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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its majority owned subsidiaries, and Clyra. Management believes Clyra’s financial statements are appropriately consolidated with that of the Company after reviewing the guidance of ASC Topic

810,

“Consolidation” and because the Company is Clyra’s largest shareholder, owning

46.3%

of its outstanding voting stock at

March 31, 2018,

and

two

members of BioLargo’s board of directors are

two

three

members of Clyra’s board of directors (see Note

). All intercompany accounts and transactions have been eliminated.

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.

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. 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.

Our cash balances were made up of the following:

	DECEMBER 31, 201 7		March 3 1 , 201 8
BioLargo, Inc. and wholly owned subsidiaries	$	461,914	$	574,106
Clyra Medical Technologies, Inc.		528,543		347,836
Total	$	990,457	$	921,942

Receivables, Policy [Policy Text Block]

Accounts Receivable

Trade accounts receivable are recorded net of allowances for doubtful accounts. Estimates for allowances for doubtful accounts are determined based on payment history and individual customer circumstances. The allowance for doubtful accounts as of

December 31, 2017

and

March 31, 2018

was

$2,500,

respectively.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Credit Concentration

The Company had

three

customers during the

three

months ended

March 31, 2017

and

2018

that each accounted for more than

10%

of consolidated revenues in the respective periods as follows:

	March 31, 2017			March 31, 2018
Customer A		28	%		39	%
Customer B		17	%		<10	%
Customer C		12	%		<10	%
Customer D		<10	%		18	%
Customer E		<10	%		18	%

The Company had

five

customers that accounted for more than

10%

of consolidated accounts receivable at

December

31,

2017

and

three

customers at

March 31, 2018

as follows:

	December 31, 2017			March 31, 201 8
Customer A		12	%		23	%
Customer B		19	%		<10	%
Customer C		12	%		<10	%
Customer D		10	%		<10	%
Customer E		10	%		<10	%
Customer F		<10	%		13	%
Customer G		<10	%		11	%

Inventory, Policy [Policy Text Block]

Inventory

Inventories are stated at the lower of cost or net realizable value using the average cost method. Inventories consisted of:

	DECEMBER 31, 2017		MARCH 31, 2018
Raw material	$	34,104	$	48,211
Finished goods		19,869		8,594
Total	$	53,973	$	56,805

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, deemed dividends, allowance for bad debt, asset depreciation and amortization, 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 consolidated financial statements.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Share-based Payments

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 options model.

For equity instruments issued and outstanding where performance is

not

complete, but the instrument has been recorded, those instruments are measured again at their then current fair market values at each of the reporting dates (they are “marked-to market”) until the performance and the contract are complete.

Warrant Policy [Policy Text Block]

Warrants

The Unit Offerings of our convertible promissory note and a Series A stock purchase warrant 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, 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.

The convertible note is recorded at its 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. Further, the convertible promissory note is examined for any intrinsic beneficial conversion feature (“BCF”) of which the convertible price of the note is less than the closing stock price on date of issuance. If the relative fair value method is used to value the convertible promissory note and there is an intrinsic BCF, a further analysis is undertaken of the BCF using an effective conversion price which assumes the conversion price is the relative fair value divided by the number of shares the convertible debt is converted into by its terms. The adjusted BCF value is accounted for as equity.

The warrant and BCF relative fair values are also recorded as a discount to the convertible promissory notes. As present, these equity features of the convertible promissory notes have recorded a discount to the convertible notes that is substantially equal to the proceeds received.

Non Cash Transactions [Policy Text Block]

Non-Cash Transactions

We have established a policy relative to the methodology to determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock. The value is 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, Policy [Policy Text Block]

Revenue Recognition

We adopted ASU

2014

09,

“Revenue from Contracts with Customers”, Topic

606,

as of

December 15, 2017

and applied for the fiscal year starting

January 1, 2018.

The guidance focuses on the core principle for revenue recognition.

The core principle of the guidance 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, an entity should apply the following steps:

Step

Identify the contract(s) with a customer.

Step

Identify the performance obligations in the contract.

Step

Determine the transaction price.

Step

Allocate the transaction price to the performance obligations in the contract.

Step

Recognize revenue when (or as) the entity satisfies a performance obligation.

We have revenue from

two

subsidiaries, Odor-

-More and BLEST. Odor-

-More identifies its contract with the customer through a purchase order whether in writing or verbal, 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. Odor-

-More recognizes revenue when the order for its goods are shipped, wither FOB warehouse of FOB destination, depending on the customer’s choice of title transfer. Revenue is recognized with a reduction for sales discounts, as appropriate and negotiated in the customer’s purchase order.

