Note

Debt Obligations

The following table summarizes our debt obligations outstanding as of

December 31, 2017

and

March 31, 2018.

	December 31, 201 7		March 31, 201 8
C urrent liabilities
Convertible notes payable
One-year convertible notes, mature July 18, 2018	$	280,000	$	280,000
Convertible notes, mature June 1, 2018		4,468,847		4,468,847
Nine-month convertible note, matures September 18, 2018		500,000		500,000
Nine-month convertible note, matures October 16, 2018		—		150,000
Total convertible notes payable	$	5,248,847	$	5,398,847

L ong-term liabilities :
Line of credit, matures September 1, 2019	$	—	$	390,000
Convertible notes payable
Convertible note, matures July 20, 2019		440,000		440,000
Convertible notes, mature June 17, 2019		283,571		283,571
Convertible notes, mature December 31, 2019		292,000		292,000
Convertible note, matures March 8, 2020		—		50,000
Convertible notes, mature June 20, 2020		523,700		603,700
Convertible notes, mature April 20, 2021		—		100,000
Total convertible notes payable	$	1,539,271	$	1,769,271

Total	$	6,788,118	$	7,558,118

For the

three

months ended

March 31, 2017

and

2018,

we recorded

$953,636

and

$832,408

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

Subsequent to

March 31, 2018,

holders of notes representing

$4,133,738

in the above table agreed to convert their notes prior to maturity (see Note

See our Annual Report on Form

-K for the year ended

December 31, 2017,

for a complete description of the debt obligations set forth in the above table. The following describes changes to the debt obligations for the

three

months ended

March 31, 2018.

FirstFire Global Opportunity Fund Investment (matures

October 16, 2018)

January 16, 2018,

we entered into a securities purchase agreement (the “FirstFire Purchase Agreement”) and a registration rights agreement (the “FirstFire RRA”) with FirstFire Global Opportunity Fund, LLC (“FirstFire”), and issued a convertible promissory note (the “FirstFire Note”) in the aggregate principal amount of

$150,000

annual interest, which is convertible into shares of common stock of the Company at

$0.394

per share, subject to the terms, and certain limitations and conditions set forth in the FirstFire Purchase Agreement and FirstFire Note. FirstFire

may

convert the FirstFire Note at any time. The Company

may

require the conversion of the FirstFire Note in the event the Company’s common stock has traded at a price per share of

$0.75

or above for the

ten

trading days immediately preceding the mandatory conversion, and the shares underlying the conversion are subject to an effective registration statement filed with the SEC. The FirstFire Note matures on

October 16, 2018.

Pursuant to the FirstFire Purchase Agreement, the Company issued

75,000

shares of common stock to FirstFire as a commitment fee (the “FirstFire Commitment Shares”) at

$0.39

per share and

$29,250

is recorded as a discount on convertible notes and will amortize to interest expense over the term of the note.

Under the Note and FirstFire Purchase Agreement, the Company has reserved

394,949

shares of common stock for issuance upon conversion of the Note. Pursuant to the FirstFire RRA, the Company agreed to file a registration statement with the SEC registering all shares of common stock into which the FirstFire Note is convertible, and the FirstFire Commitment Shares. The FirstFire Purchase Agreement allows for an adjustment to the number of FirstFire Commitment Shares in the event the closing price of our common stock, on the earlier of the date the registration statement is deemed effective and

trading days following the

six

-month anniversary of the FirstFire Note, is lower than the closing price on

January 16, 2018 (

which was

$0.39

). In such event, additional shares would be issued to FirstFire such that the aggregate FirstFire Commitment Shares issued have the same value as the shares issued on

January 16, 2018.

Pursuant to the requirements set forth in the registration rights agreements, we filed a registration statement with the SEC which was deemed effective as of

February 8, 2018.

February 8, 2018,

our common stock last traded at

$0.3147

per share. Because the last traded price of our common stock on the date the registration statement was deemed effective was less than the price of our common stock on the dates of the FirstFire Purchase Agreements, at their option, we are required to issue additional “commitment shares”. FirstFire exercised that right, and we issued

36,536

additional shares of our common stock and

$11,498

is recorded as additional discount on convertible notes and will amortize to interest expense over the term of the note.

FirstFire represented to the Company, among other things, that it was an “accredited investor” (as such term is defined in Rule

501

(a) of Regulation D under the Securities Act of

1933,

as amended). The FirstFire Note, FirstFire Purchase Agreement, and the FirstFire RRA contain customary representations, warranties, agreements and conditions including indemnification rights and obligations of the parties. The FirstFire Note contains a price protection provision such that if we issue a security with any term more favorable to the holder of such security that was

not

similarly provided in the FirstFire Note, then the Company shall notify FirstFire of such additional or more favorable term and such term, at its option, shall become a part of the FirstFire Note.

Line of credit, matures

September 1, 2019

March 1, 2018,

we received

$390,000

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

18%

per annum, for which we have pledged our inventory and accounts receivable as collateral. Interest is paid quarterly, and, at the option of the holder, payable in either (i) cash, (ii) our common stock, calculated based on the

-day average closing price, or (iii) options to purchase our common stock, priced at the

-day average closing price, the number of shares doubled, and expiring

years from the date of grant. The holder of the line of credit has the right to call due the outstanding principal amount on

-days’ notice at any time after

September 1, 2019.

