10-Q

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 June 30, 2017.

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, including zip code, of principal executive offices)

(949) 643-9540

(Registrant’s telephone number, including area code)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes  ☒ No      ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 August 11, 2017 was 100,585,385 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	21
Item 4	Controls and Procedures	32
PART II
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5	Other Information	34
Item 6	Exhibits	34
	Signatures	35
Exhibit Index

i. 

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BIOLARGO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2016 AND JUNE 30, 2017

	DECEMBER 31, 2016			JUNE 30, 2017 (Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,910,153		$	433,539
Accounts receivable		67,994			78,105
Inventories		34,446			36,907
Prepaid expenses and other current assets		4,089			12,795
Total current assets		2,016,682			561,346
Equipment, net of depreciation		59,315			50,336
Other non-current assets, net of amortization		36,729			31,269
Total assets	$	2,112,726		$	642,951
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable and accrued expenses	$	200,103		$	344,438
Accrued officer bonus		80,000			—
Convertible notes payable		560,000			4,830,097
Discount on convertible notes payable and line of credit, net of amortization		(398,910	)		(2,108,435	)
Derivative warrant liability		663,560			570,595
Line of credit		50,000			50,000
Deposit		—			50,000
Total current liabilities		1,154,753			3,736,695
Long-term liabilities:
Convertible notes payable		5,250,668			675,571
Line of credit		—			250,000
Discount on convertible notes payable and line of credit, net of amortization		(3,522,497	)		(543,483	)
Total liabilities		2,882,924			4,118,783
COMMITMENTS, CONTINGENCIES (Notes 8 and 9)
STOCKHOLDERS’ DEFICIT:
Convertible Preferred Series A, $.00067 Par Value, 50,000,000 Shares Authorized, -0- Shares Issued and Outstanding, at December 31, 2016 and June 30, 2017.		—			—
Common stock, $.00067 Par Value, 200,000,000 Shares Authorized, 92,975,970 and 99,898,718 Shares Issued, at December 31, 2016 and June 30, 2017, respectively.		62,179			66,885
Additional paid-in capital		90,609,774			92,533,290
Accumulated deficit		(91,915,426	)		(96,256,129	)
Accumulated other comprehensive loss		(81,694	)		(97,680	)
Total Biolargo stockholders’ deficit		(1,325,167	)		(3,753,634	)
Non-controlling interest (Note 6)		554,969			277,802
Total stockholders’ deficit		(770,198	)		(3,475,832	)
Total liabilities and stockholders’ deficit	$	2,112,726		$	642,951

See accompanying notes to unaudited consolidated financial statements.

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Table of Contents

BIOLARGO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2017

(UNAUDITED)

	THREE-MONTHS						SIX-MONTHS
	JUNE 30, 2016			JUNE 30, 2017			JUNE 30, 2016			JUNE 30, 2017
Revenues	$	38,986		$	99,978		$	52,928		$	145,995
Cost of revenues		(15,757	)		(73,399	)		(21,838	)		(95,929	)
Gross profit:		23,229			26,579			31,090			50,066
Selling, general and administrative expenses		923,564			1,162,018			1,854,471			2,217,073
Research and development		329,968			324,280			681,018			715,616
Amortization and depreciation		2,845			6,515			5,575			14,439
Total operating expenses:		1,256,377			1,492,813			2,541,064			2,947,128
Operating loss:		(1,233,148	)		(1,466,234	)		(2,509,974	)		(2,897,062	)
Other (expense) income:
Interest expense		(478,525	)		(1,119,273	)		(884,850	)		(2,072,829	)
Change in fair value of derivative warrant liability		—			56,352			—			321,872
Grant income		43,338			11,361			82,096			70,149
Total other expense:		(435,187	)		(1,051,560	)		(802,754	)		(1,680,808	)
Net loss		(1,668,335	)		(2,517,794	)		(3,312,728	)		(4,577,870	)
Net loss attributable to noncontrolling interest		(54,859	)		(173,911	)		(121,831	)		(237,167	)
Net loss attributable to common shareholders	$	(1,613,476	)	$	(2,343,883	)	$	(3,190,897	)	$	(4,340,703	)
Net loss per share attributable to common shareholders:
Loss per share attributable to shareholders – basic and diluted	$	(0.02	)	$	(0.03	)	$	(0.04	)	$	(0.05	)
Weighted average number of common shares outstanding:		86,419,573			97,770,161			86,133,395			94,718,273
Comprehensive loss:
Net loss	$	(1,668,335	)	$	(2,517,794	)	$	(3,312,728	)	$	(4,577,870	)
Foreign currency translation		(606	)		32,150			(9,924	)		(15,986	)
Comprehensive loss		(1,668,941	)		(2,485,644	)		(3,322,652	)		(4,593,856	)
Comprehensive loss attributable to noncontrolling interest		(54,859	)		(173,911	)		(121,831	)		(237,167	)
Comprehensive loss attributable to common stockholders	$	(1,614,082	)	$	(2,311,733	)	$	(3,200,821	)	$	(4,356,689	)

See accompanying notes to unaudited consolidated financial statements.

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BIOLARGO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 2017

(UNAUDITED)

See accompanying notes to unaudited consolidated financial statements.

	Common stock				Additional paid-in			Accumulated			Accumulated other comprehensive			Non- controlling
	Shares		Amount		capital			deficit			loss			interest			Total
Balance, December 31, 2016		92,975,970	$	62,179	$	90,609,774		$	(91,915,426	)	$	(81,694	)	$	554,969		$	(770,198	)
Vendors and interest		2,491,704		1,734		502,259			—			—			—			504,263
Conversion of notes		1,419,107		952		529,048			—			—			—			530,000
Exercise of warrants		510,000		343		152,657			—			—			—			153,000
Exercise of stock options		2,501,937		1,677		(1,677	)		—			—			—			—
Stock option compensation expense		—		—		515,959			—			—			—			515,959
Fair value of warrants and conversion feature issued as discount on convertible notes payable		—		—		225,000			—			—			—			225,000
Purchase of Clyra shares		—		—		—			—			—			(40,000	)		(40,000	)
Net loss		—		—		—			(4,340,703	)		—			(237,167	)		(4,577,870	)
Foreign currency translation		—		—		—			—			(15,986	)		—			(15,986	)
Balance, June 30, 2017		99,898,718	$	66,885	$	92,533,290		$	(96,256,129	)	$	(97,680	)	$	277,802		$	(3,475,832	)

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BIOLARGO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2017

(UNAUDITED)

	JUNE 30, 2016			JUNE 30, 2017
Cash flows from operating activities
Net loss	$	(3,312,728	)	$	(4,577,870	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock option compensation expense		491,440			515,959
Common stock issued for interest and in lieu of salary to officers and fees for services from consultants		489,107			504,263
Interest expense related to amortization of the discount on convertible notes payable and line of credit and deferred financing costs		668,257			1,723,396
Change in derivative liability		—			(321,872	)
Amortization and depreciation expense		5,575			14,439
Bad debt expense		—			15,000
Changes in assets and liabilities:
Accounts receivable		(5,275	)		(25,111	)
Inventories		13,555			(2,461	)
Prepaid expenses and other current assets		5,247			(8,706	)
Accounts payable and accrued expenses		(13,839	)		144,335
Officer bonus		—			(80,000	)
Deposits		(35,000	)		50,000
Net cash used in operating activities		(1,693,661	)		(2,048,628	)
Cash flows from investing activities
Equipment purchase		(5,500	)		—
Net cash used in investing activities		(5,500	)		—
Cash flows from financing activities
Proceeds from convertible notes		535,000			225,000
Proceeds from line of credit		300,000			250,000
Purchase of Clyra Shares		—			(40,000	)
Proceeds from exercise of warrants		—			153,000
Net cash provided by financing activities		835,000			588,000
Effect of foreign currency translation		(9,924	)		(15,986	)
Net change in cash and cash equivalents		(874,085	)		(1,476,614	)
Cash and cash equivalents at beginning of period		1,763,114			1,910,153
Cash and equivalents at end of period	$	889,029		$	433,539
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest	$	—		$	4,487
Income taxes	$	4,000		$	5,350
Non-cash investing and financing activities
Conversion of accounts payable into stock options	$	183,159		$	243,824
Fair value of warrants issued in conjunction with convertible notes payable	$	772,405		$	225,000
Settlement of accounts payable and interest into shares of common stock	$	489,107		$	504,263
Convertible notes into shares of common stock	$	—		$	530,000

See accompanying notes to unaudited consolidated financial statements

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BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Business and Organization

Outlook

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. As reflected in the accompanying financial statements, for the six months ended June 30, 2017 we had a net loss of $4,577,870, and used $2,048,628 cash in operations, and at June 30, 2017, had negative working capital of $3,175,349, current assets of $561,346, and an accumulated stockholders’ deficit of $96,256,129. The foregoing factors raise substantial doubt about our ability to continue as a going concern. Ultimately, our ability to continue as a going concern is dependent upon our ability to attract significant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations by licensing or otherwise commercializing products incorporating our technologies. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

We have been, and anticipate that we will continue to be, limited in terms of our capital resources. Our total cash balance was $433,539 at June 30, 2017. Our cash decreased over $1,400,000 from December 31, 2016 to June 30, 2017. Although our revenues in the six months ended June 30, 2017 increased almost three-fold from the same period in 2016, they are not sufficient to fund our operations and our sales must increase substantially before they will be. At times in the past we have not had enough cash or sources of capital to pay our accounts payable and expenses as they arise, and have relied on the issuance of stock options and common stock, as well as extended payment terms with our vendors, to continue to operate. We will be required to raise substantial additional capital to expand our operations, including without limitation, hiring additional personnel, additional scientific and third-party testing, costs associated with obtaining regulatory approvals and filing additional patent applications to protect our intellectual property, and possible strategic acquisitions or alliances, as well as to meet our liabilities as they become due for the next 12 months. We continue to raise money through private securities offerings for the foreseeable future. Subsequent to June 30, 2017, we have received over $800,000 of investments (see Note 9.)

As of June 30, 2017, we had $5,805,668 in principal amounts due on various debt obligations (see Note 3). Of that amount, $4,830,097 are convertible at our option into common stock at maturity. Additionally, as of June 30, 2017, we had $344,438 of accounts payable and accrued expenses (see Note 6).

The unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to Rule 8-03 of Regulation S-X under the Securities Act of 1933, as amended. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for annual financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. For some of our activities, we are still operating in the early stages of the sales and distribution process, and therefore our operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017, or for any other period. These unaudited consolidated financial statements and notes should be read in conjunction with the Company’s audited financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2017.

We operate six wholly-owned subsidiaries: BioLargo Life Technologies, Inc., organized under the laws of the State of California in 2006, Odor-No-More, Inc., organized under the laws of the State of California in 2009, BioLargo Water USA, Inc., organized under the laws of the State of California in 2013, BioLargo Water, Inc., organized under the laws of Canada in 2014, BioLargo Maritime Solutions, Inc. organized under the laws of the State of California in 2016, and BioLargo Development Corp., organized under the laws of the State of California in 2016. Additionally, we own a controlling ownership interest in Clyra Medical Technologies, Inc., organized under the laws of the State of California in 2012.

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BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany accounts and transactions have been eliminated.

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 compensation and financing transactions, uncollectible accounts receivable, asset impairment and amortization, and taxes, 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.  

Share-based Payments

All share-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their fair values.

For stock issued to consultants and other non-employees for services, we record the expense based on the fair market value of the securities as of the date of the stock issuance. The issuance of fully vested stock warrants or options to non-employees are valued at the time of issuance utilizing the Black Scholes calculation and the amount is charged to expense. The issuance of stock warrants or options to non-employees that vest over time are revalued each reporting period until vested to determine the amount to be recorded as an expense in the respective period. As the warrants or options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting.

Warrants

The Unit Offerings of our convertible promissory note and a Series A stock purchase warrant 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, 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 measured again at its then current fair value at each subsequent reporting dates (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.

The convertible note is recorded at its 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. Further, the convertible promissory note is examined for any intrinsic beneficial conversion feature (“BCF”) which the effective convertible price of the note is less than the closing stock price on date of issuance. The adjusted BCF value is accounted for as equity.

The warrant and BCF fair values are also recorded as a discount to the convertible promissory notes. The equity features of the convertible promissory notes resulted in a discount to the convertible notes that is equal to the proceeds received.

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BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Non-Cash Transactions

We have established a policy relative to the methodology to determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock. The value is 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.

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.

Revenue Recognition

Revenues are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. We also may generate revenues from royalties and license fees from our intellectual property. Licensees typically 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. License fees are recognized over the estimated period of future benefit to the average licensee.

Government Grants

We have been awarded grants from the Canadian National Research Institute – Industrial Research Assistance Program (NRC-IRAP) and the National Science and Engineering Research Council of Canada (NSERC). The government grants received are considered other income and are included in our consolidated statements of operations. We received our first grant in 2015 and have been awarded over thirty grants totaling approximately $1,100,000. Some of the funds from these grants are given directly to third parties (such as the University of Alberta) 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.

The grants provide for (i) recurring monthly amounts and (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 and the development of our AOS filter. 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.

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 stock options and warrants were exercised into common stock. For the three and six months ended June 30, 2016 and 2017, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the anti-dilutive effect of the warrants and stock options on the Company’s net loss.

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BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Concentrations of Credit Risk

All highly liquid investments with original maturities of three months or less or money market accounts held at financial institutions are considered to be cash. Substantially all of the cash is placed with one financial institution. At June 30, 2017 and December 31, 2016, the year the cash accounts are exposed to credit loss for amounts in excess of insured limits of $250,000 in the event of non-performance by the institution, however, it is not anticipated that there will be non-performance. At June 30, 2017 and December 31, 2016, the Company had cash balances in excess of federally insured limits in the amount of approximately $183,539 and $1,660,153, respectively.

Allowance for uncollectible receivables

Management evaluates credit quality by evaluating the exposure to individual counterparties, and, where warranted, management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized in income in the period in which they are determined. At June 30, 2017, the allowance for uncollected receivables was $15,000.

Recent Accounting Pronouncements

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which we are required to apply for annual periods beginning after December 15, 2017. Although management is still evaluating the potential impact of the adoption of this standard, its preliminary analysis is that the new guidelines currently will not substantially impact our revenue presentation.

In March 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based award transactions and adds two practical expedients for nonpublic entities. The new standards are effective for annual periods beginning after December 15, 2017. An entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the impact of the pending adoption of the ASU on our consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Although management is still evaluating the potential impact of the adoption of this standard, its preliminary analysis is that the new guidelines currently will not materially impact our balance sheet presentation.

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BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 3. Convertible Notes Payable and Lines of Credit

	DECEMBER 31, 2016		JUNE 30, 2017
Current liabilities:
Line of credit, matures December 1, 2017	$	50,000	$	50,000
Convertible notes payable
One-Year Convertible notes, mature July 8, 2017	$	280,000	$	—
One-Year Convertible notes, mature December 30, 2017		280,000		280,000
Convertible notes, mature June 1, 2018*		—		4,550,097
Total convertible notes payable	$	560,000	$	4,830,097
Long-term liabilities:
Clyra Line of credit, matures March 31, 2019	$	—	$	250,000
Convertible notes payable, net of current portion
Convertible notes, mature June 1, 2018*	$	4,800,097	$	—
Convertible notes, mature September 17, 2019		283,571		283,571
Convertible notes, mature December 31, 2019		167,000		292,000
Convertible notes, mature June 20, 2020		—		100,000
Total convertible notes payable , net of current portion	$	5,250,668	$	675,571
Total	$	5,860,668	$	5,805,668

 * The convertible notes that mature June 1, 2018, were considered “long-term” liabilities as of December 31, 2016, and “current” liabilities (due within one year) as of June 30, 2017. As such, those same liabilities are in both the “long-term” and “current” liabilities section in the above table.

For the three and six months ended June 30, 2016, we recorded $478,525 and $884,850 and for the three and six months ended June 30, 2017, we recorded $1,119,273 and $2,072,829 of interest expense related to the amortization of our discount on our convertible notes payable and interest from our convertible notes and lines of credit.

Line of Credit, matures December 1, 2017

On June 6, 2016, we received $300,000 pursuant to a line of credit, accruing interest at a rate of 18% per annum, for which we have pledged our inventory and accounts receivable as collateral. The line of credit may be repaid following nine-months from the date of issuance or at the maturity date December 1, 2017.

Each investor, for no additional consideration, received a warrant to purchase our common stock. (See Note 5.) The warrant allows for the purchase of the number of common shares equal to the investment amount (e.g., one warrant share for each dollar invested).

On September 17, 2016, investors holding $250,000 of the line of credit converted their line of credit into convertible promissory notes and stock purchase warrants on the same terms and notes issued in the 2015 Unit Offering.

As of December 31, 2016, and June 30, 2017, $50,000 remains outstanding on this line of credit.

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BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

One-Year Convertible Notes, mature July 8, 2017

On July 8, 2016, we received $250,000 and issued convertible promissory notes (convertible at $0.45 per share) with a maturity date of July 8, 2017 to two accredited investors’ in the aggregate principal amount of $280,000. Interest is charged upon issuance at 3% per annum. We issued these investors stock purchase warrants to purchase an aggregate 400,000 shares of our common stock exercisable at $0.65 per share, which expire five years from the date of grant. (See Note 5.)

On January 13, 2017, the holders of these notes exercised their right to convert their notes in aggregate principal amount of $280,000 into 640,889 shares of our common stock.

One-Year Convertible Notes, mature December 30, 2017

On December 30, 2016, we received $250,000 and issued convertible promissory notes (convertible at $0.57 per share) with a maturity date of December 30, 2017 to two accredited investors, in the aggregate principal amount of $280,000. Interest is charged upon issuance at 3% per annum. We also issued these investors stock purchase warrants to purchase an aggregate 400,000 shares of our common stock exercisable at $0.75 per share, which expire five years from the date of grant. (See Note 5.)

Subsequent to June 30, 2017, the conversion price of these notes were reduced, and the holders exercised their right to convert the notes. (See Note 9.)

Convertible Notes, mature June 1, 2018 (2015 Unit Offering)

On January 15, 2015, we commenced a private securities offering of “units”, each Unit consisting of a convertible promissory note and Series A stock purchase warrant (“2015 Unit Offering”), which was closed on September 16, 2016. The price and availability of the Units were set forth in five “Pricing Supplements” issued from time-to-time. Each note issued is convertible into the Company’s common stock at the Unit price set forth in the particular pricing supplement, and matures June 1, 2018.

Interest due may be paid quarterly in cash or shares of common stock; all interest due thus far has been paid in shares of common stock. If paid by the issuance of common stock, interest is paid at a conversion price equal to the average closing price of the Company’s common stock over the 20 trading days prior to the interest payment due date. The principal amount of the note may be paid by the issuance of shares of common stock, or cash, upon maturity at the Company’s election. When paid in shares, the number of shares to be issued shall be calculated by dividing the principal amount invested by the Unit price, as it is established at the time of the original investment by the applicable Pricing Supplement. The notes may be converted at any time by the investor, at maturity by the Company, or by the Company prior to maturity, so long as all of the following conditions are met: (i) the shares issued as payment are registered with the SEC, (ii) the Company’s common stock closes for ten consecutive trading days at or above three times the Unit price. On June 15, 2017, a registration statement registering the shares issuable upon conversion was deemed effective by the SEC.

Each investor, for no additional consideration, received a Series A stock purchase warrant. (See Note 5).

As of June 30, 2017, the outstanding balance for notes issued in the 2015 Unit Offering, maturing June 1, 2018 is as follows:

Unit/Conversion Price		Warrant Exercise Price		Aggregate
$	0.25	$	0.40	$	1,652,384
$	0.35	$	0.45		1,751,046
$	0.55	$	0.70		1,146,667
				$	4,550,097

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During the six months ended June 30, 2017, investors elected to convert an aggregate $250,000 principal amount promissory notes issued in our 2015 Unit Offering and accrued interest into 406,789 shares of our common stock.

During the six months ended June 30, 2016, we received $535,000, and issued unsecured convertible promissory notes with maturity dates of June 1, 2018, which accrue interest at the rate of 12% per annum.

Clyra Line of Credit, matures March 31, 2019

On March 31, 2017, our subsidiary Clyra Medical Technologies, Inc., of which we hold 54% of the outstanding stock, obtained a $250,000 line of credit from Sanatio Capital LLC, accruing interest at a rate of 10% per annum and a 5% original issue discount. The line of credit may be repaid at the maturity date March 31, 2019. Clyra received $175,000 of the line of credit in the three months ended March 31, 2017. Subsequent to March 31, 2017, Clyra received the remaining $75,000. Subsequent to June 30, 2017, Sanatio and Clyra agreed to convert the line of credit to equity at the same price as offered to Clyra investors. (See Note 9).

Convertible Notes, mature September 17, 2019

On September 17, 2016, investors in the line of credit (see “Line of Credit, matures December 1, 2017,” above), converted an aggregate principal amount of $250,000 plus accrued interest of $33,571 promissory notes convertible at 55 cents per share. Other than the maturity date of September 17, 2019, these notes contain the same terms as the notes issued in the 2015 Unit Offering. Our common stock closed at $0.70 on September 17, 2016. In addition to the convertible promissory note, the investors received a Series A stock purchase warrant to purchase an aggregate 515,583 shares of our common stock at an exercise price of $0.70 per share. (See Note 5.)

Convertible Notes, mature December 31, 2019 (Winter 2016 Unit Offering)

On December 27, 2016, we commenced a private securities offering (titled the “Winter 2016 Unit Offering”) which offered the sale of $600,000 of “Units,” each Unit consisting of a convertible promissory note and stock purchase warrant. The promissory notes issued to investors were convertible at $0.57 cents per share, a discount to the market price of our stock on that date of $0.86, mature December 31, 2019, and bear interest at the rate of 12% per annum on the amount invested. Any interest due will be paid quarterly in arrears in cash or shares of common stock. If paid by the issuance of common stock, interest is paid at a conversion price equal to the average closing price of the Company’s common stock over the 20 trading days prior to the interest payment due date. The principal amount of the note may be paid by the issuance of shares of common stock, or cash, upon maturity at the Company’s election.

When paid in shares, the number of shares to be issued shall be calculated by dividing the principal amount invested by the $0.57 conversion price. Promissory notes may be converted at any time by the investor, at maturity by the Company, or by the Company prior to maturity, so long as the following conditions are met: (i) the Shares issued as payment are registered with the SEC; and (ii) the Company’s common stock closes for ten consecutive trading days at or above three times the Unit price. In addition to the convertible promissory note, each investor received a warrant allowing for the purchase of the number of shares of BioLargo common stock equal to the investment amount divided by $0.57 (e.g., one warrant share for each share of common stock which the investor is eligible to receive through conversion of his original convertible note). The exercise price of the warrant is $0.70 per share of common stock and expire on December 31, 2021 (see Note 5). The Company may “call” the warrants, requiring the investor to exercise their warrants within 30 days or forever lose the rights to do so, only if the following conditions have been met: (i) the underlying Shares are registered with the SEC and (ii) the Company’s common stock closes for 10 consecutive trading days at or above two times the exercise price. The shares underlying the warrants contain “piggy back” registration rights for any registrations subsequent to the Form S-1 filed January 24, 2017.

Subsequent to December 31, 2016, and prior to the offering’s termination on January 13, 2017, we received $125,000 in investments from three accredited investors, and issued warrants to purchase 219,298 shares of our common stock. From inception of the offering through its termination, we received $292,000 from six investors, issued convertible notes in the aggregate of $292,000, and issued warrants to purchase 512,281 shares of our common stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Convertible Notes, mature June 20, 2020 (Summer 2017 Unit Offering)

On May 24, 2017, we commenced a private securities offering (titled the “Summer 2017 Unit Offering”) which offered the sale of $1,500,000 of “Units,” each Unit consisting of a convertible promissory note and stock purchase warrant. The promissory notes issued to investors are convertible at $0.42 cents per share, mature June 20, 2020, and bear interest at the rate of 12% per annum on the amount invested. Any interest due will be paid quarterly in arrears in cash or shares of common stock. If paid by the issuance of common stock, interest is paid at a conversion price equal to the average closing price of the Company’s common stock over the 20 trading days prior to the interest payment due date. The principal amount of the note may be paid by the issuance of shares of common stock, or cash, upon maturity at the Company’s election.

When paid in shares, the number of shares to be issued shall be calculated by dividing the principal amount invested by the $0.42 conversion price. Promissory notes may be converted at any time by the investor, at maturity by the Company, or by the Company prior to maturity, so long as the following conditions are met: (i) the Shares issued as payment are registered with the SEC; and (ii) the Company’s common stock closes for ten consecutive trading days at or above three times the Unit price. In addition to the convertible promissory note, each investor received a warrant allowing for the purchase of the number of shares of BioLargo common stock equal to the investment amount divided by $0.42 (e.g., one warrant share for each share of common stock which the investor is eligible to receive through conversion of his original convertible note). The exercise price of the warrant is $0.65 per share of common stock and expire on June 20, 2022 (see Note 5). The Company may “call” the warrants, requiring the investor to exercise their warrants within 30 days or forever lose the rights to do so, only if the following conditions have been met: (i) the underlying Shares are registered with the SEC and (ii) the Company’s common stock closes for 10 consecutive trading days at or above two times the exercise price.

Note 4. Share-Based Compensation

Common Stock

On May 2, 2017, pursuant to an employment agreement with the Company’s president, Dennis Calvert (see Note 9, “Calvert Employment Agreement”), we issued Mr. Calvert 1,500,000 shares of common stock. The shares are subject to a “lock-up agreement” whereby the shares remain unvested unless and until the earlier of (i) a sale of the Company, (ii) the successful commercialization of the Company’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 resulting in his termination. The Company will expense the fair value of the stock if and when it is probable that any of the conditions above are met.

Stock options

During the three and six months ended June 30, 2016, we recorded an aggregate $189,601 and $491,440, and during the three and six months ended June 30, 2017, we recorded an aggregate $235,671 and $515,959, in selling, general and administrative expense related to the issuance of stock options. We issued options through our 2007 Equity Incentive Plan and outside of our 2007 Equity Incentive Plan.

2007 Equity Incentive Plan

On August 7, 2007, and as amended April 29, 2011, our Board of Directors adopted the BioLargo, Inc. 2007 Equity Incentive Plan (“2007 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. The Board’s Compensation Committee administers this plan. The plan allows grants of common shares or options to purchase common shares. As plan administrator, the Compensation Committee has sole discretion to set the price of the options. The Compensation Committee may at any time amend or terminate the plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On June 19, 2017, the date of our annual stockholders’ meeting, we recorded the issuance of options to purchase an aggregate 40,000 shares of our common stock to the non-employee members of our Board of Directors, pursuant to the terms of the 2007 Equity Plan which calls for an annual automatic issuance. The exercise price of $0.43 equals the price of our common stock on the grant date. The fair value of these options totaled $15,600 and was recorded as selling, general and administrative expense.

On February 10, 2017, we extended our engagement agreement with our Chief Financial Officer. The sole consideration for the one-year extension was the issuance of an option to purchase 300,000 shares of our common stock, at an exercise price of $0.69 per share which was equal to the closing price of our common stock on the date of grant. The option expires February 10, 2027, and vests over the term of the engagement with 125,000 shares having vested as of February 10, 2017, and the remaining shares to vest 25,000 shares monthly beginning March 1, 2017, and each month thereafter, so long as his agreement is in full force and effect. The fair value of the option totaled $207,000, and during the three and six months ended June 30, 2017, we recorded $51,750 and $155,250 of selling, general and administrative expense on our statement of operations. The balance will vest monthly through September 30, 2017.

On June 20, 2016, we recorded the issuance of options to purchase an aggregate 40,000 shares of our common stock to the non-employee members of our Board of Directors, pursuant to the terms of the 2007 Equity Plan which calls for an annual automatic issuance. The exercise price of $0.45 equals the price of our common stock on the grant date. The fair value of these options totaled $18,000 and was recorded as selling, general and administrative expense.

On March 21, 2016, our Board of Directors extended by five years the expiration of options to purchase 307,777 shares of our common stock issued to our Board of Directors and vendors in March 2011. The options were originally issued in exchange for unpaid obligations and now expire on March 21, 2021. The weighted-average fair value of the options resulted in additional $119,971 of selling, general and administrative expenses.

Activity for our stock options under the 2007 Plan for the six-months ended June 30, 2016 and 2017 is as follows:

									Weighted
Balance, June 30, 2016:									Average
	Options		Shares			Exercise			Price per
	Outstanding		Available			Price per share			share
Balances as of December 31, 2015		10,241,086		1,758,914		$0.23	–	1.89	$	0.44
Granted		40,000		(40,000	)		0.45			0.45
Expired		—		—			—			—
Balance, June 30, 2016		10,281,086		1,718,914		$0.23	–	1.89	$	0.44

									Weighted
									Average
Balance, June 30, 2017:	Options		Shares			Exercise			Price per
	Outstanding		Available			Price per share			share
Balances as of December 31, 2016		9,916,586		1,981,414		$0.23	–	1.89	$	0.44
Granted		340,000		(340,000	)	0.39	–	0.69		0.65
Exercised		—		—			—			—
Balance, June 30, 2017		10,256,586		1,641,414		$0.23	–	1.89	$	0.44

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Options issued Outside of the 2007 Equity Incentive Plan

During the three and six-months ended June 30, 2017, we issued options to purchase 237,353 and 820,879 shares of our common stock at exercise prices ranging between $0.43 – $0.67 per share to vendors and to members of our board of directors. The fair value of the options issued during the three and six months ended June 30, 2017, totaled $120,311 and $277,074 and is recorded as selling, general and administrative expenses.

On May 2, 2017, pursuant to his employment agreement, we granted to Mr. Calvert, an option (the “Option”) to purchase 3,731,322 shares of the Company’s common stock. The Option shall be a non-qualified stock option, exercisable at $0.45 per share, which represents the market price of the Company’s common stock as of the date of the agreement, exercisable for ten years from the date of grant and vesting in equal increments on the anniversary of the agreement for five years. Notwithstanding the foregoing, any portion of the Option which has not yet vested shall be immediately vested in the event of, and prior to, a change of control, as defined in the Calvert Employment Agreement. The Option contains the other terms standard in option agreements issued by the Company, including provisions for a cashless exercise. The fair value of this option totaled $1,679,095 and will be amortized monthly through May 2, 2022. During the three months ended June 30, 2017, we recorded $27,985 of selling, general and administrative expense.

