UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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
BIOLARGO, INC.
(Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| | | OTC Markets (OTCQB) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| 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
The number of shares of the Registrant’s Common Stock outstanding as of November 10, 2023 was
FORM 10-Q
INDEX
| Item 1 |
1 | |
| Item 2 |
Management's Discussion and Analysis and Financial Condition and Results of Operations |
27 |
| Item 4 |
37 |
| Item 2 |
39 | |
| Item 5 |
40 | |
| Item 6 |
40 | |
| 42 |
PART I – FINANCIAL INFORMATION
BIOLARGO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF September 30, 2023 AND December 31, 2022
(in thousands, except for share and per share data)
| September 30, 2023 | December 31, | |||||||
| (unaudited) | 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Inventories, net of allowance | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of depreciation | ||||||||
| Other non-current assets | ||||||||
| Investment in South Korean joint venture | ||||||||
| Right of use, operating lease, net of amortization | ||||||||
| Clyra Medical prepaid marketing | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Clyra Medical accounts payable and accrued expenses | ||||||||
| Debt obligations | ||||||||
| Clyra Medical debt obligations | ||||||||
| Deferred revenue | ||||||||
| Lease liability | ||||||||
| Customer deposits | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Debt obligations, net of current | ||||||||
| Lease liability, net of current | ||||||||
| Clyra Medical debt obligations | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES (Note 12) | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred Series A, $par value, shares authorized, -- shares issued and outstanding, at September 30, 2023 and December 31, 2022 | ||||||||
| Common stock, $par value, shares authorized, and shares issued at September 30, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total BioLargo Inc. and subsidiaries stockholders’ equity | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BIOLARGO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE Three and Nine Months Ended September 30, 2023 AND 2022
(in thousands, except for share and per share data)
(unaudited)
| Three Months |
Nine Months |
|||||||||||||||
| September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
| Revenues |
||||||||||||||||
| Product revenue |
$ | $ | $ | $ | ||||||||||||
| Service revenue |
||||||||||||||||
| Total revenue |
||||||||||||||||
| Cost of revenue |
||||||||||||||||
| Cost of goods sold |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Cost of service |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Gross profit |
||||||||||||||||
| Selling, general and administrative expenses |
||||||||||||||||
| Research and development |
||||||||||||||||
| Operating loss: |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other (expense) income: |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| PPP loan forgiveness |
||||||||||||||||
| Tax credit (reversal) |
( |
) | ||||||||||||||
| Grant income |
||||||||||||||||
| Total other expense: |
( |
) | ||||||||||||||
| Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net loss attributable to noncontrolling interest |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net loss attributable to common shareholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per share attributable to common shareholders: |
||||||||||||||||
| Loss per share attributable to shareholders – basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Comprehensive loss: |
||||||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Foreign currency translation |
( |
) | ( |
) | ( |
) | ||||||||||
| Comprehensive loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Comprehensive loss attributable to noncontrolling interest |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Comprehensive loss attributable to common stockholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BIOLARGO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE Three and Nine Months Ended September 30, 2023 AND 2022
(in thousands, except for share and per share data)
(unaudited)
| Common stock |
Additional paid-in |
Accumulated |
Accumulated other comprehensive |
Non-controlling |
Total stockholders’ equity |
|||||||||||||||||||||||
| Shares |
Amount |
capital |
deficit |
Loss |
interest |
(deficit) |
||||||||||||||||||||||
| Balance, December 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Sale of stock for cash |
||||||||||||||||||||||||||||
| Issuance of common stock for services |
||||||||||||||||||||||||||||
| Issuance of common stock in exchange for Clyra shares |
— | — | — | — | — | — | ||||||||||||||||||||||
| Stock option compensation expense |
— | |||||||||||||||||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services |
— | |||||||||||||||||||||||||||
| Warrant issued for interest |
— | |||||||||||||||||||||||||||
| Clyra – sales of Series A Preferred Stock |
— | |||||||||||||||||||||||||||
| Clyra – Series A Preferred Stock – dividend |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Biolargo Energy Technology Inc. (BETI) offering |
— | |||||||||||||||||||||||||||
| Noncontrolling interest allocation |
— | ( |
) | |||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Foreign currency translation |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, March 31, 2023 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Sale of stock for cash |
||||||||||||||||||||||||||||
| Issuance of common stock for services |
||||||||||||||||||||||||||||
| Stock option compensation expense |
— | |||||||||||||||||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services |
— | |||||||||||||||||||||||||||
| Clyra – sales of Series A Preferred Stock |
— | |||||||||||||||||||||||||||
| Clyra – Series A Preferred Stock – dividend |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Biolargo Energy Technology Inc. (BETI) offering |
— | |||||||||||||||||||||||||||
| Noncontrolling interest allocation |
— | ( |
) | |||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Foreign currency translation |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, June 30, 2023 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Sale of stock for cash |
||||||||||||||||||||||||||||
| Issuance of common stock for services |
||||||||||||||||||||||||||||
| Stock option compensation expense |
— | |||||||||||||||||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services |
— | |||||||||||||||||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock option exercise |
— | |||||||||||||||||||||||||||
| Clyra – sales of Series A Preferred Stock |
— | |||||||||||||||||||||||||||
| Clyra – Series A Preferred Stock – dividend |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Biolargo Energy Technology Inc. (BETI) offering |
— | |||||||||||||||||||||||||||
| Noncontrolling interest allocation |
— | ( |
) | |||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Foreign currency translation |
— | |||||||||||||||||||||||||||
| Balance, September 30, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Common stock |
Additional paid-in |
Accumulated |
Accumulated other comprehensive |
Non-controlling |
Total stockholders’ equity |
|||||||||||||||||||||||
| Shares |
Amount |
capital |
deficit |
Loss |
interest |
(deficit) |
||||||||||||||||||||||
| Balance, December 31, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Sale of stock for cash |
||||||||||||||||||||||||||||
| Issuance of common stock for services |
||||||||||||||||||||||||||||
| Stock option compensation expense |
— | |||||||||||||||||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services |
— | |||||||||||||||||||||||||||
| Noncontrolling interest allocation |
— | ( |
) | |||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Foreign currency translation |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, March 31, 2022 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Sale of stock for cash |
||||||||||||||||||||||||||||
| Issuance of common stock for services |
||||||||||||||||||||||||||||
| Stock option compensation expense |
— | |||||||||||||||||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services |
— | |||||||||||||||||||||||||||
| Noncontrolling interest allocation |
— | ( |
) | |||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Foreign currency translation |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, June 30, 2022 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Sale of stock for cash |
||||||||||||||||||||||||||||
| Issuance of common stock for services |
||||||||||||||||||||||||||||
| Stock option compensation expense |
— | |||||||||||||||||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services |
— | |||||||||||||||||||||||||||
| Noncontrolling interest allocation |
— | ( |
) | |||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Foreign currency translation |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, September 30, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BIOLARGO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE Nine Months Ended September 30, 2023 AND 2022
(in thousands, except for share and per share data)
(unaudited)
| September 30, 2023 |
September 30, 2022 |
|||||||
| Cash flows from operating activities |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Stock option compensation expense |
||||||||
| Common stock issued for services |
||||||||
| Bad debt expense |
||||||||
| Excess and obsolete inventory |
||||||||
| Amortization of right-of-use operating lease assets |
||||||||
| Interest expense related to amortization of the discount on note payable |
||||||||
| Fair value of warrant issued for interest |
||||||||
| PPP loan forgiveness |
( |
) | ||||||
| Loss on investment in South Korean joint venture |
||||||||
| Depreciation expense |
||||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ( |
) | ||||
| Inventories |
( |
) | ( |
) | ||||
| Prepaid expenses and other assets |
( |
) | ||||||
| Accounts payable and accrued expenses |
( |
) | ( |
) | ||||
| Clyra accounts payable and accrued expenses |
( |
) | ( |
) | ||||
| Deferred revenue |
( |
) | ( |
) | ||||
| Lease liability, net |
( |
) | ||||||
| Customer deposits |
( |
) | ||||||
| Net cash used in operating activities |
( |
) | ( |
) | ||||
| Cash flows from investing activities |
||||||||
| Equipment purchases |
( |
) | ( |
) | ||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities |
||||||||
| Proceeds from sale of common stock |
||||||||
| Proceeds from sale of BETI common stock |
||||||||
| Repayment of note payable and vehicle loan |
( |
) | ||||||
| Repayment by Clyra on inventory line of credit |
( |
) | ( |
) | ||||
| Proceeds from sale of Clyra Medical preferred stock |
||||||||
| Proceeds from Clyra Medical stock option exercise |
||||||||
| Net cash provided by financing activities |
||||||||
| Net effect of foreign currency translation |
( |
) | ( |
) | ||||
| Net change in cash |
||||||||
| Cash at beginning of year |
||||||||
| Cash at end of period |
$ | $ | ||||||
| Supplemental disclosures of cash flow information |
||||||||
| Cash paid during the year for: |
||||||||
| Interest |
$ | $ | ||||||
| Income taxes |
$ | $ | ||||||
| Short-term lease payments not included in lease liability |
$ | $ | ||||||
| Non-cash investing and financing activities |
||||||||
| Equipment added using capital lease |
$ | $ | ||||||
| Right of use |
$ | $ | ||||||
| Allocation of noncontrolling interest |
$ | $ | ||||||
| Preferred Series A dividend |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Note 1. Business and Organization
Description of Business
BioLargo, Inc. (“BioLargo”, or the “Company”) invents, develops, and commercializes innovative platform technologies to solve challenging environmental problems like PFAS contamination (per- and polyfluoroalkyl substances), advanced water and wastewater treatment, industrial odor control, air quality control, infection control, and myriad environmental remediation challenges. Our business strategy is straightforward: we invent or acquire technologies that we believe have the potential to be disruptive in large commercial markets; we develop and validate these technologies to advance and promote their commercial success as we leverage our considerable scientific, engineering, and entrepreneurial talent; we then monetize these technical assets through a variety of business structures that may include licensure, joint venture, sale, spin off, or by deploying direct to market strategies.
Organization
We are a Delaware corporation formed in 1991. We have
Liquidity / Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of our business. For the nine months ended September 30, 2023, we generated revenues of $
During the nine months ended September 30, 2023, we sold (i) $
If we are unable to rely on our current arrangement with Lincoln Park to fund our working capital requirements, we will have to rely on other forms of financing, and there is no assurance that we will be able to do so, or if we do so, it will be on favorable terms.
The foregoing factors raise substantial doubt about our ability to continue as a going concern, unless we are able to continue to raise funds through stock sales to Lincoln Park or other private financings, or attain a reasonable threshold of operating efficiencies and achieve profitable operations. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and partially owned subsidiaries BETI, BLEST and Clyra Medical. All intercompany accounts and transactions have been eliminated.
Foreign Currency
The Company has designated the functional currency of BioLargo Water, Inc., our Canadian subsidiary, to be the Canadian dollar. Therefore, translation gains and losses resulting from differences in exchange rates are recorded in accumulated other comprehensive income.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when acquired to be cash equivalents. Substantially all cash equivalents are held in short-term money market accounts at one of the largest financial institutions in the United States, Bank of America. From time to time, our cash account balances are greater than the Federal Deposit Insurance Corporation insurance limit of $250,000 per owner per bank, and during such times, we are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the financial institution. We do not anticipate non-performance by our financial institution.
As of September 30, 2023, and December 31, 2022, our cash balances were made up of the following (in thousands):
| September 30, 2023 | December 31, 2022 | |||||||
| BioLargo, Inc. and subsidiaries | $ | $ | ||||||
| Clyra Medical Technologies, Inc. | ||||||||
| Total | $ | $ | ||||||
Accounts Receivable
In June 2016, the FASB issued ASU 2016-13, which sets out the principles for the recognition of measurement of credit losses on financial instruments, including trade receivables. The standard eliminates the probable initial recognition threshold and requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. The new standard was effective for the Company beginning January 1, 2023 and primarily impacted trade accounts receivable.
Accounts receivable are customer obligations that are unconditional. Accounts receivable are presented net of an allowance for doubtful accounts for expected credit losses, which represents an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and, if necessary, provides an allowance for doubtful accounts and expected credit losses. A provision to the allowances for doubtful accounts for expected credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment, and the Company’s historical experience. Provisions to the allowances for doubtful accounts for expected credit losses are recorded to general and administrative expenses. The Company writes off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues collection of the receivable. The Company does not have any off-balance-sheet credit exposure related to customers. As of September 30, 2023, and December 31, 2022, the allowance for doubtful accounts for expected credit losses was $
Credit Concentration
We have a limited number of customers that account for significant portions of our revenue. During the three and nine months ended September 30, 2023 and 2022, the following customers accounted for more than 10% of consolidated revenues:
| Three Months | Nine Months | |||||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
| Customer A | ||||||||||||||||
| Customer B |
|
|
| |||||||||||||
| Customer C |
|
|
|
| ||||||||||||
At September 30, 2023,
| September 30, 2023 | December 31, 2022 | |||||||
| Customer A | % | % | ||||||
| Customer B |
| % | ||||||
| Customer D |
| % | ||||||
Inventory
Inventories are stated at the lower of cost or net realizable value using the average cost method. The allowance for obsolete inventory as of September 30, 2023, and December 31, 2022, was $
| September 30, 2023 | December 31, 2022 | |||||||
| Raw material | $ | $ | ||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
Other Non-Current Assets
Other non-current assets consisted of (i) security deposits related to our business offices, (ii) three patents acquired on October 22, 2021, for $
| September 30, 2023 | December 31, 2022 | |||||||
| Patents | $ | $ | ||||||
| Security deposits | ||||||||
| Tax credit receivable | — | |||||||
| Total | $ | $ | ||||||
Equity Method of Accounting
On March 20, 2020, we invested $
We account for our investment in the joint venture under the equity method of accounting. We have determined that while we have significant influence over the joint venture through our technology license and our position on the Board of Directors, we do not control the joint venture or are otherwise involved in managing the entity and we own less than a majority of the equity. Therefore, we record the asset on our consolidated balance sheet and record an increase or decrease of the recorded balance by our percentage ownership of the profits or losses in the joint venture. The joint venture has incurred a loss since inception and our
Impairment
Long-lived and definite lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future undiscounted cash flows from the use of the asset and its eventual disposition is less than the carrying amount of the asset, then an impairment loss is recognized. The impairment loss is measured based on the fair value of the asset. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. There were
Earnings (Loss) Per Share
We report basic and diluted earnings (loss) per share (“EPS”) for common and common share equivalents. Basic EPS is computed by dividing reported earnings by the weighted average shares outstanding. Diluted EPS is computed by adding to the weighted average shares the dilutive effect if convertible notes payable, stock options and warrants were exercised into common stock. For the three and nine months ended September 30, 2023, and 2022, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the Company’s net loss which creates an anti-dilutive effect of the convertible notes payable, warrants and stock options.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ from those estimates. Estimates are used when accounting for stock-based transactions, debt transactions, derivative liabilities, allowance for bad debt, asset depreciation and amortization, impairment expense, among others.
The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results of our financial statements.
Share-Based Compensation Expense
We recognize compensation expense for stock option awards on a straight-line basis over the applicable service period of the award, which is the vesting period. Fair value is determined on the grant date. Share-based compensation expense is based on the grant date fair value estimated using the Black-Scholes Option Pricing Model.
For stock and stock options issued to consultants and other non-employees for services, the Company measures and records an expense as of the earlier of the date at which either: a commitment for performance by the non-employee has been reached or the non-employee’s performance is complete. The equity instruments are measured at the current fair value, and for stock options, the instruments are measured at fair value using the Black Scholes option model.
The following methodology and assumptions were used to calculate share-based compensation for the nine months ended September 30, 2023, and 2022:
| 2023 | 2022 | |||||||||||||||
| Non Plan | 2018 Plan | Non Plan | 2018 Plan | |||||||||||||
| Risk free interest rate | % | % | % | % | ||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Expected dividend yield | ||||||||||||||||
| Forfeiture rate | ||||||||||||||||
| Life in years | ||||||||||||||||
Expected price volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. The expected volatility is derived from the historical daily change in the market price of our common stock, as we believe that historical volatility is the best indicator of future volatility.
The risk-free interest rate used in the Black-Scholes calculation is based on the prevailing U.S. Treasury yield as determined by the U.S. Federal Reserve. We have never paid any cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future.
Warrants
Warrants issued with our convertible and non-convertible debt instruments are accounted for under the fair value and relative fair value method. The warrant is first analyzed per its terms as to whether it has derivative features or not. If the warrant is determined to be a derivative and not qualify for equity treatment, then it is measured at fair value using the Black Scholes option model and recorded as a liability on the balance sheet. The warrant is re-measured at its then current fair value at each subsequent reporting date (it is “marked-to-market”). If the warrant is determined to not have derivative features, it is recorded into equity at its fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the convertible note. Convertible debt instruments are recorded at fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant. The warrant relative fair values are also recorded as a discount to the convertible promissory notes.
Non-Cash Transactions
We determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock based on the market price of our common stock issued as consideration, at the date of the agreement of each transaction or when the service is rendered or product is received.
Revenue Recognition
We account for revenue in accordance with ASC 606, “Revenue from Contacts with Customers”. The guidance focuses on the core principle for revenue recognition, which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the guidance provides that an entity should apply the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company’s products are sold through a contract with the customer and a written purchase order, in which the details of the contract are defined including the transaction price and method of shipment. The only performance obligation is to create and ship the product, and each product has separate pricing. Revenue is recognized at a point in time when the goods are shipped if the agreement is FOB manufacturer, and when goods are delivered if FOB destination. Revenue is recognized with a reduction for sales discounts, as appropriate and negotiated in the customer’s purchase order.
Service contracts are performed through a written contract, which specifies the performance obligations and the rate at which the services will be billed, typically by time and materials. Each service is separately negotiated and priced. Revenue is recognized as services are performed and completed, or, for services related to product installations, at the completion of the installation. A few contracts have called for milestone or fixed cost payments, where we invoice an agreed-to amount per month for the life of the contract. In these instances, completed work, billed hourly, is recognized as revenue. If the billing amount is greater or lesser than the completed work, a receivable or payable is created. These accounts are adjusted upon additional billings as the work is completed. To date, there have been no discounts or other financing terms for the contracts.
The Company has outstanding contract liability obligations of $
As we generate revenues from royalties or license fees from our intellectual property, a licensee will pay a license fee in one or more installments and ongoing royalties based on their sales of products incorporating or using our licensed intellectual property. We have entered into a licensing agreement for the CupriDyne Clean product, and we recognize royalty and license fees on a quarterly basis as the product is sold through to third parties and reported to us.
Government Grants
We have been awarded multiple research grants from the private and public Canadian research programs. The income we receive directly from grants is recorded as other income. We have been awarded over 80 grants since our first in 2015. Some of the funds from these grants are given directly to third parties (such as the University of Alberta or a third-party research scientist) to support research on our technology. The grants have terms generally ranging between and 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 typically provide for (i) recurring monthly amounts, (ii) reimbursement of costs for research talent for which we invoice to request payment, and (iii) ancillary cost reimbursement for research talent travel related costs. All awarded grants have specific requirements on how the money is spent, typically to employ researchers. None of the funds may be used for general administrative expenses or overhead in the United States. These grants have substantially increased our level of research and development activities in Canada. We continue to apply for Canadian government and agency grants to fund research and development activities. Not all of our grant applications have been awarded, and no assurance can be made that any pending grant application, or any future grant applications, will be awarded.
Income Taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of asset and liabilities. Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax asset and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
We account for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by generally accepted accounting principles (“GAAP”). Under GAAP, the tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. Management believes there are
The Company assessed its earnings history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of September 30, 2023, and December 31, 2022. Accordingly, a 100% valuation allowance was recorded against the net deferred tax asset.
The Company recognizes interest and penalties on income taxes as a component of income tax expense, should such an expense be realized.
Fair Value of Financial Instruments
Management believes the carrying amounts of the Company’s financial instruments as of September 30, 2023, and December 31, 2022 approximate their respective fair values because of the short-term nature of these instruments. Such instruments consist of cash, accounts receivable, prepaid assets, accounts payable, line of credit, and other assets and liabilities. The carrying amount of debt instruments are believed to approximate fair value as the stated interest rates are reflective of the prevailing market rates.
Tax Credits
Our research and development activities in Canada may entitle our Canadian subsidiary to claim benefits under the “Scientific Research and Experimental Development Program”, a Canadian federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada. Benefits under the program include credits to taxable income. If our Canadian subsidiary does not have taxable income in a reporting period, we instead receive a tax refund from the Canadian Revenue Authority. Those refunds are classified in Other Income on our Consolidated Statement of Operations and Comprehensive Loss.
During the three months ended September 30, 2023, our subsidiary, Clyra, received $
Leases
At inception of a lease contract, we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period of the contract, and (3) whether we have the right to direct the use of the asset during such time period. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases are classified as either finance leases or operating leases. A lease must be classified as a finance lease if any of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any of these criteria. We have no leases classified as finance leases. As of September 30, 2023, the weighted average remaining lease term for our operating leases was years. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, management estimates the incremental borrowing rate, which currently is estimated to be
As of September 30, 2023, the right-of-use assets totaled $
Property and Equipment
Property and equipment includes machinery and leasehold improvements and is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from
Recent Accounting Pronouncements
Currently there are no recently released pronouncements that are considered applicable to the Company’s financial statements.
Note 3. Sale of Stock for Cash
Lincoln Park Financing
On December 13, 2022, we entered into a stock purchase agreement (the “2022 LPC Purchase Agreement”) with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us at our request up to an aggregate of $
During the three and nine months ended September 30, 2023, we sold
During the three and nine months ended September 30, 2022, pursuant to a prior (similar) arrangement, we sold
Unit Offerings
We did sell any shares in our Unit Offerings during the three months ended September 30, 2023. During the nine months ended September 30, 2023, we sold
During the three and nine months ended September 30, 2022, pursuant to our unit offerings, we sold
Note 4. Debt Obligations
The following table summarizes our debt obligations outstanding as of September 30, 2023, and December 31, 2022 (in thousands). The table does not include debt obligations of our partially owned subsidiary Clyra Medical (see Note 8, “Debt Obligations of Clyra Medical”).
| September 30, 2023 | December 31, 2022 | |||||||
| Current portion of debt: | ||||||||
| SBA Paycheck Protection Program loan | $ | $ | ||||||
| Vehicle loan, current portion | ||||||||
| Convertible note payable, matures March 1, 2023 | ||||||||
| SBA EIDL Loan, matures July 2050, current portion | ||||||||
| Debt discount, net of amortization | ( | ) | ||||||
| Total current portion of debt | $ | $ | ||||||
| Long-term debt: | ||||||||
| SBA Paycheck Protection Program loans, matures May 2025 | $ | $ | ||||||
| Vehicle loan, matures March 2029 | ||||||||
| SBA EIDL Loan, matures July 2050 | ||||||||
| Total long-term debt, net of current | $ | $ | ||||||
| Total | $ | $ | ||||||
For the three and nine months ended September 30, 2023, we recorded $
For the three and nine months ended September 30, 2022, we recorded $
Vehicle loan
On February 7, 2023, we entered a loan agreement with Bank of America for the purchase of a vehicle used in operations totaling $
Convertible note payable, matures March 1, 2023
On March 6, 2023, we entered into an agreement with the holder of a $
SBA Program Loans
On February 7, 2022, we received notice that the SBA had forgiven $
On May 12, 2022, we received notice that the SBA had denied the forgiveness application of BLEST’s $
In July 2020, ONM Environmental received an Economic Injury Disaster Loan from the SBA in the amount of $
Note 5. Share-Based Compensation
Issuance of Common Stock in exchange for Services
Payment of Officer Salaries
On September 30, 2023, two officers agreed to convert an aggregate $
On September 30, 2022, we issued
Shares issued to Officers are unvested at the date of grant and subject to a lock-up agreement restricting vesting and sale until the earlier of (i) the consummation of a sale (in a single transaction or in a series of related transactions) of BioLargo by means of a sale of (a) a majority of the then outstanding common stock of BioLargo (whether by merger, consolidation, sale or transfer of common stock, reorganization, recapitalization or otherwise) or (b) all or substantially all of the assets of BioLargo; and (ii) the successful commercialization of BioLargo’s products or technologies as demonstrated by its receipt of at least $
Payment of Consultant and Vendor Fees
On September 30, 2023, we issued
On September 30, 2022, we issued
All of these offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and/or Regulation D promulgated thereunder as not involving a public offering of securities.
