

 

Operating Loss (BLEST)

 

BLEST incurred an operating loss of $568,000 and $1,388,000, in the three and nine months ended September 30, 2023, compared to an operating loss of $179,000 and $158,000 in the three and nine months ended September 30, 2022. The increase in operating loss was due to lower third party-revenues, and an increase in intercompany research and development activities for both the battery and AEC projects.

 

Because the subsidiary had an operating loss, we invested cash during the year to allow it to maintain operations. BLEST’s need for a cash subsidy to support its operations has increased in 2023. Our goal for this operation is that it produces a profit and contributes to corporate overhead in a significant way, although predicting when that will happen and other uncertainties in the market, and our limited resources, is difficult.

 

Clyra Medical

 

In the three and nine months ended September 30, 2023, Clyra Medical generated $14,000 and $20,000 in revenues, had $441,000 and $1,270,000 in total costs and expenses which included $68,000 and $262,000 in research and development expenses, and an operating loss of $427,000 and $1,250,000, respectively. In the same periods in 2022, it generated $17,000 and $34,000 in revenue, had $257,000 and $770,000 in total costs and expenses, including $31,000 and $73,000 in research and development expenses, and an operating loss of $240,000 and $736,000. We expect these losses to continue until Clyra can increase its sales of its Bioclynse wound irrigation solution.

 

 

BETI

 

Formed to develop and commercialize a sodium-sulfur battery technology, BETI raised $25,000 and $905,000 in investment capital in the three and nine months ended September 30, 2023, respectively, did not generate revenue, and incurred $559,000 and $943,000 in expenses, respectively, primarily related to the development of battery prototypes.

 

Selling, General and Administrative Expense – consolidated

 

Our Selling, General and Administrative expense (“SG&A”) include both cash (for example, salaries to employees) and non-cash expenses (for example, stock option compensation expense). Our consolidated SG&A increased in the aggregate by 60% and 20% in the three and nine months ended September 30, 2023, to $2,278,000 and $5,794,000, respectively. The largest components of our SG&A expenses included (in thousands):

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30, 2023

   

September 30, 2022

   

September 30, 2023

   

September 30, 2022

 

Salaries and payroll related

  $ 682     $ 593     $ 1,862     $ 2,035  

Professional fees

    139       110       555       451  

Consulting

    542       155       926       605  

Office expense

    511       341       1,462       1,072  

Sales and marketing

    164       71       375       205  

Investor relations

    128       86       307       233  

Board of director expense

    112       68       307       246  
      2,278       1,424       5,794       4,847  

 

In the three and nine months ended September 30, 2023, our non-cash expenses from stock for service, stock options and warrant expense total $762,000 and $1,621,000, respectively, and $434,000 and $1,640,000 in the same periods in the prior year. Office expense included $138,000 and $445,000 of insurance expenses in the three and nine months ended September 30, 2023, and $117,000 and $360,000 in the same periods in the prior year. Insurance expenses increased due to market conditions unrelated to the Company’s activities.

 

In general, salaries and payroll related expenses are affected by the issuance of stock options and the valuation of the common stock at the time. While this declined in the nine months ended September 30, 2023 versus 2022, due to fewer issuances of stock options, it increased in the three months ended September 30, 2023 versus 2022, due to increases in issuances and higher employment costs.

 

The Company has had increased professional fees and consulting costs due to the work on the salt battery in BETI and to additional capital raises, requiring more legal and investor relations work.

 

Research and Development

 

In the three and nine months ended September 30, 2023, we spent $694,000 and $1,846,000, respectively, in the research and development of our technologies and products. This was an increase of 23% and 81% compared to the three and nine months ended September 30, 2022. The increase is primarily due to work related to (i) the battery project, and (ii) the AEC. In future periods, we expect research and development work to decrease related to both projects, especially the AEC. 

 

Interest expense

 

Our interest expense for the three and nine months ended September 30, 2023, was $12,000 and $72,000, respectively, compared with $14,000 and $42,000, respectively, in the same periods in 2022. Of our total interest expense in 2023, $39,000 was paid in cash, and the remainder was comprised primarily of non-cash debt discounts related to warrants issued in conjunction with debt instruments being amortized over the life of the debt instrument; for the nine months ended September 30, 2023, non-cash interest expense totaled $33,000.

 

Other Income and Expense

 

During the three months ended September 30, 2023, our subsidiary, Clyra, received $41,000 of Employer Retention Tax Credits.  There was no grant income received in the three months ended September 30, 2023.  For the nine months ended September 30, 2023, grant income totaled $32,000, compared to $51,000 for the same period prior year.  Grant income is primarily generated through our wholly owned Canadian subsidiary, we have been awarded more than 80 research grants over the years from various public and private agencies, including the Canadian National Research Institute – Industrial Research Assistance Program (NRC-IRAP), the National Science and Engineering Research Council of Canada (NSERC), and the Metropolitan Water District of Southern California’s Innovative Conservation Program “ICP”. The research grants received are considered reimbursement grants related to costs we incur and therefore are included as Other Income. Grant funds paid directly to third parties are not included as income in our financial statements.