During the three and six months ended June 30, 2016, we issued options to purchase 220,554 and 484,077 shares of our common stock at exercise prices ranging between $0.33 – $0.45 per share to vendors and to members of our board of directors. During the three and six months ended June 30, 2016, the fair value of these options totaled $96,196 and $183,159 and is recorded as selling, general and administrative expenses.

The fair value of the options issued prior to 2016 that vested during the three and six-months ended June 30, 2016, was $75,405 and $170,310, and during the three and six months ended June 30, 2017, was $20,025 and $40,050.

Exercise of Stock Option 

On April 30, 2017, the Company’s president, Dennis Calvert, delivered a notice of exercise of 3,866,630 shares pursuant to his stock option agreement dated April 30, 2007. The exercise price was $0.18 per share, and the Company issued 2,501,937 shares, calculated by multiplying the difference between the market price of $0.51 and the exercise price of $0.18 with the number of shares exercised, and dividing that amount by the market price. No cash consideration was tendered with respect to the exercise. The remaining 3,866,629 shares available for purchase under the option agreement expired unexercised.

Pursuant to a “lock-up agreement” dated April 30, 2017, Mr. Calvert agreed to restrict the sales of the shares received until the earlier of (i) the consummation of a sale (in a single transaction or in a series of related transactions) of the Company by means of a sale of (a) a majority of the then outstanding common stock (whether by merger, consolidation, sale or transfer of common stock, reorganization, recapitalization or otherwise) or (b) all or substantially all of its assets; and (ii) the successful commercialization of the Company’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 Calvert dated May 2, 2017 and resulting in Calvert’s termination.

Activity of our stock options issued outside of the 2007 Plan for the six-months ended June 30, 2016 and 2017 is as follows:

							Weighted
Balance, June 30, 2016:							Average
	Options			Exercise			Price per
	Outstanding			Price per share			share
Balance, December 31, 2015		19,394,975		$0.18	–	1.00	$	0.40
Granted		484,077		0.33	–	0.45		0.38
Exercised		(60,000	)		0.25			0.25
Balance, June 30, 2016		19,819,052		$0.18	–	1.00	$	0.41

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

							Weighted
							Average
Balance, June 30, 2017:	Options			Exercise			Price per
	Outstanding			Price per share			share
Balance, December 31, 2016		20,148,766		$0.18	–	1.00	$	0.43
Granted		4,552,201		0.43	–	0.67	$	0.47
Expired		(3,866,629	)		0.18			0.18
Exercised		(3,866,630	)		0.18			0.18
Balance, June 30, 2017		16,967,708		$0.18	–	1.00	$	0.41

We recognize employee compensation expense for stock option awards on a straight-line basis over the applicable service period of the award, which is the vesting period. Share-based compensation expense is based on the grant date fair value estimated using the Black-Scholes Option Pricing Model. The following methodology and assumptions were used to calculate share based compensation for the six-months ended June 30:

	2016						2017
	Non Plan			2007 Plan			Non Plan			2007 Plan
Risk free interest rate	1.77	–	1.91%	1.26	–	1.36%	2.29	–	2.40%	2.31	–	2.40%
Expected volatility	641	–	645%	311	–	315%	578	–	601%	578	–	601%
Expected dividend yield		—			—			—			—
Forfeiture rate		—			—			—			—
Expected life in years		7			5			7			7

Expected price volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. 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.

Historically, we have not had significant forfeitures of unvested stock options granted to employees and Directors. A significant number of our stock option grants are fully vested at issuance or have short vesting provisions. Therefore, we have estimated the forfeiture rate of our outstanding stock options as zero.

Note 5. Warrants

We recorded $668,257 and $1,723,396 of interest expense related to the amortization of the discount on convertible notes, line of credit, deferred financing fees and for the extension of warrants set to expire during the six-months ended June 30, 2016 and 2017, respectively.

Warrants Issued Concurrently with the Summer 2017 Unit Offering

During the three months ended June 30, 2017, pursuant to the terms of our Summer 2017 Unit Offering (see Note 3), we issued warrants to purchase up to an aggregate 238,096 shares of our common stock at an exercise price of $0.65 per share. These warrants expire June 20, 2022. The relative fair value of these warrants resulted in $125,000 recorded as a discount on our convertible notes.

Warrants Issued Concurrently with the Winter 2016 Unit Offering

During the three months ended March 31, 2017, pursuant to the terms of our Winter 2016 Unit Offering (see Note 3), we issued warrants to purchase up to an aggregate 219,298 shares of our common stock at an exercise price of $0.70 per share. These warrants expire December 31, 2021. The relative fair value of these warrants resulted in $125,000 recorded as a discount on our convertible notes.

The Winter 2016 Unit Offering closed January 13, 2017, and in total we issued warrants to purchase up to an aggregate 512,281 shares of our common stock at an exercise price of $0.70 per share. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Warrants Issued Concurrently with One-Year Convertible Notes

On July 8, 2016, we issued warrants to purchase an aggregate 400,000 shares of our common stock. These warrants are initially exercisable at $0.65 per share and expire July 8, 2021. The fair value of warrants issued resulted in $160,000 discount on the one-year convertible note. The exercise price of the stock purchase warrant may be adjusted downward in the event we sell our common stock or issue warrants at a lower price, other than through our 2015 Unit Offering. On May 24, 2017, we initiated the Summer 2017 Unit Offering offering promissory notes convertible at $0.42 per share (see Note 3). Since these securities were sold at less than the exercise price of the July 8, 2016 warrants, the exercise price of the warrants were decreased from 65 to 42 cents per share, and the number of shares issuable under the warrant increased by 219,048 shares to a total of 619,048 shares. The warrants do not qualify for equity classification, therefore we recognize the warrants as a derivative liability. As a result, we are required to calculate the fair value at each reporting period and record the change.

On December 30, 2016 we issued warrants to purchase an aggregate 400,000 shares of our common stock. These warrants are initially exercisable at $0.75 per share and expire December 30, 2021. The stock price on the date of grant was $0.83. The fair value of warrants issued resulted in $280,000 discount on the one-year convertible note. The exercise price of the stock purchase warrant may be adjusted downward in the event we sell our common stock or issue warrants at a lower price, other than through our 2015 Unit Offering. On May 24, 2017, we initiated the Summer 2017 Unit Offering offering promissory notes convertible at $0.42 per share (see Note 3). Since these securities were sold at less than the exercise price of the December 30, 2016 warrants, the exercise price of the warrants were decreased from 75 to 42 cents per share, and the number of shares issuable under the warrant increased by 314,285 shares to a total of 714,285 shares. The warrants do not qualify for equity classification, therefore we recognize the warrants as a derivative liability. As a result, we are required to calculate the fair value at each reporting period and record the change.

The fair value of these warrants on June 30, 2017, totaled $570,595 and is recorded as a derivative liability on our balance sheet. The change in fair value for the three and six months ended June 30, 2017, resulted in other income of $56,352 and $321,872, respectively, recorded on our statement of operations. For the additional warrants issued when the exercise price decreased, we recognized $228,000 of additional interest expense.

2015 Unit Offering Warrants

During the six-months ended June 30, 2016, pursuant to the terms of our 2015 Unit Offering (see Note 3), we issued warrants to purchase up to an aggregate 1,528,571 shares of our common stock at an exercise price of $0.45 per share. These warrants were issued to investors and as commissions, and are set to expire June 1, 2020.

During the six-months ended June 30, 2016, the intrinsic and relative fair value of these warrants resulted in $535,000, respectively, recorded as a discount on our convertible notes on our consolidated balance sheets.

Warrants Issued Concurrently with Line of Credit

During the six-months ended June 30, 2016 we issued warrants to purchase an aggregate 300,000 shares of our common stock. These warrants are exercisable at $0.35 per share and expire June 2021. The relative fair value of warrants issued resulted in $237,405 discount on the line of credit.

Exercise of Warrants

During the six months ended June 30, 2017, we issued 510,000 shares of our common stock and in exchange we received proceeds totaling $153,000 from the exercise of our outstanding stock purchase warrants. Of the warrants exercised, 370,000 shares were exercised at $0.30 per share and 140,000 shares were exercised at $0.25 per share. No warrants were exercised in the six months ended June 30, 2016.

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

Balance, June 30, 2016	Number of
	Shares			Price Range
Outstanding as of December 31, 2015		13,779,438		$0.125	–	1.00
Issued		1,828,571			0.45
Expired		(183,545	)		0.55
Outstanding as of June 30, 2016		15,424,464		$0.125	–	1.00

Balance, June 30, 2017	Number of
	Shares			Price Range
Outstanding as of December 31, 2016		20,035,114		$0.125	–	1.00
Issued		990,727		0.42	–	0.70
Exercised		(510,000	)	0.25	–	0.30
Expired		—			—
Outstanding as of June 30, 2017		20,515,841		$0.125	–	1.00

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The fair value of each award grant is estimated on the date of grant using the Black-Scholes option-pricing model. The determination of expense of warrants issued for services or settlement also uses the option-pricing model. The principal assumptions we used in applying this model were as follows for the six-months ended June 30:

	2016			2017
Risk free interest rate	1.26	–	1.36%	1.83	–	1.93%
Expected volatility	311	–	315%	293	–	297%
Expected dividend yield		—			—
Forfeiture rate		—			—
Expected life in years		5			5

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.

Note 6. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses included the following:

	December 31,		June 30,
	2016		2017
Accounts payable and accrued expenses	$	22,231	$	158,690
Payroll tax liability		137,500		137,500
Accrued officer bonus		80,000		—
Accrued interest		40,372		48,248
Total accounts payable and accrued expenses	$	280,103	$	344,438

The payroll tax liability is the Company’s estimate of payroll taxes due on the past services of independent contractors. The Company is currently attempting to reduce the liability to approximately $5,000 through the IRS Voluntary Classification Settlement Program.

On September 27, 2016, the board approved a $60,000 bonus for each of our Chief Executive and Chief Science Officers, $20,000 of which was paid to each in 2016. Each were paid the remaining $40,000 in January 2017.

During the six months ended June 30, 2016 and 2017, we issued 746,943 and 1,807,829 shares of common stock in lieu of fees for services provided by vendors, consultants and an officer, resulting in a grant date fair value of $275,232 and $168,022, respectively, and recorded in selling, general and administrative expense.

During the six months ended June 30, 2016 and 2017 we issued 546,157 and 683,875 shares of common stock resulting in a grant date fair value of $213,875 and $337,246, respectively. The shares were issued to settle our accrued interest liability, which is recorded as interest expense in our consolidated statements of operations. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 7. Noncontrolling Interest

In May 2012, we formed a subsidiary for the purpose of marketing and selling medical products containing our technology, Clyra Medical Technology, Inc. (“Clyra”). Until December 17, 2012, this subsidiary was wholly-owned, with 7,500 shares issued to BioLargo, Inc. On December 17, 2012, Clyra issued 1,500 shares of Clyra common stock to a three-member management team, one-third of which vested immediately, and the remaining over time. The shares granted to the three executives are restricted from transfer until a sale of the company, whether by means of a sale of its stock or substantially all of its assets, or otherwise by agreement of Clyra, BioLargo and the executives.

On December 30, 2015, Clyra sold 9,830 shares of its Series A Preferred Stock (“Preferred Shares”) to Sanatio Capital, LLC (“Sanatio”) for $750,000. This sale was made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and Regulation D promulgated thereunder as not involving a public offering of securities. As a result of the sale, Sanatio owned 40% of Clyra’s issued and outstanding shares, BioLargo owned 54%, and the remainder is owned by management. Concurrent with the sale of the Preferred Shares, the shareholders entered into a shareholders’ agreement that provides for a three member board of directors, consisting of the company’s president, a person appointed by BioLargo, and a person appointed by Sanatio.

As set forth in Clyra’s Amended and Restated Articles of Incorporation, Preferred Shares accrue an annual dividend of 8% for a period of five years. Although the dividends began to accrue immediately, Clyra has no obligation to declare a dividend until a product of the company has received a premarket approval by the United States Federal Drug Administration (“FDA”), or for which a premarket notification pursuant to form 510(k) has been submitted and for which the FDA has given written clearance to market the product in the United States (either, “FDA Approval”). After FDA Approval, annually on December 20, and unless prohibited by California law governing distributions to shareholders, Clyra is required to declare and pay any accruing dividends to holders of Preferred Shares then accrued but unpaid. Management classifies the Preferred Shares dividend as a medium probability of occurring and as of June 30, 2017 the Preferred Shares dividend has an accrued and undeclared balance of $90,000.

Holders of Preferred Shares are entitled to preferential payments in the event of a liquidation, dissolution or winding up of the company, in an amount equal to any accrued and unpaid dividends. After such preference, any remaining assets are distributed pro-rata between holders of Clyra common stock and Preferred Shares as if the Preferred Shares had converted to Clyra common stock. Holders of Preferred Shares may convert the shares to Clyra common stock initially on a one-to-one basis. The conversion formula is subject to change in the event Clyra sells stock at a lower price than the price paid by Sanatio.

In addition to the foregoing, Clyra entered into a consulting agreement with Beach House Consulting, LLC, through which Jack B. Strommen will be providing consulting services to the company. Mr. Strommen is the founder of Beach House Consulting, LLC. Mr. Strommen will be assisting the company in its sales and marketing activities once it has FDA Approval on a product, at which point the agreement provides that Mr. Strommen is to receive $23,438 per month for a period of four years. As of June 30, 2017, the Company has not presented any products to the FDA for FDA approval.

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BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

From inception, Clyra has generated no revenues and the financial impact of Clyra’s operations for the three and six months ended June 30, 2017, resulted in a net loss of $387,490 and $524,572.

Note 8. Commitments and Contingencies.

Calvert Employment Agreement

On May 2, 2017, BioLargo, Inc. (the “Company”) and its President and Chief Executive Officer Dennis P. Calvert entered into an employment agreement (the “Calvert Employment Agreement”), replacing in its entirety the previous employment agreement with Mr. Calvert dated April 30, 2007.

The Calvert Employment Agreement provides that Mr. Calvert will continue to serve as the President and Chief Executive Officer of the Company and receive base compensation equal to his current rate of pay of $288,603 annually. In addition to this base compensation, the agreement provides that he is eligible to participate in incentive plans, stock option plans, and similar arrangements as determined by the Company’s Board of Directors, health insurance premium payments for himself and his immediate family, a car allowance of $800 per month, paid vacation of four weeks per year, and bonuses in such amount as the Compensation Committee may determine from time to time.

The Calvert Employment Agreement provides that Mr. Calvert will be granted an option (the “Option”) to purchase 3,731,322 shares of the Company’s common stock. The Option shall be a non-qualified stock option, exercisable at $0.45 per share, which represents the market price of the Company’s common stock as of the date of the agreement, exercisable for ten years from the date of grant and vesting in equal increments over five years. Notwithstanding the foregoing, any portion of the Option which has not yet vested shall be immediately vested in the event of, and prior to, a change of control, as defined in the Calvert Employment Agreement. The agreement also provides for a grant of 1,500,000 shares of common stock, subject to the execution of a “lock-up agreement” whereby the shares remain unvested unless and until the earlier of (i) a sale of the Company, (ii) the successful commercialization of the Company’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 resulting in his termination. The Option contains the other terms standard in option agreements issued by the Company, including provisions for a cashless exercise.

The Calvert Employment Agreement has a term of five years, unless earlier terminated in accordance with its terms. The Calvert Employment Agreement provides that Mr. Calvert’s employment may be terminated by the Company due to his death or disability, for cause, or upon a merger, acquisition, bankruptcy or dissolution of the Company. “Disability” as used in the Calvert Employment Agreement means physical or mental incapacity or illness rendering Mr. Calvert unable to perform his duties on a long-term basis (i) as evidenced by his failure or inability to perform his duties for a total of 120 days in any 360-day period, or (ii) as determined by an independent and licensed physician whom Company selects, or (iii) as determined without recourse by the Company’s disability insurance carrier. “Cause” means that Mr. Calvert has (i) engaged in willful misconduct in connection with the Company’s business; or (ii) been convicted of, or plead guilty or nolo contendre in connection with, fraud or any crime that constitutes a felony or that involves moral turpitude or theft. If Mr. Calvert’s employment is terminated due to merger or acquisition, then he will be eligible to receive the greater of (i) one year’s compensation plus an additional one half year for each year of service since the effective date of the employment agreement or (ii) one year’s compensation plus an additional one half year for each year remaining in the term of the agreement. Otherwise, he is only entitled to receive compensation due through the date of termination.

The Calvert Employment Agreement requires Mr. Calvert to keep certain information confidential, not to solicit customers or employees of the Company or interfere with any business relationship of the Company, and to assign all inventions made or created during the term of the Calvert Employment Agreement as “work made for hire”.

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BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 9. Subsequent Events.

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

One-Year Convertible Notes, mature July 18, 2018

On July 18, 2017, we received $250,000 and issued convertible promissory notes (convertible at $0.42 per share) with a maturity date of July 18, 2018 to two accredited investors in the aggregate principal amount of $280,000. Interest is charged upon issuance at 3% per annum. We issued the investors stock purchase warrants to purchase an aggregate 400,000 shares exercisable at $0.65 per share, which expire July 18, 2023. The exercise price of the stock purchase warrant may be adjusted downward in the event we sell our common stock or issue warrants at a lower price, other than securities issued through out Summer 2017 Unit Offering, for the payment of interest on promissory notes, for convertible notes, and warrants issued to the two investors. In the event we register the shares underlying the notes, under certain conditions we may call the warrants and require they be exercised or forfeited.

One-Year Convertible Notes, mature December 30, 2017

The promissory notes issued on December 30, 2016 convertible at $0.57 per share contain a provision that allows the investor to convert its note to the terms of a note subsequently issued by the company under more favorable terms. On July 18, 2017, we issued notes under similar terms as the December 30, 2016 notes, convertible at $0.42 per share, and provided notice to the investors of the reduction in the conversion price of the two notes issued December 30, 2016, to $0.42 per share.

On July 20, 2017, the holders of these notes exercised their right to convert their notes in aggregate principal amount of $280,000 into 686,667 shares of our common stock.

Two-Year Convertible Note

On July 20, 2017, the company accepted $400,000 and issued a promissory note with a 10% original issue discount in the principal amount of $440,000, due in two years, that accrues interest at 12% paid quarterly. The note is convertible, at the holder’s option, into either BioLargo common shares at $0.42 per share, 2,000 shares of Clyra Medical Technologies common stock held by BioLargo, or any combination thereof. At maturity, the note automatically converts into shares of BioLargo common stock at $0.42 per share, unless otherwise instructed by the holder. Interest may be paid in cash, common stock, or options to purchase common stock, at the holder’s option.

Clyra Medical Technologies, Inc.

On August 4, 2017, Clyra commenced a private securities offering of its common shares at a price of $160 per share, and accepted $1,000,000 in subscriptions. It issued 6,250 shares of its common stock to two investors. Of that amount, BioLargo invested $250,000 and was issued 1,562.5 shares.

On July 22, 2017, Sanatio Capital LLC and Clyra agreed to convert the $250,000 line of credit held by Sanatio to common shares at a price per share equal to that offered to investors in the Clyra offering. As of the date of conversion, the outstanding amount due on the line of credit was $270,400. Once the offering price was established, Sanatio was issued 1,690 shares of Clyra common stock at $160 per share.

Subsequent to the issuance of shares to investors in the offering and to Sanatio, BioLargo owns 15,298 shares of Clyra common stock. These shares comprise 46.33% of the voting stock at Clyra. Two members of BioLargo’s board of directors (Dennis P. Calvert and Jack B. Strommen) are two of the three members of Clyra’s board of directors.

Summer 2017 Unit Offering

Subsequent to June 30, 2017, we accepted investments for our Summer 2017 Unit Offering (see Note 3) in the aggregate amount of $182,200 from five accredited investors, and issued convertible promissory notes in the face amount of the investments that mature June 20, 2020. We also issued warrants to these investors to purchase an aggregate 433,810 shares.

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Item 2.               Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q of BioLargo, Inc. (the “Company”) contains forward-looking statements. These forward-looking statements include predictions regarding, among other things:

● our business plan;

● the commercial viability of our technologies and products incorporating our technologies;

● the effects of competitive factors on our technologies and products incorporating our technologies;

● expenses we will incur in operating our business;

● our ability to end persistent operating losses and generate positive cash flow and operating income;

● our ability to identify potential applications of our technologies in industries other than the animal health industry and to bring viable products to market in such industries;

● the application of our technologies in the food and beverage industry;

● the willingness of other companies to incorporate our technologies into new or existing products or services and provide continued support for such products or services;

● the ability of our licensees to successfully produce, advertise and market products incorporating our technologies;

● the continued success and viability of our licensees holding the exclusive right to exploit our technologies in particular fields;

● the sufficiency of our liquidity and working capital;

● our ability to finance product field testing, hiring of personnel, required regulatory approvals, and needed patent applications;

● continued availability and affordability of resources used in our technologies and the production of our products and services; and

● whether we are able to complete additional capital or debt financings in order to continue to fund operations and continue as a going concern.

You can identify these and other forward-looking statements by the use of words such as “may”, “will”, “expects”, “anticipates”, “believes”, “estimates”, “continues”, or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.

Such statements, which include statements concerning future revenue sources and concentrations, selling, general and administrative expenses, research and development expenses, capital resources, additional financings and additional losses, are subject to risks and uncertainties, including, but not limited to, those discussed elsewhere in this Form 10-Q, that could cause actual results to differ materially from those projected.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016. Unless otherwise expressly stated herein, all statements, including forward-looking statements, set forth in this Form 10-Q are as of June 30, 2017, unless expressly stated otherwise, and we undertake no duty to update this information.

As used in this Report, the term Company refers to BioLargo, Inc., a Delaware corporation, and its wholly-owned subsidiaries, BioLargo Life Technologies, Inc., a California corporation, Odor-No-More, Inc., a California corporation, BioLargo Water USA, Inc., a California corporation, BioLargo Development Corp., a California corporation, BioLargo Maritime Solutions, Inc., a California corporation, a Canadian subsidiary BioLargo Water, Inc.; and Clyra Medical Technologies, Inc. (“Clyra”), a subsidiary in which the Company owns a controlling ownership interest.  

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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

Our goal is to make life better by delivering sustainable technology-based products that help solve some of the most widespread problems threatening the world's supply of water, air, food, agriculture, healthcare and energy. We create and refine intellectual property that forms a foundation from which to build and create break-through products and technology for licensure to commercial partners. Our products harness the power of iodine – “Nature’s Best Solution” – to eliminate contaminants that threaten our water, our health and our quality of life.

We invent, patent, prove and partner – to create best-of-class products and technology for commercialization as we build value for our stockholders and deliver benefits to our world.

Invent – Three Platform Technologies

We feature three patent protected platform technologies with diverse product opportunities across multiple industries – the AOS (Advanced Oxidation System), CupriDyne, and Isan. Each features the use of the all-natural iodine molecule. While they all use iodine, they are quite different in terms of the methods by which they exploit the use of iodine, the form and composition of iodine used, and therefore their function and value proposition can be quite different for each commercial application.

AOS

The AOS is our invention that combines iodine, water filter materials and electricity within a water treatment device. Our AOS generates extremely high oxidation potential within the device to achieve extremely high rates of disinfection to eliminate infectious biological pathogens like Salmonella enterica, Listeria monocytogenes and Escherichia coli, as well as a model virus Bacteriophage T4. It is also able to oxidize and break-down, or otherwise eliminate, or remove, soluble organic contaminants like acids, solvents, sulfur compounds, oil and gas by-products, and pharmaceutical by-products commonly found in a wide variety of contaminated water sources. The AOS’ extremely high oxidation potential, generated using extremely low levels of energy, is the key.

The term “oxidation potential” refers to the measure of the performance by which an oxidant is able to “break down” a material through removing electrons, and sometimes by the addition of oxygen. Two commonly understood examples of oxidation are: the rusting of a shipyard anchor by salty air, and the breakdown and conversion of wood into ash by fire and oxygen. The key to our AOS is its ability to generate extremely high oxidation potential in a continuous flow device that attacks contaminants in water flowing through it. Aside from its measurably superior disinfection rates, the AOS also boasts substantially lower power consumption rates than competing advanced water treatment technologies such as UV, electro-chlorination, or ozonation. For some applications, it is this value proposition that sets the AOS technology above other water treatment options, as the AOS may allow safe and reliable water treatment for a fraction of the cost of its competitors, and may even enable advanced water treatment in applications where it would have otherwise been prohibitively costly. Our AOS embodies a break-through in science which led to BioLargo’s co-founding of multi-year research chair whose goal was to solve the contaminated water issues associated with the Canadian Oil Sands at the University of Alberta Department of Engineering in conjunction with the top five oil companies in Canada, the regional water district, and various environmental agencies of the Canadian government. This project concluded in 2016. We believe at such time as the industry moves forward to solve these issues, the opportunity for our participation will present itself. Our work is continually expanding into a number of commercial applications with a key focus on wastewater treatment, food processing, agriculture, and oil and gas. We are also at the early stages of evaluating opportunities in the maritime industry, storm drain recapture / recycling, and drinking water. Our AOS is an award-winning invention that is supported by science and engineering financial support and grants from various federal and provincial funding agencies in Canada. Our first grant in the United States was recently awarded by the Metropolitan Water District of Southern California through their Innovative Conservation Program. Financial support is expanding concurrently with ongoing work to commercially develop the latest AOS designs. We believe the AOS has an important and substantial commercial opportunity in every segment of the water treatment industry and we believe it should find early market adoption in helping manage wastewater.

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Following extensive validation testing and refinement of the basic operating system, we have begun a commercial prototype development project that includes important third party commercial validation studies and the design of its computer automation system. These next steps lead us to a product ready for commercial markets. In August 2016, we introduced our first “Alpha” prototype at our annual technical symposium. The “alpha” project was executed in collaboration with technical personnel at the Northern Alberta Institute of Technology (“NAIT”)'s Center for Sensors and Systems Integration and with NAIT's Applied Bio/Nanotechnology Industrial Research Chair. Bolstered by financial support provided by the Alberta Innovates nanoPDP program, this project focused on the development of a first-generation prototype system that incorporates a sensor platform to monitor various water parameters through online real-time data acquisition. The Alpha AOS system enables further scale up and testing in industrial settings, and work has commenced to develop a “Beta” unit for first stage commercial trials. Although we expect work on the Beta unit to continue for some time, we are ready now to design and engineer a working prototype for a commercial client. Once this Beta prototype development phase is complete, we intend to focus on producing multiple commercial ready pilot units for testing with various interested industrial clients and on securing regulatory approvals where required. We are in the process of refining our strategic plan to more narrowly focus our efforts on markets where we believe we can make an important contribution, faster adoption rates, and meaningful economic inroads.

Our AOS is being developed as a flexible modular system to allow for a wide variety of sizes, configurations and functional uses to be deployed to meet a wide variety of unique and special requirements of customers across a wide range of industries.

In February 2017 Mark Lambert joined our team as a “strategic advisor” to help develop and refine our commercialization plan for AOS. Mr. Lambert has over 25 years of experience as a senior level executive with extensive experience in the water, renewable energy and environmental services industries.

In July of 2017 we hired Shan Yong, PhD as the Director of Business Development for the BioLargo AOS. Dr. Yong has more than 14 years of experience in international business development and technology consulting in the water and environmental sector.

We are currently engaged in three commercial bench-scale pilot studies to validate performance of the AOS with industry-provided water. Two of these studies are being supervised and audited by a commercial engineering firm. The outcome of the studies will evaluate disinfection, destruction and removal of soluble organics in a potential client’s actual waste stream.

CupriDyne® Technology

Our CupriDyne technology is used to efficiently deliver iodine in various products. It can be delivered in any physical form and can be combined with other ingredients, such as fragrances in our odor control products, and surfactants in our stain removal and odor control products. Additional ingredients can often be added without sacrificing its practical and safe functions as well its oxidation potential. Our product designs include liquids, sprays, gels, powders, coatings and absorbents.

Safety and efficacy are key for CupriDyne. Each of our product designs delivers iodine safely, and precisely, to achieve effective odor control, stain-removal, or surface washing, and in some applications at high doses, broad-spectrum disinfection. CupriDyne’s primary ingredients, as well as reaction by-products, are “generally recognized as safe” (“G.R.A.S”) by the U.S. Food and Drug Administration as food additives in their basic forms. CupriDyne’s commercial product opportunities are diverse and we have an extensive menu of product designs in various stages of commercialization and licensure development, discussed in detail below in the “Commercial, Household and Personal Care Products” and “CupriDyne Clean – Industrial Odor Control” sections.

We believe CupriDyne is unique. The iodine most of us are familiar with, sold in pharmacies and used by hospitals, has severe limitations – it is considered toxic, causes staining, and contains a limited dose of the active oxidizing ingredient. Our CupriDyne technology, on the other hand, directly addresses many of these shortcomings – it delivers iodine’s oxidizing ingredient (“free iodine”) with precision, ranging from very small doses up to very large doses with more than 30 times the performance of chlorine. We can deliver iodine that is both non-toxic and non-staining, thus extending its usefulness well beyond historical product applications.

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Our CupriDyne technology is flexible, allowing product designs to incorporate varying dosing levels. Some product designs focus on odor, and do not act as “disinfectants.” Some product designs do, and would require regulatory approval to make such claims.

Isan System

The Isan System is a reliable and efficient automated iodine dosing system. It is the winner of a Top 50 Water Technology Award by the Artemis Project and a Dupont Innovation Award. Its precise dosing combined with a straight-forward “set-it-and-forget-it” automated computer controlled system are the keys to its success. The system features controlled measuring, flow rate, dosing and iodine extraction/removal technology as well as an automatic tracking system that precisely delivers iodine in calibrated doses into a water steam or container of water. The Isan system has been proven to substantially reduce the incidence of fungal growth, spoilage, microorganisms and pathogens in water and on food. The system is capable of functioning at the high flow rates commensurate with industrial disinfection needs.

