Note 5 - Share-based Compensation

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

Note 5. Share-Based Compensation

Issuance of Common Stock in exchange for Services

Payment of Officer Salaries

On  September 30, 2025, we issued 177,235 shares of our common at $0.17 per share in lieu of $30,000 of accrued and unpaid obligations to two officers.  On June 30, 2025, we issued 350,751 shares of our common at $0.21 per share in lieu of $70,000 of accrued and unpaid obligations to two officers. On March 31, 2025, we issued 11,250 shares of our common at $0.28 per share in lieu of $3,000 of accrued and unpaid obligations to an officer.

On  September 30, 2024, an officer agreed to convert an aggregate $9,000 of accrued and unpaid salary into 41,087 shares of our common stock at $0.23 per share.  There were no shares of our common stock issued in exchange for unpaid salary during the three months ended  June 30, 2024, or  March 31, 2024.

Payment of Consultant and Vendor Fees

During the three months ended  September 30, 2025, we issued 147,059 shares of our common at $0.17 per share in lieu of $25,000 of accrued and unpaid obligations to consultants and vendors. On June 30, 2025, we issued 564,252 shares of our common at $0.21 per share in lieu of $143,000 of accrued and unpaid obligations to consultants and vendors. During the three months ended  March 31, 2025, we issued 209,080 shares of our common at $0.28 per share in lieu of $58,000 of accrued and unpaid obligations to consultants and vendors.

On  September 30, 2024, we issued 219,816 shares of our common stock at $0.23 per share in lieu of $54,000 of accrued and unpaid obligations to consultants and vendors. On   June 30, 2024, we issued 446,989 shares of our common stock at $0.26 per share in lieu of $116,000 of accrued and unpaid obligations to consultants and vendors. On   March 31, 2024, we issued 288,997 shares of our common stock at $0.35 per share in lieu of $83,000 of accrued and unpaid obligations to consultants and vendors.

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, 2025, we recorded an aggregate $844,000 and $1,951,000, and during the three and nine months ended September 30, 2024, we recorded an aggregate $237,000, and $1,264,000, in selling general and administrative expense related to the issuance of stock options. We issued options through our 2024 Equity Incentive Plan, our 2018 Equity Incentive Plan, and outside of these plans. Included in these totals is option expense related to issuances by our subsidiary, Clyra Medical, totaling $193,000 and $599,000 in the three and nine months ended September 30, 2025, and $43,000 and $165,000 in the three and nine months ended September 30, 2024. (See Note 8.)

2024 Equity Incentive Plan

On June 13, 2024, our stockholders adopted the BioLargo 2024 Equity Incentive Plan (“2024 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 13, 2034. 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 number of shares available to be issued under the 2024 Plan increases automatically on January 1 of each year by the lesser of (a) 2 million shares, or (b) such number of shares determined by our Board. As of September 30, 2025, 42,000,000 shares are authorized under the plan, and 27,520,544 remain available for grant.

Activity for our stock options under the 2024 Plan during the nine months ended September 30, 2025, and 2024, is as follows:

	Options outstanding			Weighted average price per share		Weighted average remaining life		Aggregate intrinsic Value(1)
Balance, December 31, 2023		—		$	—
Granted		3,482,270		$	0.25
Balance, September 30, 2024		3,482,270		$	0.25		9.9
Unvested		(1,261,982	)	$	0.24
Vested Balance, September 30, 2024		2,220,288		$	0.25		9.9
Balance, December 31, 2024		5,493,920		$	0.23
Granted		8,985,536		$	0.21
Balance, September 30, 2025		14,479,456		$	0.21		9.2	$	—
Unvested		(4,443,293	)	$	0.21
Vested balance, September 30, 2025		10,036,163		$	0.22		9.2	$	—

(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2025.

The options granted to purchase 8,985,536 shares during the nine months ended September 30, 2025 with an aggregate fair value of $1,577,000 were issued to board of directors, employees and consultants: (i) we issued options to purchase 1,241,688 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 $235,000; (ii) we issued options to purchase 4,907,811 shares of our common stock to employees as part of employee retention plans; the fair value of employee retention plan options totaled $793,000 and vest over time or based on performance metrics; (iii) we issued options to purchase 2,536,037 shares of our common stock to consultants in lieu of cash for expiring options and for services performed; the fair value of these options totaled $482,000 and (iv) we issued options to purchase 300,000 shares of our common stock to our Chief Financial Officer with a fair value of $67,000 for expiring options. All stock option expense is recorded on our condensed consolidated statement of operations as selling, general and administrative expense.

As of September 30, 2025, there remains $735,000 of stock option expense to be expensed over the next four years.

The options granted to purchase 3,482,270 shares during the nine months ended  September 30, 2024 with an aggregate fair value of $782,000 were issued to board of directors, employees and consultants: (i) we issued options to purchase 771,180 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 $171,000; (ii) we issued options to purchase 1,013,474 shares of our common stock to employees as part of employee retention plans; the fair value of employee retention plan options totaled $154,000 and vest over time or based on performance metrics; (iii) we issued options to purchase 697,616 shares of our common stock to consultants in lieu of cash for expiring options and for services performed; the fair value of these options totaled $223,000 and (iv) we issued options to purchase 1,000,000 shares of our common stock to our Chief Financial Officer with a fair value of $234,000 for expiring options. All stock option expense is recorded on our condensed consolidated statement of operations as selling, general and administrative expense.