 

 

During the three and nine months ended September 30, 2022, we recorded $174,000 in income related to the forgiveness of Paycheck Protection Act loan received by ONM Environmental.

 

Net Loss

 

Net loss for the three and nine months ended September 30, 2023, was $1,508,000 and $3,628,000, a loss of $0.01 per share, compared to a net loss for the three and nine months ended September 30, 2022, of $847,000 and $3,724,000, a loss of $0.01 per share, an increase of 78% and decrease of 3%, respectively. Our net loss for the three months ended September 30, 2023, increased because of the decrease in engineering service revenue and an increase in total costs and expenses, offset by the increase in product revenue. Our net loss decreased during the nine months ended September 30, 2023, primarily due to the increase of product revenue, offset by a decrease of engineering service revenue and increase in total costs and expenses.

 

The net income (loss) per business segment is as follows (in thousands):

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30, 2023

   

September 30, 2022

   

September 30, 2023

   

September 30, 2022

 

BioLargo corporate

  $ (800 )   $ (789 )   $ (2,273 )   $ (2,944 )

ONM

    968       400       2,781       592  

Clyra Medical

    (394 )     (248 )     (1,234 )     (760 )

BLEST

    (568 )     (152 )     (1,388 )     (131 )

BETI

    (559 )           (943 )      

BioLargo Water

    (155 )     (58 )     (571 )     (481 )

Net loss

    (1,508 )     (847 )     (3,628 )     (3,724 )

 

Liquidity and Capital Resources

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of our business. For the nine months ended September 30, 2023, we generated revenues of $7,860,000 through our business segments (see Note 11), had a net loss of $3,628,000, used $2,363,000 cash in operations, and at September 30, 2023, we had working capital of $2,951,000, and current assets of $4,691,000.

 

During the nine months ended September 30, 2023, we (i) sold $502,000 of our common stock to Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 3), (ii) sold $995,000 of our common stock and warrants to accredited investors (see Notes 3 and 6), (iii) sold $905,000 of Clyra Medical Series A Preferred Stock (see Note 8), and (iv) sold $1,575,000 of BETI common stock (see Note 10). Subsequent to September 30, 2023, we continued these financing activities (see Note 13). As of September 30, 2023, our cash and cash equivalents totaled $3,042,000. Our total liabilities included a $71,000 vehicle loan, $140,000 due in U.S. Small Business Administration (SBA) loans issued pursuant to the Paycheck Protection Program (see Note 4), $148,000 due to the SBA issued pursuant to the Economic Injury Disaster program (see Note 4), and $234,000 owed by Clyra Medical due in 2024 (see Note 8). We have been, and anticipate that we will continue to be, limited in terms of our capital resources, and expect to continue to need further investment capital to fund operations. Such activities have continued subsequent to September 30, 2023.

 

 

If we are unable to rely on our current arrangement with Lincoln Park to fund our working capital requirements, we will have to rely on other forms of financing, and there is no assurance that we will be able to do so, or if we do so, it will be on favorable terms.

 

The foregoing factors raise substantial doubt about our ability to continue as a going concern, unless we are able to continue to raise funds through stock sales to Lincoln Park or other private financings, or attain a reasonable threshold of operating efficiencies and achieve profitable operations. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

 

Critical Accounting Policies

 

Our discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, valuation of offerings of debt with equity or derivative features which include the valuation of the warrant component, any beneficial conversion feature and potential derivative treatment, and share-based payments. We base our estimates on anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results that differ from our estimates could have a significant adverse effect on our operating results and financial position.

 

Our significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements are described in (i) in Part I, Item 1 of this Form 10-Q, Note 2, “Summary of Significant Accounting Policies” and (ii) in the Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023, in the Notes to Consolidated Financial Statements in Part II, Item 8, and “Critical Accounting Policies and Estimates” in Part II, Item 7. There have been no material changes to the Company’s critical accounting policies and estimates since the filing of its Form 10-K.

 

Item 4.         Controls and Procedures

 

We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended – the “Exchange Act”) as of the end of the period covered by this Report. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2023, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

Our procedures have been designed to ensure that the information relating to our company, including our consolidated subsidiaries, required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure. However, our Company is continuing to grow and evolve, as our product and services sales continues to grow, and as we diversify our clients to include municipalities, increasing strain on our accounting systems. These activities put stress on our overall controls and procedures. As our operations do not yet generate enough cash to fund operations, and we rely on financing activities to maintain our level of operations and fund our anticipated growth, we do not yet have the ability to implement the more sophisticated control systems used by larger companies. Although we have made some improvements, our chief executive officer and chief financial officer have concluded that, as of the evaluation date, our disclosure controls and procedures were not effective, due to the material weakness identified below.