First developed in Australia, the Isan system was initially registered with the Australian Pesticides and Veterinary Medicines Authority (“APVMA”) and Food Standards Australia and New Zealand (“FSANZ”) in Australia and New Zealand. The system has meaningful applications and commercial value in any industry that can benefit from precise and effecting dosing of iodine in water, such as: agriculture, food production and processing, manufacturing, industrial water processes and irrigation supply. See “Clarion Water” below for information on our efforts of our licensee to commercialize the Isan system.

Patent - an Expanding Intellectual Property Estate

We have 16 patents issued and multiple pending. We believe these patents provide a foundation from which to continue building our patent portfolio and we have reasonable basis upon which to rely on our patent protections in the field of art in which we practice. We also rely on trade secrets and technical know-how to establish and maintain additional protection of our intellectual property. As our capital resources permit, we expect to expand our patent protection as we continue to refine our inventions as well as make new discoveries.

We recently filed two patent applications related to the medical products developed by our subsidiary Clyra. See “Advanced Wound Care – Clyra Medical Technologies Subsidiary” below.

Prove - a Continual Process

We have invested time and money in a wide array of third party testing, side-by-side comparisons and third party verifications to support our most important technical claims. The basic attributes of iodine are well understood by science and industry. We have evidence and experience to substantiate the following bold claims:

o AOS- when we internally compared it to the best of class competition it appears that we are:

■ more effective

■ less costly

■ faster

o CupriDyne

■ Oxidizes Volatile Organic Compounds like H2S, Sulfur Compounds, Ammonia, Fatty Acids, Mercaptans, Polyaromatic Compounds

■ Total odor elimination

■ Non-toxic and gentle

■ Generally Accepted As Safe (G.R.A.S.) – ingredients and by products are GRAS according to the FDA

■ Broad spectrum efficacy

■ Potent (less than 1/20^th the dose of comparable disinfectant [like chlorine] to achieve similar results)

■ Increases holding power of absorbents by up to six times

■ Enhanced flocculation

■ Nutritive

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Isan System

■ Precise iodine dosing

■ Anti-bacterial, anti-fungal, anti-viral

■ Effective against top five plant pathogens

■ Promotes extended shelf-life

■ Enhances root growth and foliage growth for healthier plants

■ Low corrosion

Partner – a Smart Strategic Decision

We seek to develop commercial partnerships with other companies who will partner with us and pay us for a negotiated contractual right to use our intellectual property (patents, formulas, designs, claims, know-how, secrets), in order to expand their business for their own commercial purposes. In those instances, we seek a reasonable deposit, a minimum commitment to volume, some territorial rights, and a percentage of sales for a mutually agreeable term and territory. We believe this licensing model will prove successful and meaningful for our company.

We choose to pursue a licensing strategy for its obvious and well-understood high margins, potential for explosive revenue potential and capital conserving features. While this business model can also be highly dependent upon macro-economic factors like the relative stability of the national and international economy as well as the cyclical nature of business, politics and climate for innovation and competing technical advances, we believe this is an appropriate strategy for our company.

We have a number of examples of strategic alliance or partnering initiatives whereby we are advancing both our science, our patents, our proof of claims, field trials and our commercial opportunities. There are a number of noteworthy examples:

The University of Alberta

We are engaged in a cooperative research relationship with the University of Alberta and its researchers in Edmonton, Canada. The offices and lab of our Canadian subsidiary, BioLargo Water, Inc., and our staff researchers, are located within the University of Alberta research center at Agri-Food Discovery Place. We are able to utilize the extensive resources of the University and its researchers on a contract for hire basis as needed. We work closely with the Department of Agricultural, Food and Nutritional Science at the University of Alberta and its Department of Engineering, and partner with University professors on government and industry sponsored financial awards and grants to support our ongoing research and development as we refine the AOS in preparation of commercial pilots and commercial designs. We have received over 30 grants thus far. Generally, the financial awards take on two common themes: first, science and engineering grants in which the University of Alberta is the primary recipient and contracting party with the grant agency to support work on and around our technology; and second, direct grants in which our Canadian subsidiary is the contracting party to support ongoing science and engineering to advance our AOS towards commercialization, sometimes supporting the work of PhD students at the University. In both cases, the financial awards support much, but not all, of the research budget and related costs. Our research arrangement with the University has three high value propositions for BioLargo: (i) a depth of resources and talent to accomplish highly skilled work, (ii) financial aid to support research and development costs and (iii) independent and credible validation of our technical claims.

Clarion Water

On August 18, 2014, we entered into a manufacturing and distribution license agreement for our Isan® system with Clarion Water, a new operating division of InsulTech Manufacturing, LLC (www.insultech.com), the latter of which has over 20 years of commercial success around the globe representing hundreds of millions in sales of technical products to Fortune 100 companies.

Co-owned with Peter Holdings, Ltd. through a joint venture agreement, the Isan system leverages the power of iodine to provide the world’s most effective disinfection dosing systems. It has been referred to as one of the most important technical advancements in food safety in the past 20 years. It won a ‘top 50 water company award’ by the Artemis Project in 2010 and a DuPont Innovation Award for its excellence in science and innovation in 2004.

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Per the terms of our license agreement, Clarion is obligated to pay royalties on revenue equal to 10%. As we jointly own the Isan System with Peter Holdings, Ltd., all royalties are to be shared equally with Peter Holdings. The intellectual property subject to the license agreement includes all intellectual property related to the Isan System, including all patents, trademarks, proprietary knowledge, and other similar know-how or rights relating to or arising out of the Isan System or the patents related to the Isan System. The agreement contains other terms and conditions typically found in intellectual property license agreements.

Since licensing the technology, Clarion completed a comprehensive technical and engineering update to the Isan System, featuring a new automated touch screen user interface, enhanced security, enhanced control features for increased monitoring and sensing, and adding automated functionality providing users unmatched flexibility, reliability and control over this state-of-the-art disinfectant delivery system, and begun commercial trials. In 2016, it received approval from the U.S. Environmental Protection Agency for use of Isan generated iodine, “IoMax,” as it is delivered in poultry drinking water. Clarion recently received approval for expanded uses of its IoMax iodine, including for the sanitizing livestock drinking water, livestock barns and vehicles, milking and dairy related equipment, food grade egg shells, retort cooling water, HVAC units, and general farm premises. As of June 30, 2017, we have yet to receive royalties from Clarion on this license agreement.

Downeast Logistics

In late 2013, we entered into a cooperative selling and distribution agreement with Downeast Logistics, a certified “Service-Disabled Veteran-Owned Small Business” (SDVOSB), as our distribution partner to facilitate our first order to the US Government. Downeast has been instrumental in developing ongoing sales to the United States Military. We have six products with National Stocking Numbers.

In March 2016 two of our product lines (consisting of 9 SKUs) of Nature’s Best Science products were awarded a five-year U.S. General Services Administration (GSA) supply contract, under schedule 65IIA for medical equipment and supplies. The award opens up access to these products through “GSA Advantage”, the online shopping and ordering system that provides government agencies access to thousands of contractors and millions of supplies (products) and services. We intend to apply for inclusion of additional existing and future products into GSA Advantage, including our industrial odor control product, CupriDyne Clean. In December of 2016 these same product lines as well as our CupriDyne Clean Industrial Odor Eliminator were accepted to the DOD eMALL which is another purchasing portal for the Defense Department and other State and Federal agencies. As of this date our products are approved for sale and available to all branches of government at the federal, state and local levels through five different purchasing portals.

Downeast Logistics has operated for more than thirteen years, and will continue to offer our products through multiple channels of the US Government. Its designation as a SDVOSB places Downeast Logistics within a group of highly sought after vendors to the US government. Odor-No-More has registered itself as well as several products with several procurement agencies of the US Government. Downeast has purchased approximately $24,000 in product from us in the six months ended June 30, 2017.

Independent Sales Representatives

We are working with independent representatives developing selling channels for our odor control products. We are in customer trials for our smoke-odor eliminating products. The response from customers has been excellent and we have received the highest marks for performance that is superior to the competing products. We continue to support these selling efforts with samples, training, selling materials and competitive bulk pricing. While we cannot predict the timing or outcome of these efforts, we are confident in our products’ ability to outperform the competition. As our sales within the waste handling industry expand, we will narrow this activity to more carefully identify the high-volume producers and support their efforts to build sales. While we have not experienced meaningful results in this area, we do believe that our products are finding commercial traction and that this strategy will prove valuable.

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Industrial Odor Control - CupriDyne Clean

Our CupriDyne Clean industrial products are designed to tackle tough odors in various industrial settings, such as waste processing and recycling operations, waste-water treatment facilities, waste to energy conversion operations, materials recovery facilities, food processing operations, and livestock production facilities with CupriDyne Clean. We have been told by prospective customers and experts from these markets that effective odor control for these prospective customer groups is in among the top on a list of priorities in their daily operations and their commitment to serve their local communities where they operate. We believe our product is unique and offers competitive advantages in many markets. At waste processing facilities, for example, many operators use fragrances to mask odors produced from processing and recycling waste. In contrast, our product eliminates odors on contact without fragrances, and at a lower price. Based on our test marketing and trials, we believe that many industries that must contend with odors that include, ammonia, fatty acids, sulfur, or mercaptans are dissatisfied with the current competing odor control products, place a high value on odor control solutions that actually work and are willing, with good evidence and testimonials to support our claims, to test and trial new products like our CupriDyne Clean as they search for a solution to these common and troublesome odor problems.

Our product web site can be seen at www.cupridyne.com. We have had some initial success selling CupriDyne Clean to solid waste and recycling companies and wastewater treatment companies that encourages us to continue our marketing and sales efforts in these areas. The operations of the companies in the waste handling industry segment often include transfer stations and landfill facilities. There are many large companies that dominate that marketplace. A leading information source for the waste handling industry named Waste 360 reports the revenues of the top 100 firms within the waste and recycling industry at roughly $46 billion in annual revenues based on 2015 figures. These companies often have layers of staff that participate in decision making related to using a new product like ours. They all deploy a menu of odor abatement strategies, systems, products and processes that are already in place. Often, as we present our new product and its claims, we are met with disbelief. So, while they all face an odor challenge by the very nature of their operations, they frequently are unable to believe that there is a product like ours that actually works and is safe and affordable. As a result, it has taken us more time, more work, and more money to assemble the track record, the data, and the third-party testimonials to begin breaking through to adoption in this industry. Recently, we broke through these barriers and signed “national purchasing agreements” with three top companies in the waste management industry. These agreements provide us “official” vendor status and authorize us to sell product to the customers’ local operations. Although there’s no obligation on the customer’s part to purchase a minimum amount or even any product, becoming an approved vendor is a major hurdle for a new vendor like us to overcome. We have sold product to facilities within these systems and we intend to focus our ongoing sales efforts to expand as rapidly as possible within these and other national accounts as they may develop. While the success of these efforts cannot be assured, we are confident and highly encouraged to focus and invest time, energy, staff and capital in this area as resources permit.

Multinationals and Mid-Level Industry Participants for our AOS

We believe there are a number of potential partners interested in working with us to exploit the commercial opportunities associated with the AOS technology. These opportunities are limited by common and obvious limitations, capital, the relative state of development and market readiness, and adoption rates in the marketplace. Given the significant value offerings, namely enhanced performance and lower cost, we believe we will be able to find industry partners to assist in commercialization of the AOS and are committed to pursue success in these markets. We are pursuing discussions with potential partners that can assist us in engineering the full-scale commercial model for the AOS as it would be deployed in a treatment train to decontaminate water in an industrial setting. To this end, we recently engaged a leading executive from the water industry, Mark Lambert, as well as a seasoned business development executive Shan Yong, PhD, to facilitate a refinement of our focus and assist in finding and engaging companies to partner with us.

Strategic Alliances and Engineering Support  

In October 2016 we engaged Chicago Bridge & Iron (CB&I) to support implementation of our AOS and provide independent performance verification. In February of 2017 CB&I announced that they would be selling the business unit with whom we are working to Veritas Capital. The company soon began a process of downsizing its engineering staff. This transition delayed our planned work. At this time we are unable to predict the outcome of our relationship with CB&I as we have worked diligently to secure alternative resources to fill that need.

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We have initiated multiple conversations with engineering groups and are involved in negotiations now for the scale-up and commercialization of our AOS technology as well as distribution of our various products.

In late 2016 we established a relationship with Carollo Engineering, one of the largest engineering firms in the United States dedicated solely to water related engineering. We are working with Carollo to provide independent third party oversight of some initial demonstration testing of AOS for potential municipal and food industry clients.

Commercial, Household and Personal Care Products

CHAPP includes broad product categories and many opportunities for the application of our technologies. It is defined by the ability to utilize similar, if not identical, consumption products in multiple market segments. Detergents, single use absorbents, wipes, products that provide odor or infection control and stain removal all fall within this category. Packaging ranges from consumer sizes of a few ounces to bulk packaging for commercial or industrial use. We are currently marketing products in this category under four brands – Odor-No-More, Nature’s Best Solution, Deodorall and NBS. Our primary product offerings include an animal-bedding additive that controls odor and moisture. We also sell liquid odor control products to private label (aka ‘White Label’) customers who then in turn sell product to consumers and industrial clients.

We are continuing our efforts to generate additional “private label” clients. We have fulfilled some small orders for products that we produced under a third party’s private brand. We continue to meet with new potential customers for private label opportunities. We also have relationships and remain in discussions with potential strategic partners to provide large scale manufacturing and distribution should we secure orders for the private label business opportunities or experience a rapid increase in any product whereby we need to supplement manufacturing to meet client delivery needs. Success in these markets is highly dependent upon the willingness of the potential partners to invest in product support to continue marketing and expanding customer awareness.

Our sales in the CHAPP product category are nominal. Product development, sales and marketing require significant financial resources that we currently have elected to invest elsewhere while, also, limiting our risk in these highly competitive and commodity markets. As such, our progress in this area has been slower than we had hoped. As opportunities present themselves, we market our technology for licensure to established companies in this industry segment. We rely upon independent agents and key industry contacts for this activity and it is not a top priority. We continue to expand our proof of claims and product designs for various odor and moisture control applications. We believe this segment will enjoy commercial success only after we prove the market viability for our CupriDyne Clean product. Therefore, we are more narrowly focused on the business to business sales and marketing activity to help gain exposure and build credibility for our consumer product designs and technology.

BioLargo Maritime Solutions, Inc.

We formed BioLargo Maritime Solutions, Inc. to organize and evaluate business opportunities in and around the maritime industry for our technologies, including our AOS. This market segment is marked by delays in the adoption and enforcement of certain ballast water regulations that have been forcasted to spurn a major international market for on ship ballast water treatment systems. The market is delayed. While the trend and regulatory initiatives are continuing, the economics of current technical solutions and the business case has remained uncertain and fraught with what we believe to be high capital requirements and a less than optimal return on investment proposition. While we remain optimistic, we are hesitant to fully puruse this market segement until we are more confident in our fututure success. We will need to organize a strategy and additional resources, including capital and proper staffing, to pursue business opportunities. This subsidiary is not yet operational.

Advanced Wound Care – Clyra Medical Technologies Subsidiary

In 2012 we formed Clyra Medical Technologies, Inc. (“Clyra”) to commercialize our technology in the medical products industry, with an initial focus on advanced wound care. Our advanced wound care products combine broad-spectrum antimicrobial capabilities with iodine’s natural and well-understood metabolic pathway to promote healing. Our products are highly differentiated by the gentle nature in which they can perform. We believe these benefits, along with its non-staining feature and reduced product costs as compared with other antimicrobials, give our products a competitive advantage in the marketplace.

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With new funding in place, in 2016 Clyra re-initiated product development and testing with experts and well-established contract manufacturing companies from industry. It has concluded development on two products and has retained a leading company to prepare documentation for pre-market notification to the FDA under Section 510(k) of the Food, Drug and Cosmetic Act. This process is almost complete and application is imminent. Clyra hopes to have FDA clearance and product available for sale by year’s end. While no assurances can be made about the ultimate success any FDA applications once filed, given the forward-looking nature of such events, Clyra has retained and engaged a team of experts in the area to guide it through the process. In the interim, Clyra is working with “key opinion leaders” and conducting clinical trials to further develop product claims, and their roll out, marketing, and distribution plans. Recently, Dr. Brock Liden, a renowned wound care expert, presented Clyra’s platform technology at the 15th annual Peter Sheehan Wound Healing: Science & Industry Conference in Puerto Rico, attended by leading wound care clinicians and researchers. Applications for U.S. patents were recently filed for these products under development and we intend to continue expanding patent coverage as we refine our products, as available. Clyra is also evaluating potential product designs where our current product designs can be used or slightly modified/enhanced to create new products for new medial related markets like dental, veterinary medicine, over the counter applications and the like.

As set forth in Part II, Item 5, Clyra recently conducted a private offering of its common stock. Subsequent to the offering, BioLargo owns 46% of Clyra’s issued and outstanding shares. Two of Clyra’s three board seats are filled by current members of BioLargo’s board of directors, and we continue to work closely with Clyra to advance the development of the platform technology and furtherance of its business plan. Our license agreement with Clyra remains in place, whereby Clyra is obligated to pay to BioLargo a royalty of 6% on sales.

Results of Operations—Comparison of the three and six months ended June 30, 2017 and 2016

Revenue

Our revenue from product sales are increasing, primarily due to an increase in the volume of sales of our CupriDyne Clean Industrial Odor Control products to landfills and waste processing operations. The volume of sales of our Specimen Transport Solidifier pouches to the U.S. military increased, although not to the extent as our CupriDyne Clean products. For the six months ended June 30, 2017, our total product sales increased by 176% over the comparable period in 2016. For the three months, it increased 156%.

With respect to our CupriDyne Clean Industrial Odor Control products, we do not have a long enough sales history to identify trends or uncertainties that would affect future sales. In the past few months, we have signed “national purchasing agreements” that authorize us to sell product to the operational facilities of three of the largest waste handling companies in the United States. None of those agreements require the company to purchase a minimum amount, or any, product. Our first such agreement was executed just prior to the beginning of our second fiscal quarter, and thus sales to companies for which we have national purchasing agreements increased significantly from the first quarter, and accounted for 44% of our total revenue in the three months ended June 30, 2017. With respect to sales of our odor control products to the waste handling industry in general, we are finding that in colder climates, odors are less noticeable at waste processing facilities, and thus there appears to be less of a demand for odor control products in winter months. Locations that are near populated areas are more likely to pursue the use of active odor control and abatement products like ours.

Other Income

Our wholly owned Canadian subsidiary has been awarded more than 30 research grants from various Canadian public and private agencies, including the Canadian National Research Institute – Industrial Research Assistance Program (NRC-IRAP) and the National Science and Engineering Research Council of Canada (NSERC). The grants received are considered reimbursement grants related to costs we incur and therefore are included as Other Income on our income statement. The majority of grant funds awarded are paid directly to third parties. Amounts paid directly to third parties are not included as other income in our financial statements. We also received a grant from the Metropolitan Water District of Southern California pursuant to its Innovative Conservation Program to test our AOS system with three wastewater matrices to determine its disinfection and decontamination capabilities.

Although we are continuing to apply for government and industry grants, and have been successful in so applying in the past, we cannot be certain of continuing those successes in the future.

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Cost of Goods Sold

Our cost of goods sold includes costs of raw materials, contract manufacturing, and proportions of salaries and expenses related to the sales and marketing efforts of our products, including commissions. Because we have not achieved a meaningful product revenue base, and our number of products is increasing, the inclusion of the fixed costs related to the product development and manufacturing increases our cost of goods disproportionately, resulting in high percentage fluctuations.

Selling, General and Administrative Expense

Our Selling, General and Administrative (“SG&A”) expenses include both cash and non-cash expenses. Our total SG&A increased $238,454 (26%) and $362,602 (20%) in the three and six months ended June 30, 2017 compared to the same period in 2016. The largest components of our selling, general and administrative expenses for the three and six months ended June 30, 2017 and 2016 included:

	Three months ended				Six months ended
	June 30, 2016		June 30, 2017		June 30, 2016		June 30, 2017
Salaries and payroll-related expenses	$	244,287		387,221	$	462,045	$	712,747
Consulting expense		241,579		236,925		513,880		474,255
Professional fees		134,547		125,601		278,800		312,644
Investor relations		31,863		65,402		68,600		105,488

Our salaries and payroll related expenses increased in 2017 primarily due to the option issuance to our Chief Financial Officer, and generally to an increase in our operational activites.

With respect to our professional fees, this increase was a result of increased legal work for patent application and prosecutions and audit and legal work needed with respect to the Form S-1 filed on January 25, 2017.

Our investor relations fees increased due to our efforts and activities at various conferences and with consultants promoting the BioLargo brand.

Research and Development

Research and development expenses decreased $5,688 (2%) and increased $34,598 (5%) for the three and six-months ended June 30, 2017, as compared to the same periods in 2016. The level of activity in research and development expenses is consistent with the use of funds from the investment in Clyra, and increased activities at our research facility at the University of Alberta due in part to our grant funding.

Interest expense

Interest expense increased $640,748 and $1,187,979 for the three and six-months ended June 30, 2017, as compared to the same periods in 2016. Our interest expense increased significantly because of the increase in principal amount of outstanding convertible promissory notes and the amortization of the debt discount on the warrants issued in our 2015 Unit Offering and our Winter 2016 Unit Offering. From March 31, 2016, through June 30, 2017, we increased our debt balance by approximately $3,000,000. Our debt and now totals approximately $5,800,000 on which we are paying interest primarly through the issuance of common stock.

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Net Loss

Net loss for the three and six-months ended June 30, 2017 was $2,517,794 and $4,577,870, a loss of $0.03 and $0.05 per share, compared to a net loss for the three and six-months ended June 30, 2016 of $1,668,335 and $3,312,728, a loss of $0.02 and $0.04 per share. The net loss increased mainly due to the increased interest expense and to increased compensation expense offset somewhat by the gain from the change in the value of the derivative liability. The net loss per share did not change as the increase in net loss was offset by the increase in common shares outstanding. We do not expect to generate revenues in amount significant enough for us to generate a profit in the foreseeable future. (See Part I, Item II, “Our Business”, above.)

Liquidity and Capital Resources

We have been, and anticipate that we will continue to be, limited in terms of our capital resources. As reflected in the accompanying financial statements, we had a net loss of $4,577,870 for the six months ended June 30, 2017, and an accumulated stockholders’ deficit of $96,256,129 as of June 30, 2017. Our total cash balance was $433,539 at June 30, 2017, a decrease of $1,476,614 since December 31, 2016. Our working capital at June 30, 2017 was negative $3,175,349. The short-term demands on our liquidity consist of our obligations to pay our employees, multiple consultants, and for other ongoing operational obligations, including research and development activities in Canada and in our medical subsidiary. In the past, because we had limited capital available, we have paid only a portion of these obligations in cash, and the remainder by the issuance of common stock or options pursuant to the accounts payable conversion plan approved by our board of directors.

As of June 30, 2017, we had $5,805,668 in principal amounts due on various debt obligations (see Note 3). Of that amount, $4,830,097 are convertible at our option into common stock at maturity. Additionally, we had $344,438 of accounts payable and accrued expenses (see Note 6).

On June 15, 2017, our registration statement on Form S-1/A was deemed effective by the SEC. This registration statement registered the shares underlying the notes and warrants issued in our 2015 Unit Offering. The warrants contain a “call provision” that allows the company to require all or a portion of the warrant be exercised or forfeited if the closing price of the company’s common stock equals or exceeds two times the warrant exercise price for ten consecutive business days. The call provision is only available once the warrant shares are registered with the SEC. The warrants issued to investors in the 2015 Unit Offering have exercise prices that vary from 40 to 70 cents per share. Approximately $3.5 million of warrants are exercisable at 40 cents per share. Were the price of our common stock to increase to 80 cents per share such that we could “call” (all or a portion of) these warrants, there is no assurance that all of the investors would exercise their rights to purchase shares under the warrants, or that our stock price would remain at above 80 cents per share once we called the warrants.

We will be required to raise substantial additional capital to continue our current level of operations, including without limitation, hiring additional personnel, additional scientific and third-party testing, costs associated with obtaining regulatory approvals and filing additional patent applications to protect our intellectual property, and possible strategic acquisitions or alliances, as well as to meet our liabilities as they become due for the next 12 months. We have been, and will continue to be, required to financially support the operations of our subsidiaries, none of which are operating at a positive cash flow. Only one subsidiary, Clyra, has financing in place to fund operations for the remainder of the year.

The foregoing factors raise substantial doubt about our ability to continue as a 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. Ultimately, our ability to continue as a going concern is dependent upon our ability to attract significant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations by licensing or otherwise commercializing products incorporating our technologies. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

We are continuing to explore numerous alternatives for our current and longer-term financial requirements, including additional raises of capital from investors in the form of convertible debt or equity. We recently concluded a successful raise of $1,000,000 at our subsidiary Clyra. And, we are in discussions to secure an equity line of credit. However, there can be no assurance that we will be able to raise any additional capital.

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It is also unlikely that we will be able to qualify for bank or other financial institutional debt financing until such time as our operations are considerably more advanced and we are able to demonstrate the financial strength to provide confidence for a lender, which we do not currently believe is likely to occur for at least the next 12 months or more.

If we are unable to raise sufficient capital, we may be required to curtail some of our operations, including efforts to develop, test, market, evaluate and license our BioLargo technology. If we were forced to curtail aspects of our operations, there could be a material adverse impact on our financial condition and results of operations.

Critical Accounting Policies  

Our unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these consolidated financial statements. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 30, 2017, in the Notes to the Consolidated Financial Statements and the Critical Accounting Estimates sections. In addition, refer to Note 2 to the consolidated interim financial statements included in Part I, Item 1 of this report.

The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results of the Company reports in its consolidated financial statements.

It the Company’s policy to expense share based payments as of the date of grant in accordance with Auditing Standard Codification Topic 718 “Share-Based Payment.” Application of this pronouncement requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior. Most of these inputs are either highly dependent on the current economic environment at the date of grant or forward-looking expectations projected over the expected term of the award. As a result, the actual impact of adoption on future earnings could differ significantly from our current estimate.

Recent Accounting Pronouncements

See Note 2, “Recent Accounting Pronouncements”, to the Consolidated Financial Statements.

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) as of the end of the period covered by this Report.

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. Based on this evaluation, our chief executive officer and chief financial officer concluded that as of the evaluation date our disclosure controls and procedures are effective.

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.

There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

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PART II

OTHER INFORMATION

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

Stock Issued for Services

During the three-months ended June 30, 2017, we issued 98,496 shares of common stock to two consultants. The common stock was issued for services provided by consultants and is recorded in selling general and administrative expense in our consolidated statement of operations.

Stock issued as payment for interest on convertible notes

On June 20, 2017, we issued 373,471 shares of common stock to holders of our convertible promissory notes. These shares were issued as payment of $158,267 in accrued interest at a price of $0.4235 per share, and is recorded as interest expensein our consolidated statement of operations.

Summer 2017 Private Securities Offering

On May 24, 2017, we commenced a private securities offering (titled the “Summer 2017 Unit Offering”) which offered the sale of $1,500,000 of “Units,” each Unit consisting of a convertible promissory note and stock purchase warrant. The promissory notes issued to investors thus far are convertible at $0.42 cents per share, mature June 20, 2020, and bear interest at the rate of 12% per annum on the amount invested. Any interest due will be paid quarterly in arrears in cash or shares of common stock. If paid by the issuance of common stock, interest is paid at a conversion price equal to the average closing price of the Company’s common stock over the 20 trading days prior to the interest payment due date. The principal amount of the note may be paid by the issuance of shares of common stock, or cash, upon maturity at the Company’s election.

When paid in shares, the number of shares to be issued shall be calculated by dividing the principal amount invested by the $0.42 conversion price. Promissory notes may be converted at any time by the investor, at maturity by the Company, or by the Company prior to maturity, so long as the following conditions are met: (i) the Shares issued as payment are registered with the SEC; and (ii) the Company’s common stock closes for ten consecutive trading days at or above three times the Unit price. In addition to the convertible promissory note, each investor received a warrant allowing for the purchase of the number of shares of BioLargo common stock equal to the investment amount divided by $0.42 (e.g., one warrant share for each share of common stock which the investor is eligible to receive through conversion of his original convertible note). The exercise price of the warrant is $0.65 per share of common stock and expire on June 20, 2022. The Company may “call” the warrants, requiring the investor to exercise their warrants within 30 days or forever lose the rights to do so, only if the following conditions have been met: (i) the underlying Shares are registered with the SEC and (ii) the Company’s common stock closes for 10 consecutive trading days at or above two times the exercise price.

During the three months ended June 30, 2017, we received an aggregate $100,000 from two investors and issued convertible promissory notes with a maturity date of June 20, 2020, convertible into our common stock at $0.42 per share. Each investor, for no additional consideration, received a stock purchase warrant exercisable at $0.65 per share, which right terminates June 20, 2022. We issued warrants to purchase an aggregate 238,096 shares to the two investors.

Issuance of Stock Options in exchange for payment of payables

On June 30, 2017, we issued options to purchase 237,353 shares of our common stock at an exercise price of $0.43 per share to our board of directors, in lieu of $62,500 in fees, and to vendors in lieu or accrued and unpaid fees $26,374.

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Conversion of Notes

On June 6, 2017, an investor in our 2015 Unit Offering exercised the right to convert a promissory note in the principal amount of $130,000, plus $3,291 of interest, into 378,767 shares of our common stock.

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

On August 8, 2017, the Company’s partially owned subsidiary Clyra Medical Technologies, Inc., received funds for a subscription of $750,000 to its private offering of 6,250 shares of its common stock at a price of $160 per share. Clyra issued 4,687.5 shares to the investor. It also received a $250,000 investment from BioLargo, Inc., and issued 1,562.5 shares to BioLargo. In conjunction with this offering, Sanatio Capital, holder of a $250,000 line of credit, the owner of 8,847 preferred shares of Clyra, and owned by Jack B. Strommen, a member of both Clyra and BioLargo’s board of directors, agreed to convert the amounts due under its line of credit, including interest, into shares of Clyra common stock at the same price as investors in the offering. As of the date Sanatio and Clyra agreed to convert the line of credit, the amount due on the line of credit was $270,400, and Sanatio was issued 1,690 shares of Clyra common stock in full satisfaction thereof.