Each investor, for

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

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

one

warrant share for each dollar invested).

Two-Year Convertible Note, matures

July 20, 2019

July 20, 2017,

the Company accepted

$400,000

and issued a promissory note with a

10%

original issue discount in the principal amount of

$440,000,

matures

July 20, 2019

and accrues interest at

12%.

The note originally provided that interest was to be paid quarterly beginning

October 1, 2017,

in either cash, common stock, or an option to purchase common stock, in the holder’s discretion. On

January 25, 2018,

the interest provisions in the note were modified such that the

12%

annual simple interest is due at maturity.

At maturity, the principal amount of the note and any accrued and unpaid interest automatically converts, at the holder’s option, into either BioLargo common shares at

$0.42

per share,

2,000

shares of Clyra Medical Technologies common stock held by BioLargo, or any combination thereof. The fair value of the beneficial conversion feature resulted in a

$171,429

recorded on our consolidated balance sheet as a discount on convertible notes payable, net of current portion. The discount will be amortized monthly as interest expense through

July 20, 2019.

Note payable, matures

March 8, 2020

March 8, 2018,

we received

$50,000

and entered into a note payable. The note is due on upon demand from the noteholder, with

sixty

days’ notice. The demand

may

not

be made before

June 30, 2018,

and in the absence of the demand, the maturity date is

March 8, 2023.

In lieu of interest, we issued the note holder a warrant to purchase

150,000

shares of our common stock at an exercise price of

$0.35.

The warrant expires

February 28, 2023.

The shares available for purchase vest in increments of

6,250

shares per month. (See Note

)

Convertible Notes, mature

June 20, 2020 (

Summer

2017

Unit Offering)

May 24, 2017,

we commenced a private securities offering (titled the “Summer

2017

Unit Offering”) which offered the sale of

$1,500,000

of “Units,” each Unit consisting of a convertible promissory note and stock purchase warrant. Concurrently, we issued Pricing Supplement

No.

setting the initial unit/conversion price at

$0.42

per share, and the initial warrant exercise price at

$0.65

per share. The promissory notes issued to investors mature

June 20, 2020,

and bear interest at the rate of

12%

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

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

may

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

may

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

ten

consecutive trading days at or above

three

times the Unit price.

In addition to the convertible promissory note, each investor received a warrant allowing for the purchase of the number of shares of BioLargo common stock equal to the investment amount divided by the unit/conversion price (e.g.,

one

warrant share for each share of common stock which the investor is eligible to receive through conversion of the note). (See Note

) The warrants expire on

June 20, 2022.

The Company

may

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

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

consecutive trading days at or above

two

times the exercise price.

Through

December 31, 2017,

we had received

$523,700

in investments in the Summer

2017

Unit Offering, from

ten

accredited investors, all pursuant to Pricing Supplement

No.

investments were received pursuant to a

second

pricing supplement issued on

December 11, 2017,

setting the unit price at

$0.394

per share. On

February 22, 2018,

we issued Pricing Supplement

No.

setting the Unit price to

$0.30

and the warrant exercise price at

$0.48.

During the

three

months ended

March 31, 2018,

we received

$80,000

in investments from

two

accredited investors pursuant to this

third

pricing supplement. The offering was terminated at the conclusion of processing these

two

investments.

The offering documents assured the investors that in the event a subsequent pricing supplement offered a lower conversion or exercise price, prior investors would be given those favorable terms. Because we issued a

third

pricing supplement lowering the Unit price to

$0.30

per share, the unit price for the prior investors was lowered to

$0.30.

As a result, the number of warrant shares available for purchase by each investor increased. (See Note

)

Subsequent to

March 31, 2018,

holders of

$478,700

of Summer

2017

Offering notes elected to accept the Company’s offer of incentive shares to convert these notes prior to maturity (see Note

Convertible Notes, mature

April 20, 2021 (

Spring

2018

Unit Offering)

March 1, 2018,

we commenced a private securities offering (titled the “Spring

2018

Unit Offering”) which offered the sale of

$1,500,000

of “Units,” each Unit consisting of a convertible promissory note and stock purchase warrant. Concurrently, we issued Pricing Supplement

No.

setting the initial unit/conversion price at

$0.30

per share, and the initial warrant exercise price at

$0.48

per share. The promissory notes issued to investors mature

April 20, 2021,

and bear interest at the rate of

12%

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

may

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

may

ten

consecutive trading days at or above

three

times the Unit price.

In addition to the convertible promissory note, each investor will receive a warrant allowing for the purchase of the number of shares of BioLargo common stock equal to the investment amount divided by the unit/conversion price (e.g.,

one

warrant share for each share of common stock which the investor is eligible to receive through conversion of the note). (See Note

)

Through

March 31, 2018,

we had received

one

investment for

$100,000

in this offering, and issued a warrant to purchase

333,333

shares. This investment was received from an entity owned/controlled by a member of our board of directors.