BIOLARGO, INC.

Note6. Warrants

We have certain warrants outstanding to purchase our common stock, at various prices, for thethree months ended* March 31, 2026* and2025 is as follows:

Warrants issued in Unit Offerings

During thethree months ended* March 31, 2026*, we issuedsix-month stock purchase warrants to purchase an aggregate 599,416 shares of our common stock at $0.22 per share, andfive-year stock purchase warrants to purchase an aggregate 599,416 shares of our common stock at $0.27 per share, in conjunction with the sale of stock to investors in our Unit Offerings (see Note3). The relative fair value of the warrant component of the units sold to investors totaled $58,000. 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.

We didnot issue any warrants in conjunction with unit offerings in thethree months ended* March 31, 2025.*

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:

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.

Note7. Accounts Payable and Accrued Expenses

As of* March 31, 2026*, accounts payable and accrued expenses included the following (in thousands):

As of* December 31, 2025*, accounts payable and accrued expenses included the following (in thousands):

See Note8, “Accounts Payable and Accrued Expenses”, for the accounts payable and accrued expenses of Clyra Medical.

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Note8. Noncontrolling Interest–** Clyra Medical**

As discussed in Note2 above, we consolidate the operations of our partially owned subsidiary Clyra Medical.

Debt Obligations of Clyra Medical

Secured Promissory Notes

During the year ended* December 31, 2024,Clyra issued promissory notes in the aggregate amount of $1,064,000, the funds of which were used to purchase and secured by equipment for at-scale production of its wound irrigation solution products. Of this total, $200,000 was issued to BioLargo and this eliminates during consolidation of intercompany transactions. The notes bear interest at the rate of 15% per annum, mature intwo* years, and require interest-only payments until maturity. During2025, Clyra issued secured promissory notes in the aggregate amount of $436,000, the funds of which were used to purchase equipment for at-scale manufacture of its products. The notes bear interest at the rate of 15% per annum, mature on* October 31, 2026,require interest-only payments until maturity, and maybe pre-paid at any time. Each investor received a warrant to purchase the number of Clyra common shares equal to the face amount of the note divided by six, at an exercise price of $6.00 per share, expiring October 31, 2029.Warrant to purchase 72,667 shares of Clyra common stock were issued. The fair value of the warrants totaled $99,000 and is recorded as a debt discount, which is amortized as interest expense over the term of the secured promissory note. As of March 31, 2026,and December 31, 2025,*the balance outstanding totaled $1,300,000.

Guaranteed Note Offering

During thethree months ended* March 31, 2026*, Clyra issued the guaranteed promissory notes in the aggregate amount of $2,395,000. The notes bear interest at the rate of 15% per annum, matures* February 28, 2029,and is guaranteed by the Company’s largest stockholder, BioLargo Inc. Each investor received a warrant to purchase an aggregate of number of Clyra common shares equal to the face amount of the note divided by7.5,* divided by two, at an exercise price of $7.50 per share, expiring* February 28, 2031.*Warrants to purchase 159,668 shares of Clyra common stock were issued. The fair value of these warrants issued totaled $232,000 and is recorded as a debt discount and will be amortized to interest expense over the term of the guaranteed note offering.

During2025, Clyra issued guaranteed promissory notes in the aggregate amount of $575,000. The notes bear interest at the rate of 15% per annum, matures* July 15, 2027,and is guaranteed by the Company’s largest stockholder, BioLargo Inc. Each investor received a warrant to purchase an aggregate of number of Clyra common shares equal to the face amount of the note divided by six, at an exercise price of $6.50 per share, expiring July 15, 2028.*Warrants to purchase 88,462 shares of Clyra common stock were issued. The fair value of these warrants issued totaled $80,000 and is recorded as a debt discount and will be amortized to interest expense over the term of the guaranteed promissory notes.

As of* March 31, 2026* and* December 31, 2025,*the balance outstanding totals $2,970,000 and $575,000, respectively.

The Black-Scholes model is used to calculate the initial fair value of the warrants issued as part of the Clyra Medical debt obligations, we used a stock price on the date of grant of $6.00 per share, volatility ranging between 35 -43%. Because Clyra is a private company withno secondary market for its common stock, the resulting fair value was discounted by 30%.

Line of Credit

On* June 30, 2020,Clyra Medical entered into a Revolving Line of Credit Agreement whereby Vernal Bay Capital Group, LLC ("Vernal") committed to provide a $1,000,000 inventory line of credit. Since inception, Clyra Medical received $260,000 in draws and made repayments totaling $126,000. The interest rate on this line of credit is 15%. On December 13, 2022,Clyra and Vernal amended the Revolving Line of Credit Agreement extending the maturity date of the line of credit to September 30, 2024and modifying the payment terms such that amounts of principal due in each month are capped at a maximum of 15% of the principal amount then due under the note. The maturity date hasnot* been further extended, and Clyra continues to provide monthly reporting and make interest payments to Vernal as required. As of* March 31, 2026* and* December 31, 2025* the balance outstanding on this line of credit totaled $134,000. Subsequent to* March 31, 2026,*this line of credit was paid in full.