Item 6. Exhibits

The exhibits listed below are attached hereto:

		Incorporated by Reference Herein
Exhibit Number	Exhibit Description	Form	File Date
3.1	Amended and Restated Certificate of Incorporation for BioLargo, Inc. filed March 16, 2007	Form 10-KSB	5/4/2007
3.3	Bylaws of BioLargo, Inc., as amended and restated	Form 10-KSB	5/23/2003
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 Convertible Promissory Note issued in 2015 Unit Offering	Form 10-K	3/31/2015
4.4	Form of Series A Stock Purchase Warrant issued in 2015 Unit Offering	Form 10-K	3/31/2015
4.5	Form of Stock Options issued in exchange for reduction in accounts payable.	Form 10-K	3/31/2015
4.6	$300,000 Line of Credit issued June 2016	Form 10-K	3/30/2017
4.7	Stock purchase warrant issued with Line of Credit in June 2016	Form 10-Q	8/15/2016
4.8	Securities Purchase Agreement dated July 8, 2016	Form 10-Q	11/14/2016
4.9	Form of Note issued to One Year Note holder in July 2016	Form 10-Q	8/15/2016
4.10	Form of Warrant issued to One Year Note holder in July 2016	Form 10-Q	8/15/2016

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4.11	Form of Note Issued in Winter 2016 Unit Offering	Form S-1	1/25/2017
4.12	Form of Warrant Issued in Winter 2016 Unit Offering	Form S-1	1/25/2017
4.13	Form of Note issued to One Year Note holder dated December 30, 2016	Form S-1	1/25/2017
4.14	Form of Warrant issued to One Year Note holder dated December 30, 2016	Form S-1	1/25/2017
4.15	Stock Option dated February 10, 2017 issued to Chief Financial Officer Charles K. Dargan II.	Form 8-K	2/14/2017
4.16	Option to purchase common stock issued to Dennis P. Calvert dated May 2, 2017	Form 8-K	5/4/2017
4.17*	Form of Note issued in Summer 2017 Offering
4.18*	Form of Warrant issued in Summer 2017 Offering
4.19*	Form of One-Year Note issued July 2017
4.20*	Form of Warrant issued to One-Year Noteholder July 2017
4.21*	Two-year Note in face amount of $440,000 issued July 2017
10.1†	Employment Agreement with Dennis P. Calvert dated May 2, 2017.	Form 8-K	5/4/2017
10.2†	February 10, 2017 extension to Engagement Extension Agreement with Charles K. Dargan, II.	Form 8-K	2/14/2017
10.3	License Agreement with Insultech Manufacturing LLC dba Clarion Water	Form 10-Q	8/15/2014
10.4	License Agreement between Clyra Medical Technologies, Inc., dated December 17, 2012	Form 8-K	1/6/2016
10.5	December 30, 2015 amendment to License Agreement with Clyra Medical Technologies, Inc.	Form 8-K	1/6/2016
10.6	Commercial Lease Agreement for 14921 Chestnut St., Westminster, CA 92683	Form 8-K	8/24/2016
10.7	Lock-Up Agreement with Dennis P. Calvert dated April 30, 2017	Form 8-K	5/4/2017
10.8	Lock-Up Agreement with Dennis P. Calvert dated May 2, 2017.	Form 8-K	5/4/2017
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
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
32*	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
101.INS**	XBRL Instance
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation
101.DEF**	XBRL Taxonomy Extension Definition
101.LAB**	XBRL Taxonomy Extension Labels
101.PRE**	XBRL Taxonomy Extension Presentation

* Filed herewith 

** Furnished herewith 

† Management contract or compensatory plan, contract or arrangement

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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: August 14, 2017	BIOLARGO, INC. By: /s/ DENNIS P. CALVERT
	Dennis P. Calvert Chief Executive Officer
Date: August 14, 2017	By: /s/ CHARLES K. DARGAN, II
	Chief Financial Officer

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EX-4.17

Exhibit 4.17

[FORM OF] CONVERTIBLE PROMISSORY NOTE

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THERE IS AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

Amount: $________	Westminster, California
Instrument #:	Issuance Date: _____

FOR VALUE RECEIVED, BIOLARGO, INC., a corporation organized under the laws of the state of Delaware (“Issuer”), promises to pay to the order of ______________________ (hereafter, together with any subsequent holder hereof, called “Holder”), at its office, at “Holder’s Address” (as that term is defined below), or at such other place as Holder may direct, the “Amount” noted above (the “Loan Amount”), payable on June 20, 2020 (the “Maturity Date”). This convertible note is duly authorized issue of the Issuer, purchased by the initial Holder in the Issuer’s Summer 2017 Unit Offering pursuant to the subscription agreement (“Subscription Agreement”) submitted by the original Holder and accepted by the Issuer on the “Issuance Date” noted above (the “Issuance Date”), and designated as its “Summer 2017 Unit Offering Convertible Note” (referred to herein as the “Note”). This Note is issued as part of a “Unit”, comprised of this Note and a stock purchase warrant, at a Unit Price of $____, issued to the original Holder in conjunction with the Company’s Summer 2017 Unit Offering. This principal amount of this Note is convertible, pursuant to the terms set forth herein, at $____ per share (“Conversion Price”).

The Issuer agrees to pay interest on the unpaid principal amount of the Loan Amount from time to time outstanding hereunder at the following rates per year, compounded annually: (i) before the Maturity Date, whether by acceleration or otherwise, at the rate per annum equal to twelve percent (12%); (ii) after the Maturity Date, until paid, at a rate per annum equal to fifteen percent (15%).

Payments of both principal and interest are to be made in immediately available funds in lawful money of the United States of America, or in Common Stock of the Issuer, at the Issuer’s option, as set forth below.

     The Note is subject to the following additional provisions:

1.     Interest. Accrual of interest shall commence as of the Issuance Date. Interest will be paid quarterly on March 20th, June 20th, September 20th, and December 20th (the first quarter pro-rated based on the actual number of days elapsed in said quarter), on the date of the conversion of the Note (mandatory or voluntary, as set forth below), and also on the Maturity Date, such interest to be paid, at the Company’s option, in cash or in that number of shares of Common Stock of the Issuer (the “Common Stock”) at a price per share equal to the average closing price of the Company’s common stock for the 20 trading days preceding a given interest due date (“Interest Conversion Price”). Unless otherwise agreed in writing by both parties hereto, the interest so payable will be paid to the person in whose name this Note (or one or more predecessor Notes) is registered on the records of the Issuer regarding registration and transfers of the Note (the “Note Register”), provided, however, that the Issuer’s obligation to a transferee of this Note arises only if such transfer, sale or other disposition is made in accordance with the terms and conditions contained in this Note and the Subscription Agreement that the original Holder executed at the time of making an investment in the Issuer.

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2.     Withholdings. The Issuer shall be entitled to withhold from all payments of principal and/or interest of this Note any amounts required to be withheld under the applicable provisions of the Internal Revenue Code of 1986, as amended, or other applicable laws at the time of such payments.

3.     Transfer. This Note has been issued subject to investment representations of the original Holder hereof and may be transferred or exchanged only in compliance with the Securities Act and applicable state securities laws and in compliance with the restrictions on transfer provided in the Subscription Agreement. Prior to the due presentment for such transfer of this Note, the Issuer and any agent of the Issuer may treat the person in whose name this Note is duly registered in the Note Register as the owner hereof for the purpose of receiving payment as herein provided and all other purposes, whether or not this Note is overdue, and neither the Issuer nor any such agent shall be affected by notice to the contrary. The transferee shall be bound, as the original Holder by the same representations and terms described herein and under the Subscription Agreement.

4.     Conversion by Holder. The Holder may, at its option, at any time convert the principal amount of this Note or any portion thereof, into such number of shares of fully paid and non-assessable Common Stock of the Issuer (“Conversion Shares”) as is obtained by dividing the Loan Amount by the Conversion Price. The right to convert the Note may be exercised by the Holder by telecopying, emailing to ShareholderServices@BioLargo.com, mailing (via first class mail, postage prepaid) or personally delivering an executed and completed notice of conversion (the “Notice of Voluntary Conversion”) to the Issuer. The business day on which a Notice of Voluntary Conversion is delivered in accordance with the provisions hereof shall be deemed the “Voluntary Conversion Date”. The Holder must return to Issuer the original Note. The Issuer shall cause the issuance of the Conversion Shares to an account in Holder’s name at Issuer’s transfer agent, or, upon Holder’s request, issue and deliver a paper certificate representing the Conversion Shares, within ten business days after the later to occur of (i) the Voluntary Conversion Date or (ii) the business day on which the Issuer has received from the Holder the original Note being so converted. Accrued interest shall be due on the Voluntary Conversion Date and paid as set forth above in Paragraph 1.

5.     Conversion by Issuer – Prior to Maturity Date. If the following two conditions are met, the Issuer may, at its option, “call” the Note due and issue shares of its common stock in full payment thereof: (i) the “Conversion Shares” are subject to an effective registration statement filed with the Securities & Exchange Commission, and (ii) the Issuer’s common stock last trades for ten (10) consecutive trading days at a value of at least three times the Unit Price. The foregoing does not create an obligation by the Issuer to register the Conversion Shares. If such conditions are met, the Issuer may require the Holder to convert the principal amount of the Note or any portion thereof, into such number of Conversion Shares as is obtained by dividing the Loan Amount by the Conversion Price. The obligation of the Holder to convert the Note may be exercised by the Company by telecopying, emailing, mailing (via first class mail, postage prepaid) or personally delivering an executed and completed notice of conversion (the “Notice of Mandatory Conversion”) to the Holder’s Address maintained in the Note Register. The Holder covenants and agrees to acknowledge a Notice of Mandatory Conversion in writing by completing, dating and signing such Notice of Mandatory Conversion and returning it to the Company by telecopier, electronic mail, first class mail (postage prepaid) or personal delivery (the “Holder Acknowledgment Date”), along with the original Note. The business day on which the Company delivers a Notice of Mandatory Conversion in accordance with the provisions hereof shall be deemed the “Mandatory Conversion Date”. The Holder must return to Issuer the original Note, if not held by the Company. The Issuer will cause the issuance of Conversion Shares to an account in Holder’s name at Issuer’s transfer agent, or, upon Holder’s request, issue and deliver a paper certificate representing the Conversion shares, within ten business days after the later to occur of (i) the Holder Acknowledgment Date or (ii) the date that the Issuer has received from the Holder the original Note being so converted. Accrued interest shall be due on the Mandatory Conversion Date and paid as set forth above in Paragraph 1.

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6.     Conversion by Issuer – at Maturity. At the Maturity Date, the Issuer may, at its option, require the Holder to convert the principal amount of the Note or any portion thereof, into such number of Conversion Shares as is obtained by dividing the Loan Amount by the Conversion Price. The obligation of the Holder to convert the Note may be exercised by the Company by telecopying, emailing, mailing (via first class mail, postage prepaid) or personally delivering an executed and completed notice of conversion (the “Notice of Mandatory Conversion”) to the Holder’s Address maintained in the Note Register. The Holder covenants and agrees to acknowledge a Notice of Mandatory Conversion in writing by completing, dating and signing such Notice of Mandatory Conversion and returning it to the Company by telecopier, electronic mail, first class mail (postage prepaid) or personal delivery (the “Holder Acknowledgment Date”), along with the original Note. The business day on which the Company delivers a Notice of Mandatory Conversion in accordance with the provisions hereof shall be deemed the “Mandatory Conversion Date”. The Holder must return to Issuer the original Note, if not held by the Company. The Issuer will cause the issuance of Conversion Shares to an account in Holder’s name at Issuer’s transfer agent, or, upon Holder’s request, issue and deliver a paper certificate representing the Conversion shares, within ten Business Days after the later to occur of (i) the Holder Acknowledgment Date or (ii) the date that the Issuer has received from the Holder the original Note being so converted. Accrued interest shall be due on the Mandatory Conversion Date and paid as set forth above in Paragraph 1.

7.     Reduction of Principal upon Conversion. The principal amount of this Note, and any accrued interest thereon, shall be reduced as per that principal amount indicated on the Notice of Voluntary Conversion or Notice of Mandatory Conversion, as the case may be, upon the proper receipt by the Holder of such Conversion Shares due upon such Notice of Voluntary Conversion or Notice of Mandatory Conversion.

8.     Adjustment. The number of Conversion Shares shall be adjusted as follows. If the Issuer shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, the number of Conversion Shares in effect immediately prior to such subdivision shall be proportionately increased, and conversely, in case the outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the number of Conversion Shares in effect immediately prior to such subdivision shall be proportionately decreased.

9.      No provision of this Note shall alter or impair the obligation of the Issuer, which is absolute and unconditional, upon an Event of Default (as defined below), to pay the principal of, and interest on this Note at the place, time, and rate, and in the coin or currency herein prescribed.

10.     Events of Default. Each of the following occurrences is hereby defined as an “Event of Default”:

a.     Nonpayment. The Issuer shall fail to make any payment of principal, interest, or other amounts payable hereunder when and as due; or

b.     Dissolutions, etc. The Issuer or any subsidiary shall fail to comply with any provision concerning its existence or any prohibition against dissolution, liquidation, merger, consolidation or sale of assets; or

c.     Noncompliance with this Agreement. The Issuer shall fail to comply in any material respect with any provision hereof, which failure does not otherwise constitute an Event of Default, and such failure shall continue for ten (10) days after the occurrence of such failure; or

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d.     Bankruptcy. Any bankruptcy, insolvency, reorganization, arrangement, readjustment, liquidation, dissolution, or similar proceeding, domestic or foreign, is instituted by or against the Issuer or any of its subsidiaries, or the Issuer or any of its subsidiaries shall take any step toward, or to authorize, such a proceeding; or

e.     Insolvency. The Issuer shall make a general assignment for the benefit of its creditors, shall enter into any composition or similar agreement, or shall suspend the transaction of all or a substantial portion of its usual business.

11.     Holder’s Election upon Default. If one or more “Events of Default” shall occur, then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) or cured as provided herein, at the option of the Holder, and in the Holder’s sole discretion, the Holder may elect to consider this Note (and all interest through such date) immediately due and payable. In order to so elect, the Holder must deliver written notice of the election and the amount due to the Issuer via certified mail, return receipt requested, at the Issuer’s address as set forth herein (or any other address provided to the Holder), and thereafter the Issuer shall have ten business days upon receipt to cure the Event of Default, pay the Note, or convert the amount due on the Note pursuant to the conversion formula set forth above. It is agreed that in the event of such action, such Holder shall be entitled to receive all reasonable fees, costs and expenses incurred, including without limitation such reasonable fees and expenses of attorneys. The parties acknowledge that a change in control of the Issuer shall not be deemed to be an Event of Default as set forth herein.

12.     Invalid or Unenforceable Provisions. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

13.     Voting Rights. This Note does not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Issuer prior to the conversion into Common Stock thereof, except as provided by applicable law. If, however, at the time of the surrender of this Note and conversion the Holder hereof shall be entitled to convert this Note, the Conversion Shares so issued shall be and be deemed to be issued to such holder as the record owner of such shares as of the close of business on the Conversion Date.

IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed by an officer thereunto duly authorized.

BIOLARGO, INC.                

              /S/DENNIS P CALVERT

By___________________________

Name: Dennis P. Calvert, President

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NOTICE OF VOLUNTARY CONVERSION

SUMMER 2017 UNIT OFFERING

(To be Executed by the Registered Holder in order to convert the Note)

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount due on the Convertible Promissory Note instrument number _____ (“Note”), plus outstanding interest due on the amount converted, into shares of Common Stock of BioLargo, Inc., according to the conditions set forth in the Note. Shares due for principal shall be calculated based on the Conversion Price set forth in the Note. Shares due for accrued interest shall be calculated based on the average closing price of the Company’s common stock for the 20-trading days preceding the delivery date of this Notice, pursuant to the terms of the Note.

The undersigned represents and warrants to BioLargo that, as of the date hereof, the undersigned is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Exchange Act of 1934, as amended.

Signature:                                                     Date Signed: _____________________

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NOTICE OF MANDATORY CONVERSION

   (To be Executed by the Company in order to required the Holder to convert the Note)

     The undersigned hereby notifies you of its irrevocably election to require you to convert $___________ of the principal amount of the above Note, and $__________ of accrued and unpaid interest, into ___________ Shares of Common Stock of BioLargo, Inc. according to the conditions hereof, as of the date written below.

Date of Mandatory Conversion:                                                         BIOLARGO, INC.   By (Signature)                                                  Print Name:                                                        Title: ____________________________

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EX-4.18

Exhibit 4.18

BIOLARGO, INC.

[FORM OF] WARRANT TO PURCHASE COMMON STOCK

WITH CALL PROVISION

INSTRUMENT NO. _________ ISSUED: __________ 

THIS CERTIFIES THAT, for value received, ______________ (the “Holder”), is entitled upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date issued set forth above (the “Exercise Date”) and on or prior to the close of business on June 20, 2022 (the “Termination Date”) but not thereafter, to subscribe for and purchase from BioLargo, Inc., a Delaware corporation (the “Company”), up to __________ shares (the “Warrant Shares”) of common stock, par value, $0.00067, of the Company (the “Common Stock”). The exercise price per share of the Common Stock under this Warrant shall be _______ subject to adjustment hereunder (the “Exercise Price”).

This Warrant is issued in connection with and as consideration for the initial Holder’s investment in the Company’s private securities offering dated May 24, 2017, titled its Summer 2017 Unit Offering, in which the initial Holder purchased a Unit consisting of a convertible promissory note in the principal amount of $______ and this Warrant certificate.

1.     Method of Exercise; Payment; Issuance of New Warrant.

(a)     Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto; and, within three (3) Trading Days (for purposes herein, “Trading Day” means a day on which any of the following markets or exchanges on which the Common Stock is listed or quoted is open for trading on the date in question (“Trading Market”): the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Markets (or any successors to any of the foregoing)), of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one Business Day of receipt of such notice.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

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(b)     Mechanics of Exercise.

(i)     Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent (“Transfer Agent” means American Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address of 6201-15th Avenue, Brooklyn, New York 11219 and a facsimile number of 718-236-2641, and any successor transfer agent of the Company) to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is then a participant in such system and there is an effective Registration Statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder, by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise Form, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (such date, the “Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the first date on which all of the foregoing have been delivered to the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 1(c)(vi) prior to the issuance of such shares, having been paid.  If the Company fails for any reason to deliver to the Holder certificates evidencing the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such certificates are delivered or Holder rescinds such exercise. In the event that there is not an effective Registration Statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder, shares purchased hereunder shall be delivered to the Holder by credit the account of the Holder at the Company’s Transfer Agent by the date that is ten Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise Form, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (such date, the “Warrant Share Delivery Date”).

(ii)      Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(iii)      Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then, the Holder will have the right to rescind such exercise.

(iv)      Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

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(v)     No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

(vi)     Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

(vii)     Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

(viii)     “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time), (b)  if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Company and reasonably acceptable to a majority in interest of the Securities then outstanding, the fees and expenses of which shall be paid by the Company.

2.     Call Provision. In the event that both of the following conditions are met (the “Call Conditions”), the Company may “call” this Warrant requiring the Holder purchase all or a portion of the Warrant Shares pursuant to the provisions of this Paragraph: (i) the closing price of the Common Stock for each of ten (10) consecutive trading days, equals or exceeds two (2) times the Exercise Price (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the date of issuance of this Warrant), and (ii) the Warrant Shares are subject to an effective registration statement (“Registration Statement”) filed with the Securities & Exchange Commission. If the Call Conditions are satisfied concurrently, the Company may, within thirty (30) calendar days of such day, call for cancellation of all or any portion of the remaining Warrant Shares for which a Notice of Exercise Form has not yet been delivered (such right, a “Call”). To exercise this right, the Company must deliver to the registered Holder a written notice (a “Call Notice”), indicating therein the unexercised portion of this Warrant to which such notice applies. In the event a Notice of Exercise Form for any portion of this Warrant subject to such Call Notice shall not have been received by the Company within thirty (30) calendar days after the date of the Call Notice, then such portion shall be forfeited in its entirety without payment or consideration to the registered Holder.  

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3.     Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable, and free from all preemptive rights, taxes, liens and charges with respect to the issue thereof; provided, however, that the Company shall not be required to pay any transfer taxes with respect to the issue of shares in any name other than that of the registered holder hereof. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. The Company shall at all times take all such action and obtain all such permits or orders as may be necessary to enable the Company lawfully to issue such Common Stock as duly and validly issued, fully paid and nonassessable shares upon exercise in full of this Warrant.

4.     Adjustment. This Warrant shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

(a)     Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the date hereof effect a subdivision of the outstanding Common Stock, the Exercise Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the date hereof combine the outstanding Common Stock, the Exercise Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

(b)     Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the date hereof shall make or issue a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Exercise Price shall be decreased as of the time of such issuance, by multiplying the Exercise Price by a fraction:

(x) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance; and

(y) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

(c)     Adjustment of Number of Shares. Upon each adjustment of the Exercise Price pursuant to either Section 4(a) or 4(b) of this Warrant, the number of shares of Common Stock purchasable upon exercise of this Warrant shall be adjusted to the number of shares of Common Stock, calculated to the nearest one hundredth of a share, obtained by multiplying the number of shares of Common Stock purchasable immediately prior to such adjustment upon the exercise of the Warrant by the Exercise Price in effect prior to such adjustment and dividing the product so obtained by the new Exercise Price.

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(d)     Adjustment for Reclassification, Exchange and Substitution. If the Common Stock issuable upon the exercise of this Warrant are changed into the same or different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination provided for in Section 4(a) above, a dividend or distribution provided for in Section 4(b) above, or a reorganization, merger, consolidation or sale of assets, provided for in Section 4(e) below), then and in any such event the Holder shall have the right thereafter to exercise this Warrant into the kind and amount of stock and other securities receivable upon such recapitalization, reclassification or other change, by holders of the number of shares of Common Stock for which this Warrant might have been exercised immediately prior to such recapitalization, reclassification or change.

(e)     Reorganization, Mergers, Consolidations or Sales of Assets. If at any time or from time to time there is a capital reorganization of the Common Stock (other than a subdivision or combination provided for in Section 4(a) above, a dividend or distribution provided for in Section 4(b) above, or a reclassification or exchange of shares provided for in Section 4(d) above) or a merger or consolidation of the Company with or into another entity, or a sale of all or substantially all of the Company’s properties and assets to any other person or entity, then, as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant the number of shares of stock or other securities, money or property of the Company, or of the successor entity resulting from such merger or consolidation or sale, to which a holder of Common Stock deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale. The Company shall not effect any reorganization, merger, consolidation or sale unless prior to the consummation thereof each entity or person (other than the Company) that may be required to deliver any cash, securities or other property upon the exercise of this Warrant shall assume, by written instrument delivered to the Holder, the obligation to deliver to the Holder such cash, securities or other property as in accordance with the foregoing provisions the Holder may be entitled to receive. The foregoing provisions of this Section 4(e) shall similarly apply to successive reorganizations, mergers, consolidations and sales.

(f)     No Impairment. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of this Section and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company will not issue any capital stock of any class which is preferred as to dividends or as to the distribution of assets upon the voluntary or involuntary dissolution, liquidation or winding up of the Company.

(g)     Notice of Adjustments. Whenever this Warrant shall be adjusted pursuant to this Section 4, the Company shall make a certificate signed by an officer of the Company setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the new Exercise Price and the type or the number of Shares purchasable after giving effect to such adjustment, and shall cause copies of such certificate to be mailed (by first class mail, postage prepaid) to the Holder.

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5.     Notice of Record Date. In the event:

(1) that the Company declares a dividend (or any other distribution) on any of its capital stock (including without limitation, its Common Stock);

(2) that the Company repurchases or redeems any of its capital stock (including without limitation, its Common Stock) or any rights to acquire such capital stock;

(3) that the Company subdivides or combines its outstanding shares of Common Stock;

(4) of any reclassification of the Common Stock, or of any consolidation, merger or share exchange of the Company into or with another entity, or of the sale of all or substantially all of the assets of the Company;

(5) of the involuntary or voluntary dissolution, liquidation or winding up of the Company; or

(6) of any offer of its Common Stock or any rights to acquire such Common Stock for consideration paid per share of Common Stock less than the Exercise Price then in effect.

then the Company shall notify the Holder at least 30 days prior to the date specified in (A), (B) or (C) below, in writing stating:

(A)     the record date of such dividend, distribution, repurchase, redemption, subdivision or combination, or, if a record is not to be taken, the date as to which the holders of Common Stock of record to be entitled to such dividend, distribution, repurchase, redemption, subdivision or combination are to be determined;

(B)     the date on which such reclassification, consolidation, merger, share exchange, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding up; or

(C)     the date on which such offering of its Common Stock or any rights to acquire such Common Stock for consideration paid per share of Common Stock less than the Exercise Price is expected to become consummated.

6.     Transfer of Warrant.

(a)     Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

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(b)     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 6(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date set forth on the first page of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

(c)     Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

(d)     Understandings or Arrangements. Such Holder is acquiring this Warrant as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Warrant (this representation and warranty not limiting such Holder’s right to sell the Warrant pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws.) Such Holder is acquiring this Warrant hereunder in the ordinary course of its business.

7.     Miscellaneous.

(a)     No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1(d)(i).

(b)     Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

(c)     Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a business day, then, such action may be taken or such right may be exercised on the next succeeding business day.

(d)     Authorized Shares.

(i)     The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

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(ii)     Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

(iii)    Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

(e)     Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of Delaware law.

(f)     Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

(g)     Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies.  Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(h)     Notices. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including electronic mail and facsimile) and delivered to the applicable party at its address specified opposite its signature below, or at such other address as shall be designated by such party in a written notice to the other. All such notices and communications shall, when mailed, telegraphed, telexed, telecopied or cabled or sent by overnight courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier.

(i)     Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(j)     Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

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(k)     Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

(l)     Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holders holding Warrants at least equal to a majority of the Warrant Shares issuable upon exercise of all then outstanding Warrants.

(m)     Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(n)     Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed and delivered by its duly authorized officer on the day and year first above written.

BIOLARGO, INC.

                /S/ DENNIS P CALVERT

By: _________________________

 Name: Dennis P. Calvert, President

Address: 14921 Chestnut St.

                  Westminster, CA 92683

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EXHIBIT A

NOTICE OF EXERCISE –WARRANT

TO:     BIOLARGO, INC.

(1) The undersigned hereby elects to purchase _____________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Unless said Warrant Shares will be delivered electronically via DWAC, please issue the Warrant Shares in the name of the undersigned or in such other name as is specified below in “book entry” form at the Company’s transfer agent.

If the Warrant Shares will be delivered electronically via DWAC, please issue them to the following account:

Name of DTC Participant (broker-dealer at which the account of Holder to be

credited with the Warrant Shares is maintained): _______________________________________________________________________________

DTC Participant Number: ________________________________________________________________________________________________

Name of Account at DTC Participant to be credited with the Shares: ________________________________________________________________

____________________________________________________________________________________________________________________

Account Number at DTC Participant to be credited with the Shares: ________________________________________________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: ______________________________________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _______________________________________

Name of Authorized Signatory: _________________________________________________________

Title of Authorized Signatory: __________________________________________________________

Date: ___________________________________________________

EXHIBIT B

NOTICE OF TRANSFER –WARRANT

(To be signed only upon transfer of Warrant and subject to other conditions of this Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ____________________________________________ the right represented by the attached Warrant to purchase __________ shares of the Common Stock of BioLargo, Inc., to which the attached Warrant relates, and appoints BioLargo, Inc. as Attorney-in-fact to transfer such right on the books of BioLargo, Inc., with full power of substitution in the premises.

The undersigned understands that any transfer of the attached Warrant is subject to full compliance with Federal and applicable state securities laws and other requirements, which requirements shall be determined and which issues shall be decided by BioLargo, Inc., in its sole and absolute discretion, prior to consenting to and recognizing such transfer.

Dated:                                                     

(Signature must conform in all respects to the name of the Holder as specified on the face of the Warrant)

(Address)

EX-4.19

Exhibit 4.19

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

BioLargo, Inc.

[FORM OF] Convertible Note

Issuance Date: July 18, 2017	Original Principal Amount:     $______
Note No.	Purchase Price Paid at Close:   $_____

FOR VALUE RECEIVED, BioLargo, Inc., a Delaware corporation (the "Company"), hereby promises to pay to the order of ___________________, or registered assigns (the "Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest ("Interest") on any outstanding Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the "Issuance Date") until the same becomes due and payable, upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof).

The Original Principal Amount is $________ which consists of the Purchase Price paid at Closing of $______ and an Original Issue Discount (“OID”) of $_____. For purposes hereof, the term “Outstanding Balance” means the Original Principal Amount, as reduced or increased, as the case may be, pursuant to the terms hereof for conversion, breach hereof or otherwise, plus any accrued but unpaid interest, collection and enforcements costs, and any other fees or charges incurred under this Note.

(1)     GENERAL TERMS

(a)     Payment of Principal. The "Maturity Date" shall be one (1) year from the Issuance Date, as may be extended at the sole option of the Holder.

(b)     Interest. A one-time interest charge of three percent (3%) (“Interest Rate”) shall be applied on the Issuance Date to the Original Principal Amount. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its assignee in whose name this Note is registered on the records of the Company regarding registration and transfers of Notes in cash or converted into Common Stock at the Conversion Price.

(c)     Security. This Note shall not be secured by any collateral or any assets pledged to the Holder.

(d)     Warrants. The Company shall issue to Holder or Holders a Warrant to purchase ___________ shares of the Company’s common stock, attached hereto as Exhibit B.

(2)     EVENTS OF DEFAULT.

(a)     An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body

(i)     The Company's failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder) or any other Transaction Document;

(ii)     A Conversion Failure as defined in section 3(b)(ii);

(iii)    The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

(iv)   The Company or any subsidiary of the Company shall default in any of its obligations under any other Note or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created;

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(v)     The Common Stock is suspended or delisted for trading on the Over the Counter QB market (the “Primary Market”), unless the Common Stock is “uplisted” to NASDAQ or other national exchange;

(vi)    The Company loses its ability to deliver shares via “DWAC/FAST” electronic transfer;

(vii)   The Company loses its status as “DTC Eligible”;

(viii)  The Company shall become late or delinquent in its filing requirements as a fully-reporting issuer registered with the Securities & Exchange Commission.

