Note 5. Share-Based Compensation

Issuance of Common Stock in exchange for Services

Payment of Officer Salaries

On  March 31, 2026, we issued 69,444 shares of our common at $0.16 per share in lieu of $11,000 of accrued and unpaid obligations to an officer.

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. 

Payment of Consultant and Vendor Fees

On  March 31, 2026, we issued 212,963 shares of our common at $0.16 per share in lieu of $35,000 of accrued and unpaid obligations to consultants and vendors. 

On 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.

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 months ended March 31, 2026, and 2025, we recorded an aggregate $699,000 and $615,000, in selling general and administrative expense related to the issuance of stock options. We issued options through our 2024 Equity Incentive Plan, and outside of these plans. Included in these totals is option expense related to issuances by our subsidiary, Clyra Medical, totaling $413,000 and $206,000 during the three months ended March 31, 2026, and 2025. (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 March 31, 2026, 44,000,000 shares are authorized under the plan, and 24,892,531 remain available for grant.

Activity for our stock options under the 2024 Plan during the three months ended March 31, 2026, and 2025, is as follows:

(1) – Aggregate intrinsic value based on closing common stock price of $0.16 at March 31, 2026.

The options granted to purchase 2,314,455 shares during the three months ended March 31, 2026 with an aggregate fair value of $325,000 were issued to board of directors, employees and consultants: (i) we issued options to purchase 439,816 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 $61,000; (ii) we issued options to purchase 879,169 shares of our common stock to employees as part of employee retention plans; the fair value of employee retention plan options totaled $121,000 and vest over time or based on performance metrics; (iii) we issued options to purchase 695,470 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 $97,000 and (iv) we issued options to purchase 300,000 shares of our common stock to our Chief Financial Officer with a fair value of $46,000 for expiring options. All stock option expense is recorded on our condensed consolidated statement of operations as selling, general and administrative expense.

As of March 31, 2026, there remains $846,000 of stock option expense to be expensed over the next four years.

The options granted to purchase 2,024,538 shares during the three months ended  March 31, 2025, with an aggregate fair value of $491,000 were issued to board of directors, employees and consultants: (i) we issued options to purchase 334,820 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 $82,000; (ii) we issued options to purchase 809,645 shares of our common stock to employees as part of employee retention plans; the fair value of employee retention plan options totaled $199,000 and vest over time or based on performance metrics; (iii) we issued options to purchase 580,073 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 $143,000 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.

Extension of Agreement with Chief Financial Officer

On  January 31, 2026, the Engagement Agreement with our Chief Financial Officer Charles K. Dargan, II automatically extended for a one-year period to expire  January 31, 2027 (the “2026-27 Term”). As the sole compensation for the 2026-27 Term, and in accordance with his contract, 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 $0.18 per share, the closing price of BioLargo’s common stock on the last trading day of January 2026, expires ten years from the grant date, and was issued pursuant to the Company’s 2024 Equity Incentive Plan.

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 $0.25 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.

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 three months ended March 31, 2026, and 2025, is as follows:

(1) – Aggregate intrinsic value based on closing common stock price of $0.16 at March 31, 2026

During the three months ended March 31, 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 March 31, 2026, there remains $280,000 of stock option expense to be expensed over the next two years.

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 three months ended March 31, 2026 and 2025 is as follows:

⁽¹⁾ – Aggregate intrinsic value based on closing common stock price of $0.16 at March 31, 2026.

Non-Plan Options

Activity of our non-plan stock options issued for the three months ended March 31, 2026 and 2025 is as follows:

(1) – Aggregate intrinsic value based on closing common stock price of $0.16 at March 31, 2026.

There were no options issued during the three months ended March 31, 2026. 

During the three months ended  March 31, 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 March 31, 2026, there remains $39,000 of stock option expense to be expensed over the next two years.