Stock Option Expense
During the three and nine months ended September 30, 2023, we recorded an aggregate $
2018 Equity Incentive Plan
On June 22, 2018, our stockholders adopted the BioLargo 2018 Equity Incentive Plan (“2018 Plan”) as a means of providing our directors, key employees, and consultants additional incentive to provide services. Both stock options and stock grants may be made under this plan for a period of
Activity for our stock options under the 2018 Plan during the nine months ended September 30, 2023, and 2022, is as follows:
| Options Outstanding | Exercise Price per share | Weighted Average Price per share | Aggregate intrinsic Value(1) | |||||||||||||
| Balance, December 31, 2022 | $ | $ | ||||||||||||||
| Granted | $ | |||||||||||||||
| Balance, September 30, 2023 | $ | |||||||||||||||
| Unvested | ( | ) | $ | |||||||||||||
| Vested, September 30, 2023 | $ | $ | ||||||||||||||
| Balance, December 31, 2021 | $ | |||||||||||||||
| Granted | $ | |||||||||||||||
| Balance, September 30, 2022 | $ | |||||||||||||||
(1) – Aggregate intrinsic value based on closing common stock price of $
The options granted to purchase
The options granted to purchase
Chief Financial Officer Contract Extension
On March 21, 2023, we and our Chief Financial Officer Charles K. Dargan, II formally agreed to extend the engagement agreement dated February 1, 2008 (the “Engagement Agreement”, which had been previously extended multiple times), pursuant to which Mr. Dargan has been and continues to serve as the Company’s Chief Financial Officer. The Engagement Extension Agreement dated as of March 21, 2023 (the “Engagement Extension Agreement”) provides for an additional -year term to expire January 31, 2024 (the “Extended Term”), at which time Mr. Dargan will continue to serve as CFO, unless and until either party terminates the agreement.
As the sole compensation for the Extended Term, Mr. Dargan was issued an option (“Option”) to purchase
The Option is Mr. Dargan’s sole compensation for the Extended Term. As was the case in all prior terms of his engagement, there is no cash component of his compensation for the Extended Term. Mr. Dargan is eligible to be reimbursed for business expenses he incurs in connection with the performance of his services as the Company’s Chief Financial Officer (although he has made no such requests for reimbursement in the past). All other provisions of the Engagement Agreement not expressly amended pursuant to the Engagement Extension Agreement remain the same, including provisions regarding indemnification and arbitration of disputes.
2007 Equity Incentive Plan
On September 7, 2007, and as amended April 29, 2011, the BioLargo, Inc. 2007 Equity Incentive Plan (“2007 Plan”) was adopted as a means of providing our directors, key employees and consultants additional incentive to provide services. Both stock options and stock grants may be made under this plan for a period of
Activity for our stock options under the 2007 Plan for the nine months ended September 30, 2023 and 2022 is as follows:
| Options Outstanding | Exercise price per share | Weighted Average Price per share | Aggregate intrinsic Value(1) | |||||||||||||
| Balance, December 31, 2022 | $ | $ | ||||||||||||||
| Expired | ( | ) | - | |||||||||||||
| Balance, September 30, 2023 | $ | $ | — | |||||||||||||
| Balance, December 31, 2021 | $ | |||||||||||||||
| Expired | ( | ) | - | |||||||||||||
| Balance, September 30, 2022 | $ | $ | ||||||||||||||
(1) – Aggregate intrinsic value based on closing common stock price of $
Non-Plan Options
Activity of our non-plan stock options issued for the nine months ended September 30, 2023 and 2022 is as follows:
| Non-plan Options outstanding | Exercise price per share | Weighted averageprice per share | Aggregate intrinsic Value(1) | |||||||||||||
| Balance, December 31, 2022 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Balance, September 30, 2023 | $ | $ | ||||||||||||||
| Unvested | ( | ) | ||||||||||||||
| Vested, September 30, 2023 | $ | $ | $ | |||||||||||||
| Balance, December 31, 2021 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Balance, September 30, 2022 | $ | $ | ||||||||||||||
(1) – Aggregate intrinsic value based on closing common stock price of $
During the nine months ended September 30, 2023, we issued options to purchase an aggregate
During the nine months ended September 30, 2022, we issued options to purchase
Note 6. Warrants
We have certain warrants outstanding to purchase our common stock, at various prices, as described in the following table:
| Warrants outstanding | Exercise price per share | Weighted average price per share | Aggregate intrinsic value(1) | |||||||||||||
| Balance, December 31, 2022 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | |||||||||||||
| Balance, December 31, 2021 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Balance, September 30, 2022 | $ | $ | ||||||||||||||
(1) – Aggregate intrinsic value based on closing common stock price of $
Warrants issued in Unit Offerings
During the nine months ended September 30, 2023, pursuant to our Unit Offerings (see Note 3), we issued -month stock purchase warrants to purchase an aggregate
During the nine months ended September 30, 2022, pursuant to our Unit Offerings (see Note 3), we issued nine-month stock purchase warrants to purchase an aggregate
Warrant issued in conjunction with amendment to note payable
On March 6, 2023, we entered into an agreement with the holder of a $
Fair Value – Interest Expense
To determine interest expense related to our outstanding warrants issued in conjunction with debt offerings, the fair value of each award grant is estimated on the date of grant using the Black-Scholes option pricing model and the relative fair values are amortized over the life of the warrant. For the determination of expense of warrants issued for services, extinguishment of debt and settlement management also uses the option-pricing model. The principal assumptions we used in applying this model were as follows:
| 2023 | 2022 | |||||||
| Risk free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| 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. The expected life in years is based on the contract term of the warrant.
Note 7. Accounts Payable and Accrued Expenses
As of September 30, 2023, accounts payable and accrued expenses included the following (in thousands):
| Category | BioLargo | ONM | BLEST | Water | BETI | Intercompany amounts | Totals | |||||||||||||||||||||
| Accounts payable | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Accrued payroll | ||||||||||||||||||||||||||||
| Accrued interest | ||||||||||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||||
As of December 31, 2022, accounts payable and accrued expenses included the following (in thousands):
| Category | BioLargo | ONM | BLEST | Water | Intercompany amounts | Totals | ||||||||||||||||||
| Accounts payable | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
| Accrued payroll | ||||||||||||||||||||||||
| Accrued interest | ||||||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||
See Note 8, “Accounts Payable and Accrued Expenses”, for the accounts payable and accrued expenses of Clyra Medical.
Note 8. Noncontrolling Interest – Clyra Medical
As discussed in Note 2 above, we consolidate the operations of our partially owned subsidiary Clyra Medical.
Debt Obligations of Clyra Medical
Promissory Note
On April 8, 2022, Clyra Medical issued a promissory note in the principal amount of $
Line of Credit
On June 30, 2020, Clyra Medical entered into a Revolving Line of Credit Agreement whereby Vernal Bay Capital Group, LLC committed to provide a $
On December 13, 2022, Clyra Medical entered into an amendment of the Revolving Line of Credit Agreement whereby the maturity date of the line of credit was extended to September 30, 2024, and the payment terms were modified such that amounts of principal due in each month are capped at a maximum of
As of September 30, 2023, the balance outstanding on this line of credit totals $
Equity Transactions
As of September 30, 2023, Clyra had
BioLargo Conversion of Intercompany Balances
In July 2023, BioLargo converted $
Sales of Series A Preferred Stock
During the three months ended September 30, 2023, Clyra sold
Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its Series A Preferred stock, plus accrued dividends, into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 30 prior trading days. Elections may made beginning January 1, 2025, and ending on June 30, 2026.
Clyra Stock Options
| Clyra Options Outstanding | Exercise price per share | Weighted average price per share | ||||||||||
| Balance, December 31, 2022 | $ | $ | ||||||||||
| Exercised | ( | ) | $ | $ | ||||||||
| Granted | ||||||||||||
| Balance, September 30, 2023 | $ | $ | ||||||||||
| Balance, December 31, 2021 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Balance, September 30, 2022 | $ | $ | ||||||||||
Clyra issues options to its employees and consultants in lieu of compensation owed on a regular basis. The fair value of the options issued totaled $
During the three months ended September 30, 2023, two option holders elected to exercise their stock options; Clyra received $
| September 30, 2023 | December 31, 2022 | |||||||
| Risk free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | — | — | ||||||
| Forfeiture rate | — | — | ||||||
| Expected life in years | ||||||||
Accounts Payable and Accrued Expenses
At September 30, 2023, and December 31, 2022, Clyra had the following accounts payable and accrued expenses (in thousands):
| Category | 2023 | 2022 | ||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll | ||||||||
| Accrued interest | ||||||||
| Accrued dividend | — | |||||||
| Total | $ | $ | ||||||
Note 9. BioLargo Engineering, Science and Technologies, LLC
In September 2017, we commenced a full-service environmental engineering firm and formed a Tennessee entity named BioLargo Engineering, Science & Technologies, LLC (“BLEST”). In conjunction with the start of this subsidiary we entered into employment agreements with six scientists and engineers. (See Note 11 “Business Segment Information”.) BLEST was capitalized with two classes of membership units: Class A,
The BLEST Compensation Committee has met regularly since the subsidiary commenced operations. In 2018, it reviewed the operating performance and determined that the performance metrics were not met and as a result, did award any Class B units or stock options. As of December 31, 2021, BLEST employees had earned
Note 10. BioLargo Energy Technologies, Inc.
BioLargo Energy Technologies, Inc. (“BETI”) was formed for the purpose of commercializing a sodium-sulfur battery technology. BioLargo purchased
During the three months ended September 30, 2023, BETI sold
As of September 30, 2023, BETI had
Note 11. Business Segment Information
BioLargo has operating business segments, plus its corporate entity which is responsible for general corporate operations, including administrative functions, finance, human resources, marketing, legal, etc. The operational business segments are:
| 1. | ONM Environmental -- which sells odor and volatile organic control products and services (located in Westminster, California); |
| 2. | Clyra Medical Technologies (“Clyra Medical”) -- which develops and sells medical products based on our technologies; |
| 3. | BLEST -- which provides professional engineering services on a time and materials basis for outside clients and supports our internal operations as needed (located in Oak Ridge, Tennessee); |
| 4. | BioLargo Water (“Water”) – our research, development and innovation group operating out of the University of Alberta, Edmonton, Canada; and |
| 5. | BioLargo Energy Technologies, Inc. (“BETI”) – formed to commercialize our sodium-sulfur battery technology. |
Other than ONM Environmental, during the last three quarterly periods none of our operating business units have operated at a profit, and therefore each required additional cash to meet its monthly expenses, funded through BioLargo’s sales of debt or equity, research grants, and tax credits. BETI and Clyra Medical have also been funded by third party investors who invest directly in exchange for equity ownership in that entity.
The segment information for the three and nine months ended September 30, 2023, and 2022, is as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | ||||||||||||||||
| BioLargo corporate | $ | $ | $ | $ | ||||||||||||
| ONM Environmental | ||||||||||||||||
| BLEST | ||||||||||||||||
| BETI | ||||||||||||||||
| Water | ||||||||||||||||
| Clyra Medical | ||||||||||||||||
| Intersegment revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Research and development expense | ||||||||||||||||
| BioLargo corporate | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| ONM Environmental | ( | ) | ( | ) | ||||||||||||
| BLEST | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| BETI | ( | ) | ( | ) | ||||||||||||
| Water | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Clyra Medical | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Intersegment R&D | ||||||||||||||||
| Total | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Operating income (loss) | ||||||||||||||||
| BioLargo corporate | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| ONM Environmental | ||||||||||||||||
| BLEST | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| BETI | ( | ) | ( | ) | ||||||||||||
| Water | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Clyra Medical | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Interest income (expense) | ||||||||||||||||
| BioLargo corporate | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| ONM Environmental | ( | ) | ( | ) | ||||||||||||
| Clyra Medical | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Water | ||||||||||||||||
| Total | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| As of September 30, 2023 | BioLargo | ONM | Clyra | BLEST | Water | BETI | Elimination | Total | ||||||||||||||||||||||||
| Tangible assets | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Right of use leased asset | ||||||||||||||||||||||||||||||||
| Investment in South Korean joint venture | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| As of December 31, 2022 | BioLargo | ONM | Clyra | BLEST | Water | Elimination | Total | |||||||||||||||||||||
| Tangible assets | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Right of use | ||||||||||||||||||||||||||||
| Investment in South Korean joint venture | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Note 12. Commitments and Contingencies
Office Leases
We have long-term operating leases for office, industrial and laboratory space in Westminster, California, Oak Ridge, Tennessee, and Alberta, Canada. Payments made under operating leases are charged to the Consolidated Statement of Operations and Comprehensive Loss on a straight-line basis over the term of the operating lease agreement. Short-term leases less than one-year are not included in our analysis. For the three and nine months ended September 30, 2023, rental expense was $
Note 13. Subsequent Events.
Management has evaluated subsequent events through the date of the filing of this quarterly report and management noted the following for disclosure.
Lincoln Park Capital Purchase of Shares
From October 1, 2023, through November 13, 2023, we sold
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This quarterly report on Form 10-Q contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding BioLargo’s capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding BioLargo’s ability to carry out its planned development and production of products. Forward-looking statements are made, without limitation, in relation to BioLargo’s operating plans, BioLargo’s liquidity and financial condition, availability of funds, operating and exploration costs and the market in which BioLargo competes. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in our Form most recent annual report on Form 10-K, and, from time to time, in other reports BioLargo files with the SEC. These factors may cause BioLargo’s actual results to differ materially from any forward-looking statement. BioLargo disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Unless otherwise expressly stated herein, all statements, including forward-looking statements, set forth in this Form 10-Q are as of September 30, 2023, unless expressly stated otherwise, and we undertake no duty to update this information.
As used in this report, “we” and “Company” refers to (i) BioLargo, Inc., a Delaware corporation; and (ii) its partially or wholly-owned subsidiaries BioLargo Life Technologies, Inc., a California corporation which holds our registered patents, ONM Environmental, Inc., a California corporation which manufactures, markets, sells and distributes our odor and volatile organic compound control products, BioLargo Water Investment Group, Inc., a California corporation (which wholly owns BioLargo Water, Inc., a Canadian corporation), BioLargo Development Corp., a California corporation which employs and provides benefits to our employees, BioLargo Engineering, Science & Technologies, LLC, a Tennessee limited liability company (“BLEST”) that provides professional engineering services out of Oak Ridge Tennessee, BioLargo Energy Technologies, Inc., a California corporation (“BETI”) formed to commercialize our proprietary battery technology, BioLargo Equipment Solutions & Technologies, Inc., a California corporation, and Clyra Medical Technologies, Inc., a California corporation (“Clyra Medical”) which commercializes our technologies in the medical and dental fields. All subsidiaries are wholly owned, except for BETI, BLEST and Clyra Medical.
The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the related notes to the consolidated financial statements included elsewhere in this report.
Our Business - Innovator and Solution Provider
BioLargo is in the business of creating new cleantech technologies to solve tough problems. We invent, develop, then commercialize disruptive technologies to tackle global challenges in air quality, water, environmental engineering, long duration energy storage, and advanced antimicrobial medical device platforms. Our model is to invent new technologies that solve specific problems, prove them out and develop them, then commercialize them with purpose-suited subsidiaries, identify and secure the right partnerships to increase their commercial reach, and potentially sell them or spin them out later.
Why do we do this work? Every member of our team – including PhD scientists, engineers, and entrepreneurs – has a passion for seeking new, never-before-seen innovations that can make life better around the world. We care about safeguarding the environment and human health for future generations. We care about making technologies that are affordable and flexible enough to be accessed around the world. And we care about being the best at what we do – creating best-in-class technologies to solve big, tough cleantech challenges.
Some of our areas of focus include environmental problems like PFAS contamination (per- and polyfluoroalkyl substances), water pollution by pharmaceuticals and micropollutants, air pollution by VOCs, hard-to-treat odors from landfills and sewage plants, and infection and wound healing.
Below you’ll read about the cleantech ventures and projects we are most excited about. Behind those, however, is a pipeline of other cleantech innovations in various stages of development associated with our expansive array of issued and pending patents, and having been funded in part by over 90 government grants.
We operate our business in distinct business segments:
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Odor and VOC control products, including consumer products, such as the Pooph branded pet-odor control product, and our flagship industrial odor control product, CupriDyne Clean, sold by our subsidiary ONM Environmental, Inc.; |
| ● |
Water treatment equipment and solutions, including our PFAS removal system the AEC, our co-developed minimal liquid discharge water treatment system the AROS, and our micro-pollutant treatment solution, the AOS, all sold by our subsidiary BioLargo Equipment Solutions & Technologies, Inc.; |
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Long-duration energy storage (LDES) battery solutions, being developed by our subsidiary BioLargo Energy Technologies, Inc. (97% owned by BioLargo, Inc.); |
| ● |
Medical products based on our technologies, including the FDA-cleared Bioclynse surgical wound irrigation solution sold by our partially owned subsidiary Clyra Medical Technologies, Inc.; and |
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Our professional engineering services division, which, in addition to serving outside clients on a fee for service basis, supports our internal business units, through our partially owned subsidiary BioLargo Engineering, Science & Technologies, LLC ("BLEST"). |
In addition to the foregoing, we have scientists working in a research and support facility on campus at the University of Alberta, Edmonton, Canada, and corporate offices in Westminster, California that support the operating segments with legal, accounting, human resources, and other services.
Odor Control (Consumer and Industrial)
Pooph - Consumer Private-Label Products
We sell the Pooph branded pet odor-control product to Ikigai Marketing Works, LLC, ("Ikigai") pursuant to license and manufacturing agreements. Ikigai advertises and sells Pooph to consumers and major retailers, including Walmart, Amazon, and Chewy.com, and is currently expanding to more than a dozen large retailers. Our agreement with Ikigai grants them an exclusive license to sell the Pooph pet odor-control product, and requires, in addition to purchasing product from us at an agreed-upon manufacturing margin, they pay us six percent of their sales.
During the nine months ended September 30, 2023, revenue from Ikigai comprised 77% of our company-wide revenue.
Ikigai management informs us that they are shifting focus in their advertising from direct-to-consumer to driving sales to national retailers, and that they expect to secure contracts for more than 20,000 retail stores by the end of 2023, representing an approximately ten times increase in the number of stores carrying the product as were at June 30, 2023.
Industrial Odor and VOC Solutions
ONM Environmental, Inc. is BioLargo’s subsidiary that delivers robust and comprehensive products and services to control and mitigate odor and volatile organic compounds (“VOCs”) emitted from a variety of industrial activities, including landfills and other waste handling facilities. Its flagship product – CupriDyne® Clean – is delivered through misting systems, sprayers, water trucks and similar water delivery systems designed, manufactured and installed by ONM. We believe the product is the number-one performing odor-control product in the market, and that it offers substantial savings to our customers compared with competing products. ONM Environmental holds General Engineering, Electrical, Plumbing and Low Voltage contractor licenses issued by the California Contractors State License Board, and offers a menu of services to landfills, transfer stations, wastewater treatment facilities as well as facilities in non-waste related industries. These services include engineering design, construction, installation, ongoing maintenance and on-site support services to assist our clients in the implementation and continued use of the various systems that deliver our liquid products in the field (such as misting systems).
We have been and expect to continue selling product to the largest solid waste handling companies in the country, with a portion of chemistry product sales resulting from national purchasing agreements (NPAs), and are also serving municipalities. ONM Environmental continues to focus on securing more contracts with existing customers, and developing new business. ONM also onboarded two new wastewater treatment plant customers, as well as one more manufacturing facility customer, representing encouraging advancements in expanding into non-solid-waste markets.
In addition to its goal to keep growing its revenues organically through the sale of odor and VOC control chemistry and air quality control systems to its primary market segment (municipal solid waste handling in California), ONM Environmental aims to accelerate its growth through development of new sales and distribution channels without being limited by our own sales and distribution infrastructure, such as through our partnership with Ikigai Marketing Works, LLC (see “Pooph - Consumer Private-Label Products” above).
South Korean Joint Venture
We are partners with a leading wastewater treatment solution provider based in South Korea in a joint venture to commercialize our CupriDyne® Clean products in South Korea. We own 40% of the joint venture. Although the joint venture established manufacturing and is marketing the product, the COVID-19 pandemic significantly impacted the expected growth of the company. While the local management team continues to market the product to industrial clients, their efforts have struggled to gain a foothold. We are not obligated to contribute additional funds to the venture, and cannot predict its future success.
Innovative Water Treatment Solutions
Over the years, we have developed multiple innovative technologies and equipment platforms that focus on challenging issues in the water treatment industry, including the AOS developed to remove micro-pollutants, the AEC developed to remove per- and polyfluoroalkyl substances (PFAS), and along with Garratt-Callahan, the AROS to allow for minimal water discharge. As a result of increase in interest from potential customers for our PFAS solutions, we believe we will be better able to serve this market with a uniform identity and operating unit called BioLargo Equipment Solutions & Technologies, Inc. (“BEST”), which will manage the sales and distribution of our water treatment products and related services. As we transition this venture from incubation to commercialization, we are focusing staff and resources we believe necessary for success. Ultimately, BEST will be reflected as a new operating segment in our consolidated financial statements. Although BEST is primarily focused on AEC, AROS and AOS, discussed below, it will offer comprehensive water treatment solutions, related equipment, and services.
AEC, a solution for the PFAS “Forever-Chemicals” crisis – and more
One of the most significant and timely innovations in our portfolio is our per- and polyfluoroalkyl substances (PFAS) removal and collection/disposal solution we call the Aqueous Electrostatic Concentrator (AEC), a novel water treatment system that removes PFAS from water at a lower operating cost and while generating only a fraction of the PFAS-laden waste of the most common currently used solutions (carbon filtration, ion exchange, and reverse osmosis). PFAS chemicals have been linked to cancer, immune disorders, liver dysfunction, and many other human health problems, and are contained in a vast range of manufactured goods, common household products (e.g., cleaning products, cookware), and electronics, and contaminate drinking water in unsafe levels all over the globe.