(b)     Upon the occurrence of the first Event of Default, the Outstanding Balance shall immediately increase to one hundred twenty (120%) of the Outstanding Balance immediately prior to the occurrence of the Event of Default (the “Default Effect”). The Default Effect shall automatically apply upon the occurrence of the Event of Default without the need for any party to give any notice or take any other action.

(3)     CONVERSION OF NOTE.     This Note shall be convertible into shares of the Company's Common Stock, on the terms and conditions set forth in this Section 3.

(a)     Conversion Right. Subject to the provisions of Section 3(d), at any time or from time to time, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Price (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 3(a) shall be equal to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer agent fees, legal fees, costs and any other fees or costs that may be incurred or charged in connection with the issuance of shares of the Company’s Common Stock to the Holder arising out of or relating to the conversion of this Note up to a maximum of five thousand dollars ($5,000); this amount does not include legal fees incurred by Holder.

(i)     "Conversion Amount" means the portion of the Original Principal Amount and Interest to be converted, plus any penalties, redeemed or otherwise with respect to which this determination is being made.

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(ii)     "Conversion Price" shall equal $0.42; subject to adjustment herein.

(b)     Company Conversion. Subject to the provisions of Section 3(d) and provided that all requirements of Rule 144 are met, and further provided that the following two additional conditions are met, the Company may, at its option, convert any portion of the Principal Amount and Interest into fully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Price: (i) six months has passed since the Issuance Date, and (ii) the Company’s common stock last trades for ten (10) consecutive business days at a value of at least two (2) times the Conversion Price. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 3(b) shall be equal to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer agent fees, legal fees, costs and any other fees or costs that may be incurred or charged in connection with the issuance of shares of the Company’s Common Stock to the Holder arising out of or relating to the conversion of this Note up to a maximum of five thousand dollars ($5,000); this amount does not include legal fees incurred by Holder. The obligation of the Holder to convert the Note may be exercised by the Company by telecopying, emailing, mailing (via first class mail, postage prepaid) or personally delivering an executed and completed notice of conversion (the “Notice of Mandatory Conversion”) to the Holder’s Address. The Holder covenants and agrees to acknowledge a Notice of Mandatory Conversion in writing by completing, dating and signing such Notice of Mandatory Conversion and returning it and the original Note to the Company (the date received is the “Holder Acknowledgment Date”). The business day on which a Notice of Mandatory Conversion is delivered in accordance with the provisions hereof shall be deemed the “Mandatory Conversion Date”. On or before the third business day following the Holder Acknowledgement Date, the Company will cause the issuance of Conversion Shares to an account in Holder’s name at Issuer’s transfer agent, or, upon Holder’s request, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system.

(c)     Mechanics of Conversion.

(i)     Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by email, facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York, NY Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company. On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (A) if legends are not required to be placed on certificates of Common Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule 144”) and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (B) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant the Rule 144. If this Note is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall, upon request of the Holder, as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice.

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(ii)     Company's Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of the facsimile or email copy of a Conversion Notice together with documentation satisfactory to the Transfer Agent that the shares are eligible for such electronic issuance, the Company shall fail to issue and deliver to Holder via “DWAC/FAST” electronic transfer the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), the Outstanding Amount of the Note shall increase by $2,000 per day until the Company issues and delivers a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (under Holder’s and Company’s expectation that any damages will tack back to the Issuance Date). Company will not be subject to any penalties once its transfer agent processes the shares to the DWAC system. If the Company fails to deliver shares in accordance with the timeframe stated in this Section, resulting in a Conversion Failure, the Holder, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Outstanding Balance with the rescinded conversion shares returned to the Company (under Holder’s and Company’s expectations that any returned conversion amounts will tack back to the original date of the Note).

(iii)    DWAC/FAST Eligibility.     If the Company fails for any reason (other than for compliance with applicable law) to deliver to the Holder the Shares by DWAC/FAST electronic transfer (such as by delivering a physical stock certificate) within fifteen (15) days, or if there is a Conversion Failure as defined in Section 3(b)(ii), and if the Holder incurs a Market Price Loss (defined below), then at any time subsequent to incurring the loss the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Market Price Loss and the Company must make the Holder whole by paying the Market Price Loss in cash immediately:

Market Price Loss = [(High trade price for the period between the day of conversion and the day the shares clear in the Holder’s brokerage account) x (Number of shares receivable from the conversion)] – [(Net Sales price realized by Holder) x (Number of shares receivable from the conversion)].

(iv)    DTC Eligibility & Sub-Penny. If the Company fails to maintain its status as DTC/DWAC Eligible according to common stipulations of the Depository Trust Company (“DTC/DWAC Eligible”) for any reason, or, if the Conversion Price is less than $0.01, the Principal Amount of the Note shall increase by ten thousand dollars ($10,000) (under Holder’s and Company’s expectation that any Principal Amount increase will tack back to the Issuance Date). In addition, the Conversion Price shall be redefined to equal 50% of the lowest trade occurring during the twenty-five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.

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(v)    Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

(d)     Limitations on Conversions or Trading.

(i)     Beneficial Ownership. If at any time after the Closing, the Buyer shall or would receive shares of Common Stock in payment of interest or principal under Note, upon conversion of the Note, under the Warrant, or upon exercise of the Warrant, so that the Buyer would, together with other shares of Common Stock held by it or its Affiliates, own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (the “Maximum Percentage”), the Company shall not be obligated and shall not issue to the Buyer shares of Common Stock which would exceed the Maximum Percentage, but only until such time as the Maximum Percentage would no longer be exceeded by any such receipt of shares of Common Stock by the Buyer. Upon delivery of a written notice to the Company, the Buyer may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Buyer and its Affiliates. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5.13 to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 5.13 or to make changes or supplements necessary or desirable to properly give effect to such limitation.  The limitation contained in this paragraph may not be waived and shall apply to a successor holder of the Note and Warrant.

(e)     Other Provisions.

(i)     Share Reservation.     The Company shall at all times reserve and keep available out of its authorized Common Stock a number of shares equal to at least 3 (three) times the full number of shares of Common Stock issuable upon conversion of all outstanding amounts under this Note and within 3 (three) Business Days following the receipt by the Company of a Holder's notice that such minimum number of Underlying Shares is not so reserved, the Company shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement. The Company will at all times reserve at least 3,000,000 shares of Common Stock for conversion.

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(ii)     Prepayment.     At any time following the Issuance Date, the Company shall have the option, upon 10 business days’ notice to Holder, to pre-pay the entire remaining outstanding principal amount of this Note in cash.

(iii)    Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Company of any convertible promissory note at a conversion rate more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Company shall notify the Holder of such additional or more favorable term. In such event, Holder may convert the current outstanding amount due under this Note into an investment on the same terms offered to the other investor. To the extent such investor simultaneously received a stock purchase warrant (for no additional consideration), Holder may also exchange the Warrant for a warrant on the terms issued to the investor. The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion look-back periods, interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage.

(iv)    All calculations under this Section 3 shall be rounded up to the nearest $0.00001 or whole share.

(v)     Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

(4)    Section 3(a)(10) Transaction. So long as this Note is outstanding, the Company shall not enter into any transaction or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act (a “3(a)(10) Transaction”). In the event that the Company does enter into, or makes any issuance of Common Stock related to a 3(a)(10) Transaction while this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than $25,000, will be assessed and will become immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.

(5)    REISSUANCE OF THIS NOTE.

(a)     Assignability. The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without Company’s approval.

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(b)     Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note representing the outstanding Principal.

(6)     NOTICES.     Any notices, consents, waivers or other communications required or permitted to be given under the terms shall be handled according to the Notice clause in the Securities Purchase Agreement.

The addresses for such communications shall be:

If to the Company, to:

BioLargo, Inc.

14921 Chestnut St.

Westminster, CA 92683

If to the Holder:

(7)     APPLICABLE LAW AND VENUE. This Note shall be governed by and construed in accordance with the laws of the State of California, without giving effect to conflicts of laws thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of California or in the federal courts located in the city and county of San Diego, in the State of California. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts.

(8)     WAIVER. Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

 [Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date set forth above.

COMPANY:

BioLargo, Inc.

/S/DENNIS P CALVERT

By:______________________________

Name:Dennis P. Calvert

Title:Chief Executive Officer

Note No. 

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EXHIBIT A

NOTICE OF CONVERSION

Attn: President and Legal Counsel

BioLargo, Inc.

14921 Chestnut St.

Westminster, CA 92683

The undersigned hereby elects to convert a portion of the $________ Convertible Note (Note No. ___) issued to _______ on July 18, 2017 into Shares of Common Stock of BioLargo, Inc. according to the conditions set forth in such Note as of the date written below.

By accepting this notice of conversion, you are acknowledging that the number of shares to be delivered represents less than 5% (five percent) of the common stock outstanding. If the number of shares to be delivered represents more than 4.99% of the common stock outstanding, this conversion notice shall immediately automatically extinguish and debenture Holder must be immediately notified.

Date of Conversion:

Conversion Amount:

Conversion Price:

Shares to be Delivered:

Shares delivered in name of:

Signature:

By:

Title:

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EXHIBIT B

WARRANT

EX-4.20

Exhibit 4.20

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO BIOLARGO, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

BIOLARGO, INC.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

1.     Issuance. In consideration of good and valuable consideration as set forth in the Purchase Agreement (defined below), including without limitation the Purchase Price (as defined in the Purchase Agreement), the receipt and sufficiency of which are hereby acknowledged by BioLargo, Inc., a Delaware corporation (the “Company”); Black Mountain Equities, Inc., its successors and/or registered assigns (the “Holder”), is hereby granted the right to purchase at any time on or after the Issue Date (as defined below) until the date which is the last calendar day of the month in which the fifth anniversary of the Issue Date occurs (the “Expiration Date”), 160,000 fully paid and nonassessable shares (the “Warrant Shares”) of the Company’s common stock, par value $0.00067 per share (the “Common Stock”), as such number of Warrant Shares may be adjusted from time to time pursuant to the terms and conditions of this Warrant to Purchase Shares of Common Stock (this “Warrant”). This Warrant is being issued pursuant to the terms of that certain Securities Purchase Agreement dated July 18, 2017, to which the Company and the Holder are parties (as the same may be amended from time to time, the “Purchase Agreement”).

Unless otherwise indicated herein, capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.

This Warrant was originally issued to the Holder on July 18, 2017 (the “Issue Date”).

2.     Exercise of Warrant.

2.1.     General.

(a)     This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Issue Date and ending on the Expiration Date. Such exercise shall be effectuated by submitting to the Company (either by delivery to the Company or by email or facsimile transmission) a completed and duly executed Notice of Exercise substantially in the form attached to this Warrant as Exhibit A (the “Notice of Exercise”). The date such Notice of Exercise is either faxed, emailed or delivered to the Company shall be the “Exercise Date,” provided that, if such exercise represents the full exercise of the outstanding balance of the Warrant, the Holder shall tender this Warrant to the Company within five (5) Trading Days thereafter, but only if the Warrant Shares to be delivered pursuant to the Notice of Exercise have been delivered to the Holder as of such date. The Notice of Exercise shall be executed by the Holder and shall indicate (i) the number of Warrant Shares (as defined below) to be issued pursuant to such exercise, and (ii) if applicable (as provided below), whether the exercise is a cashless exercise.

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For purposes of this Warrant, the term “Trading Day” means any day during which the principal market on which the Common Stock is traded (the “Principal Market”) shall be open for business.

(b)      To the extent this Warrant is not previously exercised, and provided that (i) the Market Price of one (1) Share is greater than the Exercise Price, (ii) the Warrant Shares are not subject to an effective registration statement under the 1933 Act, and (iii) six months have elapsed since the Issue Date, the Holder may elect to receive Warrant Shares, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and a Notice of Exercise, in which event the Company shall issue to Holder a number of Shares computed using the following formula:

X = Y (A-B)

      A

Where	X =	the number of Warrant Shares to be issued to Holder.
	Y =	the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
	A =	the Market Price (at the date of such calculation).
	B =	Exercise Price (as adjusted to the date of such calculation).

For the purposes of this Warrant, the following terms shall have the following meanings:

“Affiliate” shall mean an affiliate as such term is defined in Rule 144 under the Securities Act of 1933, as amended (or a successor rule).

“Aggregate Exercise Price Payable” shall mean the product of multiplying the number of Warrant Shares exercisable by the Exercise Price.

“Closing Price” shall mean the 4:00 P.M. last sale price of the Common Stock on the Principal Market on the relevant Trading Day(s), as reported by Bloomberg LP (or if that service is not then reporting the relevant information regarding the Common Stock, a comparable reporting service of national reputation selected by the Holder and reasonably acceptable to the Company) (“Bloomberg”) for the relevant date.

“Common Stock Equivalents” shall mean any stock or securities (convertible into or exercisable or exchangeable) for shares of Common Stock, not including the Company’s employee stock ownership plan.

“Deemed Issuance” means a requested conversion under the Note that is not honored by the Company.

“Exercise Price” shall mean sixty-five cents ($0.65) per share of Common Stock, subject to adjustments herein.

“Market Price” shall mean the Closing Price for the Common Stock on the Trading Day that is (i) five Trading Days prior to the Exercise Date or (ii) the Issue Date, whichever is greater.

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“Note” shall mean that certain Convertible Promissory Note issued by the Company to the Holder pursuant to the Purchase Agreement, as the same may be amended from time to time, and including any promissory note(s) that replace or are exchanged for such referenced promissory note.

(c)     If the Notice of Exercise form elects a “cash” exercise (or if the cashless exercise referred to in the immediately preceding subsection (b) is not available in accordance with the terms hereof), the Exercise Price per share of Common Stock for the Warrant Shares shall be payable, at the election of the Holder, in cash or by certified or official bank check or by wire transfer in accordance with instructions provided by the Company at the request of the Holder.

(d)     Upon the appropriate payment to the Company, if any, of the Exercise Price for the Warrant Shares, together with the surrender of this Warrant (if required), the Company shall promptly, but in no case later than the date that is three (3) Trading Days following the date the Exercise Price is paid to the Company (or with respect to a “cashless exercise,” the date that is three (3) Trading Days following the Exercise Date) (the “Delivery Date”), provided that the Company remains DTC/DWAC Eligible (as defined in the Note) are then satisfied, deliver or cause the Company’s Transfer Agent to deliver the applicable Warrant Shares electronically via the Deposit/Withdrawal at Custodian (“DWAC”) system to the account designated by the Holder on the Notice of Exercise. If all DWAC Eligible Conditions are not then satisfied, the Company shall instead issue and deliver or cause to be issued and delivered (via reputable overnight courier) to the address as specified in the Notice of Exercise, a certificate, registered in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder shall be entitled. For the avoidance of doubt, the Company has not met its obligation to deliver Warrant Shares by the Delivery Date unless the Transfer Agent has posted the shares for DWAC pickup and the Holder or its broker, as applicable, has been notified of this availability, or if the DWAC Eligible Conditions are not then satisfied, has actually received the certificate representing the applicable Warrant Shares no later than the close of business on the relevant Delivery Date pursuant to the terms set forth above.

(e)     If Warrant Shares are delivered later than as required under subsection (d) immediately above, the Company agrees to pay, in addition to all other remedies available to the Holder in the Transaction Documents, a late charge equal to the greater of (i) $2,000.00 and (ii) 2% of the product of (1) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (2) the Closing Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder without violating this Warrant, per Trading Day until such Warrant Shares are delivered. The Company shall pay any late charges incurred under this subsection in immediately available funds upon demand; provided, however, that, at the option of the Holder (without notice to the Company), such amount owed may be added to the principal amount of the Note. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares as required under subsection (d) immediately above, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the late charge described above shall be payable through the date notice of revocation or rescission is given to the Company.

(f)     The Holder shall be deemed to be the holder of the Warrant Shares issuable to it in accordance with the provisions of this Section 2.1 on the Exercise Date.

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2.2.     Ownership Limitation. If at any time after the Closing, the Buyer shall or would receive shares of Common Stock in payment of interest or principal under Note, upon conversion of the Note, under the Warrant, or upon exercise of the Warrant, so that the Buyer would, together with other shares of Common Stock held by it or its Affiliates, own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (the “Maximum Percentage”), the Company shall not be obligated and shall not issue to the Buyer shares of Common Stock which would exceed the Maximum Percentage, but only until such time as the Maximum Percentage would no longer be exceeded by any such receipt of shares of Common Stock by the Buyer. Upon delivery of a written notice to the Company, the Buyer may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 4.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Buyer and its Affiliates. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5.13 to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 5.13 or to make changes or supplements necessary or desirable to properly give effect to such limitation.  The limitation contained in this paragraph may not be waived and shall apply to a successor holder of the Note and Warrant.

2.3.     Call Provision. In the event that both of the following conditions are met (the “Call Conditions”), the Company may “call” this Warrant requiring the Holder purchase all or a portion of the Warrant Shares pursuant to the provisions of this Paragraph: (i) the closing price of the Common Stock for each of ten (10) consecutive business days, equals or exceeds three (3) times the Exercise Price (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the date of issuance of this Warrant), and (ii) the Warrant Shares are subject to an effective registration statement (“Registration Statement”) filed with the Securities & Exchange Commission. If the Call Conditions are satisfied concurrently, the Company may, within thirty (30) calendar days of such day, call for cancellation of all or any portion of the remaining Warrant Shares for which a Notice of Exercise Form has not yet been delivered (such right, a “Call”). To exercise this right, the Company must deliver to the registered Holder a written notice (a “Call Notice”), indicating therein the unexercised portion of this Warrant to which such notice applies. In the event a Notice of Exercise Form for any portion of this Warrant subject to such Call Notice shall not have been received by the Company within thirty (30) calendar days after the date of the Call Notice, then such portion shall be forfeited in its entirety without payment or consideration to the registered Holder.

3.     Mutilation or Loss of Warrant. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver to the Holder a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

4.     Rights of the Holder. The Holder shall not, by virtue of this Warrant alone, be entitled to any rights of a stockholder in the Company, either at law or in equity, and the rights of the Holder with respect to or arising under this Warrant are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.

5.     Certain Adjustments.

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5.1.     Capital Adjustments. If the Company shall at any time prior to the expiration of this Warrant subdivide the Common Stock, by split-up or stock split, or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock as a dividend, the number of Warrant Shares issuable upon the exercise of this Warrant shall forthwith be automatically increased proportionately in the case of a subdivision, split or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price, Market Price (in the event of a cashless exercise), and other applicable amounts, but the aggregate purchase price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 5.1 shall become effective automatically at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

5.2.     Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or change in the capital stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 5.1 above), then the Company shall make appropriate provision so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Common Stock as were purchasable by the Holder immediately prior to such reclassification, reorganization, or change. In any such case appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per Warrant Share payable hereunder, provided the aggregate purchase price shall remain the same.

5.3.     Subsequent Equity Sales. If the Company, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase) any Common Stock or Common Stock Equivalents, other than in an Exempt Transaction (defined below) entitling any person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced (and only reduced) to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the Aggregate Exercise Price Payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the Aggregate Exercise Price Payable prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.   The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock subject to this Section 5.3, indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5.3, upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. An “Exempt Transaction” includes (i) securities issued pursuant to the Company’s Summer 2017 Unit Offering; (ii) securities issued for the payment of interest on promissory notes; (iii) any convertible note; (iv) warrants issued to Black Mountain Equities, Inc., Gemini Master Fund, Ltd., or any investor affiliated therewith; and (v) stock or stock options issued in exchange for the reduction of accounts payable, including to persons providing services to the Company.

Initial:_______

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6.     Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on the exercise of this Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder and any Warrant Agent (as defined below) appointed pursuant to Section 8 hereof. Nothing in this Section 6 shall be deemed to limit any other provision contained herein.

7.     Transfer to Comply with the Securities Act. This Warrant, and the Warrant Shares, have not been registered under the 1933 Act. This Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant may only be sold, transferred, pledged or hypothecated (other than to an Affiliate) if (a) there exists an effective registration statement under the 1933 Act relating to such security or (b) the Company has received an opinion of counsel reasonably satisfactory to the Company that registration is not required under the 1933 Act. Until such time as registration has occurred under the 1933 Act, each certificate for this Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section 7. Any such transfer shall be accompanied by a transferor assignment substantially in the form attached to this Warrant as Exhibit B (the “Transferor Assignment”), executed by the transferor and the transferee and submitted to the Company. Upon receipt of the duly executed Transferor Assignment, the Company shall register the transferee thereon as the new Holder on the books and records of the Company and such transferee shall be deemed a “registered holder” or “registered assign” for all purposes hereunder, and shall have all the rights of the Holder.

8.     Warrant Agent. The Company may, by written notice to the Holder, appoint an agent (a “Warrant Agent”) for the purpose of issuing shares of Common Stock on the exercise of this Warrant pursuant hereto, exchanging this Warrant pursuant hereto, and replacing this Warrant pursuant hereto, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such Warrant Agent.

9.     Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company may treat the Holder as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

10.   Notices. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled “Notices” in the Purchase Agreement, the terms of which are incorporated herein by reference.

11.   Supplements and Amendments; Whole Agreement.     This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto. This Warrant, together with the Purchase Agreement and all the other Transaction Documents, taken together, contain the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings with respect to the subject matter hereof and thereof other than as expressly contained herein and therein.

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12.     Governing Law. This Warrant shall be governed by and interpreted in accordance with the laws of the State of Nevada, without giving effect to the principles thereof regarding the conflict of laws. The Company and, by accepting this Warrant, the Holder, each irrevocably (a) consent to and expressly submit to the exclusive personal jurisdiction of any state or federal court sitting in San Diego County, California in connection with any dispute or proceeding arising out of or relating to this Warrant, (b) agree that all claims in respect of any such dispute or proceeding may only be heard and determined in any such court, (c) expressly submit to the venue of any such court for the purposes hereof, and (d) waive any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim or objection to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper. The Company and, by accepting this Warrant, the Holder, each hereby irrevocably consent to the service of process of any of the aforementioned courts in any such proceeding by the mailing of copies thereof by reputable overnight courier (e.g., FedEx) or certified mail, postage prepaid, to such party’s address as provided for herein, such service to become effective ten (10) calendar days after such mailing. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

13.     Remedies. The remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and, without limiting any other remedies available to the Holder in the Transaction Documents, law or equity, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

14.     Counterparts. This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Signature delivered via facsimile or email shall be considered original signatures for purposes hereof.

15.     Descriptive Headings. Descriptive headings of the sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

16.     Attorney’s Fees. In the event of any litigation or dispute arising from this Warrant, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by said prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses.  Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.

17.     Severability. Whenever possible, each provision of this Warrant shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such provision shall be modified to achieve the objective of the parties to the fullest extent permitted and such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Warrant or the validity or enforceability of this Warrant in any other jurisdiction.

[Remainder of page intentionally left blank]

7

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by an officer thereunto duly authorized.

Dated: July 18, 2017

THE COMPANY:

BioLargo, Inc.

By:                                                                      

Name:     Dennis P. Calvert     

Title:       Chief Executive Officer

Date Signed: _______________________

Sec # 33021

EXHIBIT A

NOTICE OF EXERCISE OF WARRANT

TO:     BIOLARGO, INC.

The undersigned hereby irrevocably elects to exercise the right, represented by the Warrant to Purchase Shares of Common Stock dated as of July 18, 2017 (the “Warrant”), to purchase shares of the common stock, $0.00001 par value (“Common Stock”), of BIOLARGO, INC., and tenders herewith payment in accordance with Section 2 of the Warrant, as follows:

CASH: $__________________________ = (Exercise Price x Warrant Shares)
Payment is being made by:
	enclosed check
	wire transfer
	other

CASHLESS EXERCISE:

	Net number of Warrant Shares to be issued to Holder: ______*
		* X = Y (A-B)       A
Where	X =	the number of Warrant Shares to be issued to Holder.
	Y =	the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
	A =	the Market Price (at the date of such calculation).
	B =	Exercise Price (as adjusted to the date of such calculation).

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Warrant.

It is the intention of the Holder to comply with the provisions of Section 2.2 of the Warrant regarding certain limits on the Holder’s right to exercise thereunder. The Holder believes this exercise complies with the provisions of such Section 2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby, the Holder would have more shares of Common Stock than permitted under Section 2.2, this notice should be amended and revised, ab initio, to refer to the exercise which would result in the issuance of the maximum number of such shares permitted under such provision. Any exercise above such amount is hereby deemed void and revoked.

As contemplated by the Warrant, this Notice of Exercise is being sent by facsimile or email to the fax number and officer indicated above.

If this Notice of Exercise represents the full exercise of the outstanding balance of the Warrant, the Holder either (1) has previously surrendered the Warrant to the Company or (2) will surrender (or cause to be surrendered) the Warrant to the Company at the address indicated above by express courier within five (5) Trading Days after delivery or email or facsimile transmission of this Notice of Exercise; provided that the Warrant Shares to be delivered pursuant to this Notice of Exercise have been delivered to the Holder as of such date.

To the extent the Warrant Shares are not able to be delivered to the Holder via the DWAC system, please deliver certificates representing the Warrant Shares to the Holder via reputable overnight courier after receipt of this Notice of Exercise (by facsimile transmission or otherwise) to:

_____________________________________

_____________________________________

_____________________________________

Dated:     _____________________

____________________________

[Name of Holder]

By:_________________________

EXHIBIT B

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of the Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” the right represented by the Warrant to Purchase Shares of Common Stock dated as of July 18, 2017 (the “Warrant”) to purchase the percentage and number of shares of common stock, $0.00067 par value (“Common Stock”), of BIOLARGO, INC. specified under the headings “Percentage Transferred” and “Number Transferred,” respectively, opposite the name(s) of such person(s), and appoints each such person attorney to transfer the undersigned’s respective right on the books of BIOLARGO, INC. with full power of substitution in the premises.

Transferees Percentage Transferred Number Transferred

Dated:___________, ______

______________________________

[Transferor Name must conform to the name of Holder as specified on the face of the Warrant]

By: ___________________________

Name: _________________________

Signed in the presence of:

_____________________________

(Name)

ACCEPTED AND AGREED:

_____________________________

[TRANSFEREE]

By: ___________________________

Name: _________________________

EX-4.21

Exhibit 4.21

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

BioLargo, Inc.

Convertible Note

Issuance Date: July 20, 2017	Original Principal Amount:      $440,000
Note No. 33033	Purchase Price Paid at Close:    $400,000

FOR VALUE RECEIVED, BioLargo, Inc., a Delaware corporation (the "Company"), hereby promises to pay to the order of BRUCE KELBER, or registered assigns (the "Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest ("Interest") on any outstanding Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the "Issuance Date") until the same becomes due and payable, upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof).

The Original Principal Amount is $440,000 (four hundred forty thousand dollars) which consists of the Purchase Price paid at Closing of $400,000 (four hundred thousand dollars) and an Original Issue Discount (“OID”) of $40,000 (forty thousand dollars). For purposes hereof, the term “Outstanding Balance” means the Original Principal Amount, as reduced or increased, as the case may be, pursuant to the terms hereof for conversion, breach hereof or otherwise, plus any accrued but unpaid interest, collection and enforcements costs, and any other fees or charges incurred under this Note.

(1)     GENERAL TERMS

(a)     Payment of Principal. The "Maturity Date" shall be two (2) years from the Issuance Date, as may be extended at the sole option of the Holder.

(b)     Interest. Interest shall accrue at the rate of twelve (12) percent (“Interest Rate”). Interest hereunder shall be due on the first day of each calendar quarter, beginning October 1, 2017, and shall be paid within 10 days thereafter, to the Holder or its assignee in whose name this Note is registered on the records of the Company regarding registration and transfers of Notes, in cash, shares of BioLargo common stock at the average closing price of BioLargo’s common stock for the 20 business days preceding the due date, at the Holder’s option, or an option to purchase shares of BioLargo common stock on the same terms as those offered to vendors to reduce accounts payables.

(c)     Security. This Note shall not be secured by any collateral or any assets pledged to the Holder.

(2)     EVENTS OF DEFAULT.

(a)     An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body

(i)     The Company's failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder), upon demand from Holder;

(ii)     The Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

2

(3)     CONVERSION OF NOTE.

(a)     The Holder may, at its option, at any time prior to Maturity, convert the principal amount of this Note or any portion thereof, into either (i) such number of shares of fully paid and non-assessable Common Stock of BioLargo, Inc. as is obtained by dividing the conversion amount by $0.42 (a maximum of 1,047,619 BioLargo shares), or (ii) such number of shares of fully paid and non-assessable Common Stock of Clyra Medical Technologies, Inc. as is obtained by dividing the conversion amount by $220.00 (a maximum of 2,000 Clyra shares, to be transferred to Clyra by BioLargo), or (iii) any combination of BioLargo or Clyra shares (in Holder’s sole discretion). The right to convert the Note may be exercised by the Holder by telecopying, emailing to Investment@BioLargo.com, mailing (via first class mail, postage prepaid) or personally delivering an executed and completed notice of conversion (the “Notice of Voluntary Conversion”) to BioLargo. The business day on which a Notice of Voluntary Conversion is delivered in accordance with the provisions hereof shall be deemed the “Voluntary Conversion Date”. The Holder must return to Issuer the original Note.

(b)     Upon Maturity, the Note shall automatically convert to the number of shares of BioLargo common stock as is obtained by dividing the then outstanding principal amount by $0.42. The Holder may exercise its right to convert pursuant to subparagraph (a) above at any time prior to Maturity, but not after Maturity.

(c)     Other Provisions.

(i)     Prepayment.     At any time following the Issuance Date, the Company shall have the right to give the Holder notice of the Company’s intent to pre-pay the note in cash. The Holder shall have the right to convert to shares as described above, prior to the prepayment, if the Holder delivers notice of conversion to the Company within 30 days of the date of the Company’s notice of its intent to prepay in cash. If Holder does not deliver notice of conversion within 30 days, then the Company shall have the option to pre-pay the entire remaining outstanding principal amount of this Note in cash.

(4)     REISSUANCE OF THIS NOTE.

(a)     Assignability. The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without Company’s approval.

(b)     Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note representing the outstanding Principal.

(5)     NOTICES.      All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile or email if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to (a) in the case of the Company, to BioLargo, Inc., 14921 Chestnut St., Westminster, CA 92683, Email: dc@biolargo.com and (b) in the case of the Holder, to Bruce Kelber, 115 W. Spring Street, Unit B, Long Beach, CA 90806, email: beaker009@gmail.com.