 

 

It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. 

 

Under the supervision and with the participation of our management, including our chief executive officer and the chief financial officer, we have established internal control procedures in accordance with the guidelines established in the 2013 Framework —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Management evaluated the effectiveness of our internal controls, and concluded that due to our limited financial and personnel resources, the fact that we operate our business in three distinct locations in the U.S. and Canada, and the lack of sophisticated reporting systems, we continue to have a material weakness in our internal controls with respect to the closing our financial statements. Until the Company has the financial resources to implement more robust automated systems, or to hire additional dedicated accounting personnel, we expect this material weakness to continue.

 

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting, or any system we design or implement in the future, will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

 

PART II

 

OTHER INFORMATION

 

 

Item 2.          Unregistered Sales of Equity Securities and Use of Proceeds

 

The following is a report of sales of unregistered securities during the period covered by this report not previously reported in an annual report on Form 10-K, a Quarterly Report on Form 10-Q, or a Current Report on Form 8-K.

 

Clyra Medical

 

During the three months ended September 30, 2023, Clyra sold 928 shares of its Series A Preferred Stock, and in exchange received $288,000 in gross and net proceeds. Purchasers of the Series A Preferred Stock also received a 3-year warrant to purchase the same number of additional shares of common stock for $372 per share. Shares of Series A Preferred Stock earn a dividend of 15% each year. Each share of Series A Preferred stock can be converted by the holder at any time for one share of common stock. Accrued dividends may be converted to common stock at a conversion rate of $310 per share.

 

Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its Series A Preferred stock, plus accrued dividends, into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 30 prior trading days. Elections must be made during the 18-month period that begins January 1, 2025, and ends June 30, 2026.

 

BETI

 

During the three months ended September 30, 2023, BETI sold 10,000 shares of its common stock to one accredited investor and received $25,000 in gross and net proceeds. The investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its shares of BETI common stock into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 20 trading days prior to the election to exchange. Elections must be made during calendar year 2024.

 

All of these offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and/or Regulation D promulgated thereunder as not involving a public offering of securities.

 

 

Item 5.          Other Information

 

Lincoln Park

 

On December 13, 2022, we entered into a purchase agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase up to $10.0 million of the Company’s common stock, par value $0.00067 per share (the “Common Stock”), subject to certain limitations and the satisfaction of the conditions set forth in the Purchase Agreement. (See Item 9B titled “Other Information”, and the subheading “Lincoln Park”, for additional information.)

 

During the three months ended September 30, 2023, we sold 1,190,223 shares of our common stock to Lincoln Park, and received $203,000 in gross and net proceeds.

 

 

Item 6.         Exhibits

 

See the Exhibit Index for a list of exhibits filed as part of this report and incorporated herein by reference.

 

Exhibit Index

 

   

Incorporated by

Reference Herein

Exhibit

Number

Exhibit Description

Form

File Date

3.1

Amended and Restated Bylaws

Form 10-KSB

5/23/2003

3.2

Amended and Restated Certificate of Incorporation for BioLargo, Inc. filed March 16, 2007

Form 10-KSB

5/4/2007

3.3

Certificate of Amendment to Certificate of Incorporation, filed May 25, 2018

Pos Am

6/22/2018

3.4

Certificate of Amendment to Certificate of Incorporation, filed August 30, 2022

Form 10-Q

11/14/2022

3.5

Amended and Restated Articles of Incorporation of Clyra Medical Technologies, Inc. (filed December 30, 2022)

Form 10-K 

3/31/2023

4.1

BioLargo, Inc. 2007 Equity Incentive Plan

Form 10-QSB

11/19/2007

4.2

Amendment No. 1 to BioLargo 2007 Equity Incentive Plan

Def 14C (Exhibit A)

5/2/2011

4.3

Form of Stock Options issued in exchange for reduction in accounts payable.