Extension of Agreement with Chief Financial Officer

On  January 31, 2025, the Engagement Agreement with our Chief Financial Officer Charles K. Dargan, II automatically extended for a one-year period to expire January 31, 2026 (the “2025-26 Term”). As the sole compensation for the 2025-26 Term, Mr. Dargan was issued an option (“Option”) to purchase 300,000 shares of the Company’s common stock. The Option vests over the period of the extended term in monthly installments of 25,000 shares, so long as the agreement is in full force and effect. The Option is exercisable at $0.2536 per share, the closing price of BioLargo’s common stock on the last trading day of January 2025, expires ten years from the grant date, and was issued pursuant to the Company’s 2024 Equity Incentive Plan.

On  August 13, 2024, we and our Chief Financial Officer Charles K. Dargan, II agreed to extend the term of his 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 our Chief Financial Officer. The Engagement Extension Agreement dated as  August 13, 2024 (the “Engagement Extension Agreement”) expired  January 31, 2025 (the “Extended Term”), at which time the agreement will automatically renew for subsequent one-year periods. As the sole compensation for the Extended Term, Mr. Dargan was issued an option (“Option”) to purchase 300,000 shares of the Company’s common stock. The Option vests over the period of the Extended Term in monthly installments of 25,000 shares, so long as the agreement is in full force and effect. The Option is exercisable at $0.24 per share, the closing price of BioLargo’s common stock on the  August 13, 2024 grant date, expires ten years from the grant date, and was issued pursuant to the Company’s 2024 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. Upon each renewal of the agreement, Mr. Dargan will be issued an option to purchase 300,000 shares, at an exercise price equal to the closing price of the Company's common stock on the prior business day, vesting over one year.

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 of June 30, 2024, the 2018 Plan closed to further stock option grants.  The 2018 Plan closed with 9,343,614 shares unissued.

Activity for our stock options under the 2018 Plan during the nine months ended September 30, 2025, and 2024, is as follows:

	Options outstanding			Weighted average price per share		Weighted average remaining life		Aggregate intrinsic Value(1)
Balance, December 31, 2023		41,108,448		$	0.19
Granted		1,547,938		$	0.30
Exercised		(485,000	)	$	0.15
Balance, September 30, 2024		42,171,386		$	0.19		7.0
Unvested		(3,623,430	)	$	0.22
Vested Balance, September 30, 2024		38,547,956		$	0.19		6.3
Balance, December 31, 2024		42,171,386		$	0.19
Exercised		(566,951	)	$	0.16
Balance, September 30, 2025		41,604,435		$	0.19		6.1	$	279,000
Unvested		(1,946,350	)	$	0.23
Vested balance, September 30, 2025		39,658,085		$	0.19		6.0	$	279,000

(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2025

During the nine months ended September 30, 2025, an option holder elected to exercise 566,951 options using the cashless exercise option in exchange for 265,800 shares of our common stock.

As of September 30, 2025, there remains $382,000 of stock option expense to be expensed over the next two years.

The options granted to purchase 1,547,938 shares during the nine months ended  September 30, 2024 with an aggregate fair value of $418,000 were issued to board of directors, employees and consultants: (i) we issued options to purchase 267,746 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 $85,000; (ii) we issued options to purchase 735,351 shares of our common stock to employees as part of employee retention plans; the fair value of employee retention plan options totaled $160,000 and vest over time or based on performance metrics; and (iii) we issued options to purchase 544,841 shares of our common stock to replace expiring options; the fair value of these options totaled $173,000.  All stock option expense is recorded on our consolidated statement of operations as selling, general and administrative expense.

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, 2025 and 2024 is as follows:

	Options Outstanding			Weighted average price per share		Weighted average remaining life		Aggregate intrinsic Value(1)
Balance, December 31, 2023		1,564,085		$	0.61
Expired		(406,585	)	$	0.61
Balance, September 30, 2024		1,157,500		$	0.61		1.3
Balance, December 31, 2024		1,157,500		$	0.53
Expired		(777,500	)	$	0.48
Balance, September 30, 2025		380,000		$	0.63		1.3	$	—

⁽¹⁾ – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2025.

Non-Plan Options

Activity of our non-plan stock options issued for the nine months ended September 30, 2025 and 2024 is as follows:

	Non-plan Options outstanding			Weighted average price per share		Weighted average remaining life		Aggregate intrinsic Value(1)
Balance, December 31, 2023		17,375,044		$	0.39
Granted		85,251		$	0.23
Expired		(865,199	)	$	0.51
Exercised		(463,882	)	$	0.17
Balance, September 30, 2024		16,131,214		$	0.39		2.6
Unvested		(437,500	)	$	0.45
Vested Balance, September 30, 2024		15,693,714		$	0.39		2.3
Balance, December 31, 2024		15,687,642		$	0.40
Granted		32,143		$	0.28
Expired		(1,793,434	)	$	0.39
Balance, September 30, 2025		13,926,351		$	0.40		2.1	$	22,000
Unvested		(218,750	)	$	0.44
Vested balance, September 30, 2025		13,707,601		$	0.39		2.1	$	22,000

(1) – Aggregate intrinsic value based on closing common stock price of $0.17 at September 30, 2025.

During the nine months ended September 30, 2025, we issued options to purchase an aggregate 32,143 shares of our common stock at $0.28 per share to vendors for fees for services.  The fair value of the options issued totaled an aggregate $8,000 and is recorded in our selling, general and administrative expense.  As of September 30, 2025, there remains $55,000 of stock option expense to be expensed over the next one year.

During the nine months ended  September 30, 2024, we issued options to purchase an aggregate 85,251 shares of our common stock to vendors for fees for services.  The fair value of the options issued totaled an aggregate $18,000 and is recorded in our selling, general and administrative expense. 

During the nine months ended  September 30, 2024, investors exercised stock options and we received $153,000 of proceeds and issued 463,882 shares of our common stock.