PFAS is often referred to as the “contaminant of the decade.” The EPA proposed new drinking water standards on March 14, 2023, limiting certain PFAS chemicals to four parts per trillion – a standard our AEC can meet. We believe these proposed rules will continue to push the market to find and adopt commercially viable solutions to remove PFAS chemicals from water. Additionally, some emerging regulations on PFAS in the U.S. are expected to skew the market toward seeking treatment technologies that produce as little PFAS-laden solid waste as possible, a favorable trend for our AEC that generates very little PFAS-laden waste. Detection of unsafe levels of PFAS around the world has given rise to a number of market opportunities, including in drinking water, industrial wastewater, municipal wastewater, solid waste, organic foods and more.
We have successfully validated the AEC as an effective system to selectively extract and collect PFAS chemicals from contaminated water including performance testing that shows “non-detect” levels of removal, which meets new EPA standards. We have demonstrated more than 10,000 hours of continuous operation showing no materially significant degradation of the AEC system’s components or performance over time. As a modular system, we believe the AEC is scalable to small portable commercial units as well as very large commercial operations, and we believe that our engineering team has the experience to deliver systems to meet the needs of any sized commercial installation. In order to provide a full turn-key solution for our customers, we have developed an expanded offering whereby we can bundle a service package with each customer project that includes a membrane exchange program, the collection of PFAS, and transport and destruction of the PFAS.
Our strategy to market our PFAS treatment technology and related engineering services is as follows: 1) focus on demonstrating our technology’s efficacy in first demonstration projects, trials, and early customer deployments with the understanding that this early success can be leveraged to secure larger and more numerous subsequent projects, 2) market our PFAS expertise and our technology by presenting at industry events and conferences around the country, cultivating our status as “thought leaders” in the space, 3) use our network of manufacturer’s representatives and channel selling partners to maximize the number of potential opportunities with early adopters, and 4) engage in discussions with credible distribution partners at established water treatment technology companies.
The AEC’s commercial roll-out is being executed with the help of a network of sales representative organizations whose role will be to market and sell the treatment system, related equipment, and the Company’s engineering services to municipal and industrial customers across the country. We have secured channel partner agreements with several sales representative organizations ensuring coverage for most of the continental United States. We are currently in negotiations with multiple prospective industrial and municipal customers to treat PFAS contaminated water. These opportunities include small to medium sized municipalities, waste facilities, Air Force bases, remediation sites, and industrial sites. We have recently commenced work on a project to remove PFAS from a municipal drinking water supply in New Jersey using our AEC technology.
AROS Minimal Liquid Discharge Water Treatment
In association with Garratt-Callahan, a national industrial water treatment company, our engineers developed a “minimal liquid discharge” wastewater treatment system, called AROS, based on Garratt-Callahan’s patented technology that is able to reduce industrial wastewater discharge and therefore reduce wastewater discharge fees for customers. Garratt-Callahan is currently marketing the AROS system to its customers. BLEST will serve as the manufacturing partner and Garratt-Callahan will serve as the selling distributor to leverage their national sales force and over one hundred years of providing services and products to customers. Garratt-Callahan has identified multiple customer prospects, as has BioLargo, through its own marketing efforts. We remain confident that this innovation and partnership will find commercial success, as we are in contract negotiations with prospective customers.
Advanced Oxidation System (AOS)
The Advanced Oxidation water treatment system (AOS) is our patented water treatment device that generates highly oxidative and energetic species of iodine and other molecules which allow it to eliminate pathogenic organisms and organic contaminants rapidly and effectively as water passes through the device. The key value proposition of the AOS is its ability to reduce or eliminate a wide variety of waterborne contaminants with high performance, including the normally hard-to-treat class of recalcitrant water contaminants called “micropollutants”, while using very little electricity and input chemicals.
Our proof-of-concept studies and on-site pilot projects have generated results that project the AOS will be more cost- and energy-efficient than commonly used advanced water treatment technologies such as UV, electro-chlorination, and ozonation. Furthermore, our technology has been proven capable of removing hard-to-treat organic micropollutants such as pharmaceuticals from water more quickly and energy-efficiently than other technologies. Together, these characteristics make the AOS an economical and versatile tool to enable wastewater treatment and reuse in the face of emerging water contaminants and increasing regulatory scrutiny on industrial wastewater discharge.
Our current sales and marketing efforts for the AOS focus on: 1) domestic water and wastewater treatment markets in agriculture, pharmaceutical, and small municipal where the technology’s claims of low energy usage and proven pharmaceutical/micropollutant removal is especially valuable, and 2) opportunities to treat drinking water in Europe, where pharmaceuticals/micropollutants in water and wastewater are currently regulated in many countries, focusing on cultivating partnerships with established European organizations.
The AOS has been included as a component of treatment train (comprehensive system) for a number of projects being scoped and budgeted through our engineering subsidiary. In addition, it has been included in the catalog of offerings being sold through our independent representatives as well as channel partners.
BioLargo Energy Technologies, Inc.
BioLargo acquired a proprietary sodium-sulfur battery technology and has formed and secured initial seed capital for a subsidiary – BioLargo Energy Technologies, Inc. (“BETI”) – designed to address the ongoing shift toward renewable energy production and the growth in global electricity demand, and the consequent drastic expansion in energy storage capacity in the US and world-wide that will be needed to accommodate increased demand and the intermittent nature of renewable energy sources like wind and solar.
During the nine months ended September 30, 2023, BETI raised $1,005,000 from the sale of its stock (including $100,000 from BioLargo). The capital is being used to build a pilot-scale production facility located in our Oak Ridge Tennessee engineering facility in order to construct prototype batteries. Construction is progressing as planned, and we believe the facility will be operational and producing batteries prior to year end. Prototype batteries will be tested to confirm energy efficiency, useful life expectancy, energy density, safety profile, number of charge/discharge cycles, and other technical claims that may differentiate the battery from incumbent technologies. Batteries built based on the underlying technology a decade ago demonstrated features that far surpass comparable lithium-ion batteries, the dominant incumbent technology in the market, including:
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This sodium-sulfur battery technology demonstrates increased safety, no runaway fire risks, and a more sustainable design – with no rare-earth elements – that is capable of being manufactured completely from the domestic supply chain. |
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Unlike lithium-ion batteries, BioLargo’s battery can charge and discharge completely, with no degradation of performance, ensuring virtually unlimited charge/discharge cycles, without self-discharge. |
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BioLargo’s battery technology also demonstrates increased energy efficiency and energy density in comparison to lithium-ion batteries, and a longer useful life expectancy of at least 10 years. |
The BioLargo battery uses common, inexpensive, domestically available materials, and through its unique design and manufacturing process, creates an energy storage solution that has higher energy density than lithium virtually unlimited charge/discharge cycles, stable and secure supply chain management, and which is far safer than lithium-ion batteries, the current dominant energy storage technology. While the concept of sodium-sulfur salt batteries is not new (a concept conceived more than 80 years ago), we are not aware of any known ‘salt’ battery that can match the performance metrics of our battery.
Our battery technology operates at higher temperatures, and its casing and materials when combined, are heavier than lithium-ion, making it more suitable for stationary energy storage applications like grid-scale energy storage, electric vehicle charging stations, and commercial and residential energy storage, and believed to be less suitable for placement into electric vehicles or portable electronics.
Clyra Medical Technologies, Inc. - Bioclynse Wound Irrigation Solution
Clyra Medical Technologies, Inc. is our partially owned subsidiary creating medical products based on our technologies. Its primary product is a surgical wound irrigation solution, called Bioclynse, that can help manage patient care and outcomes. The first target market for this product is orthopedics, including hip and knee replacement surgeries. Management believes Bioclynse outperforms competing products as it has proven performance in biofilm disruption and inhibition, is non-toxic and non-cytotoxic, is non-sensitizing to tissue, and unlike competing products, does not require it to be rinsed and/or removed from a surgical cavity.
Clyra has secured manufacturing with independent third parties, has a robust quality control system for FDA compliance, has a national director of sales, has secured independent manufacturer’s representatives and is actively expanding these efforts to build out a national rep network. Simultaneously, Clyra is focused on developing partnerships with large, well-established distributors who can help rapidly accelerate the product’s access to clinicians and surgeons in hospitals around the country.
During the nine months ended September 30, 2023, Clyra sold $1,575,000 in preferred stock to support these efforts.
Full Service Environmental Engineering
BioLargo Engineering, Science & Technologies, LLC (“BLEST”) offers full service environmental engineering to third parties and provides engineering support services to our internal teams to accelerate the commercialization of our technologies.
BLEST focuses its efforts in three areas:
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providing engineering services to third-party clients as well as affiliated BioLargo entities; |
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supporting internal product development; and |
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advancing their own technical innovations such as the AEC PFAS treatment technology and the battery energy storage system. |
BLEST operates out of an engineering facility in Oak Ridge (a suburb of Knoxville), Tennessee), and employs a group of scientists and engineers, many of whom are owners of the entity (BioLargo owns 82%). The team is led by Randall Moore, who served as Manager of Operations for Consulting and Engineering for the Knoxville office of CB&I Environmental & Infrastructure and was formerly a leader at The Shaw Group, Inc., a Fortune 500 global engineering firm. Many of the other team members are also former employees of CB&I and Shaw, with the exception of more recent staff hires. The team is highly experienced across multiple industries and we believe are considered experts in their respective fields, including: chemical engineering, wastewater treatment (including design, operations, data gathering and data evaluation), process safety, energy efficiency, air pollution, design and control, technology evaluation, technology integration, air quality management & testing, engineering management, permitting, industrial hygiene, applied research and development, air testing, environmental permitting, HAZOP review, chemical processing, thermal design, computational fluid dynamics, mechanical engineering, mechanical design, NEPDES permitting, RCRA/TSCA compliance and permitting, project management, storm water design & permitting, computer assisted design (CAD), bench chemistry, continuous emission monitoring system operator, data handling and evaluation and decommissioning and decontamination of radiological and chemical contaminated facilities. The team has decades of high-level experience in the energy industry. The engineering team has also developed an extended network of trusted engineering subcontractors that assist in serving specific client projects as needed.
BLEST engineers generate revenue through services to third party clients, as well as for internal BioLargo projects such as the AEC and battery (revenues from internal projects are eliminated in the consolidation of our financial statements and are designed “intersegment revenue”). Third party contracts include ongoing work at U.S. Air Force bases for air quality control. Efforts to expand this work as well as with other clients are consistently ongoing.
Results of Operations
Our revenues increased 78% and 107% in the three and nine months ended September 30, 2023, as compared with the same periods in 2022. Revenues from the sale of products for the nine months ended September 30, 2023, were $7,392,000, a 192% increase over the same period of 2022, primarily due to sales of a pet odor product (under the brand name “Pooph”) to our consumer-packaged goods partners at Ikigai Marketing Works, which comprised 74% and 76% of our company-wide revenues in the three and nine months ended September 30, 2023.
ONM Environmental
Our wholly-owned subsidiary ONM Environmental generates revenues through (i) sales of our flagship product CupriDyne Clean, including related design, installation, and maintenance services on the systems that deliver CupriDyne Clean at its clients’ facilities, and (ii) sale of private-label products to third parties, including the Pooph branded pet odor product.
Revenue (ONM Environmental)
ONM Environmental’s revenues increased 110% (to $2,513,000) and 195% (to $7,374,000) in the three and nine months ended September 30, 2023, compared with the same periods in the prior year. The increase in revenues was almost entirely due to an increase in the volume of sales of private label odor-control products, specifically the Pooph branded pet-odor product, sold to Ikigai, which comprised 81% of ONM Environmental’s total revenues for the three and nine months ended September 30, 2023. As Ikigai shifts its business model from primarily direct-to-consumer (primarily through their website and Amazon), to retailers like Walmart, we expect both continued overall growth in sales and fluctuations in the amount of product ordered from quarter-to-quarter. Although Ikigai management has expressed confidence in the continued increase of the number of retail stores nationwide carrying the Pooph product, we have no control over those efforts and cannot predict their ultimate success. Any downturn in purchases of the Pooph product from Ikigai will affect our results of operations, as it did so for the second quarter of 2023. (See also our risk factor titled “A significant portion of our revenue is concentrated with one customer” set forth in our Form 10-Q filed May 16, 2023.)
Cost of Goods Sold (ONM Environmental)
ONM Environmental’s cost of goods sold includes costs of raw materials, contract manufacturing, and portions of depreciation, salaries and expenses related to the manufacturing and installation of its products. As a percentage of revenue, ONM Environmental’s costs of goods for the three and nine months ended September 30, 2023, were 47%, an increase of 5% and 2%, compared to the same periods in 2022. The fluctuation in cost of goods is due an increase raw material costs.
Selling, General and Administrative Expense (ONM Environmental)
ONM Environmental’s selling, general and administrative expenses increased by 19% and 14% during the three and nine months ended September 30, 2023, as compared with the same period in 2022. These expenses increased due to an increase of sales and support staff. If revenues continue to increase, we expect a need to increase support staff.
Operating Income (ONM Environmental)
ONM Environmental generated operating income of $969,000 and $2,786,000 in the three and nine months ended September 30, 2023, compared to operating income of $400,000 and $418,000 for the three and nine months ended September 30, 2022. The generation of operating income for the three and nine months ended September 30, 2023, was entirely dependent on sale of Pooph branded products to Ikigai.
BLEST (engineering division)
Revenue (BLEST)
Our engineering segment's (BLEST's) revenues decreased 49% (to $145,000) and 63% (to $466,000), net of intersegment revenue, in the three and nine months ended September 30, 2023. Revenues decreased due to an increase in activities supporting internal BioLargo projects such as the AEC PFAS treatment system and the buildout of manufacturing facilities for the battery prototype. These services are billed internally, are considered intersegment revenue, are eliminated in the consolidation of our financial statements, and have prevent BLEST from scaling up operations serving third party clients. In the three and nine months ended September 30, 2023, intersegment revenue for BLEST totaled $698,000 and $1,276,000 and for the three and nine months ended September 30, 2022, intersegment revenue for BLEST totaled $118,000 and $359,000. The decrease in BLEST’s revenue net of intersegment revenue is due to a decrease in the number of client contracts, and its focus on supporting internal projects.
Cost of Services Sold (BLEST)
BLEST’s cost of services includes employee labor as well as subcontracted costs. In the three and nine months ended September 30, 2023, cost of services were 46% and 58% of its revenues, versus 84% and 61% in the same period in 2022. These fluctuations are due to our ability to estimate the costs to perform fixed-fee service contracts. In 2023, BLEST has been able to perform per the estimates and there were no unforeseen costs that increase the costs of services.
Selling, General and Administrative Expense (BLEST)
BLEST’s SG&A expenses were $213,000 and $612,000, in the three and nine months ended September 30, 2023, compared to $123,000 and $363,000, in the three and nine months ended September 30, 2022, primarily due to increased rent, insurance and an additional employee.
Operating Loss (BLEST)
BLEST incurred an operating loss of $568,000 and $1,388,000, in the three and nine months ended September 30, 2023, compared to an operating loss of $179,000 and $158,000 in the three and nine months ended September 30, 2022. The increase in operating loss was due to lower third party-revenues, and an increase in intercompany research and development activities for both the battery and AEC projects.
Because the subsidiary had an operating loss, we invested cash during the year to allow it to maintain operations. BLEST’s need for a cash subsidy to support its operations has increased in 2023. Our goal for this operation is that it produces a profit and contributes to corporate overhead in a significant way, although predicting when that will happen and other uncertainties in the market, and our limited resources, is difficult.
Clyra Medical
In the three and nine months ended September 30, 2023, Clyra Medical generated $14,000 and $20,000 in revenues, had $441,000 and $1,270,000 in total costs and expenses which included $68,000 and $262,000 in research and development expenses, and an operating loss of $427,000 and $1,250,000, respectively. In the same periods in 2022, it generated $17,000 and $34,000 in revenue, had $257,000 and $770,000 in total costs and expenses, including $31,000 and $73,000 in research and development expenses, and an operating loss of $240,000 and $736,000. We expect these losses to continue until Clyra can increase its sales of its Bioclynse wound irrigation solution.
BETI
Formed to develop and commercialize a sodium-sulfur battery technology, BETI raised $25,000 and $905,000 in investment capital in the three and nine months ended September 30, 2023, respectively, did not generate revenue, and incurred $559,000 and $943,000 in expenses, respectively, primarily related to the development of battery prototypes.
Selling, General and Administrative Expense – consolidated
Our Selling, General and Administrative expense (“SG&A”) include both cash (for example, salaries to employees) and non-cash expenses (for example, stock option compensation expense). Our consolidated SG&A increased in the aggregate by 60% and 20% in the three and nine months ended September 30, 2023, to $2,278,000 and $5,794,000, respectively. The largest components of our SG&A expenses included (in thousands):
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
| Salaries and payroll related |
$ | 682 | $ | 593 | $ | 1,862 | $ | 2,035 | ||||||||
| Professional fees |
139 | 110 | 555 | 451 | ||||||||||||
| Consulting |
542 | 155 | 926 | 605 | ||||||||||||
| Office expense |
511 | 341 | 1,462 | 1,072 | ||||||||||||
| Sales and marketing |
164 | 71 | 375 | 205 | ||||||||||||
| Investor relations |
128 | 86 | 307 | 233 | ||||||||||||
| Board of director expense |
112 | 68 | 307 | 246 | ||||||||||||
| 2,278 | 1,424 | 5,794 | 4,847 | |||||||||||||
In the three and nine months ended September 30, 2023, our non-cash expenses from stock for service, stock options and warrant expense total $762,000 and $1,621,000, respectively, and $434,000 and $1,640,000 in the same periods in the prior year. Office expense included $138,000 and $445,000 of insurance expenses in the three and nine months ended September 30, 2023, and $117,000 and $360,000 in the same periods in the prior year. Insurance expenses increased due to market conditions unrelated to the Company’s activities.
In general, salaries and payroll related expenses are affected by the issuance of stock options and the valuation of the common stock at the time. While this declined in the nine months ended September 30, 2023 versus 2022, due to fewer issuances of stock options, it increased in the three months ended September 30, 2023 versus 2022, due to increases in issuances and higher employment costs.
The Company has had increased professional fees and consulting costs due to the work on the salt battery in BETI and to additional capital raises, requiring more legal and investor relations work.
Research and Development
In the three and nine months ended September 30, 2023, we spent $694,000 and $1,846,000, respectively, in the research and development of our technologies and products. This was an increase of 23% and 81% compared to the three and nine months ended September 30, 2022. The increase is primarily due to work related to (i) the battery project, and (ii) the AEC. In future periods, we expect research and development work to decrease related to both projects, especially the AEC.
Interest expense
Our interest expense for the three and nine months ended September 30, 2023, was $12,000 and $72,000, respectively, compared with $14,000 and $42,000, respectively, in the same periods in 2022. Of our total interest expense in 2023, $39,000 was paid in cash, and the remainder was comprised primarily of non-cash debt discounts related to warrants issued in conjunction with debt instruments being amortized over the life of the debt instrument; for the nine months ended September 30, 2023, non-cash interest expense totaled $33,000.
Other Income and Expense
During the three months ended September 30, 2023, our subsidiary, Clyra, received $41,000 of Employer Retention Tax Credits. There was no grant income received in the three months ended September 30, 2023. For the nine months ended September 30, 2023, grant income totaled $32,000, compared to $51,000 for the same period prior year. Grant income is primarily generated through our wholly owned Canadian subsidiary, we have been awarded more than 80 research grants over the years from various public and private agencies, including the Canadian National Research Institute – Industrial Research Assistance Program (NRC-IRAP), the National Science and Engineering Research Council of Canada (NSERC), and the Metropolitan Water District of Southern California’s Innovative Conservation Program “ICP”. The research grants received are considered reimbursement grants related to costs we incur and therefore are included as Other Income. Grant funds paid directly to third parties are not included as income in our financial statements.
During the three and nine months ended September 30, 2022, we recorded $174,000 in income related to the forgiveness of Paycheck Protection Act loan received by ONM Environmental.
Net Loss
Net loss for the three and nine months ended September 30, 2023, was $1,508,000 and $3,628,000, a loss of $0.01 per share, compared to a net loss for the three and nine months ended September 30, 2022, of $847,000 and $3,724,000, a loss of $0.01 per share, an increase of 78% and decrease of 3%, respectively. Our net loss for the three months ended September 30, 2023, increased because of the decrease in engineering service revenue and an increase in total costs and expenses, offset by the increase in product revenue. Our net loss decreased during the nine months ended September 30, 2023, primarily due to the increase of product revenue, offset by a decrease of engineering service revenue and increase in total costs and expenses.
The net income (loss) per business segment is as follows (in thousands):
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
|||||||||||||
| BioLargo corporate |
$ | (800 | ) | $ | (789 | ) | $ | (2,273 | ) | $ | (2,944 | ) | ||||
| ONM |
968 | 400 | 2,781 | 592 | ||||||||||||
| Clyra Medical |
(394 | ) | (248 | ) | (1,234 | ) | (760 | ) | ||||||||
| BLEST |
(568 | ) | (152 | ) | (1,388 | ) | (131 | ) | ||||||||
| BETI |
(559 | ) | — | (943 | ) | — | ||||||||||
| BioLargo Water |
(155 | ) | (58 | ) | (571 | ) | (481 | ) | ||||||||
| Net loss |
(1,508 | ) | (847 | ) | (3,628 | ) | (3,724 | ) | ||||||||
Liquidity and Capital Resources
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of our business. For the nine months ended September 30, 2023, we generated revenues of $7,860,000 through our business segments (see Note 11), had a net loss of $3,628,000, used $2,363,000 cash in operations, and at September 30, 2023, we had working capital of $2,951,000, and current assets of $4,691,000.
During the nine months ended September 30, 2023, we (i) sold $502,000 of our common stock to Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 3), (ii) sold $995,000 of our common stock and warrants to accredited investors (see Notes 3 and 6), (iii) sold $905,000 of Clyra Medical Series A Preferred Stock (see Note 8), and (iv) sold $1,575,000 of BETI common stock (see Note 10). Subsequent to September 30, 2023, we continued these financing activities (see Note 13). As of September 30, 2023, our cash and cash equivalents totaled $3,042,000. Our total liabilities included a $71,000 vehicle loan, $140,000 due in U.S. Small Business Administration (SBA) loans issued pursuant to the Paycheck Protection Program (see Note 4), $148,000 due to the SBA issued pursuant to the Economic Injury Disaster program (see Note 4), and $234,000 owed by Clyra Medical due in 2024 (see Note 8). We have been, and anticipate that we will continue to be, limited in terms of our capital resources, and expect to continue to need further investment capital to fund operations. Such activities have continued subsequent to September 30, 2023.
If we are unable to rely on our current arrangement with Lincoln Park to fund our working capital requirements, we will have to rely on other forms of financing, and there is no assurance that we will be able to do so, or if we do so, it will be on favorable terms.
The foregoing factors raise substantial doubt about our ability to continue as a going concern, unless we are able to continue to raise funds through stock sales to Lincoln Park or other private financings, or attain a reasonable threshold of operating efficiencies and achieve profitable operations. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Critical Accounting Policies
Our discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, valuation of offerings of debt with equity or derivative features which include the valuation of the warrant component, any beneficial conversion feature and potential derivative treatment, and share-based payments. We base our estimates on anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results that differ from our estimates could have a significant adverse effect on our operating results and financial position.
Our significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements are described in (i) in Part I, Item 1 of this Form 10-Q, Note 2, “Summary of Significant Accounting Policies” and (ii) in the Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023, in the Notes to Consolidated Financial Statements in Part II, Item 8, and “Critical Accounting Policies and Estimates” in Part II, Item 7. There have been no material changes to the Company’s critical accounting policies and estimates since the filing of its Form 10-K.