BLEST, identifies services to be performed in a written contract, which specifies the performance obligations and the rate at which the services will be billed. Each service is separately negotiated and priced. Revenue is recognized when services are performed and completed. BLEST bills time and materials for the services it provides. To date, there have been

discounts or other financing terms for the contracts.

We also

may

generate revenues from royalties and license fees from our intellectual property. In the event we do so, we anticipate a licensee would 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. Upon entering into a licensing agreement, we will determine the appropriate method of recognizing the royalty and license fees.

Government Grants [Policy Text Block]

Government Grants

We have been awarded multiple research grants from the Canadian National Research Institute – Industrial Research Assistance Program (NRC-IRAP) and the National Science and Engineering Research Council of Canada (NSERC). The grants received are considered other income and are included in our consolidated statements of operations. We received our

first

grant in

2015

and have been awarded over

grants totaling approximately

$1,600,000.

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

six

and

eighteen

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

assurance can be made that any pending grant application, or any future grant applications, will be awarded.

Segment Reporting, Policy [Policy Text Block]

Business

egment

nformation

2017,

the Company operated with

three

business segments - Odor-

-More, Clyra, and BioLargo/other. In

2018,

the Company determined that it operates a

fourth

business segment – BLEST, based on the manner in which the chief operating decision maker now manages the engineering division, including resource allocation and performance assessment.

Odor-

-More is engaged in developing and selling products using the BioLargo technology. Clyra is engaged in developing medical products using the BioLargo technology, with an emphasis in advanced wound care. BLEST is engaged in providing professional engineering services. BioLargo/Other includes certain functional roles that do

not

engage in revenue generating activities, such as corporate operations and oversight, research and development, and general corporate and administrative functions, including finance, human resources, marketing and legal.

The segment information for the

three

months ended

March 31, 2018,

is as follows:

	Odor - No - More			Clyra			BLEST			BioLargo / Other			Total
Revenues	$	224,397		$	—		$	38,632		$	—		$	263,029
Cost of goods/services		(134,464	)		—			(28,728	)		—			(163,192	)
Depreciation and amortization		4,093			—			6,230			—			10,323
Interest expense		—			—			—			832,408			832,408
Expenditures for assets		—			—			18,753			—			18,753
Equipment, net of depreciation		42,299			—			74,996			—			117,295
Net loss		(200,000	)		(198,721	)		(46,387	)		(1,984,460	)		(2,429,568	)
Tangible assets, net		293,997			347,836			140,722			448,542			1,231,097

The segment information for the

three

months ended

March 31, 2017,

is as follows (BLEST was

not

formed or operational during the

three

months ended

March 31, 2017,

and is thus

not

reflected in this table):

	Odor - No - More			Clyra			BioLargo / Other			Total
Revenues	$	46,017		$	—		$	—		$	46,017
Cost of goods/services		(22,530	)		—			—			(22,530	)
Depreciation and amortization		7,924			—			—			7,924
Interest expense		—			8,750			944,886			953,636
Expenditures for assets		—			—			—			—
Equipment, net of depreciation		54,121			—			—			54,121
Net loss		(175,000	)		(137,082	)		(2,013,594	)		(2,325,676	)
Tangible assets, net		180,292			268,771			1,015,039			1,464,092

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 stock options and warrants were exercised into common stock. For the

three

months ended

March 31, 2017

and

2018,

the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the anti-dilutive effect of the warrants and stock options on the Company’s net loss.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting

Pronouncements

May 2017,

the FASB issued ASU

2017

09,

“Compensation – Stock Compensation (topic

718

)”. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

718.

An entity should account for the effects of a modification unless all the following are met: (i) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified, (ii) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified and (iii) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after

December 15, 2017.

Management has analyzed the new guideline and it has

not

substantially impacted our accounting for stock compensation awards upon adoption in the current period.

March 2016,

the FASB issued Accounting Standards Update (ASU)

No.

2016

09,

“Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for share-based award transactions and adds

two

practical expedients for nonpublic entities. The new standards are effective for annual periods beginning after

December 15, 2017.

An entity that elects early adoption must adopt all the amendments in the same period. Management has analyzed the new guideline and it has

not

substantially impacted our consolidated financial statements upon adoption during the current period.

February 2016,

the FASB issued Accounting Standards Update

No.

2016

02,

“Leases”. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new guidelines will create a ROU asset and lease liability for the Company’s lease agreements in place at the time the standard goes into effect. Currently, the Company has

two

real property leases with terms longer than

months.