3

(6)     APPLICABLE LAW AND VENUE. This Note shall be governed by and construed in accordance with the laws of the State of California, without giving effect to conflicts of laws thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of California or in the federal courts located in the city and county of San Diego, in the State of California. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts.

(7)     WAIVER. Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

 [Signature Page Follows]

4

IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date set forth above.

COMPANY:

BioLargo, Inc.

          /s/Dennis P Calvert

By:_______________________

Name:Dennis P. Calvert

Title:Chief Executive Officer

Note No. 33033

EXHIBIT A

NOTICE OF CONVERSION

Attn: President and Legal Counsel

BioLargo, Inc.

14921 Chestnut St.

Westminster, CA 92683

The undersigned hereby elects to convert a portion of the $440,000 Convertible Note (Note No. 33033) issued to Bruce Kelber on July 20, 2017 into Shares of common stock of BioLargo, Inc., or common stock of Clyra Medical Technologies, Inc., according to the conditions set forth in such Note as of the date written below.

Date of Conversion:
Conversion Amount – BioLargo Shares (at $0.42/share):	$
Conversion Amount – Clyra Shares (at $220/share)	$

____________________________

Bruce Kelber

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Dennis P. Calvert, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BioLargo, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2017	By:	/s/ DENNIS P. CALVERT
		Dennis P. Calvert
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles K. Dargan II, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BioLargo, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2017	By:	/s/ CHARLES K. DARGAN II
		Charles K. Dargan II
		Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Dennis P. Calvert, Chief Executive Officer of BioLargo, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that the Quarterly Report of BioLargo, Inc. on Form 10-Q for the quarter ended June 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of BioLargo, Inc.

Dated: August 14, 2017	By:	/s/ DENNIS P. CALVERT
		Dennis P. Calvert
		President and Chief Executive Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to BioLargo, Inc. and will be retained by BioLargo, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

I, Charles K. Dargan II, Chief Financial Officer of BioLargo, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that the Quarterly Report of BioLargo, Inc. on Form 10-Q for the quarter ended June 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of BioLargo, Inc.

Dated: August 14, 2017	By:	/s/ CHARLES K. DARGAN II
		Charles K. Dargan II
		Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to BioLargo, Inc. and will be retained by BioLargo, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 11, 2017
Document Information [Line Items]
Entity Registrant Name	BIOLARGO, INC.
Entity Central Index Key	0000880242
Trading Symbol	blgo
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		100,585,385
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 433,539	$ 1,910,153
Accounts receivable	78,105	67,994
Inventories	36,907	34,446
Prepaid expenses and other current assets	12,795	4,089
Total current assets	561,346	2,016,682
Equipment, net of depreciation	50,336	59,315
Other non-current assets, net of amortization	31,269	36,729
Total assets	642,951	2,112,726
Current liabilities:
Accounts payable and accrued expenses	344,438	200,103
Accrued officer bonus		80,000
Convertible notes payable	4,830,097	560,000
Discount on convertible notes payable and line of credit, net of amortization	(2,108,435)	(398,910)
Derivative warrant liability	570,595	663,560
Line of credit	50,000	50,000
Deposit	50,000
Total current liabilities	3,736,695	1,154,753
Long-term liabilities:
Convertible notes payable	675,571	5,250,668
Line of credit	250,000
Discount on convertible notes payable and line of credit, net of amortization	(543,483)	(3,522,497)
Total liabilities	4,118,783	2,882,924
COMMITMENTS, CONTINGENCIES (Notes 8 and 9)
STOCKHOLDERS’ DEFICIT:
Convertible Preferred Series A, $.00067 Par Value, 50,000,000 Shares Authorized, -0- Shares Issued and Outstanding, at December 31, 2016 and June 30, 2017.
Common stock, $.00067 Par Value, 200,000,000 Shares Authorized, 92,975,970 and 99,898,718 Shares Issued, at December 31, 2016 and June 30, 2017, respectively.	66,885	62,179
Additional paid-in capital	92,533,290	90,609,774
Accumulated deficit	(96,256,129)	(91,915,426)
Accumulated other comprehensive loss	(97,680)	(81,694)
Total Biolargo stockholders’ deficit	(3,753,634)	(1,325,167)
Non-controlling interest (Note 6)	277,802	554,969
Total stockholders’ deficit	(3,475,832)	(770,198)
Total liabilities and stockholders’ deficit	$ 642,951	$ 2,112,726

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Convertible Preferred Stock, Par Value (in dollars per share)	$ 0.00067	$ 0.00067
Convertible Preferred Stock, Shares Authorized (in shares)	50,000,000	50,000,000
Convertible Preferred Stock, Shares Issued (in shares)	0	0
Convertible Preferred Stock, Shares Outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.00067	$ 0.00067
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	99,898,718	92,975,970

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues	$ 99,978	$ 38,986	$ 145,995	$ 52,928
Cost of revenues	(73,399)	(15,757)	(95,929)	(21,838)
Gross profit:	26,579	23,229	50,066	31,090
Selling, general and administrative expenses	1,162,018	923,564	2,217,073	1,854,471
Research and development	324,280	329,968	715,616	681,018
Amortization and depreciation	6,515	2,845	14,439	5,575
Total operating expenses:	1,492,813	1,256,377	2,947,128	2,541,064
Operating loss:	(1,466,234)	(1,233,148)	(2,897,062)	(2,509,974)
Other (expense) income:
Interest expense	(1,119,273)	(478,525)	(2,072,829)	(884,850)
Change in fair value of derivative warrant liability	56,352		321,872
Grant income	11,361	43,338	70,149	82,096
Total other expense:	(1,051,560)	(435,187)	(1,680,808)	(802,754)
Net loss	(2,517,794)	(1,668,335)	(4,577,870)	(3,312,728)
Net loss attributable to noncontrolling interest	(173,911)	(54,859)	(237,167)	(121,831)
Net loss attributable to common shareholders	$ (2,343,883)	$ (1,613,476)	$ (4,340,703)	$ (3,190,897)
Net loss per share attributable to common shareholders:
Loss per share attributable to shareholders – basic and diluted (in dollars per share)	$ (0.03)	$ (0.02)	$ (0.05)	$ (0.04)
Weighted average number of common shares outstanding: (in shares)	97,770,161	86,419,573	94,718,273	86,133,395
Comprehensive loss:
Net loss	$ (2,517,794)	$ (1,668,335)	$ (4,577,870)	$ (3,312,728)
Foreign currency translation	32,150	(606)	(15,986)	(9,924)
Comprehensive loss	(2,485,644)	(1,668,941)	(4,593,856)	(3,322,652)
Comprehensive loss attributable to noncontrolling interest	(173,911)	(54,859)	(237,167)	(121,831)
Comprehensive loss attributable to common stockholders	$ (2,311,733)	$ (1,614,082)	$ (4,356,689)	$ (3,200,821)

XML

Consolidated Statement of Stockholders' Equity (Deficit) (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Noncontrolling Interest [Member]	Total
Balance (in shares) at Dec. 31, 2016	92,975,970
Balance at Dec. 31, 2016	$ 62,179	$ 90,609,774	$ (91,915,426)	$ (81,694)	$ 554,969	$ (770,198)
Vendors and interest (in shares)	2,491,704
Vendors and interest	$ 1,734	502,259				504,263
Conversion of notes (in shares)	1,419,107
Conversion of notes	$ 952	529,048				$ 530,000
Exercise of warrants (in shares)	510,000					510,000
Exercise of warrants	$ 343	152,657				$ 153,000
Exercise of stock options (in shares)	2,501,937
Exercise of stock options	$ 1,677	(1,677)
Stock option compensation expense		515,959				515,959
Fair value of warrants and conversion feature issued as discount on convertible notes payable		225,000				225,000
Purchase of Clyra shares					(40,000)	(40,000)
Net loss			(4,340,703)		(237,167)	(4,577,870)
Foreign currency translation				(15,986)		(15,986)
Balance (in shares) at Jun. 30, 2017	99,898,718
Balance at Jun. 30, 2017	$ 66,885	$ 92,533,290	$ (96,256,129)	$ (97,680)	$ 277,802	$ (3,475,832)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities
Net loss	$ (4,577,870)	$ (3,312,728)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock option compensation expense	515,959	491,440
Common stock issued for interest and in lieu of salary to officers and fees for services from consultants	504,263	489,107
Interest expense related to amortization of the discount on convertible notes payable and line of credit and deferred financing costs	1,723,396	668,257
Change in derivative liability	(321,872)
Amortization and depreciation expense	14,439	5,575
Bad debt expense	15,000
Changes in assets and liabilities:
Accounts receivable	(25,111)	(5,275)
Inventories	(2,461)	13,555
Prepaid expenses and other current assets	(8,706)	5,247
Accounts payable and accrued expenses	144,335	(13,839)
Officer bonus	(80,000)
Deposits	50,000	(35,000)
Net cash used in operating activities	(2,048,628)	(1,693,661)
Cash flows from investing activities
Equipment purchase		(5,500)
Net cash used in investing activities		(5,500)
Cash flows from financing activities
Proceeds from convertible notes	225,000	535,000
Proceeds from line of credit	250,000	300,000
Purchase of Clyra Shares	(40,000)
Proceeds from exercise of warrants	153,000
Net cash provided by financing activities	588,000	835,000
Effect of foreign currency translation	(15,986)	(9,924)
Net change in cash and cash equivalents	(1,476,614)	(874,085)
Cash and cash equivalents at beginning of period	1,910,153	1,763,114
Cash and equivalents at end of period	433,539	889,029
Supplemental disclosures of cash flow information
Interest	4,487
Income taxes	5,350	4,000
Non-cash investing and financing activities
Conversion of accounts payable into stock options	243,824	183,159
Fair value of warrants issued in conjunction with convertible notes payable	225,000	772,405
Settlement of accounts payable and interest into shares of common stock	504,263	489,107
Convertible notes into shares of common stock	$ 530,000

XML

Note 1 - Business and Organization

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note

1.

Business and Organization

Outlook

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. As reflected in the accompanying financial statements, for the

six

months ended

June 30, 2017

we had a net loss of

$4,577,870,

and used

$2,048,628

cash in operations, and at

June 30, 2017,

had negative working capital of

$3,175,349,

current assets of

$561,346,

and an accumulated stockholders’ deficit of

$96,256,129.

The foregoing factors raise substantial doubt about our ability to continue as a going concern. Ultimately, our ability to continue as a going concern is dependent upon our ability to attract significant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations by licensing or otherwise commercializing products incorporating our technologies. The financial statements do

not

include any adjustments that might be necessary if we are unable to continue as a going concern.

We have been, and anticipate that we will continue to be, limited in terms of our capital resources. Our total cash balance was

$433,539

at

June 30, 2017.

Our cash decreased over

$1,400,000

from

December 31, 2016

to

June 30, 2017.

Although our revenues in the

six

months ended

June 

30,

 

2017

increased almost

three

-fold from the same period in

2016,

they are

not

sufficient to fund our operations and our sales must increase substantially before they will be. At times in the past we have

not

had enough cash or sources of capital to pay our accounts payable and expenses as they arise, and have relied on the issuance of stock options and common stock, as well as extended payment terms with our vendors, to continue to operate. We will be required to raise substantial additional capital to expand our operations, including without limitation, hiring additional personnel, additional scientific and

third

-party testing, costs associated with obtaining regulatory approvals and filing additional patent applications to protect our intellectual property, and possible strategic acquisitions or alliances, as well as to meet our liabilities as they become due for the next

12

 months. We continue to raise money through private securities offerings for the foreseeable future. Subsequent to

June 30, 2017,

we have received over

$800,000

of investments (see Note

9.

)

As of

June 30, 2017,

we had

$5,805,668

in principal amounts due on various debt obligations (see Note

3

). Of that amount, $

4,830,097

are convertible at our option into common stock at maturity. Additionally, as of

June 30, 2017,

we had

$344,438

of accounts payable and accrued expenses (see Note

6

).

The unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to Rule

8

-

03

of Regulation S-

X

under the Securities Act of

1933,

as amended. Accordingly, they do

not

include all of the information and notes required by generally accepted accounting principles for annual financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. For some of our activities, we are still operating in the early stages of the sales and distribution process, and therefore our operating results for the

six

months ended

June 30, 2017

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 

31,

 

2017,

or for any other period. These unaudited consolidated financial statements and notes should be read in conjunction with the Company’s audited financial statements and accompanying notes included in the Annual Report on

Form

10

-K for the year ended

December 31, 2016

filed with the Securities and Exchange Commission (the “SEC”) on

March 30, 2017.

We operate

six

wholly-owned subsidiaries: BioLargo Life Technologies, Inc., organized under the laws of the State of California in

2006,

Odor-

No

-More, Inc., organized under the laws of the State of California in

2009,

BioLargo Water USA, Inc., organized under the laws of the State of California in

2013,

BioLargo Water, Inc., organized under the laws of Canada in

2014,

BioLargo Maritime Solutions, Inc. organized under the laws of the State of California in

2016,

and BioLargo Development Corp., organized under the laws of the State of California in

2016.

Additionally, we own a controlling ownership interest in Clyra Medical Technologies, Inc., organized under the laws of the State of California in

2012.

XML

Note 2 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

Note

2.

Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany accounts and transactions have been eliminated.

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 compensation and financing transactions, uncollectible accounts receivable, asset impairment and amortization, and taxes, 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.  

Share-based Payments

All share-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their fair values.

For stock issued to consultants and other non-employees for services, we record the expense based on the fair market value of the securities as of the date of the stock issuance. The issuance of fully vested stock warrants or options to non-employees are valued at the time of issuance utilizing the Black Scholes calculation and the amount is charged to expense. The issuance of stock warrants or options to non-employees that vest over time are revalued each reporting period until vested to determine the amount to be recorded as an expense in the respective period. As the warrants or options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting.

Warrants

The Unit Offerings of our convertible promissory note and a Series A stock purchase warrant 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, 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 measured again at its then current fair value at each subsequent reporting dates (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.

The convertible note is recorded at its 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. Further, the convertible promissory note is examined for any intrinsic beneficial conversion feature (“BCF”) which the effective convertible price of the note is less than the closing stock price on date of issuance. The adjusted BCF value is accounted for as equity.

The warrant and BCF fair values are also recorded as a discount to the convertible promissory notes. The equity features of the convertible promissory notes resulted in a discount to the convertible notes that is equal to the proceeds received.

Non-Cash Transactions

We have established a policy relative to the methodology to determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock. The value is 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.

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.

Revenue Recognition

Revenues are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. We also

may

generate revenues from royalties and license fees from our intellectual property. Licensees typically 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. License fees are recognized over the estimated period of future benefit to the average licensee.

Government Grants

We have been awarded grants from the Canadian National Research Institute – Industrial Research Assistance Program (NRC-IRAP) and the National Science and Engineering Research Council of Canada (NSERC). The government grants received are considered other income and are included in our consolidated statements of operations. We received our

first

grant in

2015

and have been awarded over

thirty

 grants totaling approximately

$1,100,000.

Some of the funds from these grants are given directly to

third

parties (such as the University of Alberta) 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.

The grants provide for (i) recurring monthly amounts and (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 and the development of our AOS filter. 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.

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 stock options and warrants were exercised into common stock. For the

three

and

six

months ended

June 30, 2016

and

2017,

the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the anti-dilutive effect of the warrants and stock options on the Company’s net loss.

Concentrations of Credit Risk

All highly liquid investments with original maturities of

three

months or less or money market accounts held at financial institutions are considered to be cash. Substantially all of the cash is placed with

one

financial institution. At

June 30, 2017

and

December 31, 2016,

the year the cash accounts are exposed to credit loss for amounts in excess of insured limits of

$250,000

in the event of non-performance by the institution, however, it is

not

anticipated that there will be non-performance. At

June 30, 2017

and

December 31, 2016,

the Company had cash balances in excess of federally insured limits in the amount of approximately

$183,539

and

$1,660,153,

respectively.

Allowance for uncollectible receivables

Management evaluates credit quality by evaluating the exposure to individual counterparties, and, where warranted, management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized in income in the period in which they are determined. At

June 30, 2017,

the allowance for uncollected receivables was

$15,000.

Recent Accounting Pronouncements

In

April 2016,

the FASB issued ASU

2016

-

10,

“Revenue from Contracts with Customers (Topic

606

): Identifying Performance Obligations and Licensing”. The amendments in this Update affect the guidance in Accounting Standards Update

2014

-

09,

 Revenue from Contracts with Customers (Topic

606

), which we are required to apply for annual periods beginning after

December 15, 2017.

Although management is still evaluating the potential impact of the adoption of this standard, its preliminary analysis is that the new guidelines currently will

not

substantially impact our revenue presentation.

In

March 2016,

the FASB issued Accounting Standards Update (ASU)

No.

2016

-

09,

Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based award transactions and adds

two

practical expedients for nonpublic entities. The new standards are effective for annual periods beginning after

December 15, 2017.

An entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the impact of the pending adoption of the ASU on our consolidated financial statements.

In

February 2016,

the FASB issued Accounting Standards Update

No.

2016

-

02,

Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Although management is still evaluating the potential impact of the adoption of this standard, its preliminary analysis is that the new guidelines currently will

not

 materially impact our balance sheet presentation.

XML

Note 3 - Convertible Notes Payable and Lines of Credit

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

3.

Convertible Notes Payable and Lines of Credit

	DECEMBER 31, 201 6		JUNE 3 0 , 201 7
Current liabilities:
Line of credit, matures December 1, 2017	$	50,000	$	50,000
Convertible notes payable
One-Year Convertible notes, mature July 8, 2017	$	280,000	$	—
One-Year Convertible notes, mature December 30, 2017		280,000		280,000
Convertible notes, mature June 1, 2018*		—		4,550,097
Total convertible notes payable	$	560,000	$	4,830,097
Long-term liabilities:
Clyra Line of credit, matures March 31, 2019	$	—	$	250,000
Convertible notes payable, net of current portion
Convertible notes, mature June 1, 2018*	$	4,800,097	$	—
Convertible notes, mature September 17, 2019		283,571		283,571
Convertible notes, mature December 31, 2019		167,000		292,000
Convertible notes, mature June 20, 2020		—		100,000
Total convertible notes payable , net of current portion	$	5,250,668	$	675,571
Total	$	5,860,668	$	5,805,668

 

* The convertible notes that mature

June 1, 2018,

were considered “long-term” liabilities as of

December 31, 2016,

and “current” liabilities (due within

one

year) as of

June 30, 2017.

As such, those same liabilities are in both the “long-term” and “current” liabilities section in the above table.

For the

three

and

six

months ended

June 30, 2016,

we recorded

$478,525

and

$884,850

and for the

three

and

six

months ended

June 30, 2017,

we recorded

$1,119,273

and

$2,072,829

of interest expense related to the amortization of our discount on our convertible notes payable and interest from our convertible notes and lines of credit.

Line of Credit, matures

December 1, 2017

On

June 6, 2016,

we received

$300,000

pursuant to a line of credit, accruing interest at a rate of

18%

per annum, for which we have pledged our inventory and accounts receivable as collateral. The line of credit

may

be repaid following

nine

-months from the date of issuance or at the maturity date

December 1, 2017.

Each investor, for

no

additional consideration, received a warrant to purchase our common stock. (See Note

5.

) The warrant allows for the purchase of the number of common shares equal to the investment amount (e.g.,

one

warrant share for each dollar invested).

On

September 17, 2016,

investors holding

$250,000

of the line of credit converted their line of credit into convertible promissory notes and stock purchase warrants on the same terms and notes issued in the

2015

Unit Offering.

As of

December 31, 2016,

and

June 30, 2017,

$50,000

remains outstanding on this line of credit.

One-Year

Convertible

N

otes, mature

July 8, 2017

On

July 8, 2016,

we received

$250,000

and issued convertible promissory notes (convertible at

$0.45

per share) with a maturity date of

July 8, 2017

to

two

accredited investors’ in the aggregate principal amount of

$280,000.

Interest is charged upon issuance at

3%

per annum. We issued these investors stock purchase warrants to purchase an aggregate

400,000

shares of our common stock exercisable at

$0.65

per share, which expire

five

years from the date of grant. (See Note

5.

)

On

January 13, 2017,

the holders of these notes exercised their right to convert their notes in aggregate principal amount of

$280,000

into

640,889

shares of our common stock.

One-Year Convertible Note

s

, mature

December 30, 2017

On

December 30, 2016,

we received

$250,000

and issued convertible promissory notes (convertible at

$0.57

per share) with a maturity date of

December 30, 2017

to

two

accredited investors, in the aggregate principal amount of

$280,000.

Interest is charged upon issuance at

3%

per annum. We also issued these investors stock purchase warrants to purchase an aggregate

400,000

shares of our common stock exercisable at

$0.75

per share, which expire

five

years from the date of grant. (See Note

5.

)

Subsequent to

June 30, 2017,

the conversion price of these notes were reduced, and the holders exercised their right to convert the notes. (See Note

9.

)

Convertible Notes, mature

June 1, 2018

(

2015

Unit Offering)

On

January 15, 2015,

we commenced a private securities offering of “units”, each Unit consisting of a convertible promissory note and Series A stock purchase warrant (

“2015

Unit Offering”), which was closed on

September 16, 2016.

The price and availability of the Units were set forth in

five

“Pricing Supplements” issued from time-to-time. Each note issued is convertible into the Company’s common stock at the Unit price set forth in the particular pricing supplement, and matures

June 1, 2018.

Interest due

may

be paid quarterly in cash or shares of common stock; all interest due thus far has been paid in shares of common stock. If paid by the issuance of common stock, interest is paid at a conversion price equal to the average closing price of the Company’s common stock over the

20

trading days prior to the interest payment due date. The principal amount of the note

may

be paid by the issuance of shares of common stock, or cash, upon maturity at the Company’s election. When paid in shares, the number of shares to be issued shall be calculated by dividing the principal amount invested by the Unit price, as it is established at the time of the original investment by the applicable Pricing Supplement. The notes

may

be converted at any time by the investor, at maturity by the Company, or by the Company prior to maturity, so long as all of the following conditions are met: (i) the shares issued as payment are registered with the SEC, (ii) the Company’s common stock closes for

ten

consecutive trading days at or above

three

times the Unit price. On

June 15, 2017,

a registration statement registering the shares issuable upon conversion was deemed effective by the SEC.

Each investor, for

no

additional consideration, received a Series A stock purchase warrant. (See Note

5

).

As of

June 30, 2017,

the outstanding balance for notes issued in the

2015

Unit Offering, maturing

June 1, 2018

is as follows:

Unit/ Conversion Price		Warrant Exercise Price		Aggregate
$	0.25	$	0.40	$	1,652,384
$	0.35	$	0.45		1,751,046
$	0.55	$	0.70		1,146,667
				$	4,550,097

During the

six

months ended

June 30, 2017,

investors elected to convert an aggregate

$250,000

principal amount promissory notes issued in our

2015

Unit Offering and accrued interest into

406,789

shares of our common stock.

During the

six

months ended

June 30, 2016,

we received

$535,000,

and issued unsecured convertible promissory notes with maturity dates of

June 

1,

 

2018,

which accrue interest at the rate of

12%

per annum.

Clyra Line of Credit, matures

March 31, 2019

On

March 31, 2017,

our subsidiary Clyra Medical Technologies, Inc., of which we hold

54%

of the outstanding stock, obtained a

$250,000

line of credit from Sanatio Capital LLC, accruing interest at a rate of

10%

per annum and a

5%

original issue discount. The line of credit

may

be repaid at the maturity date

March 31, 2019.

Clyra received

$175,000

of the line of credit in the

three

months ended

March 31, 2017. 

Subsequent to

March 31, 2017,

Clyra received the remaining

$75,000.

Subsequent to

June 30, 2017,

Sanatio and Clyra agreed to convert the line of credit to equity at the same price as offered to Clyra investors. (See Note

9

).

Convertible Notes, mature

September 17, 2019

On

September 17, 2016,

investors in the line of credit (see “Line of Credit, matures

December 1, 2017,”

above), converted an aggregate principal amount of

$250,000

plus accrued interest of

$33,571

promissory notes convertible at

55

cents per share. Other than the maturity date of

September 17, 2019,

these notes contain the same terms as the notes issued in the

2015

Unit Offering. Our common stock closed at

$0.70

on

September 17, 2016.

In addition to the convertible promissory note, the investors received a Series A stock purchase warrant to purchase an aggregate

515,583

shares of our common stock at an exercise price of

$0.70

per share. (See Note

5.

)

Convertible Notes, mature

December 31, 2019 (

Winter

2016

Unit Offering)

On

December 27, 2016,

we commenced a private securities offering (titled the “Winter

2016

Unit Offering”) which offered the sale of

$600,000

of “Units,” each Unit consisting of a convertible promissory note and stock purchase warrant. The promissory notes issued to investors were convertible at

$0.57

cents per share, a discount to the market price of our stock on that date of

$0.86,

mature

December 31, 2019,

and bear interest at the rate of

12%

per annum on the amount invested. Any interest due will be paid quarterly in arrears in cash or shares of common stock. If paid by the issuance of common stock, interest is paid at a conversion price equal to the average closing price of the Company’s common stock over the

20

trading days prior to the interest payment due date. The principal amount of the note

may

be paid by the issuance of shares of common stock, or cash, upon maturity at the Company’s election.

When paid in shares, the number of shares to be issued shall be calculated by dividing the principal amount invested by the

$0.57

conversion price. Promissory notes

may

be converted at any time by the investor, at maturity by the Company, or by the Company prior to maturity, so long as the following conditions are met: (i) the Shares issued as payment are registered with the SEC; and (ii) the Company’s common stock closes for

ten

consecutive trading days at or above

three

times the Unit price. In addition to the convertible promissory note, each investor received a warrant allowing for the purchase of the number of shares of BioLargo common stock equal to the investment amount divided by

$0.57

(e.g.,

one

warrant share for each share of common stock which the investor is eligible to receive through conversion of his original convertible note). The exercise price of the warrant is

$0.70

per share of common stock and expire on

December 31, 2021 (

see Note

5

). The Company

may

“call” the warrants, requiring the investor to exercise their warrants within

30

days or forever lose the rights to do so, only if the following conditions have been met: (i) the underlying Shares are registered with the SEC and (ii) the Company’s common stock closes for

10

consecutive trading days at or above

two

times the exercise price. The shares underlying the warrants contain “piggy back” registration rights for any registrations subsequent to the Form S-

1

filed

January 24, 2017.

Subsequent to

December 31, 2016,

and prior to the offering’s termination on

January 13, 2017,

we received

$125,000

in investments from

three

accredited investors, and issued warrants to purchase

219,298

shares of our common stock. From inception of the offering through its termination, we received

$292,000

from

six

investors, issued convertible notes in the aggregate of

$292,000,

and issued warrants to purchase

512,281

shares of our common stock.

Convertible Notes, mature

June 20, 2020 (

Summer

2017

Unit Offering)

On

May 24, 2017,

we commenced a private securities offering (titled the “Summer

2017

Unit Offering”) which offered the sale of

$1,500,000

of “Units,” each Unit consisting of a convertible promissory note and stock purchase warrant. The promissory notes issued to investors are convertible at

$0.42

cents per share, mature

June 

20,

 

2020,

and bear interest at the rate of

12%

per annum on the amount invested. Any interest due will be paid quarterly in arrears in cash or shares of common stock. If paid by the issuance of common stock, interest is paid at a conversion price equal to the average closing price of the Company’s common stock over the

20

trading days prior to the interest payment due date. The principal amount of the note

may

be paid by the issuance of shares of common stock, or cash, upon maturity at the Company’s election.

When paid in shares, the number of shares to be issued shall be calculated by dividing the principal amount invested by the

$0.42

conversion price. Promissory notes

may

be converted at any time by the investor, at maturity by the Company, or by the Company prior to maturity, so long as the following conditions are met: (i) the Shares issued as payment are registered with the SEC; and (ii) the Company’s common stock closes for

ten

consecutive trading days at or above

three

times the Unit price. In addition to the convertible promissory note, each investor received a warrant allowing for the purchase of the number of shares of BioLargo common stock equal to the investment amount divided by

$0.42

(e.g.,

one

warrant share for each share of common stock which the investor is eligible to receive through conversion of his original convertible note). The exercise price of the warrant is

$0.65

per share of common stock and expire on

June 20, 2022 (

see Note

5

). The Company

may

“call” the warrants, requiring the investor to exercise their warrants within

30

days or forever lose the rights to do so, only if the following conditions have been met: (i) the underlying Shares are registered with the SEC and (ii) the Company’s common stock closes for

10

consecutive trading days at or above

two

times the exercise price.

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Note 4 - Share-based Compensation

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

Note

4.

Share-Based Compensation

Common Stock

On

May 2, 2017,

pursuant to an employment agreement with the Company’s president, Dennis Calvert (see Note

9,

“Calvert Employment Agreement”), we issued Mr. Calvert

1,500,000

shares of common stock. The shares are subject to a “lock-up agreement” whereby the shares remain unvested unless and until the earlier of (i) a sale of the Company, (ii) the successful commercialization of the Company’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 resulting in his termination. The Company will expense the fair value of the stock if and when it is probable that any of the conditions above are met.

Stock options

During the

three

and

six

months ended

June 30, 2016,

we recorded an aggregate

$189,601

and

$491,440,

and during the

three

and

six

months ended

June 30, 2017,

we recorded an aggregate

$235,671

and

$515,959,

in selling, general and administrative expense related to the issuance of stock options. We issued options through our

2007

Equity Incentive Plan and outside of our

2007

Equity Incentive Plan.

2007

Equity Incentive Plan

On

August 

7,

2007,

and as amended

April 29, 2011,

our Board of Directors adopted the BioLargo, Inc.

2007

Equity Incentive Plan (

“2007

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. The Board’s Compensation Committee administers this plan. The plan allows grants of common shares or options to purchase common shares. As plan administrator, the Compensation Committee has sole discretion to set the price of the options. The Compensation Committee

may

at any time amend or terminate the plan.

On

June 19, 2017,

the date of our annual stockholders’ meeting, we recorded the issuance of options to purchase an aggregate

40,000

shares of our common stock to the non-employee members of our Board of Directors, pursuant to the terms of the

2007

Equity Plan which calls for an annual automatic issuance. The exercise price of

$0.43

equals the price of our common stock on the grant date. The fair value of these options totaled

$15,600

and was recorded as selling, general and administrative expense.