Item 4. Controls and Procedures
We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended – the “Exchange Act”) as of the end of the period covered by this Report. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2023, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Our procedures have been designed to ensure that the information relating to our company, including our consolidated subsidiaries, required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure. However, our Company is continuing to grow and evolve, as our product and services sales continues to grow, and as we diversify our clients to include municipalities, increasing strain on our accounting systems. These activities put stress on our overall controls and procedures. As our operations do not yet generate enough cash to fund operations, and we rely on financing activities to maintain our level of operations and fund our anticipated growth, we do not yet have the ability to implement the more sophisticated control systems used by larger companies. Although we have made some improvements, our chief executive officer and chief financial officer have concluded that, as of the evaluation date, our disclosure controls and procedures were not effective, due to the material weakness identified below.
It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Under the supervision and with the participation of our management, including our chief executive officer and the chief financial officer, we have established internal control procedures in accordance with the guidelines established in the 2013 Framework —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Management evaluated the effectiveness of our internal controls, and concluded that due to our limited financial and personnel resources, the fact that we operate our business in three distinct locations in the U.S. and Canada, and the lack of sophisticated reporting systems, we continue to have a material weakness in our internal controls with respect to the closing our financial statements. Until the Company has the financial resources to implement more robust automated systems, or to hire additional dedicated accounting personnel, we expect this material weakness to continue.
Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting, or any system we design or implement in the future, will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following is a report of sales of unregistered securities during the period covered by this report not previously reported in an annual report on Form 10-K, a Quarterly Report on Form 10-Q, or a Current Report on Form 8-K.
Clyra Medical
During the three months ended September 30, 2023, Clyra sold 928 shares of its Series A Preferred Stock, and in exchange received $288,000 in gross and net proceeds. Purchasers of the Series A Preferred Stock also received a 3-year warrant to purchase the same number of additional shares of common stock for $372 per share. Shares of Series A Preferred Stock earn a dividend of 15% each year. Each share of Series A Preferred stock can be converted by the holder at any time for one share of common stock. Accrued dividends may be converted to common stock at a conversion rate of $310 per share.
Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its Series A Preferred stock, plus accrued dividends, into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 30 prior trading days. Elections must be made during the 18-month period that begins January 1, 2025, and ends June 30, 2026.
BETI
During the three months ended September 30, 2023, BETI sold 10,000 shares of its common stock to one accredited investor and received $25,000 in gross and net proceeds. The investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its shares of BETI common stock into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 20 trading days prior to the election to exchange. Elections must be made during calendar year 2024.
All of these offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and/or Regulation D promulgated thereunder as not involving a public offering of securities.
Lincoln Park
On December 13, 2022, we entered into a purchase agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase up to $10.0 million of the Company’s common stock, par value $0.00067 per share (the “Common Stock”), subject to certain limitations and the satisfaction of the conditions set forth in the Purchase Agreement. (See Item 9B titled “Other Information”, and the subheading “Lincoln Park”, for additional information.)
During the three months ended September 30, 2023, we sold 1,190,223 shares of our common stock to Lincoln Park, and received $203,000 in gross and net proceeds.
See the Exhibit Index for a list of exhibits filed as part of this report and incorporated herein by reference.
Exhibit Index
| 10.21 |
Form 10-Q |
5/17/2023 |
|
| 21.1 |
Form 10-Q | 5/17/2023 |
|
| 31.1* |
filed herewith |
||
| 31.2* |
filed herewith |
||
| 32* |
filed herewith |
||
| 101.INS** |
Inline XBRL Instance |
||
| 101.SCH** |
Inline XBRL Taxonomy Extension Schema |
||
| 101.CAL** |
Inline XBRL Taxonomy Extension Calculation |
||
| 101.DEF** |
Inline XBRL Taxonomy Extension Definition |
||
| 101.LAB** |
Inline XBRL Taxonomy Extension Labels |
||
| 101.PRE** |
Inline XBRL Taxonomy Extension Presentation |
||
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101) |
* Filed herewith
** Furnished herewith
† Management contract or compensatory plan, contract or arrangement
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: November 14, 2023 |
BIOLARGO, INC.
By: /s/ DENNIS P. CALVERT |
|
| Dennis P. Calvert Chief Executive Officer |
||
| Date: November 14, 2023 |
By: /s/ CHARLES K. DARGAN, II |
|
| Chief Financial Officer |
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: November 14, 2023 |
By: |
/s/ DENNIS P. CALVERT |
||||
|
Dennis P. Calvert |
||||||
|
Chief Executive Officer |
||||||
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: November 14, 2023 |
By: |
/s/ CHARLES K. DARGAN II |
||||
|
Charles K. Dargan II |
||||||
|
Chief Financial Officer |
||||||
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 September 30, 2023, 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: November 14, 2023 |
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 September 30, 2023, 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: November 14, 2023 |
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.
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| 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) | 550,000,000 | 550,000,000 |
| Common stock, shares issued (in shares) | 288,626,570 | 278,462,706 |
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Revenue from Contract with Customer, Including Assessed Tax | $ 2,672,000 | $ 1,500,000 | $ 7,860,000 | $ 3,786,000 |
| Cost of revenue | ||||
| Gross profit | 1,435,000 | 752,000 | 4,066,000 | 1,892,000 |
| Selling, general and administrative expenses | 2,278,000 | 1,424,000 | 5,794,000 | 4,847,000 |
| Research and development | 694,000 | 271,000 | 1,846,000 | 1,018,000 |
| Operating loss | (1,537,000) | (943,000) | (3,574,000) | (3,973,000) |
| Other (expense) income: | ||||
| Interest expense | (12,000) | (14,000) | (72,000) | (42,000) |
| PPP loan forgiveness | 0 | 0 | 0 | 174,000 |
| Tax credit (reversal) | 41,000 | 66,000 | (14,000) | 66,000 |
| Grant income | 0 | 44,000 | 32,000 | 51,000 |
| Total other expense: | 29,000 | 96,000 | (54,000) | 249,000 |
| Net loss | (1,508,000) | (847,000) | (3,628,000) | (3,724,000) |
| Net loss attributable to noncontrolling interest | (308,000) | (343,000) | (853,000) | (340,000) |
| Net loss attributable to common shareholders | $ (1,200,000) | $ (504,000) | $ (2,775,000) | $ (3,384,000) |
| Net loss per share attributable to common shareholders: | ||||
| Loss per share attributable to shareholders – basic and diluted (in dollars per share) | $ (0.01) | $ (0) | $ (0.01) | $ (0.01) |
| Weighted average number of common shares outstanding: (in shares) | 287,943,346 | 270,665,820 | 284,559,487 | 265,812,188 |
| Comprehensive loss: | ||||
| Net loss | $ (1,508,000) | $ (847,000) | $ (3,628,000) | $ (3,724,000) |
| Foreign currency translation | 1,000 | (59,000) | (12,000) | (70,000) |
| Comprehensive loss | (1,507,000) | (906,000) | (3,640,000) | (3,794,000) |
| Comprehensive loss attributable to noncontrolling interest | (308,000) | (343,000) | (853,000) | (340,000) |
| Comprehensive loss attributable to common stockholders | (1,199,000) | (563,000) | (2,787,000) | (3,454,000) |
| Product [Member] | ||||
| Revenue from Contract with Customer, Including Assessed Tax | 2,529,000 | 1,216,000 | 7,392,000 | 2,532,000 |
| Cost of revenue | ||||
| Cost of Goods and Services Sold | (1,170,000) | (515,000) | (3,533,000) | (1,174,000) |
| Service [Member] | ||||
| Revenue from Contract with Customer, Including Assessed Tax | 143,000 | 284,000 | 468,000 | 1,254,000 |
| Cost of revenue | ||||
| Cost of Goods and Services Sold | $ (67,000) | $ (233,000) | $ (261,000) | $ (720,000) |
Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) |
Clyra Medical Technologies [Member]
Common Stock [Member]
|
Clyra Medical Technologies [Member]
Additional Paid-in Capital [Member]
|
Clyra Medical Technologies [Member]
Retained Earnings [Member]
|
Clyra Medical Technologies [Member]
AOCI Attributable to Parent [Member]
|
Clyra Medical Technologies [Member]
Noncontrolling Interest [Member]
|
Clyra Medical Technologies [Member] |
BioLargo Energy Technologies, Inc (BETI) [Member]
Common Stock [Member]
|
BioLargo Energy Technologies, Inc (BETI) [Member]
Additional Paid-in Capital [Member]
|
BioLargo Energy Technologies, Inc (BETI) [Member]
Retained Earnings [Member]
|
BioLargo Energy Technologies, Inc (BETI) [Member]
AOCI Attributable to Parent [Member]
|
BioLargo Energy Technologies, Inc (BETI) [Member]
Noncontrolling Interest [Member]
|
BioLargo Energy Technologies, Inc (BETI) [Member] |
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, 2021 | 255,893,726 | |||||||||||||||||
| Balance at Dec. 31, 2021 | $ 171,000 | $ 143,718,000 | $ (139,121,000) | $ (115,000) | $ (3,720,000) | $ 933,000 | ||||||||||||
| Sale of stock for cash (in shares) | 6,703,789 | |||||||||||||||||
| Sale of stock for cash | $ 4,000 | 1,198,000 | 0 | 0 | 0 | 1,202,000 | ||||||||||||
| Issuance of common stock for services (in shares) | 86,752 | |||||||||||||||||
| Issuance of common stock for services | $ 0 | 17,000 | 0 | 0 | 0 | 17,000 | ||||||||||||
| Stock option compensation expense | 0 | 660,000 | 0 | 0 | 0 | 660,000 | ||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | $ 0 | $ 141,000 | $ 0 | $ 0 | $ 0 | $ 141,000 | ||||||||||||
| Noncontrolling interest allocation | 0 | (528,000) | 0 | 0 | 528,000 | 0 | ||||||||||||
| Net loss | 0 | 0 | (1,652,000) | 0 | 108,000 | (1,544,000) | ||||||||||||
| Foreign currency translation | $ 0 | 0 | 0 | (8,000) | 0 | (8,000) | ||||||||||||
| Balance (in shares) at Dec. 31, 2021 | 255,893,726 | |||||||||||||||||
| Balance at Dec. 31, 2021 | $ 171,000 | 143,718,000 | (139,121,000) | (115,000) | (3,720,000) | 933,000 | ||||||||||||
| Net loss | (3,724,000) | |||||||||||||||||
| Foreign currency translation | (70,000) | |||||||||||||||||
| Balance (in shares) at Mar. 31, 2022 | 262,684,267 | |||||||||||||||||
| Balance at Mar. 31, 2022 | $ 175,000 | 145,206,000 | (140,773,000) | (123,000) | (3,084,000) | 1,401,000 | ||||||||||||
| Sale of stock for cash (in shares) | 5,011,570 | |||||||||||||||||
| Sale of stock for cash | $ 4,000 | 944,000 | 0 | 0 | 0 | 948,000 | ||||||||||||
| Issuance of common stock for services (in shares) | 340,891 | |||||||||||||||||
| Issuance of common stock for services | $ 0 | 59,000 | 0 | 0 | 0 | 59,000 | ||||||||||||
| Stock option compensation expense | 0 | 234,000 | 0 | 0 | 0 | 234,000 | ||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 82,000 | 0 | 0 | 0 | 82,000 | ||||||||||||
| Noncontrolling interest allocation | 0 | (103,000) | 0 | 0 | 103,000 | 0 | ||||||||||||
| Net loss | 0 | 0 | (1,228,000) | 0 | (105,000) | (1,333,000) | ||||||||||||
| Foreign currency translation | $ 0 | 0 | 0 | (3,000) | 0 | (3,000) | ||||||||||||
| Balance (in shares) at Jun. 30, 2022 | 268,036,728 | |||||||||||||||||
| Balance at Jun. 30, 2022 | $ 179,000 | 146,422,000 | (142,001,000) | (126,000) | (3,086,000) | 1,388,000 | ||||||||||||
| Sale of stock for cash (in shares) | 6,207,084 | |||||||||||||||||
| Sale of stock for cash | $ 4,000 | 1,113,000 | 0 | 0 | 0 | 1,117,000 | ||||||||||||
| Issuance of common stock for services (in shares) | 378,828 | |||||||||||||||||
| Issuance of common stock for services | $ 1,000 | 95,000 | 0 | 0 | 0 | 96,000 | ||||||||||||
| Stock option compensation expense | 0 | 253,000 | 0 | 0 | 0 | 253,000 | ||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 85,000 | 0 | 0 | 0 | 85,000 | ||||||||||||
| Noncontrolling interest allocation | 0 | (498,000) | 0 | 0 | 498,000 | 0 | ||||||||||||
| Net loss | 0 | 0 | (504,000) | 0 | (343,000) | (847,000) | ||||||||||||
| Foreign currency translation | $ 0 | 0 | 0 | (59,000) | 0 | (59,000) | ||||||||||||
| Balance (in shares) at Dec. 31, 2022 | 278,462,706 | |||||||||||||||||
| Balance at Dec. 31, 2022 | $ 186,000 | 148,435,000 | (143,594,000) | (149,000) | (2,867,000) | 2,011,000 | ||||||||||||
| Sale of stock for cash (in shares) | 4,201,402 | |||||||||||||||||
| Sale of stock for cash | $ 3,000 | 797,000 | 0 | 0 | 0 | 800,000 | ||||||||||||
| Issuance of common stock for services (in shares) | 930,490 | |||||||||||||||||
| Issuance of common stock for services | $ 1,000 | 206,000 | 0 | 0 | 0 | 207,000 | ||||||||||||
| Issuance of common stock in exchange for Clyra shares (in shares) | 527,983 | |||||||||||||||||
| Stock option compensation expense | $ 0 | 195,000 | 0 | 0 | 0 | 195,000 | ||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 61,000 | 0 | 0 | 0 | 61,000 | ||||||||||||
| Warrant issued for interest | 0 | 30,000 | 0 | 0 | 0 | 30,000 | ||||||||||||
| Clyra – sales of Series A Preferred Stock | 0 | 0 | 0 | 0 | 225,000 | 225,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 550,000 | $ 550,000 | ||||||
| Clyra – Series A Preferred Stock – dividend | 0 | 0 | 0 | 0 | (27,000) | (27,000) | ||||||||||||
| Noncontrolling interest allocation | 0 | 467,000 | 0 | 0 | (467,000) | 0 | ||||||||||||
| Net loss | 0 | 0 | (247,000) | 0 | (247,000) | (494,000) | ||||||||||||
| Foreign currency translation | $ 0 | 0 | 0 | (6,000) | 0 | (6,000) | ||||||||||||
| Balance (in shares) at Dec. 31, 2022 | 278,462,706 | |||||||||||||||||
| Balance at Dec. 31, 2022 | $ 186,000 | 148,435,000 | (143,594,000) | (149,000) | (2,867,000) | 2,011,000 | ||||||||||||
| Clyra – sales of Series A Preferred Stock | 1,575,000 | 905,000 | ||||||||||||||||
| Net loss | (3,628,000) | |||||||||||||||||
| Foreign currency translation | (12,000) | |||||||||||||||||
| Balance (in shares) at Mar. 31, 2023 | 284,122,581 | |||||||||||||||||
| Balance at Mar. 31, 2023 | $ 190,000 | 150,191,000 | (143,841,000) | (155,000) | (2,833,000) | 3,552,000 | ||||||||||||
| Sale of stock for cash (in shares) | 2,677,169 | |||||||||||||||||
| Sale of stock for cash | $ 2,000 | 492,000 | 0 | 0 | 0 | 494,000 | ||||||||||||
| Issuance of common stock for services (in shares) | 420,911 | |||||||||||||||||
| Issuance of common stock for services | $ 0 | 75,000 | 0 | 0 | 0 | 75,000 | ||||||||||||
| Stock option compensation expense | 0 | 222,000 | 0 | 0 | 0 | 222,000 | ||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 66,000 | 0 | 0 | 0 | 66,000 | ||||||||||||
| Clyra – sales of Series A Preferred Stock | 0 | 0 | 0 | 0 | 1,062,000 | 1,062,000 | ||||||||||||
| Clyra – Series A Preferred Stock – dividend | 0 | 0 | 0 | 0 | (45,000) | (45,000) | ||||||||||||
| Noncontrolling interest allocation | 0 | 1,461,000 | 0 | 0 | (1,461,000) | 0 | ||||||||||||
| Net loss | 0 | 0 | (1,328,000) | 0 | (298,000) | (1,626,000) | ||||||||||||
| Foreign currency translation | $ 0 | 0 | 0 | (7,000) | 0 | (7,000) | ||||||||||||
| Biolargo Energy Technology Inc. (BETI) offering | 0 | 0 | 0 | 0 | 330,000 | 330,000 | ||||||||||||
| Balance (in shares) at Jun. 30, 2023 | 287,220,661 | |||||||||||||||||
| Balance at Jun. 30, 2023 | $ 192,000 | 152,507,000 | (145,169,000) | (162,000) | (3,245,000) | 4,123,000 | ||||||||||||
| Sale of stock for cash (in shares) | 1,190,223 | |||||||||||||||||
| Sale of stock for cash | $ 1,000 | 202,000 | 0 | 0 | 0 | 203,000 | ||||||||||||
| Issuance of common stock for services (in shares) | 215,686 | |||||||||||||||||
| Issuance of common stock for services | $ 0 | 37,000 | 0 | 0 | 0 | 37,000 | ||||||||||||
| Stock option compensation expense | 0 | 680,000 | 0 | 0 | 0 | 680,000 | ||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 45,000 | 0 | 0 | 0 | 45,000 | ||||||||||||
| Clyra – sales of Series A Preferred Stock | 0 | 0 | 0 | 0 | 288,000 | 288,000 | ||||||||||||
| Clyra – Series A Preferred Stock – dividend | 0 | 0 | 0 | 0 | (80,000) | (80,000) | ||||||||||||
| Noncontrolling interest allocation | 0 | (68,000) | 0 | 0 | 68,000 | 0 | ||||||||||||
| Net loss | 0 | 0 | (1,200,000) | 0 | (308,000) | (1,508,000) | ||||||||||||
| Foreign currency translation | $ 0 | $ 0 | $ 0 | $ 1,000 | $ 0 | $ 1,000 | ||||||||||||
| Biolargo Energy Technology Inc. (BETI) offering | $ 0 | $ 0 | $ 0 | $ 0 | $ 25,000 | $ 25,000 | ||||||||||||
| Clyra Medical Technologies, Inc. (Clyra) stock option exercise | $ 0 | $ 3,000 | $ 0 | $ 0 | $ 0 | $ 3,000 |
Consolidated Statement of Stockholders' Equity (Deficit) (Unaudited) 2 - USD ($) |
Clyra Medical Technologies [Member]
Common Stock [Member]
|
Clyra Medical Technologies [Member]
Additional Paid-in Capital [Member]
|
Clyra Medical Technologies [Member]
Retained Earnings [Member]
|
Clyra Medical Technologies [Member]
AOCI Attributable to Parent [Member]
|
Clyra Medical Technologies [Member]
Noncontrolling Interest [Member]
|
Clyra Medical Technologies [Member] |
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, 2021 | 255,893,726 | |||||||||||
| Balance at Dec. 31, 2021 | $ 171,000 | $ 143,718,000 | $ (139,121,000) | $ (115,000) | $ (3,720,000) | $ 933,000 | ||||||
| Sale of stock for cash (in shares) | 6,703,789 | |||||||||||
| Sale of stock for cash | $ 4,000 | 1,198,000 | 0 | 0 | 0 | 1,202,000 | ||||||
| Issuance of common stock for services (in shares) | 86,752 | |||||||||||
| Issuance of common stock for services | $ 0 | 17,000 | 0 | 0 | 0 | 17,000 | ||||||
| Stock option compensation expense | 0 | 660,000 | 0 | 0 | 0 | 660,000 | ||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | $ 0 | $ 141,000 | $ 0 | $ 0 | $ 0 | $ 141,000 | ||||||
| Noncontrolling interest allocation | 0 | (528,000) | 0 | 0 | 528,000 | 0 | ||||||
| Net loss | 0 | 0 | (1,652,000) | 0 | 108,000 | (1,544,000) | ||||||
| Foreign currency translation | $ 0 | 0 | 0 | (8,000) | 0 | (8,000) | ||||||
| Balance (in shares) at Mar. 31, 2022 | 262,684,267 | |||||||||||
| Balance at Mar. 31, 2022 | $ 175,000 | 145,206,000 | (140,773,000) | (123,000) | (3,084,000) | 1,401,000 | ||||||
| Balance (in shares) at Dec. 31, 2021 | 255,893,726 | |||||||||||
| Balance at Dec. 31, 2021 | $ 171,000 | 143,718,000 | (139,121,000) | (115,000) | (3,720,000) | 933,000 | ||||||
| Net loss | (3,724,000) | |||||||||||
| Foreign currency translation | (70,000) | |||||||||||
| Balance (in shares) at Sep. 30, 2022 | 274,622,640 | |||||||||||
| Balance at Sep. 30, 2022 | $ 184,000 | 147,470,000 | (142,505,000) | (185,000) | (2,931,000) | 2,033,000 | ||||||
| Balance (in shares) at Mar. 31, 2022 | 262,684,267 | |||||||||||
| Balance at Mar. 31, 2022 | $ 175,000 | 145,206,000 | (140,773,000) | (123,000) | (3,084,000) | 1,401,000 | ||||||
| Sale of stock for cash (in shares) | 5,011,570 | |||||||||||
| Sale of stock for cash | $ 4,000 | 944,000 | 0 | 0 | 0 | 948,000 | ||||||
| Issuance of common stock for services (in shares) | 340,891 | |||||||||||
| Issuance of common stock for services | $ 0 | 59,000 | 0 | 0 | 0 | 59,000 | ||||||
| Stock option compensation expense | 0 | 234,000 | 0 | 0 | 0 | 234,000 | ||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 82,000 | 0 | 0 | 0 | 82,000 | ||||||
| Noncontrolling interest allocation | 0 | (103,000) | 0 | 0 | 103,000 | 0 | ||||||
| Net loss | 0 | 0 | (1,228,000) | 0 | (105,000) | (1,333,000) | ||||||
| Foreign currency translation | $ 0 | 0 | 0 | (3,000) | 0 | (3,000) | ||||||
| Balance (in shares) at Jun. 30, 2022 | 268,036,728 | |||||||||||
| Balance at Jun. 30, 2022 | $ 179,000 | 146,422,000 | (142,001,000) | (126,000) | (3,086,000) | 1,388,000 | ||||||
| Sale of stock for cash (in shares) | 6,207,084 | |||||||||||
| Sale of stock for cash | $ 4,000 | 1,113,000 | 0 | 0 | 0 | 1,117,000 | ||||||
| Issuance of common stock for services (in shares) | 378,828 | |||||||||||
| Issuance of common stock for services | $ 1,000 | 95,000 | 0 | 0 | 0 | 96,000 | ||||||
| Stock option compensation expense | 0 | 253,000 | 0 | 0 | 0 | 253,000 | ||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 85,000 | 0 | 0 | 0 | 85,000 | ||||||
| Noncontrolling interest allocation | 0 | (498,000) | 0 | 0 | 498,000 | 0 | ||||||
| Net loss | 0 | 0 | (504,000) | 0 | (343,000) | (847,000) | ||||||
| Foreign currency translation | $ 0 | 0 | 0 | (59,000) | 0 | (59,000) | ||||||
| Balance (in shares) at Sep. 30, 2022 | 274,622,640 | |||||||||||
| Balance at Sep. 30, 2022 | $ 184,000 | 147,470,000 | (142,505,000) | (185,000) | (2,931,000) | 2,033,000 | ||||||
| Balance (in shares) at Dec. 31, 2022 | 278,462,706 | |||||||||||
| Balance at Dec. 31, 2022 | $ 186,000 | 148,435,000 | (143,594,000) | (149,000) | (2,867,000) | 2,011,000 | ||||||
| Sale of stock for cash (in shares) | 4,201,402 | |||||||||||
| Sale of stock for cash | $ 3,000 | 797,000 | 0 | 0 | 0 | 800,000 | ||||||
| Issuance of common stock for services (in shares) | 930,490 | |||||||||||
| Issuance of common stock for services | $ 1,000 | 206,000 | 0 | 0 | 0 | 207,000 | ||||||
| Stock option compensation expense | 0 | 195,000 | 0 | 0 | 0 | 195,000 | ||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 61,000 | 0 | 0 | 0 | 61,000 | ||||||
| Noncontrolling interest allocation | 0 | 467,000 | 0 | 0 | (467,000) | 0 | ||||||
| Net loss | 0 | 0 | (247,000) | 0 | (247,000) | (494,000) | ||||||
| Foreign currency translation | $ 0 | 0 | 0 | (6,000) | 0 | (6,000) | ||||||
| Balance (in shares) at Mar. 31, 2023 | 284,122,581 | |||||||||||
| Balance at Mar. 31, 2023 | $ 190,000 | 150,191,000 | (143,841,000) | (155,000) | (2,833,000) | 3,552,000 | ||||||
| Balance (in shares) at Dec. 31, 2022 | 278,462,706 | |||||||||||
| Balance at Dec. 31, 2022 | $ 186,000 | 148,435,000 | (143,594,000) | (149,000) | (2,867,000) | 2,011,000 | ||||||
| Net loss | (3,628,000) | |||||||||||
| Foreign currency translation | (12,000) | |||||||||||
| Balance (in shares) at Sep. 30, 2023 | 288,626,570 | |||||||||||
| Balance at Sep. 30, 2023 | $ 193,000 | 153,406,000 | (146,369,000) | (161,000) | (3,252,000) | 3,817,000 | ||||||
| Balance (in shares) at Mar. 31, 2023 | 284,122,581 | |||||||||||
| Balance at Mar. 31, 2023 | $ 190,000 | 150,191,000 | (143,841,000) | (155,000) | (2,833,000) | 3,552,000 | ||||||
| Sale of stock for cash (in shares) | 2,677,169 | |||||||||||
| Sale of stock for cash | $ 2,000 | 492,000 | 0 | 0 | 0 | 494,000 | ||||||
| Issuance of common stock for services (in shares) | 420,911 | |||||||||||
| Issuance of common stock for services | $ 0 | 75,000 | 0 | 0 | 0 | 75,000 | ||||||
| Stock option compensation expense | 0 | 222,000 | 0 | 0 | 0 | 222,000 | ||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | 0 | 66,000 | 0 | 0 | 0 | 66,000 | ||||||
| Noncontrolling interest allocation | 0 | 1,461,000 | 0 | 0 | (1,461,000) | 0 | ||||||
| Net loss | 0 | 0 | (1,328,000) | 0 | (298,000) | (1,626,000) | ||||||
| Foreign currency translation | $ 0 | 0 | 0 | (7,000) | 0 | (7,000) | ||||||
| Balance (in shares) at Jun. 30, 2023 | 287,220,661 | |||||||||||
| Balance at Jun. 30, 2023 | $ 192,000 | 152,507,000 | (145,169,000) | (162,000) | (3,245,000) | 4,123,000 | ||||||
| Sale of stock for cash (in shares) | 1,190,223 | |||||||||||
| Sale of stock for cash | $ 1,000 | 202,000 | 0 | 0 | 0 | 203,000 | ||||||
| Issuance of common stock for services (in shares) | 215,686 | |||||||||||
| Issuance of common stock for services | $ 0 | 37,000 | 0 | 0 | 0 | 37,000 | ||||||
| Stock option compensation expense | 0 | 680,000 | 0 | 0 | 0 | 680,000 | ||||||
| Clyra Medical Technologies, Inc. (Clyra) stock options issued for services | $ 0 | $ 45,000 | $ 0 | $ 0 | $ 0 | $ 45,000 | ||||||
| Noncontrolling interest allocation | 0 | (68,000) | 0 | 0 | 68,000 | 0 | ||||||
| Net loss | 0 | 0 | (1,200,000) | 0 | (308,000) | (1,508,000) | ||||||
| Foreign currency translation | $ 0 | 0 | 0 | 1,000 | 0 | 1,000 | ||||||
| Balance (in shares) at Sep. 30, 2023 | 288,626,570 | |||||||||||
| Balance at Sep. 30, 2023 | $ 193,000 | $ 153,406,000 | $ (146,369,000) | $ (161,000) | $ (3,252,000) | $ 3,817,000 |
Note 1 - Business and Organization |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
Note 1. Business and Organization
Description of Business
BioLargo, Inc. (“BioLargo”, or the “Company”) invents, develops, and commercializes innovative platform technologies to solve challenging environmental problems like PFAS contamination (per- and polyfluoroalkyl substances), advanced water and wastewater treatment, industrial odor control, air quality control, infection control, and myriad environmental remediation challenges. Our business strategy is straightforward: we invent or acquire technologies that we believe have the potential to be disruptive in large commercial markets; we develop and validate these technologies to advance and promote their commercial success as we leverage our considerable scientific, engineering, and entrepreneurial talent; we then monetize these technical assets through a variety of business structures that may include licensure, joint venture, sale, spin off, or by deploying direct to market strategies.
