Note 5 - Stockholders' Equity

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

Note

Stockholders’ Equity

Preferred Stock

Our certificate of incorporation authorizes our Board of Directors to issue preferred stock, from time to time, on such terms and conditions as they shall determine. As of

December

31,

2015

and

September

30,

2016

there were

outstanding shares of our preferred stock.

Common Stock

During the

nine

- months ended

September

30,

2015

and

2016,

we issued

1,252,339

and

1,776,664

shares of common stock in lieu of cash for salaries to officers, fees for service provided by consultants and to settle our accrued interest liability, resulting in a weighted - average grant date fair value of

$530,737

and

$702,743,

respectively, which is recorded in selling general and administrative expense and interest expense.

During the

three

- months ended

September

30,

2016,

we issued

1,341,301

shares of common stock per the request of noteholders’ to convert the principal balance and interest due on promissory notes totaling

$352,566.

There were

shares issued related to our

2015

Unit Offering during the

nine

- months ended

September

30,

2015.

During the

three

- months ended

September

30,

2016,

we issued

1,150,000

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

$355,000

from the exercise of stock purchase warrants. There were

shares issued for the exercise of warrants during

2015.

Share - Based Compensation

During the

nine

- months ended

September

30,

2015

and

2016,

we recorded an aggregate

$1,638,706

and

$645,808

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

2007

Equity Incentive Plan and outside of our

2007

Equity Incentive Plan.

2007

Equity Incentive Plan

August

2007,

and as amended

April

29,

2011,

our Board of Directors adopted the BioLargo, Inc.

2007

Equity Incentive Plan

(“2007

Plan”) as a means of providing our directors, key employees and consultants additional incentive to provide services. Both stock options and stock grants

may

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

may

at any time amend or terminate the plan. The term of the options

may

be up to

years.

June

20,

2016,

we recorded the issuance of options to purchase an aggregate

40,000

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

2007

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

$0.45

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

$18,000

and was recorded as selling, general and administrative expense.

March

21,

2016,

our Board of Directors extended by

five

years the expiration of options to purchase

307,777

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

March

2011.

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

March

21,

2021.

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

$119,971

of selling, general and administrative expenses.

September

30,

2015,

our Charles K. Dargan, II agreed to extend his engagement agreement dated

February

2008

(the “Engagement Agreement”, which had been previously extended multiple times), pursuant to which Mr. Dargan has been serving as our Chief Financial Officer. The Engagement Extension Agreement dated as of

September

30,

2015

(the “Engagement Extension Agreement”) provides for an additional term to expire

September

30,

2016

(the “Extended Term”), is retroactively effective to

February

2015,

and an extension is currently being negotiated. During the Extended Term, Mr. Dargan shall be compensated through the issuance of an option to purchase

300,000

shares of the Company’s common stock that vest over the term of the engagement with

120,000

shares vested as of

September

30,

2015,

and the remaining shares to vest

15,000

monthly, provided that the Engagement Extension Agreement with Mr. Dargan has not been terminated prior to each vesting date. During the

nine

- months ended

September

30,

2015

and

2016,

we recorded

$68,400

and

$76,950

of selling, general and administrative expense.

August

2015,

our board of directors extended by

five

years the expiration of options to purchase an aggregate

1,772,581

shares of our common stock issued to consultants, vendors and employees in

August

2010.

The options were originally issued in exchange for accrued and unpaid amounts owed to the individuals, at an exercise price of

$0.30

and now expire

August

2020.

Fair value of the option totaled

$620,403

of additional selling, general and administrative expenses.

June

24,

2015,

we recorded the issuance of options to purchase an aggregate

40,000

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

2007

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

$0.38

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

$15,200

and was recorded as selling, general and administrative expense.

June

24,

2015,

our board of directors extended by

five

years the expiration of an option to purchase

200,000

shares of our common stock issued to our Chief Science Officer in

February

2010.