On

February 10, 2017,

we extended our engagement agreement with our Chief Financial Officer. The sole consideration for the

one

-year extension was the issuance of an option to purchase

300,000

shares of our common stock, at an exercise price of

$0.69

per share which was equal to the closing price of our common stock on the date of grant. The option expires

February 10, 2027,

and vests over the term of the engagement with

125,000

shares having vested as of

February 10, 2017,

and the remaining shares to vest

25,000

shares monthly beginning

March 1, 2017,

and each month thereafter, so long as his agreement is in full force and effect. The fair value of the option totaled

$

207,000

,

and during the

three

and

six

months ended

June 30, 2017,

we recorded

$51,750

and

$155,250

of selling, general and administrative expense on our statement of operations. The balance will vest monthly through

September 

30,

2017.

On

June 20, 2016,

we recorded the issuance of options to purchase an aggregate

40,000

shares of our common stock to the non-employee members of our Board of Directors, pursuant to the terms of the

2007

Equity Plan which calls for an annual automatic issuance. The exercise price of

$0.45

equals the price of our common stock on the grant date. The fair value of these options totaled

$18,000

and was recorded as selling, general and administrative expense.

On

March 21, 2016,

our Board of Directors extended by

five

years the expiration of options to purchase

307,777

shares of our common stock issued to our Board of Directors and vendors in

March 2011.

The options were originally issued in exchange for unpaid obligations and now expire on

March 21, 2021.

The weighted-average fair value of the options resulted in additional

$119,971

of selling, general and administrative expenses.

Activity for our stock options under the

2007

Plan for the

six

-months ended

June 30, 2016

and

2017

is as follows:

									Weighted
Balance, June 30, 2016:									Average
	Options		Shares			Exercise			Price per
	Outstanding		Available			Price per share			share
Balances as of December 31, 2015		10,241,086		1,758,914		$0.23	–	1.89	$	0.44
Granted		40,000		(40,000	)		0.45			0.45
Expired		—		—			—			—
Balance, June 30, 2016		10,281,086		1,718,914		$0.23	–	1.89	$	0.44

									Weighted
									Average
Balance, June 30, 2017:	Options		Shares			Exercise			Price per
	Outstanding		Available			Price per share			share
Balances as of December 31, 2016		9,916,586		1,981,414		$0.23	–	1.89	$	0.44
Granted		340,000		(340,000	)	0.39	–	0.69		0.65
Exercised		—		—			—			—
Balance, June 30, 2017		10,256,586		1,641,414		$0.23	–	1.89	$	0.44

Options issued Outside of the

2007

Equity Incentive Plan

During the

three

and

six

-months ended

June 30, 2017,

we issued options to purchase

237,353

and

820,879

shares of our common stock at exercise prices ranging between

$0.43

–

$0.67

per share to vendors and to members of our board of directors. The fair value of the options issued during the

three

and

six

months ended

June 30, 2017,

totaled

$120,311

and

$277,074

and is recorded as selling, general and administrative expenses.

On

May 2, 2017,

pursuant to his employment agreement, we granted to Mr. Calvert, an option (the “Option”) to purchase

3,731,322

shares of the Company’s common stock. The Option shall be a non-qualified stock option, exercisable at

$0.45

per share, which represents the market price of the Company’s common stock as of the date of the agreement, exercisable for

ten

years from the date of grant and vesting in equal increments on the anniversary of the agreement for

five

years. Notwithstanding the foregoing, any portion of the Option which has

not

yet vested shall be immediately vested in the event of, and prior to, a change of control, as defined in the Calvert Employment Agreement. The Option contains the other terms standard in option agreements issued by the Company, including provisions for a cashless exercise. The fair value of this option totaled

$1,679,095

and will be amortized monthly through

May 2, 2022.

During the

three

months ended

June 30, 2017,

we recorded

$27,985

of selling, general and administrative expense.

During the

three

and

six

months ended

June 30, 2016,

we issued options to purchase

220,554

and

484,077

shares of our common stock at exercise prices ranging between

$0.33

–

$0.45

per share to vendors and to members of our board of directors. During the

three

and

six

months ended

June 30, 2016,

the fair value of these options totaled

$96,196

and

$183,159

and is recorded as selling, general and administrative expenses.

The fair value of the options issued prior to

2016

that vested during the

three

and

six

-months ended

June 30, 2016,

was

$75,405

and

$170,310,

and during the

three

and

six

months ended

June 30, 2017,

was

$20,025

and

$40,050.

Exercise of Stock Option 

On

April 30, 2017,

the Company’s president, Dennis Calvert, delivered a notice of exercise of

3,866,630

shares pursuant to his stock option agreement dated

April 30, 2007.

The exercise price was

$0.18

per share, and the Company issued

2,501,937

shares, calculated by multiplying the difference between the market price of

$0.51

and the exercise price of

$0.18

with the number of shares exercised, and dividing that amount by the market price.

No

cash consideration was tendered with respect to the exercise. The remaining

3,866,629

shares available for purchase under the option agreement expired unexercised.

Pursuant to a “lock-up agreement” dated

April 30, 2017,

Mr. Calvert agreed to restrict the sales of the shares received until the earlier of (i) the consummation of a sale (in a single transaction or in a series of related transactions) of the Company by means of a sale of (a) a majority of the then outstanding common stock (whether by merger, consolidation, sale or transfer of common stock, reorganization, recapitalization or otherwise) or (b) all or substantially all of its assets; and (ii) the successful commercialization of the Company’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 Calvert dated

May 2, 2017

and resulting in Calvert’s termination.

Activity of our stock options issued outside of the

2007

Plan for the

six

-months ended

June 30, 2016

and

2017

is as follows:

							Weighted
Balance, June 30, 2016:							Average
	Options			Exercise			Price per
	Outstanding			Price per share			share
Balance, December 31, 2015		19,394,975		$0.18	–	1.00	$	0.40
Granted		484,077		0.33	–	0.45		0.38
Exercised		(60,000	)		0.25			0.25
Balance, June 30, 2016		19,819,052		$0.18	–	1.00	$	0.41

							Weighted
							Average
Balance, June 30, 2017:	Options			Exercise			Price per
	Outstanding			Price per share			share
Balance, December 31, 2016		20,148,766		$0.18	–	1.00	$	0.43
Granted		4,552,201		0.43	–	0.67	$	0.47
Expired		(3,866,629	)		0.18			0.18
Exercised		(3,866,630	)		0.18			0.18
Balance, June 30, 2017		16,967,708		$0.18	–	1.00	$	0.41

We recognize employee compensation expense for stock option awards on a straight-line basis over the applicable service period of the award, which is the vesting period. Share-based compensation expense is based on the grant date fair value estimated using the Black-Scholes Option Pricing Model. The following methodology and assumptions were used to calculate share based compensation for the

six

-months ended

June 30:

	2016						2017
	Non Plan			2007 Plan			Non Plan			2007 Plan
Risk free interest rate	1.77	–	1.91%	1.26	–	1.36%	2.29	–	2.40%	2.31	–	2.40%
Expected volatility	641	–	645%	311	–	315%	578	–	601%	578	–	601%
Expected dividend yield		—			—			—			—
Forfeiture rate		—			—			—			—
Expected life in years		7			5			7			7

Expected price volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. 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.

Historically, we have

not

had significant forfeitures of unvested stock options granted to employees and Directors. A significant number of our stock option grants are fully vested at issuance or have short vesting provisions. Therefore, we have estimated the forfeiture rate of our outstanding stock options as zero.

XML

Note 5 - Warrants

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Warrants [Text Block]

Note

5.

Warrants

We recorded

$668,257

and

$1,723,396

of interest expense related to the amortization of the discount on convertible notes, line of credit, deferred financing fees and for the extension of warrants set to expire during the

six

-months ended

June 30, 2016

and

2017,

respectively.

Warrants Issued Concurrently with

the Summer

2017

Unit Offering

During the

three

months ended

June 30, 2017,

pursuant to the terms of our Summer

2017

Unit Offering (see Note

3

), we issued warrants to purchase up to an aggregate

238,096

shares of our common stock at an exercise price of

$0.65

per share. These warrants expire

June 20, 2022.

The relative fair value of these warrants resulted in

$125,000

recorded as a discount on our convertible notes.

Warrants Issued Concurrently with

the

Winter

2016

Unit Offering

During the

three

months ended

March 31, 2017,

pursuant to the terms of our Winter

2016

Unit Offering (see Note

3

), we issued warrants to purchase up to an aggregate

219,298

shares of our common stock at an exercise price of

$0.70

per share. These warrants expire

December 31, 2021.

The relative fair value of these warrants resulted in

$125,000

recorded as a discount on our convertible notes.

The Winter

2016

Unit Offering closed

January 13, 2017,

and in total we issued warrants to purchase up to an aggregate

512,281

shares of our common stock at an exercise price of

$0.70

per share. 

Warran

ts Issued Concurrently with One-

Year Convertible Notes

On

July 8, 2016,

we issued warrants to purchase an aggregate

400,000

shares of our common stock. These warrants are initially exercisable at

$0.65

per share and expire

July 8, 2021.

The fair value of warrants issued resulted in

$160,000

discount on the

one

-year convertible note. The exercise price of the stock purchase warrant

may

be adjusted downward in the event we sell our common stock or issue warrants at a lower price, other than through our

2015

Unit Offering. On

May 24, 2017,

we initiated the Summer

2017

Unit Offering offering promissory notes convertible at

$0.42

per share (see Note

3

). Since these securities were sold at less than the exercise price of the

July 8, 2016

warrants, the exercise price of the warrants were decreased from

65

to

42

cents per share, and the number of shares issuable under the warrant increased by

219,048

shares to a total of

619,048

shares. The warrants do

not

qualify for equity classification, therefore we recognize the warrants as a derivative liability. As a result, we are required to calculate the fair value at each reporting period and record the change.

On

December 30, 2016

we issued warrants to purchase an aggregate

400,000

shares of our common stock. These warrants are initially exercisable at

$0.75

per share and expire

December 30, 2021.

The stock price on the date of grant was

$0.83.

The fair value of warrants issued resulted in

$280,000

discount on the

one

-year convertible note. The exercise price of the stock purchase warrant

may

be adjusted downward in the event we sell our common stock or issue warrants at a lower price, other than through our

2015

Unit Offering. On

May 24, 2017,

we initiated the Summer

2017

Unit Offering offering promissory notes convertible at

$0.42

per share (see Note

3

). Since these securities were sold at less than the exercise price of the

December 30, 2016

warrants, the exercise price of the warrants were decreased from

75

to

42

cents per share, and the number of shares issuable under the warrant increased by

314,285

shares to a total of

714,285

shares. The warrants do

not

qualify for equity classification, therefore we recognize the warrants as a derivative liability. As a result, we are required to calculate the fair value at each reporting period and record the change.

The fair value of these warrants on

June 30, 2017,

totaled

$570,595

and is recorded as a derivative liability on our balance sheet. The change in fair value for the

three

and

six

months ended

June 30, 2017,

resulted in other income of

$56,352

and

$321,872,

respectively, recorded on our statement of operations. For the additional warrants issued when the exercise price decreased, we recognized

$228,000

of additional interest expense.

2015

Unit Offering Warrants

During the

six

-months ended

June 30, 2016,

pursuant to the terms of our

2015

Unit Offering (see Note

3

), we issued warrants to purchase up to an aggregate

1,528,571

shares of our common stock at an exercise price of

$0.45

per share. These warrants were issued to investors and as commissions, and are set to expire

June 1, 2020.

During the

six

-months ended

June 30, 2016,

the intrinsic and relative fair value of these warrants resulted in

$535,000,

respectively, recorded as a discount on our convertible notes on our consolidated balance sheets.

Warrants Issued

C

oncurrently with

Line of Credit

During the

six

-months ended

June 30, 2016

we issued warrants to purchase an aggregate

300,000

shares of our common stock. These warrants are exercisable at

$0.35

per share and expire

June 2021.

The relative fair value of warrants issued resulted in

$237,405

discount on the line of credit.

Exercise of Warrants

During the

six

months ended

June 30, 2017,

we issued

510,000

shares of our common stock and in exchange we received proceeds totaling

$153,000

from the exercise of our outstanding stock purchase warrants. Of the warrants exercised,

370,000

shares were exercised at

$0.30

per share and

140,000

shares were exercised at

$0.25

per share.

No

warrants were exercised in the

six

months ended

June 30, 2016.

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

Balance, June 30, 2016	Number of
	Shares			Price Range
Outstanding as of December 31, 2015		13,779,438		$0.125	–	1.00
Issued		1,828,571			0.45
Expired		(183,545	)		0.55
Outstanding as of June 30, 2016		15,424,464		$0.125	–	1.00

Balance, June 30, 201 7	Number of
	Shares			Price Range
Outstanding as of December 31, 2016		20,035,114		$0.125	–	1.00
Issued		990,727		0.42	–	0.70
Exercised		(510,000	)	0.25	–	0.30
Expired		—			—
Outstanding as of June 30, 2017		20,515,841		$0.125	–	1.00

The fair value of each award grant is estimated on the date of grant using the Black-Scholes option-pricing model. The determination of expense of warrants issued for services or settlement also uses the option-pricing model. The principal assumptions we used in applying this model were as follows for the

six

-months ended

June 30:

	2016			2017
Risk free interest rate	1.26	–	1.36%	1.83	–	1.93%
Expected volatility	311	–	315%	293	–	297%
Expected dividend yield		—			—
Forfeiture rate		—			—
Expected life in years		5			5

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.

XML

Note 6 - Accounts Payable and Accrued Expenses

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

Note

6.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses included the following:

	December 31,		June 30 ,
	2016		2017
Accounts payable and accrued expenses	$	22,231	$	158,690
Payroll tax liability		137,500		137,500
Accrued officer bonus		80,000		—
Accrued interest		40,372		48,248
Total accounts payable and accrued expenses	$	280,103	$	344,438

The payroll tax liability is the Company’s estimate of payroll taxes due on the past services of independent contractors. The Company is currently attempting to reduce the liability to approximately

$5,000

through the IRS Voluntary Classification Settlement Program.

On

September 27, 2016,

the board approved a

$60,000

bonus for each of our Chief Executive and Chief Science Officers,

$20,000

of which was paid to each in

2016.

Each were paid the remaining

$40,000

in

January 2017.

During the

six

months ended

June 30, 2016

and

2017,

we issued

746,943

and

1,807,829

shares of common stock in lieu of fees for services provided by vendors, consultants and an officer, resulting in a grant date fair value of

$275,232

and

$168,022,

respectively, and recorded in selling, general and administrative expense.

During the

six

months ended

June 30, 2016

and

2017

we issued

546,157

and

683,875

shares of common stock resulting in a grant date fair value of

$213,875

and

$337,246,

respectively. The shares were issued to settle our accrued interest liability, which is recorded as interest expense in our consolidated statements of operations.

XML

Note 7 - Noncontrolling Interest

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Noncontrolling Interest Disclosure [Text Block]

Note

7

. Noncontrolling Interest

In

May 2012,

we formed a subsidiary for the purpose of marketing and selling medical products containing our technology, Clyra Medical Technology, Inc. (“Clyra”). Until

December 17, 2012,

this subsidiary was wholly-owned, with

7,500

shares issued to BioLargo, Inc. On

December 17, 2012,

Clyra issued

1,500

shares of Clyra common stock to a

three

-member management team,

one

-

third

of which vested immediately, and the remaining over time. The shares granted to the

three

executives are restricted from transfer until a sale of the company, whether by means of a sale of its stock or substantially all of its assets, or otherwise by agreement of Clyra, BioLargo and the executives.

On

December 30, 2015,

Clyra sold

9,830

shares of its Series A Preferred Stock (“Preferred Shares”) to Sanatio Capital, LLC (“Sanatio”) for

$750,000.

This sale was made in reliance on the exemption from registration contained in Section 

4

(

2

) of the Securities Exchange Act and Regulation D promulgated thereunder as

not

involving a public offering of securities. As a result of the sale, Sanatio owned

40%

of Clyra’s issued and outstanding shares, BioLargo owned

54%,

and the remainder is owned by management. Concurrent with the sale of the Preferred Shares, the shareholders entered into a shareholders’ agreement that provides for a

three

member board of directors, consisting of the company’s president, a person appointed by BioLargo, and a person appointed by Sanatio.

As set forth in Clyra’s Amended and Restated Articles of Incorporation, Preferred Shares accrue an annual dividend of

8%

for a period of

five

years. Although the dividends began to accrue immediately, Clyra has

no

obligation to declare a dividend until a product of the company has received a premarket approval by the United States Federal Drug Administration (“FDA”), or for which a premarket notification pursuant to form

510

(k) has been submitted and for which the FDA has given written clearance to market the product in the United States (either, “FDA Approval”). After FDA Approval, annually on

December 20,

and unless prohibited by California law governing distributions to shareholders, Clyra is required to declare and pay any accruing dividends to holders of Preferred Shares then accrued but unpaid. Management classifies the Preferred Shares dividend as a medium probability of occurring and as of

June 30, 2017

the Preferred Shares dividend has an accrued and undeclared balance of

$90,000.

Holders of Preferred Shares are entitled to preferential payments in the event of a liquidation, dissolution or winding up of the company, in an amount equal to any accrued and unpaid dividends. After such preference, any remaining assets are distributed pro-rata between holders of Clyra common stock and Preferred Shares as if the Preferred Shares had converted to Clyra common stock. Holders of Preferred Shares

may

convert the shares to Clyra common stock initially on a

one

-to-

one

basis. The conversion formula is subject to change in the event Clyra sells stock at a lower price than the price paid by Sanatio.

In addition to the foregoing, Clyra entered into a consulting agreement with Beach House Consulting, LLC, through which Jack B. Strommen will be providing consulting services to the company. Mr. Strommen is the founder of Beach House Consulting, LLC. Mr. Strommen will be assisting the company in its sales and marketing activities once it has FDA Approval on a product, at which point the agreement provides that Mr. Strommen is to receive

$23,438

per month for a period of

four

years. As of

June 30, 2017,

the Company has

not

presented any products to the FDA for FDA approval.

From inception, Clyra has generated

no

revenues and the financial impact of Clyra’s operations for the

three

and

six

months ended

June 30, 2017,

resulted in a net loss of

$387,490

and

$524,572.

XML

Note 8 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

8.

Commitments and Contingencies.

Calvert Employment Agreement

On

May 2, 2017,

BioLargo, Inc. (the “Company”) and its President and Chief Executive Officer Dennis P. Calvert entered into an employment agreement (the “Calvert Employment Agreement”), replacing in its entirety the previous employment agreement with Mr. Calvert dated

April 30, 2007.

The Calvert Employment Agreement provides that Mr. Calvert will continue to serve as the President and Chief Executive Officer of the Company and receive base compensation equal to his current rate of pay of

$288,603

annually. In addition to this base compensation, the agreement provides that he is eligible to participate in incentive plans, stock option plans, and similar arrangements as determined by the Company’s Board of Directors, health insurance premium payments for himself and his immediate family, a car allowance of

$800

per month, paid vacation of

four

weeks per year, and bonuses in such amount as the Compensation Committee

may

determine from time to time.

The Calvert Employment Agreement provides that Mr. Calvert will be granted an option (the “Option”) to purchase

3,731,322

shares of the Company’s common stock. The Option shall be a non-qualified stock option, exercisable at

$0.45

per share, which represents the market price of the Company’s common stock as of the date of the agreement, exercisable for

ten

years from the date of grant and vesting in equal increments over

five

years. Notwithstanding the foregoing, any portion of the Option which has

not

yet vested shall be immediately vested in the event of, and prior to, a change of control, as defined in the Calvert Employment Agreement. The agreement also provides for a grant of

1,500,000

shares of common stock, subject to the execution of a “lock-up agreement” whereby the shares remain unvested unless and until the earlier of (i) a sale of the Company, (ii) the successful commercialization of the Company’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 resulting in his termination. The Option contains the other terms standard in option agreements issued by the Company, including provisions for a cashless exercise.

The Calvert Employment Agreement has a term of

five

years, unless earlier terminated in accordance with its terms. The Calvert Employment Agreement provides that Mr. Calvert’s employment

may

be terminated by the Company due to his death or disability, for cause, or upon a merger, acquisition, bankruptcy or dissolution of the Company. “Disability” as used in the Calvert Employment Agreement means physical or mental incapacity or illness rendering Mr. Calvert unable to perform his duties on a long-term basis (i) as evidenced by his failure or inability to perform his duties for a total of

120

days in any

360

-day period, or (ii) as determined by an independent and licensed physician whom Company selects, or (iii) as determined without recourse by the Company’s disability insurance carrier. “Cause” means that Mr. Calvert has (i) engaged in willful misconduct in connection with the Company’s business; or (ii) been convicted of, or plead guilty or 

nolo contendre

 in connection with, fraud or any crime that constitutes a felony or that involves moral turpitude or theft. If Mr. Calvert’s employment is terminated due to merger or acquisition, then he will be eligible to receive the greater of (i) 

one

year’s compensation plus an additional

one

half year for each year of service since the effective date of the employment agreement or (ii) 

one

year’s compensation plus an additional

one

half year for each year remaining in the term of the agreement. Otherwise, he is only entitled to receive compensation due through the date of termination.

The Calvert Employment Agreement requires Mr. Calvert to keep certain information confidential,

not

to solicit customers or employees of the Company or interfere with any business relationship of the Company, and to assign all inventions made or created during the term of the Calvert Employment Agreement as “work made for hire”.

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Note 9 - Subsequent Events

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

Note

9.

Subsequent Events.

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

One-Year Convertible Notes

, mature

July 18, 2018

On

July 18, 2017,

we received

$250,000

and issued convertible promissory notes (convertible at

$0.42

per share) with a maturity date of

July 18, 2018

to

two

accredited investors in the aggregate principal amount of

$280,000.

Interest is charged upon issuance at

3%

per annum. We issued the investors stock purchase warrants to purchase an aggregate

400,000

shares exercisable at

$0.65

per share, which expire

July 18, 2023.

The exercise price of the stock purchase warrant

may

be adjusted downward in the event we sell our common stock or issue warrants at a lower price, other than securities issued through out Summer

2017

Unit Offering, for the payment of interest on promissory notes, for convertible notes, and warrants issued to the

two

investors. In the event we register the shares underlying the notes, under certain conditions we

may

call the warrants and require they be exercised or forfeited.

O

ne-Year Convertible Note

s

, mature

December 30, 2017

The promissory notes issued on

December 30, 2016

convertible at

$0.57

per share contain a provision that allows the investor to convert its note to the terms of a note subsequently issued by the company under more favorable terms. On

July 18, 2017,

we issued notes under similar terms as the

December 30, 2016

notes, convertible at

$0.42

per share, and provided notice to the investors of the reduction in the conversion price of the

two

notes issued

December 30, 2016,

to

$0.42

per share.

On

July 20, 2017,

the holders of these notes exercised their right to convert their notes in aggregate principal amount of

$280,000

into

686,667

shares of our common stock.

Two-Year Convertible Note

On

July 20, 2017,

the company accepted

$400,000

and issued a promissory note with a

10%

original issue discount in the principal amount of

$440,000,

due in

two

years, that accrues interest at

12%

paid quarterly. The note is convertible, at the holder’s option, into either BioLargo common shares at

$0.42

per share,

2,000

shares of Clyra Medical Technologies common stock held by BioLargo, or any combination thereof. At maturity, the note automatically converts into shares of BioLargo common stock at

$0.42

per share, unless otherwise instructed by the holder. Interest

may

be paid in cash, common stock, or options to purchase common stock, at the holder’s option.

Clyra

Medical Technologies, Inc.

On

August 4, 2017,

Clyra commenced a private securities offering of its common shares at a price of

$160

per share, and accepted

$1,000,000

in subscriptions. It issued

6,250

shares of its common stock to

two

investors. Of that amount, BioLargo invested

$250,000

and was issued

1,562.5

shares.

On

July 22, 2017,

Sanatio Capital LLC and Clyra agreed to convert the

$250,000

line of credit held by Sanatio to common shares at a price per share equal to that offered to investors in the Clyra offering. As of the date of conversion, the outstanding amount due on the line of credit was

$270,400.

Once the offering price was established, Sanatio was issued

1,690

shares of Clyra common stock at

$160

per share.

Subsequent to the issuance of shares to investors in the offering and to Sanatio, BioLargo owns

15,298

shares of Clyra common stock. These shares comprise

46.33%

of the voting stock at Clyra. Two members of BioLargo’s board of directors (Dennis P. Calvert and Jack B. Strommen) are

two

of the

three

members of Clyra’s board of directors.

Summer

2017

Unit Offering

Subsequent to

June 30, 2017,

we accepted investments for our Summer

2017

Unit Offering (see Note

3

) in the aggregate amount of

$182,200

from

five

accredited investors, and issued convertible promissory notes in the face amount of the investments that mature

June 20, 2020.

We also issued warrants to these investors to purchase an aggregate

433,810

shares.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Use of Estimates, Policy [Policy Text Block]

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 compensation and financing transactions, uncollectible accounts receivable, asset impairment and amortization, and taxes, 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.  

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Share-based Payments

All share-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their fair values.

For stock issued to consultants and other non-employees for services, we record the expense based on the fair market value of the securities as of the date of the stock issuance. The issuance of fully vested stock warrants or options to non-employees are valued at the time of issuance utilizing the Black Scholes calculation and the amount is charged to expense. The issuance of stock warrants or options to non-employees that vest over time are revalued each reporting period until vested to determine the amount to be recorded as an expense in the respective period. As the warrants or options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting.

Warrant Policy [Policy Text Block]

Warrants

The Unit Offerings of our convertible promissory note and a Series A stock purchase warrant 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, 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 measured again at its then current fair value at each subsequent reporting dates (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.

The convertible note is recorded at its 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. Further, the convertible promissory note is examined for any intrinsic beneficial conversion feature (“BCF”) which the effective convertible price of the note is less than the closing stock price on date of issuance. The adjusted BCF value is accounted for as equity.

The warrant and BCF fair values are also recorded as a discount to the convertible promissory notes. The equity features of the convertible promissory notes resulted in a discount to the convertible notes that is equal to the proceeds received.

Non Cash Transactions [Policy Text Block]

Non-Cash Transactions

We have established a policy relative to the methodology to determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock. The value is 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.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

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.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Revenues are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. We also

may

generate revenues from royalties and license fees from our intellectual property. Licensees typically 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. License fees are recognized over the estimated period of future benefit to the average licensee.

Government Grants [Policy Text Block]

Government Grants

We have been awarded grants from the Canadian National Research Institute – Industrial Research Assistance Program (NRC-IRAP) and the National Science and Engineering Research Council of Canada (NSERC). The government grants received are considered other income and are included in our consolidated statements of operations. We received our

first

grant in

2015

and have been awarded over

thirty

 grants totaling approximately

$1,100,000.

Some of the funds from these grants are given directly to

third

parties (such as the University of Alberta) 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.

The grants provide for (i) recurring monthly amounts and (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 and the development of our AOS filter. 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.

Earnings Per Share, Policy [Policy Text Block]

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 stock options and warrants were exercised into common stock. For the

three

and

six

months ended

June 30, 2016

and

2017,

the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the anti-dilutive effect of the warrants and stock options on the Company’s net loss.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of Credit Risk

All highly liquid investments with original maturities of

three

months or less or money market accounts held at financial institutions are considered to be cash. Substantially all of the cash is placed with

one

financial institution. At

June 30, 2017

and

December 31, 2016,

the year the cash accounts are exposed to credit loss for amounts in excess of insured limits of

$250,000

in the event of non-performance by the institution, however, it is

not

anticipated that there will be non-performance. At

June 30, 2017

and

December 31, 2016,

the Company had cash balances in excess of federally insured limits in the amount of approximately

$183,539

and

$1,660,153,

respectively.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Allowance for uncollectible receivables

Management evaluates credit quality by evaluating the exposure to individual counterparties, and, where warranted, management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized in income in the period in which they are determined. At

June 30, 2017,

the allowance for uncollected receivables was

$15,000.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

April 2016,

the FASB issued ASU

2016

-

10,

“Revenue from Contracts with Customers (Topic

606

): Identifying Performance Obligations and Licensing”. The amendments in this Update affect the guidance in Accounting Standards Update

2014

-

09,

 Revenue from Contracts with Customers (Topic

606

), which we are required to apply for annual periods beginning after

December 15, 2017.

Although management is still evaluating the potential impact of the adoption of this standard, its preliminary analysis is that the new guidelines currently will

not

substantially impact our revenue presentation.

In

March 2016,

the FASB issued Accounting Standards Update (ASU)

No.

2016

-

09,

Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based award transactions and adds

two

practical expedients for nonpublic entities. The new standards are effective for annual periods beginning after

December 15, 2017.

An entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating the impact of the pending adoption of the ASU on our consolidated financial statements.

In

February 2016,

the FASB issued Accounting Standards Update

No.

2016

-

02,

Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Although management is still evaluating the potential impact of the adoption of this standard, its preliminary analysis is that the new guidelines currently will

not

 materially impact our balance sheet presentation.