Equity Transactions

As of* March 31, 2026*, and* December 31, 2025*, Clyra had 11,375,860 shares issued and outstanding, of which 746,418 and 330,000 were Series A and Series B Preferred shares, respectively. As of* March 31, 2026*, and* December 31, 2025*, of the total outstanding Clyra shares, BioLargo owned 5,305,156, common shares and 165,765 Series A Preferred shares.

Sales of Series A Preferred Stock

In an offering that closed in* October 2023,Clyra sold 746,418 shares of its Series A Preferred Stock, and in exchange received $1,800,000 in gross and net proceeds. Purchasers of the Series A Preferred Stock also received a 3-year warrant to purchase the same number of additional shares of common stock for $3.72 per share. The fair value of the warrants issued totaled $524,000. Shares of Series A Preferred Stock earn a dividend of 15% each year, compounding annually; the company is underno* obligation to pay such dividends in cash, and such dividends automatically convert to common stock upon conversion of the Series A Preferred Stock to common stock. Each share of Series A Preferred stock can be converted by the holder at any time forone share of common stock and automatically convert upon the completion of a public offering of shares in which at least $5,000,000 of gross proceeds is received by the company. Accrued dividends* maybe converted to common stock at a conversion rate of $3.10 per share. As of March 31, 2026* and* December 31, 2025*, the Preferred Series A accrued and unpaid dividend totaled $1,023,000 and $937,000, respectively. Each investor also entered into an agreement with BioLargo whereby the investor* mayexchange some or all of its Series A Preferred stock, plus accrued dividends, into shares of BioLargo common stock, at a price equal to a20%* discount of the volume weighted average price over the30 prior trading days. Elections* maybe made during the period beginning January 1, 2025,and ending on June 30, 2026.As of March 31, 2026,*no investors have elected to convert.

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Sales of Series B Preferred Stock

In an offering that closed in* October 2025,*Clyra sold 330,000 shares of its Series B Preferred Stock, and in exchange received $2,145,000 in gross and net proceeds. Purchasers of the Series B Preferred Stock also received warrants to purchase an aggregate 165,000 shares of common stock for $7.50 per share, expiring three years from the grant date. The fair value of the warrants issued totaled $94,000.

Sales of Common Stock

There wereno sales of common stock during thethree months ended* March 31, 2026.*

During thethree months ended* March 31, 2025,Clyra sold 49,167 shares of its common stock, and issued 24,584 warrants to purchase shares of its common stock at $7.50 per share, expiring February 28, 2027,*from five accredited investors. In exchange, it received $295,000 in gross proceeds. The relative fair value of these warrants totaled $38,000.

Common Stock issued for services

There wereno shares issued for services during thethree months ended* March 31, 2026.*

On* March 31, 2025,*Clyra issued 6,000 shares in lieu of cash totaling $36,000, to a vendor for services performed and issued a warrant to purchase 3,000 shares of its common stock at $6.00 per share, expiring 5 years from the grant date. The relative fair value of these warrants totaled $5,000.

Clyra Stock Options

Clyra issues options to its employees and consultants in lieu of compensation owed on a regular basis. The fair value of the options issued totaled $297,000 in thethree months ended* March 31, 2026*, and $49,000 in thethree months ended* March 31, 2025*. The Black-Scholes model is used to calculate the initial fair value, during thethree months ended* March 31, 2026and2025*, we used a stock price on the date of grant of $4.50 per share. Because Clyra is a private company withno secondary market for its common stock, the resulting fair value was discounted by 30%.

As of* March 31, 2026*, there remains $1,384,000 of stock option expense to be expensed over the next three years.

Clyra Warrants

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Accounts Payable and Accrued Expenses

At* March 31, 2026*, and* December 31, 2025*, Clyra had the following accounts payable and accrued expenses (in thousands):

Sale and leaseback of equipment

On* December 4, 2024,Clyra entered into an agreement whereby it sold and leased back certain equipment to be used in the manufacturing of its wound irrigation solution. Clyra received $350,000 cash and a secured promissory note in the principal amount of$82,000 which bears interest at 15%, requires interest be paid monthly, and the principal balance due on December 4, 2028.*The obligations of the Note are secured by the equipment pursuant to a security agreement. At the end of the lease term, Clyra has the option to purchase the equipment for$82,000. Concurrently, Clyra leased the equipment for a 49-month term. The remaining lease payments total $412,000.

Note9. BioLargo Engineering, Science and Technologies, LLC

In* September 2017,we commenced a full-service environmental engineering firm and formed a Tennessee entity named BioLargo Engineering, Science & Technologies, LLC (“BLEST”). In conjunction with the start of this subsidiary, we entered into an office lease in the Knoxville, Tennessee area, and entered into employment agreements withsix* scientists and engineers. BLEST was capitalized withtwo classes of membership units: Class A,100% owned by BioLargo, and Class B, held by management of BLEST, and which initially hadno “profit interest,” as that term is defined in Tennessee law. Class B members were also granted options to purchase up to an aggregate 1,750,000 shares of BioLargo common stock. The profit interest and option shares are subject to afive-year vesting schedule tied to the performance of the subsidiary. As of* March 31, 2026* and* December 31, 2025,*Class B members have earned 30% profit interest.

