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Note 5 - Share-based Compensation
3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Compensation and Employee Benefit Plans [Text Block]

Note 5. Share-Based Compensation

 

Issuance of Common Stock in exchange for Services

 

Payment of Officer Salaries

 

No shares were issued to officers as payment of salary during the three months ended March, 31, 2024. 

 

On  March 31, 2023, an officer agreed to convert an aggregate $6,000 of accrued and unpaid salary into 30,747 shares of our common stock at $0.20 per share.

 

Shares issued to Officers are unvested at the date of grant and subject to a lock-up agreement restricting vesting and sale until the earlier of (i) the consummation of a sale (in a single transaction or in a series of related transactions) of BioLargo by means of a sale of (a) a majority of the then outstanding common stock of BioLargo (whether by merger, consolidation, sale or transfer of common stock, reorganization, recapitalization or otherwise) or (b) all or substantially all of the assets of BioLargo; and (ii) the successful commercialization of BioLargo’s products or technologies as demonstrated by its receipt of at least $3,000,000 in cash, or the recognition of $3,000,000 in revenue, over a 12-month period from the sale of products and/or the license of technology; and (iii) the Company’s breach of the employment agreement between the Company and Officer and resulting in Officer’s termination.

 

Payment of Consultant and Vendor Fees

 

On  March 31, 2024, we issued 250,639 shares of our common stock at $0.35 per share in lieu of $83,000 of accrued and unpaid obligations to consultants and vendors. 

 

On  March 31, 2023, we issued 899,743 shares of our common stock at $0.20 per share in lieu of $201,000 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, 2024, we recorded an aggregate $488,000 and $256,000, in selling general and administrative expense related to the issuance of stock options. We issued options through our 2018 Equity Incentive Plan, and outside of this plan. Included in these totals is option expense related to issuances by our subsidiary, Clyra Medical, totaling $59,000 and $61,000 in the three months ended March 31, 2024 and 2023. 

 

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 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 2018 Plan increases automatically each January 1st by the lesser of (a) 2 million shares, or (b) such number of shares determined by our Board. As of March 31, 2024, 52,000,000 shares are authorized under the plan, and 9,343,614 remain available for grant.

 

Activity for our stock options under the 2018 Plan during the three months ended March 31, 2024, and 2023, is as follows:

 

  

Options outstanding

  

Weighted average price per share

  

Weighted average remaining life

  

Aggregate intrinsic Value(1)

 
Balance, December 31, 2022  28,484,549  $0.19         
Granted  1,320,498   0.20         
Balance, March 31, 2023  29,805,047   0.19   7.5   678,000 
                 

Balance, December 31, 2023

  41,108,448  $0.19         

Granted

  1,547,938  $0.30         

Balance, March 31, 2024

  42,656,386  $0.19   7.4  $5,909,000 

Unvested

  (5,025,052) $0.20         

Vested, March 31, 2024

  37,631,334  $0.19   

7.4

  $4,455,000 

 

(1) – Aggregate intrinsic value based on closing common stock price of $0.35 at March 31, 2024.

 

The options granted to purchase 1,547,938 shares during the three months ended March 31, 2024 with an aggregate fair value of $418,000 were issued to board of directors, employees and consultants: (i) we issued options to purchase 267,746 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 $85,000; (ii) we issued options to purchase 735,351 shares of our common stock to employees as part of employee retention plans; the fair value of employee retention plan options totaled $160,000 and vest over time or based on performance metrics; and (iii) we issued options to purchase 544,841 shares of our common stock to replace expiring options; the fair value of these options totaled $173,000.  All stock option expense is recorded on our consolidated statement of operations as selling, general and administrative expense.

 

As of March 31, 2024, there remains $5,025,000 of stock option expense to be expensed over the next 4 years.

 

The options granted to purchase 1,320,498 shares during the three months ended  March 31, 2023 with an aggregate fair value of $248,000 were issued to an officer, board of directors, employees and a consultant:  (i) we issued options to purchase 347,730 shares of our common stock at an exercise price on the respective grant date of $0.20 per share to members of our board of directors for services performed, in lieu of cash; the fair value of these options totaled $65,000; (ii) we issued options to purchase 570,204 shares of our common stock to employees as part of an employee retention plan at an exercise price on the respective date of $0.20 per share; the fair value of employee retention plan options totaled $108,000 and will vest quarterly over four years as long as they are retained as employees; (iii) we issued options to purchase 102,564 shares of our common stock to consultants in lieu of cash for expiring options at $0.20 per share totaling $19,000, and (iv) we issued 300,000 options to our Chief Financial Officer with a fair value of $ 56,000. All stock option expense is recorded on our consolidated statement of operations as selling, general and administrative expense.

 

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, 2024 and 2023 is as follows:

 

 

  

Options Outstanding

  

Weighted average price per share

  

Weighted average remaining life

  

Aggregate intrinsic Value(1)

 

Balance, December 31, 2022

  1,904,085  $0.56         

Expired

              

Balance, March 31, 2023

  1,904,085  $0.56   1.5 $ 
                 

Balance, December 31, 2023

  1,564,085  $0.61         

Expired

              

Balance, March 31, 2024

  1,564,085  $0.61   0.9 $  

 

(1) – Aggregate intrinsic value based on closing common stock price of $0.35 at March 31, 2024.

 

Non-Plan Options

 

Activity of our non-plan stock options issued for the three months ended March 31, 2024 and 2023 is as follows:

 

  

Non-plan Options outstanding

  

Weighted average price per share

  

Weighted average remaining life

  

Aggregate intrinsic Value(1)

 
Balance, December 31, 2022  19,023,829  $0.39         
Granted  48,804  $0.20         
Balance, March 31, 2023  19,072,633  $0.39   4.1  $88,000 
                 

Balance, December 31, 2023

  17,375,044  $0.39         

Expired

  (275,376) $0.44         

Balance, March 31, 2024

  17,099,668  $0.39   3.1  $695,000 

Unvested

  (1,056,177) $0.26         

Vested, March 31, 2024

  16,043,491  $0.40   3.1  $437,000 

 

(1) – Aggregate intrinsic value based on closing common stock price of $0.35 at March 31, 2024.

 

During the three months ended March 31, 2024, we did not issue options out of plan.  As of March 31, 2024, there remains $1,056,000 of stock option expense to be expensed over the next four years.

 

During the three months ended  March 31, 2023, we issued options to purchase an aggregate 48,804 shares of our common stock at $0.20 per share to vendors for fees for services. The fair value of the options issued totaled an aggregate $9,000 and is recorded in our selling, general and administrative expense.