The option was issued in exchange for unpaid salary obligation at an exercise price of

$0.575

and now expires

February

2020.

Fair value of the option totaled

$68,000

of additional selling, general and administrative expenses.

April

20,

2015,

we issued an option to purchase

700,000

shares of our common stock to a consultant. The option vests ratably over

two

years, expires

ten

years from the date of issuance, and is exercisable at

$0.40

per share. The price of our common stock on the grant date was

$0.34

per share. The fair value of this option totaled

$238,000

and is being expensed as selling, general and administrative expense over the vesting period. During the

nine

- months ended

September

30,

2015

and

2016,

we recorded

$49,550

and

$79,280

of selling, general and administrative expense. This contract ended

August

2016

and the remaining unvested

262,500

options were cancelled.

Activity for our stock options under the

2007

Plan for the

nine

- months ended

September

30,

2015

and

2016

is as follows:

									Weighted
Balance, September 30, 2015:						Exercise			Average
	Options		Shares			Price			Price per
	Outstanding		Available			per share			share
Balances as of December 31, 2014		8,601,086		3,398,914		$0.23	–	1.89	$	0.44
Granted		1,040,000		(1,040,000	)	0.30	–	0.58		0.35
Plan classification		600,000		(600,000	)	0.30	–	0.60		0.33
Balance, September 30, 2015		10,241,086		2,158,914		$0.23	–	1.89	$	0.43

										Weighted
							Exercise			Average
Balance, September 30, 2016:	Options			Shares			Price			Price per
	Outstanding			Available			per share			share
Balances as of December 31, 2015		10,241,086			1,758,914		$0.22	–	1.89	$	0.44
Granted		40,000			(40,000	)		0.45			0.45
Cancelled		(262,500	)		262,500			0.40			0.40
Balance, September 30, 2016		10,018,586			1,981,414		$0.22	–	1.89	$	0.46

Options issued Outside of the

2007

Equity Incentive Plan

During the

nine

- months ended

September

30,

2016,

we issued options to purchase

906,973

shares of our common stock at exercise prices ranging between

$0.33

–

$0.76

per share to vendors and to our members of our board of directors, in lieu of

266,504

in accrued and unpaid fees. The weighted - average fair value of these options totaled

$329,607

and is recorded as selling, general and administrative expenses.

During the

nine

- months ended

September

30,

2015,

we issued options to purchase

1,893,434

shares of our common stock at exercise prices ranging between

$0.33

–

$0.36

per share to vendors and to our members of our board of directors, in lieu of

$398,150

in accrued and unpaid fees. The weighted - average fair value of these options totaled

$808,615

and is recorded as selling, general and administrative expenses.

The grant - date fair value of the previously issued options that vested during the

nine

- months ended

September

30,

2015

and

2016

was

$77,028

and

$39,100,

respectively.

Activity of our stock options issued outside of the

2007

Plan for the

nine

- months ended

September

30,

2015

and

2016

is as follows:

Balance, September 30, 2015:							Weighted
	Options			Exercise			Average
	Outstanding			Price per share			Price per share
Balance, December 31, 2014		17,965,291		$0.18	–	1.00	$	0.40
Granted		1,893,434		0.34	–	0.36		0.35
Expired		(46,250	)		0.30			0.30
Plan classification		(600,000	)	0.30	–	0.63		0.33
Balance, September 30, 2015		19,212,474		$0.18	–	1.00	$	0.44

							Weighted
Balance, September 30, 2016:	Options			Exercise			Average
	Outstanding			Price per share			Price per share
Balance, December 31, 2015		19,394,975		$0.18	–	1.00	$	0.40
Granted		906,973		0.33	–	0.76	$	0.48
Exercised		(60,000	)		0.25			0.25
Balance, September 30, 2016		20,241,948		$0.18	–	1.00	$	0.41