Organization
We are a Delaware corporation formed in 1991. We have six wholly-owned subsidiaries: BioLargo Life Technologies, Inc., organized under the laws of the State of California in 2006; ONM Environmental, Inc., organized under the laws of the State of California in 2009; BioLargo Equipment and Technologies, Inc., organized under the laws of the State of California in 2022; BioLargo Water, Inc. (“Water”), organized under the laws of Canada in 2014; BioLargo Equipment and Solutions Technologies, Inc., organized under the laws of the State of California in 2022; and BioLargo Development Corp., organized under the laws of the State of California in 2016. Additionally, we own 53% of Clyra Medical Technologies, Inc. (“Clyra” or “Clyra Medical”), organized under the laws of the State of California in 2012 (see Note 8), 82% of BioLargo Engineering Science and Technologies, LLC (“BLEST”), organized under the laws of the State of Tennessee in 2017 (see Note 9), and 96% of BioLargo Energy Technologies, Inc. (“BETI”) organized under the laws of the State of California in 2022 (see Note 10). We consolidate the financial statements of our partially owned subsidiaries (see Note 2, subheading “Principles of Consolidation,”).
Liquidity / Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of our business. For the nine months ended September 30, 2023, we generated revenues of $7,860,000 through our business segments (see Note 11), had a net loss of $3,628,000, used $2,363,000 cash in operations, and at September 30, 2023, we had working capital of $2,951,000, and current assets of $4,691,000.
During the nine months ended September 30, 2023, we sold (i) $502,000 of our common stock to Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 3), (ii) $995,000 of our common stock and warrants to accredited investors (see Notes 3 and 6), (iii) $1,575,000 of Clyra Medical Series A Preferred Stock (see Note 8), and (iv) $905,000 of BETI common stock (see Note 10). Subsequent to September 30, 2023, we continued selling stock to Lincoln Park (see Note 13). As of September 30, 2023, our cash and cash equivalents totaled $3,042,000. Our total liabilities included a $71,000 vehicle loan, $140,000 due in U.S. Small Business Administration (SBA) loans issued pursuant to the Paycheck Protection Program (see Note 4), $148,000 due to the SBA issued pursuant to the Economic Injury Disaster program (see Note 4), and $234,000 owed by Clyra Medical due in 2024 (see Note 8). We have been, and anticipate that we will continue to be, limited in terms of our capital resources, and expect to continue to need further investment capital to fund operations.
If we are unable to rely on our current arrangement with Lincoln Park to fund our working capital requirements, we will have to rely on other forms of financing, and there is no assurance that we will be able to do so, or if we do so, it will be on favorable terms.
The foregoing factors raise substantial doubt about our ability to continue as a going concern, unless we are able to continue to raise funds through stock sales to Lincoln Park or other private financings, or attain a reasonable threshold of operating efficiencies and achieve profitable operations. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
|
Note 2 - Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, its wholly owned subsidiaries, and partially owned subsidiaries BETI, BLEST and Clyra Medical. All intercompany accounts and transactions have been eliminated.
Foreign Currency
The Company has designated the functional currency of BioLargo Water, Inc., our Canadian subsidiary, to be the Canadian dollar. Therefore, translation gains and losses resulting from differences in exchange rates are recorded in accumulated other comprehensive income.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when acquired to be cash equivalents. Substantially all cash equivalents are held in short-term money market accounts at one of the largest financial institutions in the United States, Bank of America. From time to time, our cash account balances are greater than the Federal Deposit Insurance Corporation insurance limit of $250,000 per owner per bank, and during such times, we are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the financial institution. We do not anticipate non-performance by our financial institution.
As of September 30, 2023, and December 31, 2022, our cash balances were made up of the following (in thousands):
Accounts Receivable
In June 2016, the FASB issued ASU 2016-13, which sets out the principles for the recognition of measurement of credit losses on financial instruments, including trade receivables. The standard eliminates the probable initial recognition threshold and requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. The new standard was effective for the Company beginning January 1, 2023 and primarily impacted trade accounts receivable.
Accounts receivable are customer obligations that are unconditional. Accounts receivable are presented net of an allowance for doubtful accounts for expected credit losses, which represents an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and, if necessary, provides an allowance for doubtful accounts and expected credit losses. A provision to the allowances for doubtful accounts for expected credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment, and the Company’s historical experience. Provisions to the allowances for doubtful accounts for expected credit losses are recorded to general and administrative expenses. The Company writes off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues collection of the receivable. The Company does not have any off-balance-sheet credit exposure related to customers. As of September 30, 2023, and December 31, 2022, the allowance for doubtful accounts for expected credit losses was $113,000 and $12,000, respectively.
Credit Concentration
We have a limited number of customers that account for significant portions of our revenue. During the three and nine months ended September 30, 2023 and 2022, the following customers accounted for more than 10% of consolidated revenues:
At September 30, 2023, one customer accounted for more than 10% of consolidated accounts receivable, and at December 31, 2022, three customers accounted for more than 10% of consolidated accounts receivable:
Inventory
Inventories are stated at the lower of cost or net realizable value using the average cost method. The allowance for obsolete inventory as of September 30, 2023, and December 31, 2022, was $212,000 and $158,000, respectively. Inventories consisted of (in thousands):
Other Non-Current Assets
Other non-current assets consisted of (i) security deposits related to our business offices, (ii) three patents acquired on October 22, 2021, for $34,000, and (iii) tax credit receivables from the Canadian government related to a research and development credit from our Canadian subsidiary for which we’ve applied for and received in prior periods.
Equity Method of Accounting
On March 20, 2020, we invested $100,000 into a South Korean entity (Odin Co. Ltd., “Odin”) pursuant to a Joint Venture agreement we had entered into with BKT Co. Ltd. and its U.S. based subsidiary, Tomorrow Water. We received a 40% non-dilutive equity interest, and BKT and Tomorrow Water each received 30% equity interests for an aggregate $150,000 investment.
We account for our investment in the joint venture under the equity method of accounting. We have determined that while we have significant influence over the joint venture through our technology license and our position on the Board of Directors, we do not control the joint venture or are otherwise involved in managing the entity and we own less than a majority of the equity. Therefore, we record the asset on our consolidated balance sheet and record an increase or decrease of the recorded balance by our percentage ownership of the profits or losses in the joint venture. The joint venture has incurred a loss since inception and our 40% ownership share reduced our investment interest. For the three and nine months ended September 30, 2023, the reduction of our investment interest totaled $6,000 and $18,000, respectively, and for the same periods in 2022, reduced our investment interest $15,000 and $23,000, respectively.
Impairment
Long-lived and definite lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future undiscounted cash flows from the use of the asset and its eventual disposition is less than the carrying amount of the asset, then an impairment loss is recognized. The impairment loss is measured based on the fair value of the asset. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. There were no impairment losses related to intangible assets during the three or nine months ended September 30, 2023 or 2022.
Earnings (Loss) Per Share
We report basic and diluted earnings (loss) per share (“EPS”) for common and common share equivalents. Basic EPS is computed by dividing reported earnings by the weighted average shares outstanding. Diluted EPS is computed by adding to the weighted average shares the dilutive effect if convertible notes payable, stock options and warrants were exercised into common stock. For the three and nine months ended September 30, 2023, and 2022, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the Company’s net loss which creates an anti-dilutive effect of the convertible notes payable, warrants and stock options.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ from those estimates. Estimates are used when accounting for stock-based transactions, debt transactions, derivative liabilities, allowance for bad debt, asset depreciation and amortization, impairment expense, among others.
The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results of our financial statements.
Share-Based Compensation Expense
We recognize compensation expense for stock option awards on a straight-line basis over the applicable service period of the award, which is the vesting period. Fair value is determined on the grant date. Share-based compensation expense is based on the grant date fair value estimated using the Black-Scholes Option Pricing Model.
For stock and stock options issued to consultants and other non-employees for services, the Company measures and records an expense as of the earlier of the date at which either: a commitment for performance by the non-employee has been reached or the non-employee’s performance is complete. The equity instruments are measured at the current fair value, and for stock options, the instruments are measured at fair value using the Black Scholes option model.
The following methodology and assumptions were used to calculate share-based compensation for the nine months ended September 30, 2023, and 2022:
Expected price volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. The expected volatility is derived from the historical daily change in the market price of our common stock, as we believe that historical volatility is the best indicator of future volatility.
The risk-free interest rate used in the Black-Scholes calculation is based on the prevailing U.S. Treasury yield as determined by the U.S. Federal Reserve. We have never paid any cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future.
Warrants
Warrants issued with our convertible and non-convertible debt instruments are accounted for under the fair value and relative fair value method. The warrant is first analyzed per its terms as to whether it has derivative features or not. If the warrant is determined to be a derivative and not qualify for equity treatment, then it is measured at fair value using the Black Scholes option model and recorded as a liability on the balance sheet. The warrant is re-measured at its then current fair value at each subsequent reporting date (it is “marked-to-market”). If the warrant is determined to not have derivative features, it is recorded into equity at its fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the convertible note. Convertible debt instruments are recorded at fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant. The warrant relative fair values are also recorded as a discount to the convertible promissory notes.
Non-Cash Transactions
We determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock based on the market price of our common stock issued as consideration, at the date of the agreement of each transaction or when the service is rendered or product is received.
Revenue Recognition
We account for revenue in accordance with ASC 606, “Revenue from Contacts with Customers”. The guidance focuses on the core principle for revenue recognition, which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the guidance provides that an entity should apply the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company’s products are sold through a contract with the customer and a written purchase order, in which the details of the contract are defined including the transaction price and method of shipment. The only performance obligation is to create and ship the product, and each product has separate pricing. Revenue is recognized at a point in time when the goods are shipped if the agreement is FOB manufacturer, and when goods are delivered if FOB destination. Revenue is recognized with a reduction for sales discounts, as appropriate and negotiated in the customer’s purchase order.
Service contracts are performed through a written contract, which specifies the performance obligations and the rate at which the services will be billed, typically by time and materials. Each service is separately negotiated and priced. Revenue is recognized as services are performed and completed, or, for services related to product installations, at the completion of the installation. A few contracts have called for milestone or fixed cost payments, where we invoice an agreed-to amount per month for the life of the contract. In these instances, completed work, billed hourly, is recognized as revenue. If the billing amount is greater or lesser than the completed work, a receivable or payable is created. These accounts are adjusted upon additional billings as the work is completed. To date, there have been no discounts or other financing terms for the contracts.
The Company has outstanding contract liability obligations of $2,000 as of September 30, 2023, recorded as deferred revenue. We recognized $15,000 in revenue and reduced the deferred revenue balance by the same amount as performance obligations were satisfied in the nine months ended September 30, 2023. The outstanding balance will be recognized over the remaining life of the contracts. Our Canadian subsidiary had a customer deposit outstanding at September 30, 2023, totaling $111,000, that was awarded as part of a grant for a particular project that has been delayed.
As we generate revenues from royalties or license fees from our intellectual property, a licensee will pay a license fee in one or more installments and ongoing royalties based on their sales of products incorporating or using our licensed intellectual property. We have entered into a licensing agreement for the CupriDyne Clean product, and we recognize royalty and license fees on a quarterly basis as the product is sold through to third parties and reported to us.
Government Grants
We have been awarded multiple research grants from the private and public Canadian research programs. The income we receive directly from grants is recorded as other income. We have been awarded over 80 grants since our first in 2015. Some of the funds from these grants are given directly to third parties (such as the University of Alberta or a third-party research scientist) to support research on our technology. The grants have terms generally ranging between and 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 typically provide for (i) recurring monthly amounts, (ii) reimbursement of costs for research talent for which we invoice to request payment, and (iii) ancillary cost reimbursement for research talent travel related costs. All awarded grants have specific requirements on how the money is spent, typically to employ researchers. None of the funds may be used for general administrative expenses or overhead in the United States. These grants have substantially increased our level of research and development activities in Canada. We continue to apply for Canadian government and agency grants to fund research and development activities. Not all of our grant applications have been awarded, and no assurance can be made that any pending grant application, or any future grant applications, will be awarded.
Income Taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of asset and liabilities. Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax asset and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
We account for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by generally accepted accounting principles (“GAAP”). Under GAAP, the tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. Management believes there are no unrecognized tax benefits or uncertain tax positions as of September 30, 2023, and December 31, 2022.
The Company assessed its earnings history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of September 30, 2023, and December 31, 2022. Accordingly, a 100% valuation allowance was recorded against the net deferred tax asset.
The Company recognizes interest and penalties on income taxes as a component of income tax expense, should such an expense be realized.
Fair Value of Financial Instruments
Management believes the carrying amounts of the Company’s financial instruments as of September 30, 2023, and December 31, 2022 approximate their respective fair values because of the short-term nature of these instruments. Such instruments consist of cash, accounts receivable, prepaid assets, accounts payable, line of credit, and other assets and liabilities. The carrying amount of debt instruments are believed to approximate fair value as the stated interest rates are reflective of the prevailing market rates.
Tax Credits
Our research and development activities in Canada may entitle our Canadian subsidiary to claim benefits under the “Scientific Research and Experimental Development Program”, a Canadian federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada. Benefits under the program include credits to taxable income. If our Canadian subsidiary does not have taxable income in a reporting period, we instead receive a tax refund from the Canadian Revenue Authority. Those refunds are classified in Other Income on our Consolidated Statement of Operations and Comprehensive Loss.
During the three months ended September 30, 2023, our subsidiary, Clyra, received $41,000 of Employ Retention Tax Credits.
Leases
At inception of a lease contract, we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period of the contract, and (3) whether we have the right to direct the use of the asset during such time period. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases are classified as either finance leases or operating leases. A lease must be classified as a finance lease if any of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any of these criteria. We have no leases classified as finance leases. As of September 30, 2023, the weighted average remaining lease term for our operating leases was years. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, management estimates the incremental borrowing rate, which currently is estimated to be 18%. Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease components are included in the measurement of the initial lease liability. Additional payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability. Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of short-term leases on our right-of-use asset and lease liability was not material.
As of September 30, 2023, the right-of-use assets totaled $777,000 and the lease liability totaled $792,000 on our balance sheet related to our operating leases.
Property and Equipment
Property and equipment includes machinery and leasehold improvements and is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 3 - 5 years or the remaining lease term. Newly built leaseholds, additions, renewals, and betterments that significantly extend the life of the asset are capitalized. The Company is currently constructing a facility and purchasing equipment for producing sodium sulfur batteries. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts, and any related gain or loss is reflected in income for the period.
Recent Accounting Pronouncements
Currently there are no recently released pronouncements that are considered applicable to the Company’s financial statements.
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Note 3 - Sale of Stock for Cash |
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Note 3. Sale of Stock for Cash
Lincoln Park Financing
On December 13, 2022, we entered into a stock purchase agreement (the “2022 LPC Purchase Agreement”) with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us at our request up to an aggregate of $10,000,000 of our common stock (subject to certain limitations) from time to time over a period of three years. The agreement allows us, at our sole discretion, to direct Lincoln Park to purchase shares of our common stock, subject to limitations in both volume and dollar amount. The purchase price of the shares that may be sold to Lincoln Park under the agreement is the lower of (i) the lowest sale price on the date of purchase, or (ii) the average of the three lowest closing prices in the prior 12 business days. There are no restrictions on future financings, rights of first refusal, participation rights, penalties, or liquidated damages other than a prohibition on entering into a “Variable Rate Transaction,” as defined in the agreement. Concurrently with the 2022 LPC Purchase Agreement, we entered into a Registration Rights Agreement, pursuant to which we filed a registration statement on Form S-1 with the SEC on December 23, 2022. This registration statement was declared effective on January 19, 2023.
During the three and nine months ended September 30, 2023, we sold 1,190,223 and 2,833,846 shares of our common stock to Lincoln Park, and received $203,000 and $502,000, respectively, in gross and net proceeds.
During the three and nine months ended September 30, 2022, pursuant to a prior (similar) arrangement, we sold 2,440,958 and 4,353,919 shares of our common stock to Lincoln Park, and received $485,000 and $903,000, respectively, in gross and net proceeds.
Unit Offerings
We did sell any shares in our Unit Offerings during the three months ended September 30, 2023. During the nine months ended September 30, 2023, we sold 5,234,948 shares of our common stock and received $995,000 in gross and net proceeds from accredited investors. In addition to the shares, we issued each investor a -month and a -year warrant to purchase additional shares. (See Note 6, “Warrants Issued in Unit Offering”.)
During the three and nine months ended September 30, 2022, pursuant to our unit offerings, we sold 3,766,126 and 13,568,524 shares of our common stock and received $632,000 and $2,364,000 in gross and net proceeds from thirty accredited investors. In addition to the shares, we issued each investor a -month and a -year warrant to purchase additional shares. (See Note 6, “Warrants Issued in Unit Offering”.)
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Note 4 - Debt Obligations |
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Note 4. Debt Obligations
The following table summarizes our debt obligations outstanding as of September 30, 2023, and December 31, 2022 (in thousands). The table does not include debt obligations of our partially owned subsidiary Clyra Medical (see Note 8, “Debt Obligations of Clyra Medical”).
For the three and nine months ended September 30, 2023, we recorded $12,000 and $72,000, respectively, of interest expense related to the amortization of discounts on convertible notes payable and coupon interest from our convertible notes and lines of credit.
For the three and nine months ended September 30, 2022, we recorded $14,000 and $42,000, respectively, of interest expense related to the amortization of discounts on convertible notes payable and coupon interest from our convertible notes and lines of credit.
Vehicle loan
On February 7, 2023, we entered a loan agreement with Bank of America for the purchase of a vehicle used in operations totaling $80,000, at 5.29% annual interest which matures March 7, 2029. The loan agreement requires monthly payments of $1,000.
