Note 6 - Warrants

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Warrants [Text Block]

Note 6. Warrants

We have certain warrants outstanding to purchase our common stock, at various prices, as described in the following table:

	Warrants outstanding			Weighted average price per share		Weighted average remaining life		Aggregate intrinsic value(1)
Balance, December 31, 2022		49,023,398		$	0.26
Granted		7,512,000		$	0.25
Expired		(4,684,986	)	$	0.21
Balance, March 31, 2023		51,850,412		$	0.26	$	2.4	$	122,000
Balance, December 31, 2023		51,590,300		$	0.27
Granted		3,218,422		$	0.25
Expired		(406,278	)	$	0.37
Exercised		(600,000	)	$	0.25
Balance, March 31, 2024		53,802,444		$	0.26	$	2.0	$	4,021,000

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

Warrants issued in Unit Offerings

During the three months ended March 31, 2024, we issued six-month stock purchase warrants to purchase an aggregate 1,394,737 shares of our common stock at $0.23 per share, and five-year stock purchase warrants to purchase an aggregate 1,394,737 shares of our common stock at $0.29 per share, in conjunction with the sale of stock to investors in our Unit Offerings (see Note 3). In addition to warrants issued to investors, we issued five-year stock purchase warrants to purchase an aggregate 428,948 shares of our common stock at $0.19 per share as commissions. The relative fair value of the warrant component of the units sold to investors totaled $201,000. The Black-Scholes model was used to calculate relative fair value, further discounted by the beneficial conversion feature and the value of the common stock component.

During the three months ended  March 31, 2023, pursuant to our Unit Offerings (see Note 3), we issued six-month stock purchase warrants to purchase an aggregate 3,656,000 shares of our common stock at $0.23 per share, and five-year stock purchase warrants to purchase an aggregate 3,656,000 shares of our common stock at $0.29 per share. The relative fair value of these warrants totaled $1,097,000.

Warrant issued in conjunction with amendment to note payable

On March 6, 2023, we entered into an agreement with the holder of a $50,000 note (see Note 4, “Convertible note payable, matures March 1, 2023”) to convert that note into common stock of BETI. As payment for interest, a warrant to purchase 200,000 shares of BioLargo common stock at $0.21 was issued to the investor, expiring five years from the grant date. The fair value of this warrant totaled $30,000 and was recorded as interest expense on our condensed consolidated statement of operations.

Warrant Fair Value

We use the Black-Scholes option pricing model to determine the relative fair value of warrants issued in conjunction with debt instruments, common stock, and for services. With respect to debt instruments, relative fair value is amortized over the life of the warrant. The principal assumptions we used in applying the Black-Scholes model were as follows:

	2024			2023
Risk free interest rate		4.04 – 5.28	%		3.88 – 4.27	%
Expected volatility		64 – 87	%		40 – 95	%
Expected dividend yield		—			—
Forfeiture rate		—			—
Expected life in years		.5 – 5			.5 – 5

The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are based on historical volatility of our common stock. The expected life in years is based on the contract term of the warrant.