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. Share - based compensation expense is based on the grant date fair value estimated using the Black - Scholes Option Pricing Model. The following methodology and assumptions were used to calculate share based compensation for the

nine

- months ended

September

30:

	2015						2016
	Non Plan			2007 Plan			Non Plan			2007 Plan
Risk free interest rate	1.83	–	2.33%	1.60	–	2.38%	1.77	–	2.27%	1.36	–	1.77%
Expected volatility	794	–	821%	322	–	807%	641	–	738%	315	–	641%
Expected dividend yield		–			–			–			–
Forfeiture rate		–			–			–			–
Life in years		7		3	–	7		7			5

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

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

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

zero.

Note

Stock - Based Compensation and Other Employee Benefit Plans

During the years ended

December

31,

2014

and

2015,

we recorded an aggregate

$871,788

and

$1,831,313

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

2007

Equity Incentive Plan and outside of our

2007

Equity Incentive Plan.

September

22,

2015,

we issued

150,000

shares of our common stock to the president of our Canadian subsidiary, BioLargo Water, for services performed. The stock price on the grant date was

$0.65

resulting in

$97,500

of selling, general and administrative expense.

BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2007

Equity Incentive Plan

August

2007,

and as amended

April

29,

2011,

our Board of Directors adopted the BioLargo, Inc.

2007

Equity Incentive Plan

(“2007

Plan”) as a means of providing our directors, key employees and consultants additional incentive to provide services. Both stock options and stock grants

may

at any time amend or terminate the plan.

Options issued pursuant to our

2007

Equity Incentive Plan during the year ended

December

31,

2015:

Date		Term		Option Shares		Exercise price		Stock price on grant date		Fair Value		Expense
June 24, 2015	(1)		10		40,000	$	0.38	$	0.38	$	15,200	$	15,200
April 20, 2015	(2)		10		700,000		0.40		0.34		238,000		59,460
September 30, 2015	(3)		10		300,000		0.57		0.57		171,000		68,400
Totals					1,040,000					$	424,200	$	143,060

(1)

We recorded the issuance of options to purchase an aggregate

40,000

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

2007

Equity Plan which calls for an annual automatic issuance.

(2)

We issued an option to purchase shares of our common stock to a consultant. The option vests ratably over

twenty

four

months.

(3)

September

30,

2015,

our Charles K. Dargan, II agreed to extend his engagement agreement dated

February

2008

September

30,

2015

(the “Engagement Extension Agreement”) provides for an additional term to expire

September

30,

2016

(the “Extended Term”), and is retroactively effective to

February

2015.

During the Extended Term, Mr. Dargan shall be compensated through the issuance of an option to purchase

300,000

shares of the Company’s common stock that vest over the term of the engagement with

120,000

shares vested as of

September

30,

2015,

and the remaining shares to vest

15,000

monthly, provided that the Engagement Extension Agreement with Mr. Dargan has not been terminated prior to each vesting date.

In addition to the foregoing, on

June

24,

2015,

our Board of Directors extended by

five

years the expiration of an option to purchase

200,000

shares of our common stock issued to our Chief Science Officer in

February

2010.

The option was originally issued in exchange for unpaid salary obligation at an exercise price of

$0.575

and now expires

February

2020.

The fair value of the options resulted in an additional

$68,000

of selling, general and administrative expenses.

June

24,

2015,

our board of directors extended by

five

years the expiration of options to purchase an aggregate

1,772,581

shares of our common stock issued to consultants, vendors and employees in

August

2010.

The options were originally issued in exchange for accrued and unpaid amounts owed to the individuals, at an exercise price of

$0.30

and now expire

August

2020.

Fair value of the options resulted in an additional

$620,403

of selling, general and administrative expenses.

BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Options issued pursuant to our

2007

Equity Incentive Plan during the year ended

December

31,

2014:

Date		Term		Option Shares		Exercise Price		Stock Price on grant date		Fair Value		Expense
June 23, 2014	(1)		10		40,000	$	0.63	$	0.63	$	25,200	$	25,200
June 23, 2014	(2)		10		300,000		0.63		0.63		189,000		141,000
				$	340,000					$	214,250	$	166,200

(1)

We recorded the issuance of options to purchase an aggregate

40,000

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

2007

Equity Plan which calls for an annual automatic issuance.

(2)

BioLargo, Inc. (the “Company”) and its Chief Financial Officer Charles K. Dargan, II formally agreed to extend the engagement agreement dated

February

2008

(the “Engagement Agreement”, which had been previously extended multiple times), pursuant to which Mr. Dargan has been serving as the Company’s Chief Financial Officer. The Engagement Extension Agreement dated as of

June

23,

2014

(the “Engagement Extension Agreement”) provides for an additional term to expire

January

31,

2015

(the “Extended Term”), and is retroactively effective to

February

2014.

During the Extended Term, Mr. Dargan shall be compensated through the issuance of an option to purchase shares of the Company’s common stock which vest over the term of the engagement with

100,000

shares vested as of

June

23,

2014,

and the remaining shares vest

25,000

monthly through

January

31,

2015.

Activity for our stock options under the

2007

Plan for the years ended

December

31,

2014

and

2015

is as follows:

									Weighted
									Average
	Options		Shares						Price per
	Outstanding		Available			Price per share			share
Balances as of December 31, 2013		8,561,086		3,438,914		$0.25	–	$1.89	$	0.44
Granted		40,000		(40,000	)		$0.28			0.28
Exercised		—		—			—			—
Expired		—		—			$—		$	—
Balances as of December 31, 2014		8,601,086		3,398,914		$0.25	–	$1.89	$	0.44
Granted		1,040,000		(1,040,000	)	$0.38	–	$0.57		0.45
Exercised		—		—			—			—
Reclassification		600,000		(600,000	)	0.30	–	0.63		0.33
Expired		—		—			—			—
Balances as of December 31, 2015		10,241,086		1,758,914		$0.25	–	$1.89	$	0.44

BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the stock options issued under the

2007

Equity Plan outstanding at

December

31,

2015.

				Weighted				Currently Exercisable
				Average		Weighted
Options				Remaining		Average		Number		Weighted
Outstanding				Contractual		Exercise		Of Shares		Average
at December 31, 2015	Exercise Price			Life		Price		December 31, 2015		Exercise Price
525,000	$0.40	-	1.89		2	$	1.06		525,000		1.06

892,135	0.28	-	0.99		3		0.51		892,135		0.51

1,010,000	0.31	-	0.70		4		0.56		1,010,000		0.56

3,429,450	0.22	-	0.57		5		0.33		3,429,450		0.33

1,989,340	0.34	-	0.51		6		0.37		1,989,340		0.37

715,161	0.28	-	0.40		7		0.36		715,161		0.36

640,000	0.30	–	0.65		8		0.48		640,000		0.48

740,000	0.38	–	0.40		9		0.40		233,333		0.40

300,000		0.57			10		0.57		165,000		0.57

10,241,086	$0.22	–	1.89		4	$	0.44		9,599,419	$	0.44

BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Options issued Outside of the

2007

Equity Incentive Plan

At our

June

2013

Board of Directors meeting, in an effort to preserve our cash and reduce outstanding payables, our Board adopted a plan to offer employees, board members, consultants and vendors the opportunity to convert outstanding payable amounts into either (i) an option to purchase common stock in lieu of cash payment at the then market price of our common stock, expiring

ten

years from the date of issuance, and containing “cashless” exercise provisions (each, an “Option”), the number of shares purchasable to be calculated based on the amount converted times

1.5,

or (ii) our common stock at market price. Options issued outside of the

2007

Equity Incentive Plan during the year ended

December

31,

2015

are (those issued pursuant to this Accounts Payable Conversion Plan are so noted):