Convertible note payable, matures March 1, 2023
On March 6, 2023, we entered into an agreement with the holder of a $50,000 note to convert that note into common stock of BETI (see note 10). As payment for interest, a warrant to purchase 200,000 shares of BioLargo common stock at $0.21 was issued to the investor, expiring years from the grant date. (See Note 6).
SBA Program Loans
On February 7, 2022, we received notice that the SBA had forgiven $174,000 of the ONM Environmental $217,000 Paycheck Protection Program (PPP) loan. As of September 30, 2023, the outstanding balance on this loan totals $43,000. The partial forgiveness decision has been appealed, and during such time, loan payments are deferred.
On May 12, 2022, we received notice that the SBA had denied the forgiveness application of BLEST’s $97,000 PPP loan. We have appealed that decision. During the period upon which a forgiveness decision is on appeal, loan payments are deferred. The maturity date of the BLEST PPP loan was officially extended on our request to May 2025.
In July 2020, ONM Environmental received an Economic Injury Disaster Loan from the SBA in the amount of $150,000. The note has a 3.75% annual interest rate, requires monthly payments of $731, and matures July 2050.
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Note 5 - Share-based Compensation |
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Note 5. Share-Based Compensation
Issuance of Common Stock in exchange for Services
Payment of Officer Salaries
On September 30, 2023, two officers agreed to convert an aggregate $12,000 of accrued and unpaid salary into 69,563 shares of our common stock at $0.17 per share. On June 30, 2023, an officer agreed to convert an aggregate $12,000 of accrued and unpaid salary into 68,541 shares of our common stock at $0.18 per share. On March 31, 2023, an officer agreed to convert an aggregate $6,000 of accrued and unpaid salary into 30,747 shares of our common stock at $0.20 per share.
On September 30, 2022, we issued 167,781 shares of our common stock at $0.27 per share in lieu of $72,000 of accrued and unpaid salary to our officers.
Shares issued to Officers are unvested at the date of grant and subject to a lock-up agreement restricting vesting and sale until the earlier of (i) the consummation of a sale (in a single transaction or in a series of related transactions) of BioLargo by means of a sale of (a) a majority of the then outstanding common stock of BioLargo (whether by merger, consolidation, sale or transfer of common stock, reorganization, recapitalization or otherwise) or (b) all or substantially all of the assets of BioLargo; and (ii) the successful commercialization of BioLargo’s products or technologies as demonstrated by its receipt of at least $3,000,000 in cash, or the recognition of $3,000,000 in revenue, over a 12-month period from the sale of products and/or the license of technology; and (iii) the Company’s breach of the employment agreement between the Company and Officer and resulting in Officer’s termination.
Payment of Consultant and Vendor Fees
On September 30, 2023, we issued 146,123 shares of our common stock at $0.17 per share in lieu of $25,000 of accrued and unpaid obligations to consultants and vendors. On June 30, 2023, we issued 352,370 shares of our common stock at $0.18 per share in lieu of $63,000 of accrued and unpaid obligations to consultants and vendors. On March 31, 2023, we issued 899,743 shares of our common stock at $0.20 per share in lieu of $201,000 of accrued and unpaid obligations to consultants and vendors.
On September 30, 2022, we issued 211,047 shares of our common stock at $0.27 per share in lieu of $24,000 of accrued and unpaid obligations to consultants. On June 30, 2022, we issued 76,996 shares of our common stock at $0.18 per share in lieu of $60,000 of accrued and unpaid obligations to consultants. On March 31, 2022, we issued 86,752 shares of our common stock at $0.23 per share in lieu of $31,000 of accrued and unpaid obligations to consultants.
All of these offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and/or Regulation D promulgated thereunder as not involving a public offering of securities.
Stock Option Expense
During the three and nine months ended September 30, 2023, we recorded an aggregate $725,000 and $1,269,000, and during the three and nine months ended September 30, 2022, we recorded an aggregate $338,000 and $1,455,000, in selling general and administrative expense related to the issuance of stock options. We issued options through our 2018 Equity Incentive Plan, and outside of this plan. Included in these totals is option expense related to issuances by our subsidiary, Clyra Medical, totaling $45,000 and $172,000 in the three and nine months ended September 30, 2023, and $85,000 and $308,000 in the three and nine months ended September 30, 2022. (See Note 8.)
2018 Equity Incentive Plan
On June 22, 2018, our stockholders adopted the BioLargo 2018 Equity Incentive Plan (“2018 Plan”) as a means of providing our directors, key employees, and consultants additional incentive to provide services. Both stock options and stock grants may be made under this plan for a period of 10 years. It is set to expire on its terms on June 22, 2028. Our Board of Director’s Compensation Committee administers this plan. As plan administrator, the Compensation Committee has sole discretion to set the price of the options. The plan authorizes the following types of awards: (i) incentive and non-qualified stock options, (ii) restricted stock awards, (iii) stock bonus awards, (iv) stock appreciation rights, (v) restricted stock units, and (vi) performance awards. The total number of shares reserved and available for awards pursuant to this Plan as of the date of adoption of this 2018 Plan by the Board is 40 million shares. The number of shares available to be issued under the 2018 Plan increases automatically each January 1st by the lesser of (a) 2 million shares, or (b) such number of shares determined by our Board. As of September 30, 2023, 50,000,000 shares are authorized under the plan.
Activity for our stock options under the 2018 Plan during the nine months ended September 30, 2023, and 2022, is as follows:
(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2023.
The options granted to purchase 8,219,920 shares during the nine months ended September 30, 2023 with an aggregate fair value of $1,370,000 were issued to an officer, board of directors, employees and a consultant. The exercise price for all options were issued on their respective grant date of March 31, 2023 ($0.20 per share) and June 30, 2023 ($0.18 per share) and September 30, 2023 ($0.17 per share): (i) we issued options to purchase 1,565,858 shares of our common stock to members of our board of directors for services performed, in lieu of cash; the fair value of these options totaled $266,000; (ii) we issued options to purchase 1,784,140 shares of our common stock to employees as part of an employee retention plan; the fair value of employee retention plan options totaled $306,000 and will vest quarterly over years as long as they are retained as employees; (iii) we issued options to purchase 4,069,922 shares of our common stock to consultants in lieu of cash and for expiring options totaling $657,000, and (iv) we issued 800,000 options to our Chief Financial Officer with a fair value of $141,000 (see “Chief Financial Officer Contract Extension” immediately below). Of the 800,000 issued to the CFO, 500,000 were issued for expiring options. All stock option expense is recorded on our consolidated statement of operations as selling, general and administrative expense.
The options granted to purchase 4,748,212 shares during the nine months ended September 30, 2022 were issued to officers, board of directors, employees and consultants: (i) we issued options to purchase 290,135 shares of our common stock at an exercise price on the respective grant date of $0.22 and $0.23 per share to our CFO and President to replace options that had expired; (ii) we issued options to purchase 1,134,356 shares of our common stock at an exercise price on the respective grant date ranging between $0.18 – $0.27 per share to members of our board of directors for services performed, in lieu of cash; the fair value of these options totaled (iii) we issued options to purchase 2,340,730 shares of our common stock to employees as part of an employee retention plan at an exercise price on the respective date ranging between $0.18 – $0.27 per share; the fair value of employee retention plan options totaled $492,000 and will vest quarterly over years as long as they are retained as employees; (iv) we issued options to purchase 682,991 shares of our common stock to consultants in lieu of cash for expiring options and per agreement totaling $145,000, and (v) we issued options to our Chief Financial Officer (see “Chief Financial Officer Contract Extension” immediately below). All stock option expense is recorded on our consolidated statement of operations as selling, general and administrative expense.
Chief Financial Officer Contract Extension
On March 21, 2023, we and our Chief Financial Officer Charles K. Dargan, II formally agreed to extend the engagement agreement dated February 1, 2008 (the “Engagement Agreement”, which had been previously extended multiple times), pursuant to which Mr. Dargan has been and continues to serve as the Company’s Chief Financial Officer. The Engagement Extension Agreement dated as of March 21, 2023 (the “Engagement Extension Agreement”) provides for an additional -year term to expire January 31, 2024 (the “Extended Term”), at which time Mr. Dargan will continue to serve as CFO, unless and until either party terminates the agreement.
As the sole compensation for the Extended Term, Mr. Dargan was issued an option (“Option”) to purchase 25,000 shares of the Company’s common stock for each month during the Extended Term (thus, an option to purchase 300,000 shares reflecting an extended term of 12 months). The Option vests over the period of the Extended Term, with 25,000 shares having vested as of March 21, 2023, and the remaining shares to vest 25,000 shares monthly beginning March 31, 2023, and each month thereafter, so long as the agreement is in full force and effect. The Option is exercisable at $0.20 per share, the closing price of BioLargo’s common stock on the March 21, 2023, grant date, expires years from the grant date, and was issued pursuant to the Company’s 2018 Equity Incentive Plan.
The Option is Mr. Dargan’s sole compensation for the Extended Term. As was the case in all prior terms of his engagement, there is no cash component of his compensation for the Extended Term. Mr. Dargan is eligible to be reimbursed for business expenses he incurs in connection with the performance of his services as the Company’s Chief Financial Officer (although he has made no such requests for reimbursement in the past). All other provisions of the Engagement Agreement not expressly amended pursuant to the Engagement Extension Agreement remain the same, including provisions regarding indemnification and arbitration of disputes.
2007 Equity Incentive Plan
On September 7, 2007, and as amended April 29, 2011, the BioLargo, Inc. 2007 Equity Incentive Plan (“2007 Plan”) was adopted as a means of providing our directors, key employees and consultants additional incentive to provide services. Both stock options and stock grants may be made under this plan for a period of 10 years, which expired on September 7, 2017. The Board’s Compensation Committee administers this plan. As plan administrator, the Compensation Committee has sole discretion to set the price of the options. As of September 2017, the Plan was closed to further stock option grants.
Activity for our stock options under the 2007 Plan for the nine months ended September 30, 2023 and 2022 is as follows:
(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2023.
Non-Plan Options
Activity of our non-plan stock options issued for the nine months ended September 30, 2023 and 2022 is as follows:
(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2023.
During the nine months ended September 30, 2023, we issued options to purchase an aggregate 60,040 shares of our common stock at prices on the grant date ranging $0.18 – $0.20 per share to vendors for fees for services. The fair value of the options issued totaled an aggregate $11,000 and is recorded in our selling, general and administrative expense.
During the nine months ended September 30, 2022, we issued options to purchase 105,797 shares of our common stock at prices on the grant date ranging $0.23 – $0.27 per share to a vendor for services. The fair value of these options total $36,000 and is recorded in our selling, general and administrative expense.
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Note 6 - Warrants |
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| Warrants [Text Block] |
Note 6. Warrants
We have certain warrants outstanding to purchase our common stock, at various prices, as described in the following table:
(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2023.
Warrants issued in Unit Offerings
During the nine months ended September 30, 2023, pursuant to our Unit Offerings (see Note 3), we issued -month stock purchase warrants to purchase an aggregate 5,234,948 shares of our common stock at $0.23 per share, and -year stock purchase warrants to purchase an aggregate 5,234,948 shares of our common stock at $0.29 per share. The fair value of these warrants totaled $913,000.
During the nine months ended September 30, 2022, pursuant to our Unit Offerings (see Note 3), we issued nine-month stock purchase warrants to purchase an aggregate 13,568,524 shares of our common stock at $0.19 - $0.23 per share, and -year stock purchase warrants to purchase an aggregate 13,568,524 shares of our common stock at $0.24 - $0.33 per share. The fair value of these warrants totaled $2,898,000.
Warrant issued in conjunction with amendment to note payable
On March 6, 2023, we entered into an agreement with the holder of a $50,000 note (see Note 4, “Convertible note payable, matures March 1, 2023”) to convert that note into common stock of BETI. As payment for interest, a warrant to purchase 200,000 shares of BioLargo common stock at $0.21 was issued to the investor, expiring years from the grant date. The fair value of this warrant totaled $30,000 and was recorded as interest expense on our statement of operations.
Fair Value – Interest Expense
To determine interest expense related to our outstanding warrants issued in conjunction with debt offerings, the fair value of each award grant is estimated on the date of grant using the Black-Scholes option pricing model and the relative fair values are amortized over the life of the warrant. For the determination of expense of warrants issued for services, extinguishment of debt and settlement management also uses the option-pricing model. The principal assumptions we used in applying this model were as follows:
The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are based on historical volatility of our common stock. The expected life in years is based on the contract term of the warrant.
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Note 7 - Accounts Payable and Accrued Expenses |
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Note 7. Accounts Payable and Accrued Expenses
As of September 30, 2023, accounts payable and accrued expenses included the following (in thousands):
As of December 31, 2022, accounts payable and accrued expenses included the following (in thousands):
See Note 8, “Accounts Payable and Accrued Expenses”, for the accounts payable and accrued expenses of Clyra Medical.
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Note 8 - Noncontrolling Interest - Clyra Medical |
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Note 8. Noncontrolling Interest – Clyra Medical
As discussed in Note 2 above, we consolidate the operations of our partially owned subsidiary Clyra Medical.
Debt Obligations of Clyra Medical
Promissory Note
On April 8, 2022, Clyra Medical issued a promissory note in the principal amount of $100,000 to an individual investor, payable April 8, 2024, and bearing 8% annual interest. The note may be converted by its holder at any time prior to the maturity date, and automatically converts to stock upon (i) Clyra’s sale of $5,000,000 or more of its common or preferred stock, or (ii) the maturity date, at a conversion price equal to 70% of the lowest price-per-share of shares sold to a future investor prior to the maturity date.
Line of Credit
On June 30, 2020, Clyra Medical entered into a Revolving Line of Credit Agreement whereby Vernal Bay Capital Group, LLC committed to provide a $1,000,000 inventory line of credit. Since inception, Clyra Medical received $260,000 in draws and made repayments totaling $126,000. Clyra issued Vernal Bay 322 shares of its common stock as a commitment fee for the line of credit, valued at $70,000. A security agreement of the same date grants Vernal Bay a security interest in Clyra’s inventory, as that term is defined in the Uniform Commercial Code. Clyra may prepay the note at any time.
On December 13, 2022, Clyra Medical entered into an amendment of the Revolving Line of Credit Agreement whereby the maturity date of the line of credit was extended to September 30, 2024, and the payment terms were modified such that amounts of principal due in each month are capped at a maximum of 15% of the principal amount then due under the note. Additionally, BioLargo agreed to allow Vernal Bay to elect to convert, any time prior to the note’s maturity date, the 322 shares of Clyra common stock it received as consideration for the line of credit into shares of Biolargo common stock at the then market price of BioLargo’s common stock. On January 9, 2023, Vernal Bay elected to convert Clyra shares to 527,983 BioLargo shares of common stock.
As of September 30, 2023, the balance outstanding on this line of credit totals $134,000. As of December 31, 2022, the balance outstanding on this line of credit totaled
Equity Transactions
As of September 30, 2023, Clyra had 99,501 shares issued and outstanding, of which 92,035 were common shares, and 7,466 were preferred shares. As of December 31, 2022, Clyra had 91,145 shares issued and outstanding, of which 89,070 were common shares, and 2,075 were preferred shares. As of September 30, 2023, of the outstanding amount, BioLargo owned 51,571 common shares and 1,660 Series A Preferred shares. As of December 31, 2022, of the outstanding amount, BioLargo owned 51,571 common shares and 1,352 Series A Preferred shares.
BioLargo Conversion of Intercompany Balances
In July 2023, BioLargo converted $96,000 owed to it by Clyra into 308 shares of Clyra Series A preferred shares. On March 2, 2022, BioLargo converted $633,000 owed to it by Clyra into 2,042 shares of Clyra common stock.
Sales of Series A Preferred Stock
During the three months ended September 30, 2023, Clyra sold 928 shares of its Series A Preferred Stock, and in exchange received $288,000 in gross and net proceeds from seven accredited investors. During the nine months ended September 30, 2023, Clyra sold 5,081 shares of its Series A Preferred Stock, and in exchange received $1,575,000 in gross and net proceeds from 35 accredited investors. Purchasers of the Series A Preferred Stock also received a 3-year warrant to purchase the same number of additional shares of common stock for $372 per share. The fair value of the warrants issued totaled $410,000 and is limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the Series A Preferred Stock. Shares of Series A Preferred Stock earn a dividend of 15% each year, compounding annually; the company is under no obligation to pay such dividends in cash, and such dividends automatically convert to common stock upon conversion of the Series A Preferred Stock to common stock. Each share of Series A Preferred stock can be converted by the holder at any time for one share of common stock, and automatically convert upon the completion of a public offering of shares in which at least $5,000,000 of gross proceeds is received by the company. Accrued dividends may be converted to common stock at a conversion rate of $310 per share.
Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its Series A Preferred stock, plus accrued dividends, into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 30 prior trading days. Elections may made beginning January 1, 2025, and ending on June 30, 2026.
Clyra Stock Options
Clyra issues options to its employees and consultants in lieu of compensation owed on a regular basis. The fair value of the options issued totaled $45,000 and $172,000 in the three and nine months ended September 30, 2023, and $85,000 and $308,000 in the three and nine months ended September 30, 2022. The Black-Scholes model is used to calculate the initial fair value, assuming a stock price on date of grant of $271 per share. Because Clyra is a private company with no secondary market for its common stock, the resulting fair value was discounted by 30%.
During the three months ended September 30, 2023, two option holders elected to exercise their stock options; Clyra received $2,964 and issued 2,964 shares of its common stock.
Accounts Payable and Accrued Expenses
At September 30, 2023, and December 31, 2022, Clyra had the following accounts payable and accrued expenses (in thousands):
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Note 9 - BioLargo Engineering, Science and Technologies, LLC |
9 Months Ended |
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| Notes to Financial Statements | |
| Wholly-Owned Subsidiary [Text Block] |
Note 9. BioLargo Engineering, Science and Technologies, LLC
In September 2017, we commenced a full-service environmental engineering firm and formed a Tennessee entity named BioLargo Engineering, Science & Technologies, LLC (“BLEST”). In conjunction with the start of this subsidiary we entered into employment agreements with six scientists and engineers. (See Note 11 “Business Segment Information”.) BLEST was capitalized with two classes of membership units: Class A, 100% owned by BioLargo, and Class B, held by management of BLEST, and which initially have no “profit interest,” as that term is defined in Tennessee law. However, over the succeeding years, the Class B members can earn up to a 30% profit interest. They also have been granted options to purchase up to an aggregate 1,750,000 shares of BioLargo, Inc. common stock. The profit interest and option shares are subject to a year vesting schedule tied to the performance of the subsidiary, including gross revenue targets that increase over time, obtaining positive cash flow by March 31, 2018 (which was not met), collecting 90% of its account receivables, obtaining a profit of 10% in its first year (and increasing in subsequent years) (which was not met), making progress in the scale-up and commercialization of our AOS system, and using BioLargo research scientists (such as our Canadian team) for billable work on client projects. These criteria are to be evaluated annually by BLEST’s compensation committee (which includes BioLargo’s president, CFO, and BLEST’s president), beginning September 2018. Given the significant performance criteria, the Class B units and the stock options will only be recognized in compensation expense if or when the criteria are satisfied.
The BLEST Compensation Committee has met regularly since the subsidiary commenced operations. In 2018, it reviewed the operating performance and determined that the performance metrics were not met and as a result, did award any Class B units or stock options. As of December 31, 2021, BLEST employees had earned 13% in profits interests and had earned (vested) 455,000 option shares. In January 2022, the committee again reviewed the operating performance and determined that a portion of the performance metrics were met. It was agreed that an additional one-half and one-quarter of the eligible profits interests would be vested (11% in the aggregate), and therefore an additional half of the option interests would be vested (525,000 options shares in the aggregate). The vesting of option shares resulted in a fair value totaling $65,000, recorded on our consolidated statement of operations as selling, general and administrative expense for the year ended December 31, 2021. In December 2022, the committee again reviewed the operating performance and determined that a portion of the performance metrics were met. It was agreed that an additional one-half and one-quarter of the eligible profits interests would be vested (18% in the aggregate), and therefore an additional half of the option interests would be vested (1,242,500 options shares in the aggregate). The vesting of option shares resulted in a fair value totaling and is recorded on our consolidated statement of operations as selling, general and administrative expense for the year ended December 31, 2022. |
Note 10 - BioLargo Energy Technologies, Inc. |
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| Noncontrolling Interest Disclosure [Text Block] |
Note 8. Noncontrolling Interest – Clyra Medical
As discussed in Note 2 above, we consolidate the operations of our partially owned subsidiary Clyra Medical.
Debt Obligations of Clyra Medical
Promissory Note
On April 8, 2022, Clyra Medical issued a promissory note in the principal amount of $100,000 to an individual investor, payable April 8, 2024, and bearing 8% annual interest. The note may be converted by its holder at any time prior to the maturity date, and automatically converts to stock upon (i) Clyra’s sale of $5,000,000 or more of its common or preferred stock, or (ii) the maturity date, at a conversion price equal to 70% of the lowest price-per-share of shares sold to a future investor prior to the maturity date.
Line of Credit
On June 30, 2020, Clyra Medical entered into a Revolving Line of Credit Agreement whereby Vernal Bay Capital Group, LLC committed to provide a $1,000,000 inventory line of credit. Since inception, Clyra Medical received $260,000 in draws and made repayments totaling $126,000. Clyra issued Vernal Bay 322 shares of its common stock as a commitment fee for the line of credit, valued at $70,000. A security agreement of the same date grants Vernal Bay a security interest in Clyra’s inventory, as that term is defined in the Uniform Commercial Code. Clyra may prepay the note at any time.
On December 13, 2022, Clyra Medical entered into an amendment of the Revolving Line of Credit Agreement whereby the maturity date of the line of credit was extended to September 30, 2024, and the payment terms were modified such that amounts of principal due in each month are capped at a maximum of 15% of the principal amount then due under the note. Additionally, BioLargo agreed to allow Vernal Bay to elect to convert, any time prior to the note’s maturity date, the 322 shares of Clyra common stock it received as consideration for the line of credit into shares of Biolargo common stock at the then market price of BioLargo’s common stock. On January 9, 2023, Vernal Bay elected to convert Clyra shares to 527,983 BioLargo shares of common stock.
As of September 30, 2023, the balance outstanding on this line of credit totals $134,000. As of December 31, 2022, the balance outstanding on this line of credit totaled
Equity Transactions
As of September 30, 2023, Clyra had 99,501 shares issued and outstanding, of which 92,035 were common shares, and 7,466 were preferred shares. As of December 31, 2022, Clyra had 91,145 shares issued and outstanding, of which 89,070 were common shares, and 2,075 were preferred shares. As of September 30, 2023, of the outstanding amount, BioLargo owned 51,571 common shares and 1,660 Series A Preferred shares. As of December 31, 2022, of the outstanding amount, BioLargo owned 51,571 common shares and 1,352 Series A Preferred shares.
BioLargo Conversion of Intercompany Balances
In July 2023, BioLargo converted $96,000 owed to it by Clyra into 308 shares of Clyra Series A preferred shares. On March 2, 2022, BioLargo converted $633,000 owed to it by Clyra into 2,042 shares of Clyra common stock.