Form 10-K

3/31/2015

4.4

$50,000 convertible note, matures March 8, 2020

Form 10-Q

5/14/2018

4.5

2018 Equity Incentive Plan

Form S-8

6/22/2018

4.6

Stock Option Award Agreement under 2018 Equity Incentive Plan

Form S-8

6/22/2018

4.7

Notice of Stock Option Grant under 2018 Equity Incentive Plan

Form S-8

6/22/2018

4.8

Restricted Stock Unit Award Agreement under 2018 Equity Incentive Plan

Form S-8

6/22/2018

4.9

Notice of Restricted Stock Unit Award under 2018 Equity Incentive Plan

Form S-8

6/22/2018

 

 

4.10

Revolving Line of Credit Agreement dated June 30, 2020, between Clyra Medical and Vernal Bay

Form 8-K

7/7/2020

4.11

Security Agreement dated June 30, 2020, between Clyra Medical and Vernal Bay

Form 8-K

7/7/2020

4.12

Revolving Line of Credit Note issued by Clyra Medical to Vernal Bay on June 30, 2020

Form 8-K

7/7/2020

4.13

Warrant issued in 2020 Unit Offering

Form 10-Q

8/14/2020

4.14

Amendment to $50,000 Convertible Note dated March 8, 2018

Form 10-K

3/30/2021

4.15

Warrant issued to $50,000 Convertible Noteholder on March 1, 2020

Form 10-K

3/30/2021

4.16

Satisfaction of Convertible Note dated March 8, 2018

Form 10-K

3/31/2023

10.1

Form of indemnity agreement between the Company at its officers and directors

Form 10-K

3/31/2023

10.2

License Agreement to Clyra Medical Technologies, Inc., dated December 17, 2012

Form 8-K

1/6/2016

10.3

December 30, 2015 amendment to License Agreement with Clyra Medical Technologies, Inc.

Form 8-K

1/6/2016

10.4

Consulting Agreement dated December 30, 2015 with Beach House Consulting LLC

Form 8-K

1/6/2016

10.5

Commercial Office Lease Agreement for 14921 Chestnut St., Westminster, CA 92683

Form 8-K

8/24/2016

10.6†

Employment Agreement with Dennis P. Calvert dated May 2, 2017.

Form 8-K

5/4/2017

10.7†

Lock-Up Agreement with Dennis P. Calvert dated April 30, 2017

Form 8-K

5/4/2017

10.8

Commercial Office Lease Agreement for Oak Ridge Tennessee

Form 8-K

9/8/2017

10.9

Form of Employment Agreement for Engineering Subsidiary

Form 8-K

9/8/2017

10.10

Form of Option issued to founding employees of Engineering subsidiary (BLEST)

Form 8-K

9/8/2017

10.11†

Employment Agreement with Joseph L. Provenzano dated May 28, 2019

Form 8-K

6/24/2019

10.12†

Lock-Up Agreement dated May 28, 2019

Form 8-K

6/24/2019

10.13

Purchase Agreement, dated as of March 30, 2020 by and between BioLargo, Inc. and Lincoln Park Capital Fund, LLC.

Form 8-K

3/31/2020

10.14

Amendment dated June 30, 2020 to License Agreement with Clyra Medical Technologies, Inc.

Form 8-K

7/7/2020

10.15

Amendment dated June 30, 2020 to Consulting Agreement dated December 30, 2015 between Clyra Medical and Beach House Consulting LLC

Form 8-K

7/7/2020

10.16†

2022 Engagement Extension Agreement with CFO

Form 8-K

3/24/2022

10.17

Purchase Agreement, dated as of December 13, 2022, by and between BioLargo, Inc. and Lincoln Park Capital Fund, LLC.

Form 8-K

12/19/2022

10.18

Registration Rights Agreement, dated as of December 13, 2022, by and between BioLargo, Inc. and Lincoln Park Capital Fund, LLC

Form 8-K

12/19/2022

10.19†

2023 Engagement Extension Agreement with CFO

Form 8-K

3/27/2023

10.20

Form of Share Exchange Agreement between BioLargo, Inc., and purchasers of Clyra Medical Series A Preferred Stock

Form 10-Q

5/17/2023

 

 

10.21

Form of Share Exchange Agreement between BioLargo, Inc., and purchasers of BioLargo Energy Technologies, Inc. common stock

Form 10-Q

5/17/2023

21.1

List of Subsidiaries of the Registrant

Form 10-Q

5/17/2023

31.1*

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934

 

filed herewith

31.2*

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934

 

filed herewith

32*

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

 

filed herewith

101.INS**

Inline XBRL Instance

   

101.SCH**

Inline XBRL Taxonomy Extension Schema

   

101.CAL**

Inline XBRL Taxonomy Extension Calculation

   

101.DEF**

Inline XBRL Taxonomy Extension Definition

   

101.LAB**

Inline XBRL Taxonomy Extension Labels

   

101.PRE**

Inline XBRL Taxonomy Extension Presentation

   

104

Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

   

 

* Filed herewith

 

** Furnished herewith

 

† Management contract or compensatory plan, contract or arrangement

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: November 14, 2023

 

BIOLARGO, INC.

 

 

By: /s/ DENNIS P. CALVERT

   

Dennis P. Calvert

Chief Executive Officer

     
     

Date: November 14, 2023

 

By: /s/ CHARLES K. DARGAN, II

   

Chief Financial Officer

 

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