Date		Term		Option Shares		Exercise Price		Stock Price on grant date		Fair Value		Expense
December 31, 2015	(1)		10		124,000	$	0.50	$	0.50	$	62,000	$	62,000
December 31, 2015	(2)		10		58,500		0.50		0.50		29,250		29,250
September 22, 2015	(3)		10		103,846		0.65		0.65		67,500		67,500
September 22, 2015	(4)		10		125,770		0.65		0.65		81,750		81,750
September 22, 2015	(5)		10		200,000		0.35		0.65		130,000		110,500
June 29, 2015	(6)		10		218,143		0.35		0.35		76,350		76,350
June 29, 2015	(7)		10		192,857		0.35		0.35		67,500		67,500
April 20, 2015	(8)		10		75,000		0.34		0.34		25,500		25,500
April 19, 2015	(9)		10		200,000		0.37		0.34		74,000		74,000
March 31, 2015	(10)		10		387,676		0.36		0.36		139,563		139,563
March 30, 2015	(11)		10		190,142		0.36		0.36		68,451		68,451
February 5, 2015	(12)		10		200,000		0.33		0.33		66,000		66,000
2014 and prior	(13)				__						__		74,145
Total 2015					2,075,934							$	952,509

(1)

We issued options to purchase shares of our common stock to our board of directors in lieu of

$62,000

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(2)

We issued options to purchase shares of our common stock to our vendors in lieu of

$19,500

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(3)

We issued options to purchase shares of our common stock to our board of directors in lieu of

$45,000

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(4)

We issued options to purchase shares of our common stock to vendors in lieu of

$54,500

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(5)

We issued options to purchase shares of our common stock to the president of our BioLargo Water Canada subsidiary. Of the total options issued,

140,000

vest immediately and the remaining

60,000

options vest

10,000

per month, provided that our president has not been terminated prior to each vesting date.

(6)

We issued options to purchase shares of our common stock to vendors, in lieu of

$50,900

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(7)

We issued options to purchase shares of our common stock to our members of our board of directors, in lieu of

$45,000

in accrued and unpaid fees due for their services on the board pursuant to our Accounts Payable Conversion Plan.

BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8)

We issued an option to purchase shares of our common stock to a consultant for services provided.

(9)

We issued an option to purchase shares of our common stock to

two

consultants for services provided.

(10)

We issued options to purchase shares of our common stock to

two

vendors, in lieu of

$91,750

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(11)

We issued options to purchase shares of our common stock to our members of our board of directors, in lieu of

$45,000

in accrued and unpaid fees due for their services on the board pursuant to our Accounts Payable Conversion Plan.

(12)

We issued an option to purchase

200,000

shares of our common stock to a consultant for services provided.

(13)

Expense recorded for the vesting of stock options issued in prior periods.

Options issued outside of the

2007

Equity Incentive Plan during the year ended

December

31,

2014

are:

Date		Term		Option Shares		Exercise price		Stock price on grant date		Fair Value		Expense
December 26, 2014	(1)		10		192,857	$	0.35	$	0.35	$	67,500	$	67,500
December 26, 2014	(2)		10		250,715		0.35		0.35		87,750		87,750
September 29, 2014	(3)		10		143,617		0.47		0.47		67,500		67,500
September 29, 2014	(4)		10		193,511		0.47		0.47		90,950		90,950
June 24, 2014	(5)		10		103,847		0.65		0.65		67,501		67,501
June 24, 2014	(6)		10		148,848		0.65		0.65		96,750		96,750
March 31, 2014	(7)		10		156,888		0.43		0.43		67,461		67,461
March 31, 2014	(8)		10		78,488		0.43		0.43		33,750		33,750
February 20, 2014	(9)		10		40,000		0.35		0.35		14,000		14,000
2013 and prior	(10)				__						__		40,160
Total													633,332

(1)

December

26,

2014,

we issued options to purchase

192,857

shares of our common stock at an exercise price of

$0.35

per share to our board of directors in lieu of

$45,000

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan. The fair value of the options totaled

$67,500,

resulting in

$22,500

of additional selling, general and administrative expenses.