Note10. BioLargo Energy Technologies, Inc.

BioLargo Energy Technologies, Inc. (“BETI”) was formed for the purpose of commercializing a proprietary liquid sodium battery technology. BioLargo purchased 9,000,000 shares of its common stock upon its formation and was initially its sole stockholder.

During thethree months ended* March 31, 2026*, BETI sold 124,867 shares of its common stock at $3.70 per share toseven accredited investors and received $462,000 in gross and net proceeds. No shares of common stock of BETI were sold during thethree months ended* March 31, 2025.*

As of* March 31, 2026*, BETI had 9,730,691 issued and outstanding shares, of which BioLargo holds 9,095,000 (93%).

Note11. Business Segment Information

BioLargo hassix operating business segments, plus its corporate entity which is responsible for general corporate operations, including administrative functions, finance, human resources, marketing, legal, etc. The operational business segments are:

Other than ONM Environmental,none of our operating business units have operated at a profit, and therefore have required additional cash to meet its monthly expenses, funded through sales of debt or equity, research grants, and tax credits. BETI and Clyra Medical have also been funded bythird party investors who invest directly in exchange for equity ownership in that entity.

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The segment information for thethree months ended* March 31, 2026*, and2025, is as follows (in thousands):

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Note12. Leases

Office Leases

We have long-term operating leases for office, industrial and laboratory space in Westminster, California, Oak Ridge, Tennessee, and Alberta, Canada. Payments made under operating leases are charged to the condensed consolidated statement of operations and comprehensive loss on a straight-line basis over the term of the operating lease agreement. Short-term leases less thanone-year arenot included in our analysis. For thethree months ended* March 31, 2026*, rental expense totaled $108,000 and $100,000 for thethree months ended* March 31, 2026,and2025.* The lease of our Westminster facility expires* August**2027.* The lease for Clyra Medical expires* August 2030.The lease of our Canadian facility is less thanone* year.None of our leases have additional terms related to the payments or mechanics of the lease. The leases have no additional payment terms such as common area maintenance payments, tax sharing payments or other allocable expenses. Likewise, the leases donot contain other terms and conditions of use, such as variable lease payments, residual value guaranties or other restrictive financial terms. Since there isno explicit interest rate in our leases, management used its incremental borrowing rate, which is estimated to be 18% to determine lease liability. As of* March 31, 2026*, the weighted average remaining lease term for our operating leases wassix years and the total remaining operating lease payments is $1,591,000.

Future minimum lease payments under noncancelable leases, reconciled to the Company’s discounted operating lease liabilities are as follows:

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Note 13. Legal Proceedings

ONM Environmental, Inc. is the defendant in a lawsuit filed by Pooph Inc. in the Orange County, California Superior Court on* September 11, 2025.The lawsuit allegesthree* causes of action, for Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, and Declaratory judgment, and seeks an unspecified amount of damages, allegedly arising from ONM’s manufacture of pet odor-control products sold by Pooph Inc.

BioLargo, Inc., BioLargo Life Technologies, Inc., and ONM Environmental, Inc., filed a lawsuit against Pooph, Inc. and Ikigai Marketing Works, LLC in the United States District Court, Central District of California, on* November 11, 2025,*for patent infringement, false advertising, breach of contract, false promise, unfair and fraudulent business practices and constructive fraud, seeking to recover, amongst other damages, the defendants’ failure to pay for product purchases and license royalties in the aggregate amount of $3,821,401. See Note 2, Allowance for Credit Losses, above.

While the outcomes of the lawsuits are uncertain, management believes that the resolutions of these proceedings willnot have a material adverse effect on the Company's financial position, results of operations, or cash flows. However, adverse outcomes could materially impact future financial results.

Note14. Subsequent Events

The Company has evaluated subsequent events through the date of the filing of this Quarterly Report and report the following.

Stock Issuances

Subsequent to* March 31, 2026,we have sold 1,050,000 shares of our common stock to Clearthink (see Note3*) and received $147,033 in gross proceeds.

Clyra Medical Financing Activities

Subsequent to* March 31, 2026,Clyra issued guaranteed promissory notes in the aggregate amount of$775,125* toseven accredited investors. The notes bear interest at the rate of 15% per annum, mature* February 28, 2029,and are guaranteed by the Company’s largest stockholder, BioLargo Inc. Each investor received a warrant to purchase an aggregate of number of Clyra common shares equal to the face amount of the note divided by7.5,* divided by two, at an exercise price of $7.50 per share, expiring* February 28, 2031.*Warrants to purchase 51,675 shares of Clyra common stock were issued to the investors.

BioLargo Energy (BETI) Financing Activities

Subsequent to* March 31, 2026,BETI sold 6,757 shares of its common stock at $3.70 per share toone* accredited investor and received $25,000 in gross and net proceeds.

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