XML

Note 3 - Convertible Notes Payable and Lines of Credit (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Debt [Table Text Block]

	DECEMBER 31, 201 6		JUNE 3 0 , 201 7
Current liabilities:
Line of credit, matures December 1, 2017	$	50,000	$	50,000
Convertible notes payable
One-Year Convertible notes, mature July 8, 2017	$	280,000	$	—
One-Year Convertible notes, mature December 30, 2017		280,000		280,000
Convertible notes, mature June 1, 2018*		—		4,550,097
Total convertible notes payable	$	560,000	$	4,830,097
Long-term liabilities:
Clyra Line of credit, matures March 31, 2019	$	—	$	250,000
Convertible notes payable, net of current portion
Convertible notes, mature June 1, 2018*	$	4,800,097	$	—
Convertible notes, mature September 17, 2019		283,571		283,571
Convertible notes, mature December 31, 2019		167,000		292,000
Convertible notes, mature June 20, 2020		—		100,000
Total convertible notes payable , net of current portion	$	5,250,668	$	675,571
Total	$	5,860,668	$	5,805,668

Convertible Debt [Table Text Block]

Unit/ Conversion Price		Warrant Exercise Price		Aggregate
$	0.25	$	0.40	$	1,652,384
$	0.35	$	0.45		1,751,046
$	0.55	$	0.70		1,146,667
				$	4,550,097

XML

Note 4 - Share-based Compensation (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

									Weighted
Balance, June 30, 2016:									Average
	Options		Shares			Exercise			Price per
	Outstanding		Available			Price per share			share
Balances as of December 31, 2015		10,241,086		1,758,914		$0.23	–	1.89	$	0.44
Granted		40,000		(40,000	)		0.45			0.45
Expired		—		—			—			—
Balance, June 30, 2016		10,281,086		1,718,914		$0.23	–	1.89	$	0.44

									Weighted
									Average
Balance, June 30, 2017:	Options		Shares			Exercise			Price per
	Outstanding		Available			Price per share			share
Balances as of December 31, 2016		9,916,586		1,981,414		$0.23	–	1.89	$	0.44
Granted		340,000		(340,000	)	0.39	–	0.69		0.65
Exercised		—		—			—			—
Balance, June 30, 2017		10,256,586		1,641,414		$0.23	–	1.89	$	0.44

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2016						2017
	Non Plan			2007 Plan			Non Plan			2007 Plan
Risk free interest rate	1.77	–	1.91%	1.26	–	1.36%	2.29	–	2.40%	2.31	–	2.40%
Expected volatility	641	–	645%	311	–	315%	578	–	601%	578	–	601%
Expected dividend yield		—			—			—			—
Forfeiture rate		—			—			—			—
Expected life in years		7			5			7			7

Outside of 2007 Plan [Member]

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

							Weighted
Balance, June 30, 2016:							Average
	Options			Exercise			Price per
	Outstanding			Price per share			share
Balance, December 31, 2015		19,394,975		$0.18	–	1.00	$	0.40
Granted		484,077		0.33	–	0.45		0.38
Exercised		(60,000	)		0.25			0.25
Balance, June 30, 2016		19,819,052		$0.18	–	1.00	$	0.41

							Weighted
							Average
Balance, June 30, 2017:	Options			Exercise			Price per
	Outstanding			Price per share			share
Balance, December 31, 2016		20,148,766		$0.18	–	1.00	$	0.43
Granted		4,552,201		0.43	–	0.67	$	0.47
Expired		(3,866,629	)		0.18			0.18
Exercised		(3,866,630	)		0.18			0.18
Balance, June 30, 2017		16,967,708		$0.18	–	1.00	$	0.41

XML

Note 5 - Warrants (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

Balance, June 30, 2016	Number of
	Shares			Price Range
Outstanding as of December 31, 2015		13,779,438		$0.125	–	1.00
Issued		1,828,571			0.45
Expired		(183,545	)		0.55
Outstanding as of June 30, 2016		15,424,464		$0.125	–	1.00

Balance, June 30, 201 7	Number of
	Shares			Price Range
Outstanding as of December 31, 2016		20,035,114		$0.125	–	1.00
Issued		990,727		0.42	–	0.70
Exercised		(510,000	)	0.25	–	0.30
Expired		—			—
Outstanding as of June 30, 2017		20,515,841		$0.125	–	1.00

Schedule Of Assumptions Used To Determine Fair Value Of Warrants [Table Text Block]

	2016			2017
Risk free interest rate	1.26	–	1.36%	1.83	–	1.93%
Expected volatility	311	–	315%	293	–	297%
Expected dividend yield		—			—
Forfeiture rate		—			—
Expected life in years		5			5

XML

Note 6 - Accounts Payable and Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	December 31,		June 30 ,
	2016		2017
Accounts payable and accrued expenses	$	22,231	$	158,690
Payroll tax liability		137,500		137,500
Accrued officer bonus		80,000		—
Accrued interest		40,372		48,248
Total accounts payable and accrued expenses	$	280,103	$	344,438

XML

Note 1 - Business and Organization (Details Textual) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Aug. 14, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest		$ (2,517,794)	$ (1,668,335)	$ (4,577,870)	$ (3,312,728)
Net Cash Provided by (Used in) Operating Activities, Continuing Operations				(2,048,628)	(1,693,661)
Working Capital		(3,175,349)		(3,175,349)
Assets, Current		561,346		561,346		$ 2,016,682
Retained Earnings (Accumulated Deficit)		(96,256,129)		(96,256,129)		(91,915,426)
Cash and Cash Equivalents, at Carrying Value		433,539	$ 889,029	433,539	889,029	$ 1,910,153	$ 1,763,114
Cash and Cash Equivalents, Period Increase (Decrease)				(1,476,614)	$ (874,085)
Long-term Debt, Gross		5,805,668		5,805,668
Convertible Debt		4,830,097		4,830,097
Accounts Payable and Accrued Liabilities		$ 344,438		$ 344,438
Subsequent Event [Member]
Proceeds from Issuance of Private Placement	$ 800,000

XML

Note 2 - Summary of Significant Accounting Policies (Details Textual)	6 Months Ended
	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)
Cash, Uninsured Amount	$ 183,539	$ 1,660,153
Allowance for Doubtful Accounts, Premiums and Other Receivables	$ 15,000
Canadian Government Grants [Member]
Number of Grants Received	30
Grants Receivable	$ 1,100,000
Canadian Government Grants [Member] | Minimum [Member]
Grant Term	180 days
Canadian Government Grants [Member] | Maximum [Member]
Grant Term	1 year 180 days

XML

Note 3 - Convertible Notes Payable and Lines of Credit (Details Textual) - USD ($)								1 Months Ended	3 Months Ended			6 Months Ended
	May 24, 2017	Jan. 13, 2017	Dec. 30, 2016	Dec. 27, 2016	Sep. 17, 2016	Jul. 08, 2016	Jun. 06, 2016	May 15, 2017	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Share Price			$ 0.83	$ 0.86	$ 0.70
Interest Expense, Debt									$ 1,119,273		$ 478,525	$ 2,072,829	$ 884,850
Proceeds from Lines of Credit							$ 300,000
Line of Credit Facility, Interest Rate During Period							18.00%
Debt Conversion, Original Debt, Amount												243,824	183,159
Line of Credit, Current									$ 50,000			$ 50,000		$ 50,000
Winter 2016 Unit Offering [Member]
Class of Warrant or Right, Exercise Period				30 days
Class of Warrant or Right, Exercise Period Condition, Number of Trading Days Common Stock Closes at or above 2 Times the Exercise Price				10 days
Proceeds from Issuance of Units										$ 292,000
Units Issued During Period, Value, New Issues				$ 600,000
Debt Instrument, Convertible, Conversion Price				$ 0.57
Class of Warrant or Right, Number of Securities Called by Warrants or Rights										512,281
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.70
Debt Instrument, Interest Rate, Stated Percentage				12.00%
Number of Trading Days Prior to Interest Payment Due Date if Paid by Issuance of Common Stock				20 days
Debt Conversion before Maturity, Number of Trading Days Common Stock Closes at or above 3 Times the Unit Price				10 days
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right				1
Winter 2016 Unit Offering [Member] | Three accredited Investors [Member]
Proceeds from Issuance of Units										$ 125,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights										219,298
Clyra Medical Technology Inc [Member] | Sanatio [Member]
Line of Credit Facility, Maximum Borrowing Capacity										$ 250,000
Original Issue Discount, Percentage										5.00%
Proceeds from Lines of Credit								$ 75,000		$ 175,000
Debt Instrument, Interest Rate, Stated Percentage										10.00%
Clyra Medical Technology Inc [Member]
Subsidiary, Parent Ownership Interest										54.00%
The 2015 Unit Offering [Member]
Debt Instrument, Convertible, Conversion Price
Class of Warrant or Right, Exercise Price of Warrants or Rights
Proceeds from Convertible Debt													$ 535,000
Debt Instrument, Interest Rate, Stated Percentage											12.00%		12.00%
Warrants Issued Concurrently With One Year Convertible Note [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			400,000			400,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.42		$ 0.75			$ 0.65
Class of Warrant or Right, Expiration Term			5 years			5 years
Warrant Issued in Exchange of Cancelled Line of Credit [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					515,583
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.70
Warrants Issued Concurrently to the Summer 2017 Unit Offering [Member]
Class of Warrant or Right, Exercise Period	30 days
Class of Warrant or Right, Exercise Period Condition, Number of Trading Days Common Stock Closes at or above 2 Times the Exercise Price	10 days
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.65
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	1
One Year Convertible Notes [Member]
Debt Instrument, Convertible, Conversion Price			$ 0.57			$ 0.45								$ 0.57
Debt Conversion, Original Debt, Amount		$ 280,000
Debt Conversion, Converted Instrument, Shares Issued		640,889
Proceeds from Convertible Debt			$ 250,000			$ 250,000
Debt Instrument, Face Amount			$ 280,000			$ 280,000
Debt Instrument, Interest Rate, Stated Percentage			3.00%			3.00%
Summer 2017 Unit Offering [Member]
Proceeds from Issuance of Private Placement	$ 1,500,000
Debt Instrument, Convertible, Conversion Price	$ 0.42
Debt Instrument, Interest Rate, Stated Percentage	12.00%
Number of Trading Days Prior to Interest Payment Due Date if Paid by Issuance of Common Stock	20 days
Debt Conversion before Maturity, Number of Trading Days Common Stock Closes at or above 3 Times the Unit Price	10 days
Conversion of Line of Credit to 2015 Unit Offering [Member]
Debt Conversion, Original Debt, Accrued Interest Amount					$ 33,571
Debt Instrument, Convertible, Conversion Price					$ 0.55
Debt Conversion, Original Debt, Amount					$ 250,000
Promissory Notes Issued in 2015 Unit Offering and Accrued Interest Into Common Stock [Member]
Debt Conversion, Original Debt, Amount												$ 250,000
Debt Conversion, Converted Instrument, Shares Issued												406,789
Line of Credit [Member]
Debt Instrument, Term												270 days

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Note 3 - Convertible Notes Payable and Lines of Credit - Schedule of Debt (Details) - USD ($)		Jun. 30, 2017	Dec. 31, 2016
Line of credit		$ 4,830,097	$ 560,000
Convertible notes		675,571	5,250,668
Total		5,805,668	5,860,668
Line of Credit, Matures December 1, 2017 [Member]
Line of credit		50,000	50,000
Convertible Notes Maturing on July 8, 2017 [Member]
Line of credit			280,000
Convertible Notes Maturing on December 30, 2017 [Member]
Line of credit		280,000	280,000
Convertible Notes Maturing on June 1, 2018 [Member]
Line of credit		4,550,097
Convertible notes	[1]		4,800,097
Line of Credit, Maturing on March 31, 2019 [Member]
Convertible notes		250,000
Convertible Notes Maturing on September 17, 2019 [Member]
Convertible notes		283,571	283,571
Convertible Notes Maturing on December 31, 2019 [Member]
Convertible notes		292,000	167,000
Convertible Notes, Maturing on June 20, 2020 [Member]
Convertible notes		$ 100,000

[1] The convertible notes that mature June 1, 2018, were considered "long-term" liabilities as of December 31, 2016, and "current" liabilities (due within one year) as of June 30, 2017. As such, those same liabilities are in both the "long-term" and "current" liabilities section in the above table.

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Note 3 - Convertible Notes Payable and Lines of Credit - Pricing Supplements (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Aggregate outstanding	$ 675,571	$ 5,250,668
The 2015 Unit Offering [Member]
Warrant exercise price (in dollars per share)
Aggregate outstanding	$ 4,550,097
Conversion price (in dollars per share)
Pricing Supplement No.1 [Member] | The 2015 Unit Offering [Member]
Warrant exercise price (in dollars per share)	$ 0.40
Aggregate outstanding	$ 1,652,384
Conversion price (in dollars per share)	$ 0.25
Pricing Supplement No.2 [Member] | The 2015 Unit Offering [Member]
Warrant exercise price (in dollars per share)	$ 0.45
Aggregate outstanding	$ 1,751,046
Conversion price (in dollars per share)	$ 0.35
Pricing Supplement No.3 [Member] | The 2015 Unit Offering [Member]
Warrant exercise price (in dollars per share)	$ 0.70
Aggregate outstanding	$ 1,146,667
Conversion price (in dollars per share)	$ 0.55

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Note 4 - Share-based Compensation (Details Textual) - USD ($) $ / shares in Units, xbrli-pure in Thousands							3 Months Ended		6 Months Ended
	Jun. 19, 2017	May 02, 2017	Apr. 30, 2017	Feb. 10, 2017	Jun. 20, 2016	Mar. 21, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 30, 2016	Dec. 27, 2016	Sep. 17, 2016
Share Price											$ 0.83	$ 0.86	$ 0.70
Employee Stock Option [Member]
Share Based Compensation Arrangement by Share Based Payment Award Fair Value Assumptions Expected Forfeiture Rate									0.00%
The 2007 Equity Incentive Plan [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price									$ 0.65	$ 0.45
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross									340,000	40,000
Outside of the 2007 Plan [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price									$ 0.47	$ 0.38
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross									4,552,201	484,077
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value							$ 20,025	$ 75,405	$ 40,050	$ 170,310
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period									3,866,629
Selling, General and Administrative Expenses [Member]
Allocated Share-based Compensation Expense							235,671	$ 189,601	$ 515,959	$ 491,440
Selling, General and Administrative Expenses [Member] | The 2007 Equity Incentive Plan [Member]
Allocated Share-based Compensation Expense						$ 119,971
President and Chief Executive Officer [Member]
Employment Agreement, Common Stock, Expect to Grant, Subject to Lock-Up Agreement		1,500,000
Employment Agreement, Option, Number of Shares, Expected to Grant		3,731,322
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years
Employment Agreement, Term		5 years
Employment Agreement, Lock-up Agreement, Successful Commercialization, Minimum Cash Receipt		$ 3,000,000
Employment Agreement, Lock-up Agreement, Minimum Revenue Recognized		$ 3,000,000
President and Chief Executive Officer [Member] | Non-Qualified Stock Option [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price		$ 0.45
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years
Sharebased Compensation Arrangement by Sharebased Payment Award Options Granted in Period, Fair Value		$ 1,679,095
President and Chief Executive Officer [Member] | 2007 Stock Option [Member]
Investment Options, Exercise Price			$ 0.18
Stock Issued During Period, Shares, New Issues			3,866,630
Share Price			$ 0.51
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period			3,866,629
President and Chief Executive Officer [Member] | Shares Issued for the Exercise of 2007 Stock Option [Member]
Stock Issued During Period, Shares, New Issues			2,501,937
President and Chief Executive Officer [Member] | Selling, General and Administrative Expenses [Member] | Non-Qualified Stock Option [Member]
Allocated Share-based Compensation Expense							27,985
Non-employee Members of the Board of Directors [Member] | The 2007 Equity Incentive Plan [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.43				$ 0.45
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	40,000				40,000
Non-employee Members of the Board of Directors [Member] | Selling, General and Administrative Expenses [Member] | The 2007 Equity Incentive Plan [Member]
Sharebased Compensation Arrangement by Sharebased Payment Award Options Granted in Period, Fair Value					$ 18,000
Allocated Share-based Compensation Expense	$ 15,600
Chief Financial Officer [Member] | The 2007 Equity Incentive Plan [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price				$ 0.69
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares				125,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Remaining Number of Shares to Vest Each Month				25,000
Sharebased Compensation Arrangement by Sharebased Payment Award Options Granted in Period, Fair Value							207,000		207,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				300,000
Chief Financial Officer [Member] | Selling, General and Administrative Expenses [Member] | The 2007 Equity Incentive Plan [Member]
Allocated Share-based Compensation Expense							$ 51,750		$ 155,250
Board of Directors and Vendors [Member] | The 2007 Equity Incentive Plan [Member]
Sharebased Compensation Arrangement By Sharebased Payment Award Options Expiration Period Extension						5 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross						307,777
Board of Directors and Vendors [Member] | Outside of the 2007 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross							237,353	220,554	820,879	484,077
Board of Directors and Vendors [Member] | Outside of the 2007 Plan [Member] | Minimum [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price									$ 0.43	$ 0.33
Board of Directors and Vendors [Member] | Outside of the 2007 Plan [Member] | Maximum [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price									$ 0.67	$ 0.45
Board of Directors and Vendors [Member] | Selling, General and Administrative Expenses [Member] | Outside of the 2007 Plan [Member]
Allocated Share-based Compensation Expense							$ 120,311	$ 96,196	$ 277,074	$ 183,159

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Note 4 - Share-based Compensation - Stock Options Issued Under the 2007 Equity Incentive Plan (Details) - The 2007 Equity Incentive Plan [Member] - $ / shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Weighted average price per share, beginning balance (in dollars per share)	$ 0.44	$ 0.44
Weighted average price per share, ending balance (in dollars per share)	$ 0.44	$ 0.44
Options outstanding, beginning balance (in shares)	9,916,586	10,241,086
Shares available, beginning balance (in shares)	1,981,414	1,758,914
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	340,000	40,000
Shares available, granted (in shares)	(340,000)	(40,000)
Exercise price per share, granted (in dollars per share)		$ 0.45
Weighted average price per share, granted (in dollars per share)	$ 0.65	$ 0.45
Options outstanding, ending balance (in shares)	10,256,586	10,281,086
Shares available, ending balance (in shares)	1,641,414	1,718,914
Minimum [Member]
Exercise price per share, beginning balance (in dollars per share)	$ 0.23	$ 0.23
Exercise price per share, granted (in dollars per share)	0.39
Exercise price per share, ending balance (in dollars per share)	0.23	0.23
Maximum [Member]
Exercise price per share, beginning balance (in dollars per share)	1.89	1.89
Exercise price per share, granted (in dollars per share)	0.69
Exercise price per share, ending balance (in dollars per share)	$ 1.89	$ 1.89

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Note 4 - Share-based Compensation - Stock Options Issued Outside of the 2007 Equity Incentive Plan (Details) - Outside of the 2007 Plan [Member] - $ / shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Weighted average price per share, ending balance (in dollars per share)	$ 0.41	$ 0.41
Options outstanding, beginning balance (in shares)	20,148,766	19,394,975
Weighted average price per share, beginning balance (in dollars per share)	$ 0.43	$ 0.40
Options outstanding, granted (in shares)	4,552,201	484,077
Weighted average price per share, granted (in dollars per share)	$ 0.47	$ 0.38
Options outstanding, exercised (in shares)	3,866,630	(60,000)
Options outstanding, expired (in shares)	(3,866,629)
Exercise price per share, expired (in dollars per share)	$ 0.18
Weighted average price per share, expired (in dollars per share)	$ 0.18
Exercise of stock options (in shares)	(3,866,630)	60,000
Exercised, exercise price per share (in dollars per share)	$ 0.18	$ 0.25
Weighted average price per share, exercised (in dollars per share)	$ 0.18	$ 0.25
Options outstanding, ending balance (in shares)	16,967,708	19,819,052
Minimum [Member]
Exercise price per share, beginning balance (in dollars per share)	$ 0.18	$ 0.18
Granted, exercise price per share (in dollars per share)	0.43	0.33
Exercised, exercise price per share (in dollars per share)
Exercise price per share, ending balance (in dollars per share)	0.18	0.18
Maximum [Member]
Exercise price per share, beginning balance (in dollars per share)	1	1
Granted, exercise price per share (in dollars per share)	0.67	0.45
Exercised, exercise price per share (in dollars per share)
Exercise price per share, ending balance (in dollars per share)	$ 1	$ 1

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Note 4 - Share-based Compensation - Stock Options, Valuation Assumptions (Details)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Non Plan [Member]
Risk free interest rate, minimum	2.29%	1.77%
Risk free interest rate, maximum	2.40%	1.91%
Expected volatility, minimum	578.00%	641.00%
Expected volatility, maximum	601.00%	645.00%
Expected life in years (Year)	7 years	7 years
The 2007 Equity Incentive Plan [Member]
Risk free interest rate, minimum	2.31%	1.26%
Risk free interest rate, maximum	2.40%	1.36%
Expected volatility, minimum	578.00%	311.00%
Expected volatility, maximum	601.00%	315.00%
Expected life in years (Year)	7 years	5 years

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Note 5 - Warrants (Details Textual) - USD ($)		3 Months Ended		6 Months Ended
	May 24, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017	Jan. 13, 2017	Dec. 31, 2016	Dec. 30, 2016	Dec. 27, 2016	Sep. 17, 2016	Jul. 08, 2016	Dec. 31, 2015
Share Price									$ 0.83	$ 0.86	$ 0.70
Amortization of Debt Discount (Premium)				$ 1,723,396	$ 668,257
Derivative Liability, Current		$ 570,595		570,595				$ 663,560
Fair Value Adjustment of Warrants		$ (56,352)		$ (321,872)
Stock Issued During Period, Shares, Exercise of Warrants				510,000	0
Proceeds from Warrant Exercises				$ 153,000
Class of Warrant or Right, Issued During Period				990,727	1,828,571
Class of Warrant or Right, Outstanding		20,515,841	15,424,464	20,515,841	15,424,464			20,035,114					13,779,438
Summer 2017 Unit Offering [Member]
Debt Instrument, Convertible, Conversion Price	$ 0.42
Warrants Issued Concurrently With One Year Convertible Note [Member]
Discount On Convertible Note Payable									$ 280,000			$ 160,000
Derivative Liability, Current		$ 570,595		$ 570,595
Fair Value Adjustment of Warrants		$ 56,352		321,872
Class of Warrant or Right, Interest Expense				$ 228,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights									400,000			400,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	0.42								$ 0.75			$ 0.65
Warrants Issued Concurrently to the Summer 2017 Unit Offering [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.65
Class of Warrant or Right, Issued During Period	219,048
Class of Warrant or Right, Outstanding	619,048
Warrants Issued Concurrently to the Summer 2017 Unit Offering 2 [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.42
Class of Warrant or Right, Issued During Period	314,285
Class of Warrant or Right, Outstanding	714,285
The 2015 Unit Offering [Member]
Discount On Convertible Note Payable			$ 535,000		$ 535,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			1,528,571		1,528,571
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.45		$ 0.45
Warrants Issued Concurrently with Line of Credit [Member]
Debt Instrument, Unamortized Discount			$ 237,405		$ 237,405
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			300,000		300,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.35		$ 0.35
Warrants With Exercise Price $0.30 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		370,000		370,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.30		$ 0.30
Warrants With Exercise Price $0.25 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		140,000		140,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.25		$ 0.25
Warrants Issued Concurrently to the Summer 2017 Unit Offering [Member]
Discount On Convertible Note Payable		$ 125,000		$ 125,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		238,096		238,096
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.65		$ 0.65
Warrants Issued Concurrently with Winter 2016 Unit Offering [Member]
Discount On Convertible Note Payable						$ 125,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						219,298	512,281
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 0.70	$ 0.70

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Note 5 - Warrants - Warrants Outstanding (Details) - $ / shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Issued (in shares)	990,727	1,828,571
Issued, price range (in dollars per share)		$ 0.45
Expired (in shares)	(510,000)	(183,545)
Beginning balance, outstanding (in shares)	20,035,114	13,779,438
Expired, price range (in dollars per share)		$ 0.55
Ending balance, outstanding (in shares)	20,515,841	15,424,464
Minimum [Member]
Issued, price range (in dollars per share)	$ 0.42
Beginning balance, outstanding, price range (in dollars per share)	0.25	$ 0.125
Beginning balance, outstanding, price range (in dollars per share)	0.125
Ending balance, outstanding, price range (in dollars per share)	0.125
Maximum [Member]
Issued, price range (in dollars per share)	0.70
Beginning balance, outstanding, price range (in dollars per share)	0.30	$ 1
Beginning balance, outstanding, price range (in dollars per share)	1
Ending balance, outstanding, price range (in dollars per share)	$ 1

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Note 5 - Warrants - Assumptions Used to Determine Fair Value of Warrants (Details)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Expected life in years (Year)	5 years	5 years
Minimum [Member]
Risk free interest rate	1.83%	1.26%
Expected volatility	293.00%	311.00%
Maximum [Member]
Risk free interest rate	1.93%	1.36%
Expected volatility	297.00%	315.00%

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Note 6 - Accounts Payable and Accrued Expenses (Details Textual) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended
	Sep. 27, 2016	Jan. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Accrued Payroll Taxes, Possible Reduced Amount			$ 5,000		$ 5,000
Accrued Bonuses, Current							$ 80,000
Selling, General and Administrative Expense			$ 1,162,018	$ 923,564	$ 2,217,073	$ 1,854,471
Stock Issued During Period, Shares, Issued to Settle Accrued Interest Liability					683,875	546,157
Interest Expense [Member]
Stock Issued During Period, Grant Date Fair Value, Issued to Settle Accrued Interest Liability					$ 337,246	$ 213,875
Chief Executive Officer [Member]
Accrued Bonuses, Current	$ 60,000
Bonuses Paid	$ 20,000	$ 40,000
Consultants [Member]
Stock Issued During Period, Shares, Issued for Services					1,807,829	746,943
Selling, General and Administrative Expense					$ 168,022	$ 275,232

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Note 6 - Accounts Payable and Accrued Expenses - Summary of Accounts Payable and Accrued Expenses (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Accounts payable and accrued expenses	$ 158,690	$ 22,231
Payroll tax liability	137,500	137,500
Accrued officer bonus		80,000
Accrued interest	48,248	40,372
Total accounts payable and accrued expenses	$ 344,438	$ 280,103

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Note 7 - Noncontrolling Interest (Details Textual) - USD ($)			3 Months Ended		6 Months Ended
	Dec. 30, 2015	Dec. 17, 2012	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consulting Services, Monthly Payment	$ 23,438
Consulting Services, Period of Services	4 years
Net Income (Loss) Attributable to Noncontrolling Interest			$ (173,911)	$ (54,859)	$ (237,167)	$ (121,831)
Revenue, Net			99,978	$ 38,986	145,995	$ 52,928
Clyra Medical Technology Inc [Member]
Sale of Stock, Percentage of Ownership after Transaction	54.00%
Clyra Medical Technology Inc [Member]
Investment Owned, Balance, Shares		7,500
Preferred Stock, Dividend Rate, Percentage	8.00%
Preferred Shares Dividend, Period	5 years
Dividends Payable			90,000		90,000
Net Income (Loss) Attributable to Noncontrolling Interest			(387,490)		(524,572)
Revenue, Net			$ 0		$ 0
Clyra Medical Technology Inc [Member] | Series A Preferred Stock [Member] | Sanatio [Member]
Sale of Stock, Number of Shares Issued in Transaction	9,830
Proceeds from Issuance or Sale of Equity	$ 750,000
Clyra Medical Technology Inc [Member] | Each of 3 Individuals [Member]
Stock Issued During Period, Shares, New Issues		1,500
Sanatio [Member] | Clyra Medical Technology Inc [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	40.00%

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Note 8 - Commitments and Contingencies (Details Textual) - President and Chief Executive Officer [Member]	May 02, 2017 USD ($) $ / shares shares
Employment Agreement, Annual Base Compensation	$ 288,603
Employment Agreement, Car Allowance Monthly	$ 800
Employment Agreement, Option, Number of Shares, Expected to Grant | shares	3,731,322
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Employment Agreement, Common Stock, Expect to Grant, Subject to Lock-Up Agreement | shares	1,500,000
Employment Agreement, Lock-up Agreement, Successful Commercialization, Minimum Cash Receipt	$ 3,000,000
Employment Agreement, Lock-up Agreement, Minimum Revenue Recognized	$ 3,000,000
Employment Agreement, Term	5 years
Non-Qualified Stock Option [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares	$ 0.45
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years

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Note 9 - Subsequent Events (Details Textual)							1 Months Ended	6 Months Ended
	Aug. 04, 2017 USD ($) $ / shares shares	Jul. 22, 2017 USD ($) $ / shares shares	Jul. 20, 2017 USD ($) $ / shares	Jul. 18, 2017 USD ($) $ / shares shares	Dec. 30, 2016 USD ($) $ / shares	Jul. 08, 2016 USD ($) $ / shares	Aug. 14, 2017 USD ($) shares	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2016 $ / shares
Debt Conversion, Converted Instrument, Amount								$ 530,000
Subsequent Event [Member]
Proceeds from Convertible Debt							$ 182,200
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares							433,810
Proceeds from Issuance of Private Placement							$ 800,000
Subsequent Event [Member] | Clyra Medical Technology Inc [Member]
Noncontrolling Interest, Increase from Subsidiary Equity Issuance	$ 250,000
Stock Issued During Period, Shares, New Issues | shares	1,562.5
Subsequent Event [Member] | Clyra [Member]
Noncontrolling Interest, Ownership Percentage by Parent							46.33%
Common Stock, Shares Owned | shares							15,298
Subsequent Event [Member] | Clyra Medical Technology Inc [Member]
Proceeds from Issuance of Private Placement	$ 1,000,000
Stock Issued During Period, Shares, New Issues | shares	6,250
Shares Issued, Price Per Share | $ / shares	$ 160
Subsequent Event [Member] | Sanatio [Member]
Debt Conversion, Converted Instrument, Amount		$ 250,000
Long-term Line of Credit		$ 270,400
Stock Issued During Period, Shares, New Issues | shares		1,690
Shares Issued, Price Per Share | $ / shares		$ 160
One Year Convertible Notes [Member]
Proceeds from Convertible Debt					$ 250,000	$ 250,000
Debt Instrument, Face Amount					$ 280,000	$ 280,000
Debt Instrument, Interest Rate, Stated Percentage					3.00%	3.00%
Debt Instrument, Convertible, Conversion Price | $ / shares					$ 0.57	$ 0.45				$ 0.57
One Year Convertible Notes [Member] | Subsequent Event [Member]
Proceeds from Convertible Debt				$ 250,000
Debt Instrument, Face Amount				$ 280,000
Debt Instrument, Interest Rate, Stated Percentage				3.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares				400,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares				$ 0.65
Debt Instrument, Convertible, Conversion Price | $ / shares				$ 0.42
Debt Instrument, Convertible, Number of Equity Instruments				686,667
Two Year Convertible Note [Member] | Subsequent Event [Member]
Proceeds from Convertible Debt			$ 400,000
Debt Instrument, Discount Percent			10.00%
Debt Instrument, Face Amount			$ 440,000
Debt Instrument, Interest Rate, Stated Percentage			12.00%
Debt Instrument, Convertible, Conversion Price | $ / shares			$ 0.42
Debt Instrument, Convertible, Number of Equity Instruments			2,000