Note

Debt Obligations

The following table summarizes our debt obligations outstanding as of

December 31, 2017

and

September 30, 2018.

	December 31, 201 7		September 30 , 201 8
C urrent liabilities
Lines of credit, matures September 1, 2019	$	—	$	430,000
Notes payable, mature January 5, 2019		—		400,000
Convertible notes payable
Convertible notes, mature July 18, 2018		280,000		—
Convertible notes, mature June 1, 2018		4,468,847		—
Convertible note, matures December 18, 2018*		500,000		543,108
Convertible note, matures July 20, 2019		—		440,000
Total convertible notes payable	$	5,248,847	$	983,108
Total current liabilities	$	5,248,847	$	1,813,108

L ong-term liabilities :
Convertible notes, mature June 17, 2019	$	283,571	$	—
Convertible note, matures July 20, 2019		440,000		—
Convertible notes, mature December 31, 2019		292,000		75,000
Note payable, matures March 8, 2023 (or on demand 60 days’ notice)		—		50,000
Convertible notes, mature June 20, 2020		523,700		125,000
Convertible notes, mature April 20, 2021		—		100,000
Convertible notes, mature June 15, 2021		—		110,000
Total long-term liabilities	$	1,539,271	$	460,000

Total	$	6,788,118	$	2,273,108

* The original maturity date of

September 18, 2018

was extended to

December 18, 2018 (

see “

Convertible Note, matures

December 18, 2018 (

Vista Capital)

”, below)

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.

Conversion of Debt Obligations

One-year convertible notes, mature

July 18, 2018

July 2, 2018,

the holders of

two one

-year notes in the aggregate principal amount of

$280,000,

which were due to mature on

July 18, 2018,

tendered an offer to the Company to convert

100%

of the balance due on the outstanding notes into shares of our common stock in lieu of receiving cash. We accepted the offer and agreed to convert the principal balance of

$280,000

and

$8,400

outstanding interest into an aggregate

1,153,600

shares of our common stock, at

$0.25

per share.

FirstFire Investment

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 FirstFire Note was scheduled to mature on

October 16, 2018.

June 2018,

FirstFire elected to convert

$95,761

of the outstanding principal balance of the FirstFire Note and we issued

383,047

shares. On

July 15, 2018,

FirstFire elected to convert the remaining outstanding principal and interest balance of

$54,239.

We issued an aggregate

217,960

shares at

$0.25.

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.

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. As a result of our sale of common stock at

$0.25,

the conversion price of the FirstFire Note was reduced from

$0.394

$0.25.

Convertible Note, matures

December 18, 2018 (

Vista Capital)

December 18, 2017,

we received

$500,000

pursuant to a securities purchase agreement (the “Vista Purchase Agreement”) and a registration rights agreement (the “Vista RRA”) with Vista Capital Investments, LLC (“Vista Capital”), and issued a Note (the “Vista Note”) in the aggregate principal amount of

$500,000

annual interest, which was originally 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 Vista Purchase Agreement and Vista Note. The Vista Note originally matured on

September 18, 2018.

Pursuant to the Vista Purchase Agreement, the Company issued

250,000

shares of common stock to Vista Capital as a commitment fee at

$0.39

per share and

$98,500

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

Pursuant to the Vista RRA, the Company agreed to file a registration statement with the SEC registering all shares of common stock into which the Vista Note is convertible, and the

250,000

shares issued as a commitment fee. The Vista Purchase Agreement requires additional shares be issued for the commitment fee in the event the closing price of our common stock on the date the registration statement is deemed effective is lower than the closing price on

December 18, 2017, (

which was

$0.41

). In such event, additional shares would be issued such that the aggregate shares issued have the same value as the

250,000

shares issued on

December 18, 2017.

The beneficial conversion feature resulted in a

$20,305

relative fair value recorded as a discount. The discount was amortized monthly to interest expense through

September 18, 2018.