(2)

December

26,

2014,

we issued options to purchase

250,715

shares of our common stock at an exercise price of

$0.35

per share to vendors in lieu of

$58,500

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan. The fair value of the options totaled

$87,750,

resulting in

$29,250

of additional selling, general and administrative expenses.

(3)

We issued options to purchase shares of our common stock to our board of directors in lieu of

$45,000

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(4)

We issued options to purchase shares of our common stock to vendors in lieu of

$67,500

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(5)

We issued options to purchase shares of our common stock to our board of directors in lieu of

$45,000

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6)

We issued options to purchase shares of our common stock to vendors in lieu of

$64,500

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(7)

We issued options to purchase shares of our common stock to our board of directors, in lieu of

$45,000

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(8)

We issued options to purchase shares of our common stock to a vendor, in lieu of

$22,500

in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan.

(9)

February

20,

2014,

we issued options to purchase

40,000

shares of our common stock at an exercise price of

$0.35

per share, set to expire

February

20,

2024,

and to vest over the term of the agreement. The fair value of the Options totaled

$14,000

of additional selling, general and administrative expenses.

(10)

Expense recorded for the vesting of stock options issued in prior periods.

BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Activity for our stock options issued outside of the

2007

Plan for the years ended

December

31,

2014

and

2015

is as follows:

							Weighted Average
	Options						Price per
	Outstanding			Exercise Price			share
Balances as of December 31, 2013		16,398,395		$0.18	–	$1.00	$	0.39
Granted		1,608,771		$0.25	–	0.30	$	0.50
Exercised		(41,875	)		—			—
Expired		—			—			—
Balances as of December 31, 2014		17,965,294		$0.18	–	$1.00	$	0.40
Granted		2,075,931		$0.25	–	0.65	$	0.40
Exercised		—		0.33	–	0.65		0.40
Reclassification		(600,000	)	0.30	–	0.63		0.33
Expired		(46,250	)		0.30			0.30
Balances as of December 31, 2015		19,394,975		$0.18	–	$1.00	$	0.40

The following table summarizes the stock options issued outside of the

2007

Equity Incentive Plan outstanding at

December

31,

2015.

				Weighted				Currently Exercisable
				Average		Weighted		Number of
Options				Remaining		Average		Shares at		Weighted
Outstanding at				Contractual		Exercise		December 31,		Average
December 31, 2015	Exercise Price			Life		Price		2015		Exercise Price
7,733,259		$0.18			1	$	0.18		7,733,259	$	0.18
2,400,000		0.99			1		0.99		2,400,000		0.99
691,975		0.55			3		0.55		691,975		0.55
800,000		1.00			6		1.00		483,333		1.00
168,750		0.40			7		0.40		168,750		0.40
1,456,110		0.30			7		0.30		1,456,110		0.30
3,288,246	0.25	–	0.65		8		0.28		3,288,246		0.28
1,833,518	0.33	–	0.47		9		0.40		1,833,518		0.40
1,023,112	0.35	–	0.65		10		0.40		1,013,112		0.40
19,394,972	$0.18	–	1.00		8	$	0.40		19,068,303	$	0.40

December

31,

2014

and

2015:

	2014						2015

	Non Plan			2007 Plan			Non Plan			2007 Plan
Risk free interest rate	2.25	–	2.76%		2.63	%	1.83	–	2.33%	1.60	–	2.38%
Expected volatility	837	–	935%		927	%	794	–	821%	322	–	807%
Expected dividend yield		—			—			—			—
Forfeiture rate		—			—			—			—
Expected life in years		7			7			7		3	-	7

BIOLARGO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

zero.