Sales of Series A Preferred Stock
During the three months ended September 30, 2023, Clyra sold 928 shares of its Series A Preferred Stock, and in exchange received $288,000 in gross and net proceeds from seven accredited investors. During the nine months ended September 30, 2023, Clyra sold 5,081 shares of its Series A Preferred Stock, and in exchange received $1,575,000 in gross and net proceeds from 35 accredited investors. Purchasers of the Series A Preferred Stock also received a 3-year warrant to purchase the same number of additional shares of common stock for $372 per share. The fair value of the warrants issued totaled $410,000 and is limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the Series A Preferred Stock. Shares of Series A Preferred Stock earn a dividend of 15% each year, compounding annually; the company is under no obligation to pay such dividends in cash, and such dividends automatically convert to common stock upon conversion of the Series A Preferred Stock to common stock. Each share of Series A Preferred stock can be converted by the holder at any time for one share of common stock, and automatically convert upon the completion of a public offering of shares in which at least $5,000,000 of gross proceeds is received by the company. Accrued dividends may be converted to common stock at a conversion rate of $310 per share.
Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its Series A Preferred stock, plus accrued dividends, into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 30 prior trading days. Elections may made beginning January 1, 2025, and ending on June 30, 2026.
Clyra Stock Options
Clyra issues options to its employees and consultants in lieu of compensation owed on a regular basis. The fair value of the options issued totaled $45,000 and $172,000 in the three and nine months ended September 30, 2023, and $85,000 and $308,000 in the three and nine months ended September 30, 2022. The Black-Scholes model is used to calculate the initial fair value, assuming a stock price on date of grant of $271 per share. Because Clyra is a private company with no secondary market for its common stock, the resulting fair value was discounted by 30%.
During the three months ended September 30, 2023, two option holders elected to exercise their stock options; Clyra received $2,964 and issued 2,964 shares of its common stock.
Accounts Payable and Accrued Expenses
At September 30, 2023, and December 31, 2022, Clyra had the following accounts payable and accrued expenses (in thousands):
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| Noncontrolling Interest Disclosure [Text Block] |
Note 10. BioLargo Energy Technologies, Inc.
BioLargo Energy Technologies, Inc. (“BETI”) was formed for the purpose of commercializing a sodium-sulfur battery technology. BioLargo purchased 9,000,000 shares of its common stock upon its formation, and was its sole stockholder.
During the three months ended September 30, 2023, BETI sold 10,000 shares of its common stock to one accredited investor and received $25,000 in gross and net proceeds. During the nine months ended September 30, 2023, BETI sold 467,000 shares of its common stock to 16 accredited investors, and in exchange received gross and net proceeds totaling $1,005,000. Of that amount, $100,000 in shares were purchased by BioLargo. Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its shares of BETI common stock into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 20 trading days prior to the election to exchange. Elections must be made during calendar year 2024.
As of September 30, 2023, BETI had 9,467,000 issued and outstanding shares, of which BioLargo holds 9,050,000.
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Note 11 - Business Segment Information |
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting Disclosure [Text Block] |
Note 11. Business Segment Information
BioLargo has operating business segments, plus its corporate entity which is responsible for general corporate operations, including administrative functions, finance, human resources, marketing, legal, etc. The operational business segments are:
Other than ONM Environmental, during the last three quarterly periods none of our operating business units have operated at a profit, and therefore each required additional cash to meet its monthly expenses, funded through BioLargo’s sales of debt or equity, research grants, and tax credits. BETI and Clyra Medical have also been funded by third party investors who invest directly in exchange for equity ownership in that entity.
The segment information for the three and nine months ended September 30, 2023, and 2022, is as follows (in thousands):
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Note 12 - Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Commitments and Contingencies Disclosure [Text Block] |
Note 12. Commitments and Contingencies
Office Leases
We have long-term operating leases for office, industrial and laboratory space in Westminster, California, Oak Ridge, Tennessee, and Alberta, Canada. Payments made under operating leases are charged to the Consolidated Statement of Operations and Comprehensive Loss on a straight-line basis over the term of the operating lease agreement. Short-term leases less than one-year are not included in our analysis. For the three and nine months ended September 30, 2023, rental expense was $88,000 and for the three and nine months ended September 30, 2022, rental expense was $59,000 and $228,000. The lease of our Westminster facility expires August 2024. Management has not yet determined whether it will exercise its option to extend the lease years; therefore the four-year extension is not included in the analysis. In September 2022, the lease of our Oak Ridge, Tennessee facility was extended for years. The lease of our Canadian facility is less than one year. None of our leases have additional terms related to the payments or mechanics of the lease. The leases have no additional payment terms such as common area maintenance payments, tax sharing payments or other allocable expenses. Likewise, the leases do not contain other terms and conditions of use, such as variable lease payments, residual value guaranties or other restrictive financial terms. Since there is no explicit interest rate in our leases, management used its incremental borrowing rate, which is estimated to be 18% to determine lease liability.
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Note 13 - Subsequent Events |
9 Months Ended |
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Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Subsequent Events [Text Block] |
Note 13. Subsequent Events.
Management has evaluated subsequent events through the date of the filing of this quarterly report and management noted the following for disclosure.
Lincoln Park Capital Purchase of Shares
From October 1, 2023, through November 13, 2023, we sold 873,788 shares of common stock to Lincoln Park pursuant to the 2022 LPC Purchase Agreement (see Note 3) and received $142,000 in gross and net proceeds. These sales were registered with the SEC on Form S-1 (file number 333-268973).
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Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidation, Policy [Policy Text Block] | Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and partially owned subsidiaries BETI, BLEST and Clyra Medical. All intercompany accounts and transactions have been eliminated.
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| 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.
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| Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when acquired to be cash equivalents. Substantially all cash equivalents are held in short-term money market accounts at one of the largest financial institutions in the United States, Bank of America. From time to time, our cash account balances are greater than the Federal Deposit Insurance Corporation insurance limit of $250,000 per owner per bank, and during such times, we are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the financial institution. We do not anticipate non-performance by our financial institution.
As of September 30, 2023, and December 31, 2022, our cash balances were made up of the following (in thousands):
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| Receivable [Policy Text Block] | Accounts Receivable
In June 2016, the FASB issued ASU 2016-13, which sets out the principles for the recognition of measurement of credit losses on financial instruments, including trade receivables. The standard eliminates the probable initial recognition threshold and requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. The new standard was effective for the Company beginning January 1, 2023 and primarily impacted trade accounts receivable.
Accounts receivable are customer obligations that are unconditional. Accounts receivable are presented net of an allowance for doubtful accounts for expected credit losses, which represents an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and, if necessary, provides an allowance for doubtful accounts and expected credit losses. A provision to the allowances for doubtful accounts for expected credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment, and the Company’s historical experience. Provisions to the allowances for doubtful accounts for expected credit losses are recorded to general and administrative expenses. The Company writes off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues collection of the receivable. The Company does not have any off-balance-sheet credit exposure related to customers. As of September 30, 2023, and December 31, 2022, the allowance for doubtful accounts for expected credit losses was $113,000 and $12,000, respectively.
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| Concentration Risk, Credit Risk, Policy [Policy Text Block] | Credit Concentration
We have a limited number of customers that account for significant portions of our revenue. During the three and nine months ended September 30, 2023 and 2022, the following customers accounted for more than 10% of consolidated revenues:
At September 30, 2023, one customer accounted for more than 10% of consolidated accounts receivable, and at December 31, 2022, three customers accounted for more than 10% of consolidated accounts receivable:
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| Inventory, Policy [Policy Text Block] | Inventory
Inventories are stated at the lower of cost or net realizable value using the average cost method. The allowance for obsolete inventory as of September 30, 2023, and December 31, 2022, was $212,000 and $158,000, respectively. Inventories consisted of (in thousands):
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| Other Assets, Policy [Policy Text Block] | Other Non-Current Assets
Other non-current assets consisted of (i) security deposits related to our business offices, (ii) three patents acquired on October 22, 2021, for $34,000, and (iii) tax credit receivables from the Canadian government related to a research and development credit from our Canadian subsidiary for which we’ve applied for and received in prior periods.
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| Equity Method Investments [Policy Text Block] | Equity Method of Accounting
On March 20, 2020, we invested $100,000 into a South Korean entity (Odin Co. Ltd., “Odin”) pursuant to a Joint Venture agreement we had entered into with BKT Co. Ltd. and its U.S. based subsidiary, Tomorrow Water. We received a 40% non-dilutive equity interest, and BKT and Tomorrow Water each received 30% equity interests for an aggregate $150,000 investment.
We account for our investment in the joint venture under the equity method of accounting. We have determined that while we have significant influence over the joint venture through our technology license and our position on the Board of Directors, we do not control the joint venture or are otherwise involved in managing the entity and we own less than a majority of the equity. Therefore, we record the asset on our consolidated balance sheet and record an increase or decrease of the recorded balance by our percentage ownership of the profits or losses in the joint venture. The joint venture has incurred a loss since inception and our 40% ownership share reduced our investment interest. For the three and nine months ended September 30, 2023, the reduction of our investment interest totaled $6,000 and $18,000, respectively, and for the same periods in 2022, reduced our investment interest $15,000 and $23,000, respectively.
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| Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment
Long-lived and definite lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future undiscounted cash flows from the use of the asset and its eventual disposition is less than the carrying amount of the asset, then an impairment loss is recognized. The impairment loss is measured based on the fair value of the asset. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. There were no impairment losses related to intangible assets during the three or nine months ended September 30, 2023 or 2022.
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| 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 convertible notes payable, stock options and warrants were exercised into common stock. For the three and nine months ended September 30, 2023, and 2022, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the Company’s net loss which creates an anti-dilutive effect of the convertible notes payable, warrants and stock options.
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| 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 transactions, debt transactions, derivative liabilities, allowance for bad debt, asset depreciation and amortization, impairment expense, among others.
The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results of our financial statements.
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| Share-Based Payment Arrangement [Policy Text Block] | Share-Based Compensation Expense
We recognize compensation expense for stock option awards on a straight-line basis over the applicable service period of the award, which is the vesting period. Fair value is determined on the grant date. Share-based compensation expense is based on the grant date fair value estimated using the Black-Scholes Option Pricing Model.
For stock and stock options issued to consultants and other non-employees for services, the Company measures and records an expense as of the earlier of the date at which either: a commitment for performance by the non-employee has been reached or the non-employee’s performance is complete. The equity instruments are measured at the current fair value, and for stock options, the instruments are measured at fair value using the Black Scholes option model.
The following methodology and assumptions were used to calculate share-based compensation for the nine months ended September 30, 2023, and 2022:
Expected price volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. The expected volatility is derived from the historical daily change in the market price of our common stock, as we believe that historical volatility is the best indicator of future volatility.
The risk-free interest rate used in the Black-Scholes calculation is based on the prevailing U.S. Treasury yield as determined by the U.S. Federal Reserve. We have never paid any cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future.
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| Warrant Policy [Policy Text Block] | Warrants
Warrants issued with our convertible and non-convertible debt instruments are accounted for under the fair value and relative fair value method. The warrant is first analyzed per its terms as to whether it has derivative features or not. If the warrant is determined to be a derivative and not qualify for equity treatment, then it is measured at fair value using the Black Scholes option model and recorded as a liability on the balance sheet. The warrant is re-measured at its then current fair value at each subsequent reporting date (it is “marked-to-market”). If the warrant is determined to not have derivative features, it is recorded into equity at its fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the convertible note. Convertible debt instruments are recorded at fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant. The warrant relative fair values are also recorded as a discount to the convertible promissory notes.
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| Non Cash Transactions [Policy Text Block] | Non-Cash Transactions
We determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock based on the market price of our common stock issued as consideration, at the date of the agreement of each transaction or when the service is rendered or product is received.
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| Revenue from Contract with Customer [Policy Text Block] | Revenue Recognition
We account for revenue in accordance with ASC 606, “Revenue from Contacts with Customers”. The guidance focuses on the core principle for revenue recognition, which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the guidance provides that an entity should apply the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company’s products are sold through a contract with the customer and a written purchase order, in which the details of the contract are defined including the transaction price and method of shipment. The only performance obligation is to create and ship the product, and each product has separate pricing. Revenue is recognized at a point in time when the goods are shipped if the agreement is FOB manufacturer, and when goods are delivered if FOB destination. Revenue is recognized with a reduction for sales discounts, as appropriate and negotiated in the customer’s purchase order.
Service contracts are performed through a written contract, which specifies the performance obligations and the rate at which the services will be billed, typically by time and materials. Each service is separately negotiated and priced. Revenue is recognized as services are performed and completed, or, for services related to product installations, at the completion of the installation. A few contracts have called for milestone or fixed cost payments, where we invoice an agreed-to amount per month for the life of the contract. In these instances, completed work, billed hourly, is recognized as revenue. If the billing amount is greater or lesser than the completed work, a receivable or payable is created. These accounts are adjusted upon additional billings as the work is completed. To date, there have been no discounts or other financing terms for the contracts.
The Company has outstanding contract liability obligations of $2,000 as of September 30, 2023, recorded as deferred revenue. We recognized $15,000 in revenue and reduced the deferred revenue balance by the same amount as performance obligations were satisfied in the nine months ended September 30, 2023. The outstanding balance will be recognized over the remaining life of the contracts. Our Canadian subsidiary had a customer deposit outstanding at September 30, 2023, totaling $111,000, that was awarded as part of a grant for a particular project that has been delayed.
As we generate revenues from royalties or license fees from our intellectual property, a licensee will pay a license fee in one or more installments and ongoing royalties based on their sales of products incorporating or using our licensed intellectual property. We have entered into a licensing agreement for the CupriDyne Clean product, and we recognize royalty and license fees on a quarterly basis as the product is sold through to third parties and reported to us.
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| Government Grants [Policy Text Block] | Government Grants
We have been awarded multiple research grants from the private and public Canadian research programs. The income we receive directly from grants is recorded as other income. We have been awarded over 80 grants since our first in 2015. Some of the funds from these grants are given directly to third parties (such as the University of Alberta or a third-party research scientist) to support research on our technology. The grants have terms generally ranging between and 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 typically provide for (i) recurring monthly amounts, (ii) reimbursement of costs for research talent for which we invoice to request payment, and (iii) ancillary cost reimbursement for research talent travel related costs. All awarded grants have specific requirements on how the money is spent, typically to employ researchers. None of the funds may be used for general administrative expenses or overhead in the United States. These grants have substantially increased our level of research and development activities in Canada. We continue to apply for Canadian government and agency grants to fund research and development activities. Not all of our grant applications have been awarded, and no assurance can be made that any pending grant application, or any future grant applications, will be awarded.
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| Income Tax, Policy [Policy Text Block] | Income Taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of asset and liabilities. Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax asset and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
We account for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by generally accepted accounting principles (“GAAP”). Under GAAP, the tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. Management believes there are no unrecognized tax benefits or uncertain tax positions as of September 30, 2023, and December 31, 2022.
The Company assessed its earnings history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of September 30, 2023, and December 31, 2022. Accordingly, a 100% valuation allowance was recorded against the net deferred tax asset.
The Company recognizes interest and penalties on income taxes as a component of income tax expense, should such an expense be realized.
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| Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments
Management believes the carrying amounts of the Company’s financial instruments as of September 30, 2023, and December 31, 2022 approximate their respective fair values because of the short-term nature of these instruments. Such instruments consist of cash, accounts receivable, prepaid assets, accounts payable, line of credit, and other assets and liabilities. The carrying amount of debt instruments are believed to approximate fair value as the stated interest rates are reflective of the prevailing market rates.
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| Tax Credits [Policy Text Block] | Tax Credits
Our research and development activities in Canada may entitle our Canadian subsidiary to claim benefits under the “Scientific Research and Experimental Development Program”, a Canadian federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada. Benefits under the program include credits to taxable income. If our Canadian subsidiary does not have taxable income in a reporting period, we instead receive a tax refund from the Canadian Revenue Authority. Those refunds are classified in Other Income on our Consolidated Statement of Operations and Comprehensive Loss.
During the three months ended September 30, 2023, our subsidiary, Clyra, received $41,000 of Employ Retention Tax Credits.
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| Lessee, Leases [Policy Text Block] | Leases
At inception of a lease contract, we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period of the contract, and (3) whether we have the right to direct the use of the asset during such time period. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases are classified as either finance leases or operating leases. A lease must be classified as a finance lease if any of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any of these criteria. We have no leases classified as finance leases. As of September 30, 2023, the weighted average remaining lease term for our operating leases was years. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, management estimates the incremental borrowing rate, which currently is estimated to be 18%. Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease components are included in the measurement of the initial lease liability. Additional payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability. Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of short-term leases on our right-of-use asset and lease liability was not material.
As of September 30, 2023, the right-of-use assets totaled $777,000 and the lease liability totaled $792,000 on our balance sheet related to our operating leases.
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| Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment
Property and equipment includes machinery and leasehold improvements and is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 3 - 5 years or the remaining lease term. Newly built leaseholds, additions, renewals, and betterments that significantly extend the life of the asset are capitalized. The Company is currently constructing a facility and purchasing equipment for producing sodium sulfur batteries. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts, and any related gain or loss is reflected in income for the period.
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| New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements
Currently there are no recently released pronouncements that are considered applicable to the Company’s financial statements.