Vista Capital 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 Vista Note, Vista Purchase Agreement, and Vista RRA contain customary representations, warranties, agreements and conditions including indemnification rights and obligations of the parties. The Vista 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 Vista Note, then we shall notify Vista Capital of such additional or more favorable term and such term, at its option, shall become a part of the Vista Note. As a result of our sale of common stock at

$0.25,

the conversion price of the Vista Note was reduced from

$0.394

$0.25.

June 2018,

Vista Capital elected to convert

$52,025

of the outstanding principal and interest balance of the Vista Note and we issued

208,100

shares.

September 12, 2018,

Vista Capital agreed to extend the maturity date of this note to

December 18, 2018.

In return, we increased the principal outstanding balance by

20%

$90,518.

In addition, we issued the note holder a warrant to purchase

1,812,000

shares of our common stock at

$0.25

per share, which was fair valued using the Black Scholes Option Model at

$488,344

(see Note

). As of

September 30, 2018,

the outstanding balance on the Vista Note totaled

$543,108.

The Company reserved

2,172,432

shares of common stock for issuance upon conversion. Per the guidance of ASC

470

50,

Debt Modifications and Extinguishments, modified terms are considered substantially different, if the present value of the cash flows after modification differ by at least

10%

prior to the modification. With the increase in principal, the Vista Note met the

10%

cash flow test and therefore the Company accounted for the transaction as an extinguishment of debt. The increased principal, and the warrant fair value treated as a fee for the extension, produced a

$578,942

loss on extinguishment of the convertible debt. The new

Convertible Note is recorded at principal value with a

-day maturity.

Notes payable, mature

January 5, 2019

September 19, 2018,

we received

$400,000

and issued promissory notes and stock purchase warrants to

two

investors. The promissory notes mature

January 5, 2019,

and incur interest at an annual rate of

12%.

may

extend the maturity date of the notes by

days by giving written notice at any time prior to the maturity date, and in such event the principal amount of the notes will increase by

10%,

effective as of the date of the notice. The stock purchase warrants allow the purchase of up to an aggregate

1,387,500

shares of our common stock for

$0.25

per share until

September 19, 2023.

may

“call” the warrants if the closing price of our common stock equals or exceeds

$2.50

for

consecutive trading days and the shares underlying the warrant are subject to an effective registration statement with the Securities and Exchange Commission. If we call the warrants, each investor would have

days to exercise its rights to purchase shares under the warrant or forever forfeit such rights. (See Note

)

Lines of credit, mature

September 1, 2019

March 1, 2018,

we received

$390,000,

and on

September 1, 2018,

we received

$40,000,

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 creditor, 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).

Convertible Note, matures

April 20, 2021 (

Spring

2018

Unit Offering)

March 26, 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 incurs interest at the rate of

12%

per annum on the amount invested. 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 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).

Through

March 31, 2018,

we had received

one

investment for

$100,000,

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. We did

not

receive any investments in this offering during the

three

months ended

September 30, 2018.

During

September 2018

we issued a

second

pricing supplement, which reduced the convertible note conversion price from

$0.30

$0.25

and reduced the warrant exercise price from

$0.48

$0.40.

As a result, the number of warrant shares available for purchase by each investor increased from

333,333

400,000.

(See Note

)

Convertible Note, matures

June 15, 2021 (

OID Note)

June 15, 2018,

we received

$75,000,

and on

August 7, 2018,

we received an additional

$25,000

and we issued a convertible promissory note (titled the “OID Note”) for

100%

of the funds received, or

$110,000.

The convertible promissory note is convertible into shares of the company’s common stock at a conversion price of

$0.30

per share. The original issuance discount totaled

$10,000,

recorded as a discount on convertible notes on our balance sheet. The discount will be amortized and recorded to interest expense over the term of the note. The convertible promissory note matures

June 15, 2021

and incurs interest at the rate of

15%

per annum on the OID Note. Interest due will be paid quarterly in arrears in shares of common stock, 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 OID Note is convertible by the investor at any time, and convertible by the Company (i) at maturity, (ii) in the event the Company’s stock price closes at

two

times the conversion price for

consecutive days, provided that either the shares underlying the convertible note are registered with the SEC, or more than

six

months has elapsed since the date of the investment.