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Note 2 - Summary of Significant Accounting Policies (Tables) |
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| Schedule of Cash and Cash Equivalents [Table Text Block] |
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| Schedules of Concentration of Risk, by Risk Factor [Table Text Block] |
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| Schedule of Inventory, Current [Table Text Block] |
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| Schedule of Other Assets, Noncurrent [Table Text Block] |
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| Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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Note 4 - Debt Obligations (Tables) |
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| Schedule of Debt [Table Text Block] |
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| Share-Based Payment Arrangement, Option, Activity [Table Text Block] |
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Note 6 - Warrants (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] |
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| Schedule Of Assumptions Used To Determine Fair Value Of Warrants [Table Text Block] |
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Note 7 - Accounts Payable and Accrued Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] |
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Note 8 - Noncontrolling Interest - Clyra Medical (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Ownership Interests [Table Text Block] |
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| Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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| Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] |
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| Clyra Medical [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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| Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] |
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Note 11 - Business Segment Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Segment Reporting Information, by Segment [Table Text Block] |
|
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Note 2 - Summary of Significant Accounting Policies - Summary of Cash Balances (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Cash and Cash Equivalents, at Carrying Value | $ 3,042,000 | $ 1,851,000 |
| Parent Company [Member] | ||
| Cash and Cash Equivalents, at Carrying Value | 2,280,000 | 1,681,000 |
| Noncontrolling Interest [Member] | ||
| Cash and Cash Equivalents, at Carrying Value | $ 762,000 | $ 170,000 |
Note 2 - Summary of Significant Accounting Policies - Credit Concentration (Details) - Customer Concentration Risk [Member] |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Customer A [Member] | Revenue from Contract with Customer Benchmark [Member] | ||||
| Credit concentration | 74.00% | 4.00% | 76.00% | 44.00% |
| Customer A [Member] | Accounts Receivable [Member] | ||||
| Credit concentration | 67.00% | 11.00% | ||
| Customer B [Member] | Revenue from Contract with Customer Benchmark [Member] | ||||
| Credit concentration | 10.00% | 10.00% | 10.00% | 14.00% |
| Customer B [Member] | Accounts Receivable [Member] | ||||
| Credit concentration | 10.00% | 31.00% | ||
| Customer C [Member] | Revenue from Contract with Customer Benchmark [Member] | ||||
| Credit concentration | 10.00% | 10.00% | 10.00% | 10.00% |
| Customer D [Member] | Accounts Receivable [Member] | ||||
| Credit concentration | 10.00% | 15.00% | ||
Note 2 - Summary of Significant Accounting Policies - Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Raw material | $ 78 | $ 46 |
| Finished goods | 44 | 74 |
| Total | $ 122 | $ 118 |
Note 2 - Summary of Significant Accounting Policies - Other Non-current Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Patents | $ 34 | $ 34 |
| Security deposits | 35 | 35 |
| Tax credit receivable | 55 | |
| Total | $ 69 | $ 124 |
Note 2 - Summary of Significant Accounting Policies - Stock Options, Valuation Assumptions (Details) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Non Plan [Member] | ||
| Risk free interest rate | 4.15% | |
| Expected volatility | 112.00% | |
| Expected dividend yield | 0.00% | |
| Forfeiture rate | 0.00% | |
| Expected life in years (Year) | 10 years | |
| Non Plan [Member] | Minimum [Member] | ||
| Risk free interest rate | 2.32% | |
| Expected volatility | 115.00% | |
| Non Plan [Member] | Maximum [Member] | ||
| Risk free interest rate | 3.83% | |
| Expected volatility | 117.00% | |
| 2018 Equity Incentive Plan [Member] | ||
| Expected dividend yield | 0.00% | 0.00% |
| Forfeiture rate | 0.00% | 0.00% |
| Expected life in years (Year) | 10 years | 10 years |
| 2018 Equity Incentive Plan [Member] | Minimum [Member] | ||
| Risk free interest rate | 3.48% | 2.32% |
| Expected volatility | 112.00% | 115.00% |
| 2018 Equity Incentive Plan [Member] | Maximum [Member] | ||
| Risk free interest rate | 4.15% | 3.83% |
| Expected volatility | 114.00% | 117.00% |
Note 4 - Debt Obligations - Schedule of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Long-term debt, current | $ 66 | $ 100 |
| Debt discount, net of amortization | 0 | (3) |
| Total current portion of debt | 66 | 100 |
| Total long-term debt, net of current | 293 | 237 |
| Total | 359 | 337 |
| Vehicle Loan [Member] | ||
| Long-term debt, current | 13 | 0 |
| Total long-term debt, net of current | 58 | 0 |
| Paycheck Protection Program CARES Act [Member] | ||
| SBA Paycheck Protection Program loan | 43 | 43 |
| SBA Paycheck Protection Program loans, matures May 2025 | 97 | 97 |
| Convertible Note, Maturing On March 1, 2023 [Member] | ||
| Convertible notes | 0 | 50 |
| Economic Injury Disaster Loan [Member] | ||
| Long-term debt, current | 10 | 10 |
| Total long-term debt, net of current | $ 138 | $ 140 |
Note 6 - Warrants (Details Textual) - USD ($) |
Sep. 30, 2023 |
Mar. 06, 2023 |
Sep. 30, 2022 |
||
|---|---|---|---|---|---|
| Share Price (in dollars per share) | $ 0.17 | ||||
| Warrants and Rights Outstanding | [1] | $ 18,000 | |||
| Note Payable, Maturing March 8, 2023 [Member] | |||||
| Debt Instrument, Face Amount | $ 50,000 | ||||
| Six-month Warrants in Connection With the 2020 Unit Offering [Member] | |||||
| Warrants and Rights Outstanding, Term (Month) | 6 months | ||||
| Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares) | 5,234,948 | 13,568,524 | |||
| Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 0.23 | ||||
| Six-month Warrants in Connection With the 2020 Unit Offering [Member] | Minimum [Member] | |||||
| Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 0.19 | ||||
| Six-month Warrants in Connection With the 2020 Unit Offering [Member] | Maximum [Member] | |||||
| Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 0.23 | ||||
| Five-year Warrants in Connection With the 2020 Unit Offering [Member] | |||||
| Warrants and Rights Outstanding, Term (Month) | 5 years | 5 years | |||
| Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares) | 5,234,948 | 13,568,524 | |||
| Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 0.29 | ||||
| Warrants and Rights Outstanding | $ 913,000 | $ 2,898,000 | |||
| Five-year Warrants in Connection With the 2020 Unit Offering [Member] | Minimum [Member] | |||||
| Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 0.24 | ||||
| Five-year Warrants in Connection With the 2020 Unit Offering [Member] | Maximum [Member] | |||||
| Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 0.33 | ||||
| Warrants Issued in Connection with Conversion of Interest on Note Payable Maturing March 8, 2023 [Member] | |||||
| Warrants and Rights Outstanding, Term (Month) | 5 years | ||||
| Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares) | 200,000 | ||||
| Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 0.21 | ||||
| Warrants and Rights Outstanding | $ 30,000 | ||||
| |||||
Note 6 - Warrants - Warrants Outstanding (Details) - $ / shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Balance, outstanding (in shares) | 49,023,398 | 36,765,502 |
| Granted (in shares) | 10,669,896 | 27,137,048 |
| Expired (in shares) | (11,313,584) | (10,273,722) |
| Balance, outstanding (in shares) | 48,379,710 | 53,628,828 |
| Minimum [Member] | ||
| Balance, outstanding, price range (in dollars per share) | $ 0.13 | $ 0.16 |
| Granted, price range (in dollars per share) | 0.21 | 0.2 |
| Expired, price range (in dollars per share) | 0.1 | 0.19 |
| Balance, outstanding, price range (in dollars per share) | 0.13 | 0.14 |
| Maximum [Member] | ||
| Balance, outstanding, price range (in dollars per share) | 1 | 1 |
| Granted, price range (in dollars per share) | 0.29 | 0.29 |
| Expired, price range (in dollars per share) | 0.48 | 0.48 |
| Balance, outstanding, price range (in dollars per share) | 1 | 1 |
| Weighted Average [Member] | ||
| Balance, outstanding, price range (in dollars per share) | 0.26 | 0.27 |
| Granted, price range (in dollars per share) | 0.26 | 0.23 |
| Expired, price range (in dollars per share) | 0.23 | 0.25 |
| Balance, outstanding, price range (in dollars per share) | $ 0.27 | $ 0.26 |
Note 6 - Warrants - Assumptions Used to Determine Fair Value of Warrants (Details) |
Sep. 30, 2023 |
Sep. 30, 2022 |
|---|---|---|
| Measurement Input, Price Volatility [Member] | ||
| Risk free interest rate | 0.40 | |
| Measurement Input, Expected Term [Member] | ||
| Risk free interest rate | 3 | |
| Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
| Risk free interest rate | 0.0388 | 0.0369 |
| Minimum [Member] | Measurement Input, Price Volatility [Member] | ||
| Risk free interest rate | 0.40 | |
| Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
| Risk free interest rate | 0.0427 | 0.0388 |
| Maximum [Member] | Measurement Input, Price Volatility [Member] | ||
| Risk free interest rate | 0.95 |
Note 7 - Accounts Payable and Accrued Expenses - Summary of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accounts payable | $ 670 | $ 717 |
| Accrued payroll | 194 | 198 |
| Accrued interest | 25 | 25 |
| Total | 889 | 940 |
| Corporate, Non-Segment [Member] | ||
| Accounts payable | 208 | 187 |
| Accrued payroll | 40 | 20 |
| Accrued interest | 25 | 25 |
| Operating Segments [Member] | Odor-No-More [Member] | ||
| Accounts payable | 417 | 486 |
| Accrued payroll | 85 | 58 |
| Accrued interest | 0 | 0 |
| Operating Segments [Member] | BLEST [Member] | ||
| Accounts payable | 5 | 7 |
| Accrued payroll | 69 | 120 |
| Accrued interest | 0 | 0 |
| Operating Segments [Member] | BioLargo Water [Member] | ||
| Accounts payable | 91 | 119 |
| Accrued payroll | 0 | 0 |
| Accrued interest | 0 | 0 |
| Operating Segments [Member] | BioLargo Energy Technologies, Inc (BETI) [Member] | ||
| Accounts payable | 31 | |
| Accrued payroll | 0 | |
| Accrued interest | 0 | |
| Consolidation, Eliminations [Member] | ||
| Accounts payable | (82) | (82) |
| Accrued payroll | 0 | 0 |
| Accrued interest | $ 0 | $ 0 |
Note 8 - Noncontrolling Interest - Clyra Medical (Details Textual) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 |
Jan. 09, 2023 |
Dec. 20, 2022 |
Mar. 02, 2022 |
Jun. 30, 2020 |
Jul. 31, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
Apr. 08, 2022 |
|||
| Preferred Stock, Shares Outstanding (in shares) | 0 | 0 | 0 | |||||||||||
| Proceeds from Issuance of Preferred Stock and Preference Stock | $ 1,575,000 | $ 100,000 | ||||||||||||
| Warrants and Rights Outstanding | [1] | $ 18,000 | 18,000 | |||||||||||
| Proceeds from Stock Options Exercised | $ 3,000 | $ 0 | ||||||||||||
| Clyra Medical [Member] | Common Stock [Member] | ||||||||||||||
| Investment Owned, Balance, Shares (in shares) | 51,571 | 51,571 | 51,571 | |||||||||||
| Clyra Medical [Member] | Preferred Stock, Series A [Member] | ||||||||||||||
| Investment Owned, Balance, Shares (in shares) | 1,660 | 1,660 | 1,352 | |||||||||||
| Clyra Medical [Member] | ||||||||||||||
| Shares, Outstanding (in shares) | 99,501 | 99,501 | 91,145 | |||||||||||
| Common Stock, Shares, Outstanding (in shares) | 92,035 | 92,035 | 89,070 | |||||||||||
| Shares Issued, Price Per Share (in dollars per share) | $ 310 | |||||||||||||
| Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share) | $ 171.99 | $ 1 | ||||||||||||
| Proceeds from Stock Options Exercised | $ 2,964 | |||||||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period (in shares) | 2,964 | 2,964 | ||||||||||||
| Clyra Medical [Member] | Vendors and Employees [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||||||||
| Share-Based Payment Arrangement, Expense | $ 45,000 | $ 85,000 | $ 172,000 | $ 308,000 | ||||||||||
| Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share) | $ 271 | |||||||||||||
| Clyra Medical [Member] | Employees and Consultants [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||||||||
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Discount Rate | 30.00% | |||||||||||||
| Clyra Medical [Member] | Warrants Issued in Conjunction With the Sale of Series A Preferred Stock [Member] | ||||||||||||||
| Warrants and Rights Outstanding, Term (Month) | 3 years | |||||||||||||
| Warrants and Rights Outstanding | $ 410,000 | |||||||||||||
| Clyra Medical [Member] | Shares Issued for Debt Owed to Biolargo [Member] | ||||||||||||||
| Debt Conversion, Converted Instrument, Amount | $ 633,000 | $ 96,000 | ||||||||||||
| Debt Conversion, Converted Instrument, Shares Issued (in shares) | 2,042 | 308 | ||||||||||||
| Clyra Medical [Member] | Series A Preferred Stock [Member] | ||||||||||||||
| Preferred Stock, Shares Outstanding (in shares) | 7,466 | 7,466 | 2,075 | |||||||||||
| Stock Issued During Period, Shares, New Issues (in shares) | 928 | 5,081 | ||||||||||||
| Proceeds from Issuance of Preferred Stock and Preference Stock | $ 288,000 | $ 1,575,000 | ||||||||||||
| Shares Issued, Price Per Share (in dollars per share) | $ 372 | |||||||||||||
| Preferred Stock, Dividend Rate, Percentage | 15.00% | |||||||||||||
| Preferred Stock, Convertible, Sale of Stock Amount | $ 5,000,000 | |||||||||||||
| Clyra Medical [Member] | Revolving Credit Facility [Member] | Vernal Bay Capital Group, LLC [Member] | Inventory Line of Credit [Member] | ||||||||||||||
| Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000,000 | |||||||||||||
| Proceeds from Lines of Credit, Total | $ 260,000 | |||||||||||||
| Repayments of Lines of Credit | $ 126,000 | |||||||||||||
| Stock Issued During Period, Shares, Commitment Fee (in shares) | 322 | 322 | ||||||||||||
| Stock Issued During Period, Value, Commitment Fee | $ 70,000 | |||||||||||||
| Debt Instrument, Percentage of Principal Payment, Cap | 15.00% | |||||||||||||
| Long-Term Line of Credit | $ 134,000 | $ 134,000 | $ 161,000 | |||||||||||
| Clyra Medical [Member] | Notes Payable, Other Payables [Member] | ||||||||||||||
| Debt Instrument, Face Amount | $ 100,000 | |||||||||||||
| Debt Instrument, Interest Rate, Stated Percentage | 8.00% | |||||||||||||
| Debt Instrument, Convertible, Sale of Stock Amount | $ 5,000,000 | |||||||||||||
| Debt Instrument, Convertible, Conversion Percentage | 70.00% | |||||||||||||
| Vernal Bay Capital Group, LLC [Member] | Conversion of Clyra Medical Stock Into Biolargo Common Stock [Member] | ||||||||||||||
| Conversion of Stock, Shares Issued (in shares) | 527,983 | |||||||||||||
| ||||||||||||||
Note 8 - Noncontrolling Interest - Clyra Medical - Common Shares Outstanding (Details) - Clyra Medical [Member] - $ / shares |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Options outstanding, balance (in shares) | 15,833 | 14,004 | 14,004 | |
| Balance, Exercise Price Range (in shares) | 1 | 1 | ||
| Weighted average exercise price per share, balance (in dollars per share) | $ 5.53 | $ 1 | $ 1 | |
| Exercised (in shares) | (2,964) | (2,964) | ||
| Exercised, Exercise Price Range (in dollars per share) | $ 1 | |||
| Exercised, Weighted Average Price Per Share (in dollars per share) | $ 1 | |||
| Options granted (in shares) | 1,215 | 1,403 | ||
| Granted, Exercise Price (in dollars per share) | $ 1 | |||
| Weighted average exercise price per share, granted (in dollars per share) | $ 171.99 | $ 1 | ||
| Options outstanding, balance (in shares) | 14,084 | 14,084 | 15,407 | 15,833 |
| Balance, Exercise Price Range (in shares) | 1 | |||
| Weighted average exercise price per share, balance (in dollars per share) | $ 20.85 | $ 20.85 | $ 1 | $ 5.53 |
| Minimum [Member] | ||||
| Balance, Exercise Price Range (in shares) | 1 | |||
| Granted, Exercise Price (in dollars per share) | $ 1 | |||
| Balance, Exercise Price Range (in shares) | 1 | 1 | 1 | |
| Maximum [Member] | ||||
| Balance, Exercise Price Range (in shares) | 310 | |||
| Granted, Exercise Price (in dollars per share) | $ 271 | |||
| Balance, Exercise Price Range (in shares) | 310 | 310 | 310 | |
Note 8 - Noncontrolling Interest - Clyra Medical - Valuation Assumptions (Details) |
9 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Clyra Medical [Member] | Vendors and Employees [Member] | |||
| Risk free interest rate | 2.00% | ||
| Expected volatility | 40.00% | ||
| Expected life in years (Year) | 10 years | 10 years | |
| Maximum [Member] | Clyra Medical [Member] | Vendors and Employees [Member] | |||
| Risk free interest rate | 4.15% | ||
| Expected volatility | 49.00% | ||
| Non Plan [Member] | |||
| Risk free interest rate | 4.15% | ||
| Expected volatility | 112.00% | ||
| Expected life in years (Year) | 10 years | ||
| Non Plan [Member] | Minimum [Member] | |||
| Risk free interest rate | 2.32% | ||
| Expected volatility | 115.00% | ||
| Non Plan [Member] | Minimum [Member] | Clyra Medical [Member] | Vendors and Employees [Member] | |||
| Risk free interest rate | 3.48% | ||
| Expected volatility | 40.00% | ||
| Non Plan [Member] | Maximum [Member] | |||
| Risk free interest rate | 3.83% | ||
| Expected volatility | 117.00% | ||
Note 8 - Noncontrolling Interest - Clyra Medical - Summary of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accounts payable | $ 670 | $ 717 |
| Accrued payroll | 194 | 198 |
| Accrued interest | 25 | 25 |
| Accounts payable and accrued expenses, total | 889 | 940 |
| Clyra Medical [Member] | ||
| Accounts payable | 158 | 186 |
| Accrued payroll | 12 | 45 |
| Accrued interest | 8 | 7 |
| Accrued dividend | 152 | |
| Accounts payable and accrued expenses, total | $ 330 | $ 238 |
Note 9 - BioLargo Engineering, Science and Technologies, LLC (Details Textual) - USD ($) |
1 Months Ended | 9 Months Ended | 12 Months Ended | 25 Months Ended | ||
|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2019 |
|
| Share-based Payment Arrangement, Noncash Expense, Total | $ 1,269,000 | $ 1,455,000 | ||||
| Seven Employees Working at BioLargo Engineering, Science & Technologies, LLC [Member] | ||||||
| Deferred Compensation Arrangement with Individual, Requisite Service Period (Year) | 5 years | |||||
| Potential Ownership Percentage of Subsidiary Held by Subsidiary Employees Based on Performance | 30.00% | |||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares) | 1,242,500 | |||||
| Incentive Issuance Stipulations for Subsidiary Employees, Accounts Receivable Collected by Year One of Operation | 90.00% | |||||
| Incentive Issuance Stipulations for Subsidiary Employees, Profit Earned in Year One of Operation | 10.00% | |||||
| Percentage of Profit Interest | 13.00% | |||||
| Percentage of Profits Interests Vested | 18.00% | 11.00% | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested in Period, Fair Value | $ 135,000 | $ 65,000 | ||||
| Seven Employees Working at BioLargo Engineering, Science & Technologies, LLC [Member] | Share-Based Payment Arrangement, Tranche One [Member] | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares) | 455,000 | |||||
| Seven Employees Working at BioLargo Engineering, Science & Technologies, LLC [Member] | Share-Based Payment Arrangement, Tranche Two [Member] | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares) | 525,000 | |||||
| Seven Employees Working at BioLargo Engineering, Science & Technologies, LLC [Member] | Non-Qualified Stock Option [Member] | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares) | 1,750,000 | |||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year) | 5 years | |||||
| Share-based Payment Arrangement, Noncash Expense, Total | $ 0 | |||||
| BioLargo Engineering, Science & Technologies, LLC [Member] | ||||||
| Subsidiary, Ownership Percentage, Parent | 100.00% | |||||
Note 10 - BioLargo Energy Technologies, Inc. (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | |
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Sep. 30, 2017 |
|
| BioLargo Energy Technologies, Inc (BETI) [Member] | |||
| Stock Issued During Period, Shares, New Issues (in shares) | 10,000 | 467,000 | |
| Proceeds from Issuance or Sale of Equity | $ 25,000 | $ 1,005,000 | |
| Stock Conversion, Discount on Volume Weighted average Price | 20.00% | 20.00% | |
| Shares, Outstanding (in shares) | 9,467,000 | 9,467,000 | |
| BioLargo Energy Technologies, Inc (BETI) [Member] | Biolargo [Member] | |||
| Proceeds from Issuance or Sale of Equity | $ 100,000 | ||
| BioLargo Energy Technologies, Inc (BETI) [Member] | |||
| Investment Owned, Balance, Shares (in shares) | 9,050,000 | 9,050,000 | 9,000,000 |
Note 11 - Business Segment Information (Details Textual) |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Number of Operating Segments | 5 |
Note 11 - Business Segment Information - Segment Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Revenue from Contract with Customer, Including Assessed Tax | $ 2,672,000 | $ 1,500,000 | $ 7,860,000 | $ 3,786,000 | |
| Research and development | (694,000) | (271,000) | (1,846,000) | (1,018,000) | |
| Operating loss | (1,537,000) | (943,000) | (3,574,000) | (3,973,000) | |
| Interest income (expense) | (12,000) | (14,000) | (72,000) | (42,000) | |
| Tangible assets | 5,753,000 | 5,753,000 | $ 3,958,000 | ||
| Operating Lease, Right-of-Use Asset | 777,000 | 777,000 | 867,000 | ||
| Investment in South Korean joint venture | 15,000 | 15,000 | 33,000 | ||
| Total | 6,545,000 | 6,545,000 | 4,858,000 | ||
| Investment in South Korean Joint Venture [Member] | |||||
| Investment in South Korean joint venture | 15,000 | 15,000 | 33,000 | ||
| Corporate, Non-Segment [Member] | |||||
| Revenue from Contract with Customer, Including Assessed Tax | 0 | 2,000 | 0 | 4,000 | |
| Research and development | (234,000) | (140,000) | (665,000) | (570,000) | |
| Operating loss | (797,000) | (783,000) | (2,230,000) | (2,925,000) | |
| Interest income (expense) | (3,000) | (6,000) | (43,000) | (18,000) | |
| Tangible assets | 579,000 | 579,000 | 669,000 | ||
| Operating Lease, Right-of-Use Asset | 72,000 | 72,000 | 136,000 | ||
| Total | 666,000 | 666,000 | 838,000 | ||
| Corporate, Non-Segment [Member] | Investment in South Korean Joint Venture [Member] | |||||
| Investment in South Korean joint venture | 15,000 | 15,000 | 33,000 | ||
| Operating Segments [Member] | Odor-No-More [Member] | |||||
| Revenue from Contract with Customer, Including Assessed Tax | 2,513,000 | 1,199,000 | 7,374,000 | 2,499,000 | |
| Research and development | (14,000) | 0 | (14,000) | 0 | |
| Operating loss | 969,000 | 400,000 | 2,786,000 | 418,000 | |
| Interest income (expense) | (1,000) | 0 | (5,000) | 0 | |
| Tangible assets | 3,300,000 | 3,300,000 | 2,064,000 | ||
| Operating Lease, Right-of-Use Asset | 0 | 0 | 0 | ||
| Total | 3,300,000 | 3,300,000 | 2,064,000 | ||
| Operating Segments [Member] | Odor-No-More [Member] | Investment in South Korean Joint Venture [Member] | |||||
| Investment in South Korean joint venture | 0 | 0 | 0 | ||
| Operating Segments [Member] | Clyra Medical [Member] | |||||
| Tangible assets | 1,202,000 | 1,202,000 | 631,000 | ||
| Operating Lease, Right-of-Use Asset | 0 | 0 | 0 | ||
| Total | 1,202,000 | 1,202,000 | 631,000 | ||
| Operating Segments [Member] | Clyra Medical [Member] | Investment in South Korean Joint Venture [Member] | |||||
| Investment in South Korean joint venture | 0 | 0 | 0 | ||
| Operating Segments [Member] | BLEST [Member] | |||||
| Tangible assets | 480,000 | 480,000 | 441,000 | ||
| Operating Lease, Right-of-Use Asset | 705,000 | 705,000 | 731,000 | ||
| Total | 1,185,000 | 1,185,000 | 1,172,000 | ||
| Operating Segments [Member] | BLEST [Member] | Investment in South Korean Joint Venture [Member] | |||||
| Investment in South Korean joint venture | 0 | 0 | 0 | ||
| Operating Segments [Member] | BioLargo Water [Member] | |||||
| Revenue from Contract with Customer, Including Assessed Tax | 22,000 | 1,000 | 31,000 | 1,000 | |
| Research and development | (128,000) | (119,000) | (401,000) | (446,000) | |
| Operating loss | (155,000) | (141,000) | (549,000) | (572,000) | |
| Interest income (expense) | 0 | 0 | 1,000 | 0 | |
| Tangible assets | 89,000 | 89,000 | 194,000 | ||
| Operating Lease, Right-of-Use Asset | 0 | 0 | 0 | ||
| Total | 89,000 | 89,000 | 194,000 | ||
| Operating Segments [Member] | BioLargo Water [Member] | Investment in South Korean Joint Venture [Member] | |||||
| Investment in South Korean joint venture | 0 | 0 | 0 | ||
| Operating Segments [Member] | BioLargo Energy Technologies, Inc (BETI) [Member] | |||||
| Revenue from Contract with Customer, Including Assessed Tax | 0 | 0 | 0 | 0 | |
| Research and development | (537,000) | 0 | (840,000) | 0 | |
| Operating loss | (559,000) | 0 | (943,000) | 0 | |
| Tangible assets | 144,000 | 144,000 | |||
| Operating Lease, Right-of-Use Asset | 0 | 0 | |||
| Total | 144,000 | 144,000 | |||
| Operating Segments [Member] | BioLargo Energy Technologies, Inc (BETI) [Member] | Investment in South Korean Joint Venture [Member] | |||||
| Investment in South Korean joint venture | 0 | 0 | |||
| Operating Segments [Member] | BioLargo Engineering, Science & Technologies, LLC [Member] | |||||
| Revenue from Contract with Customer, Including Assessed Tax | 843,000 | 401,000 | 1,742,000 | 1,613,000 | |
| Research and development | (433,000) | (100,000) | (971,000) | (288,000) | |
| Operating loss | (568,000) | (179,000) | (1,388,000) | (158,000) | |
| Operating Segments [Member] | Clyra Segment [Member] | |||||
| Revenue from Contract with Customer, Including Assessed Tax | 14,000 | 17,000 | 20,000 | 34,000 | |
| Research and development | (68,000) | (31,000) | (262,000) | (73,000) | |
| Operating loss | (427,000) | (240,000) | (1,250,000) | (736,000) | |
| Interest income (expense) | (8,000) | (8,000) | (25,000) | (24,000) | |
| Consolidation, Eliminations [Member] | |||||
| Revenue from Contract with Customer, Including Assessed Tax | (720,000) | (120,000) | (1,307,000) | (365,000) | |
| Tangible assets | (41,000) | (41,000) | (41,000) | ||
| Operating Lease, Right-of-Use Asset | 0 | 0 | 0 | ||
| Total | (41,000) | (41,000) | (41,000) | ||
| Consolidation, Eliminations [Member] | Investment in South Korean Joint Venture [Member] | |||||
| Investment in South Korean joint venture | 0 | 0 | $ 0 | ||
| Intersegment Eliminations [Member] | |||||
| Research and development | $ 720,000 | $ 119,000 | $ 1,307,000 | $ 359,000 | |
Note 12 - Commitments and Contingencies (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Operating Lease, Expense | $ 88,000 | $ 59,000 | $ 254,000 | $ 228,000 |
| Operating Lease, Weighted Average Remaining Lease Term (Year) | 9 years | 9 years | ||
| Lessee, Operating Lease, Discount Rate | 18.00% | 18.00% | ||
| Westminster, California Facility Lease [Member] | ||||
| Lessee, Operating Lease, Renewal Term (Year) | 4 years | 4 years | ||
| Oak Ridge, Tennessee Facility Lease [Member] | ||||
| Operating Lease, Weighted Average Remaining Lease Term (Year) | 10 years | 10 years | ||
Note 13 - Subsequent Events (Details Textual) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|---|
Nov. 13, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Proceeds from Issuance of Common Stock | $ 1,497,000 | $ 3,267,000 | |||
| Lincoln Park Capital Fund, LLC [Member] | |||||
| Stock Issued During Period, Shares, New Issues (in shares) | 1,190,223 | 2,440,958 | 2,833,846 | 4,353,919 | |
| Proceeds from Issuance of Common Stock | $ 203,000 | $ 485,000 | $ 502,000 | $ 903,000 | |
| Subsequent Event [Member] | Lincoln Park Capital Fund, LLC [Member] | |||||
| Stock Issued During Period, Shares, New Issues (in shares) | 873,788 | ||||
| Proceeds from Issuance of Common Stock | $ 142,000 | ||||