BIOLARGO, INC. 10-Q

Item 5. Other Information   On March 30, 2020, we entered into a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company has the right to sell to Lincoln Park up to $10,250,000 in shares of the Company’s common stock, $0.00067 par value per share (the “Common Stock”), over the 36-month term of the Purchase Agreement, subject to certain limitations and conditions set forth in the Purchase Agreement.   Concurrently with the execution of the Purchase Agreement on March 30, 2020, we entered into a registration rights agreement (the “Registration Rights Agreement”) with Lincoln Park pursuant to which the Company agreed, among other things, to file a registration statement with the SEC to register for sale under the Securities Act of 1933, as amended (the “Act”), the shares of common stock that may be issued and sold to Lincoln Park from time to time under the Purchase Agreement. We filed a registration statement on Form S-1 with the SEC, which was deemed effective on April 21, 2020.   Lincoln Park agreed to make an initial purchase of $250,000 of shares for $0.14 per share. That purchase was completed March 31, 2020.   The Purchase Agreement provides that, commencing on the date that a registration statement is declared effective by the SEC and a final prospectus in connection therewith is filed and the other terms and conditions of the Purchase Agreement are satisfied from time to time on any trading day the Company selects, the Company has the right, in its sole discretion, subject to the conditions and limitations in the Purchase Agreement, to direct Lincoln Park to purchase up to 100,000 shares of Common Stock (each such purchase, a “ Regular Purchase ”) over the 36-month term of the Purchase Agreement, provided that at least one trading day has passed since the last Regular Purchase. The purchase price of shares of Common Stock pursuant to the Purchase Agreement will be based on the prevailing market price at the time of sale as set forth in the Purchase Agreement. There are no trading volume requirements or restrictions under the Purchase Agreement. Lincoln Park’s obligation under each Regular Purchase shall not exceed $500,000. There is no upper limit on the price per share that Lincoln Park must pay for Common Stock under the Purchase Agreement.   In addition to regular purchases, as described above, the Company may also direct Lincoln Park to purchase additional amounts as accelerated purchases. In all instances, the Company may not sell shares of its Common Stock to Lincoln Park under the Purchase Agreement if it would result in Lincoln Park beneficially owning more than 4.99% of the Common Stock.   Lincoln Park 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), and the Company sold the securities in reliance upon exemptions from the registration requirements of United States federal and state securities laws.   The Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of the parties. The Company has the right to terminate the Purchase Agreement at any time, at no cost or penalty. During any “event of default” under the Purchase Agreement, all of which are outside of Lincoln Park’s control, Lincoln Park does not have the right to terminate the Purchase Agreement; however, the Company may not initiate any regular or other purchase of shares by Lincoln Park, until such event of default is cured. There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration Rights Agreement, other than a prohibition on entering into any “Variable Rate Transaction,” as defined in the Purchase Agreement.   Actual sales of shares of Common Stock to Lincoln Park under the Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. As set forth in the Purchase Agreement, in consideration for entering in the Purchase Agreement, the Company has agreed to issue to Lincoln Park 1,785,715 shares of Common Stock. The Company will not receive any cash proceeds from the issuance of these shares.   The net proceeds under the Purchase Agreement to the Company will depend on the frequency and prices at which the Company sells shares of its stock to Lincoln Park. The Company expects that any proceeds received by the Company from such sales to Lincoln Park will be used for working capital and general corporate purposes.   During the six months ended June 30, 2021 and 2020, we sold 18,526,309 and 3,198,358 shares, respectively, to Lincoln Park, and received $3,015,000 and $1,461,000, respectively, in gross and net proceeds. Subsequent to June 30, 2021, we continue to draw on the Purchase Agreement for working capital from time to time.   38 Table of Contents   Item 6. Exhibits   See the Exhibit Index for a list of exhibits filed as part of this report and incorporated herein by reference.   Exhibit Index       Incorporated by Reference Herein Exhibit Number Exhibit Description Form File Date 3.1 Bylaws of BioLargo, Inc., as amended and restated Form 10-KSB 5/23/2003 3.2 Amended and Restated Certificate of Incorporation for BioLargo, Inc. filed March 16, 2007 Form 10-KSB 5/4/2007 3.3 Certificate of Amendment to Certificate of Incorporation, filed May 25, 2018 Pos Am 6/22/2018 3.4 Amended and Restated Articles of Incorporation of Clyra Medical Technologies, Inc. Form 8-K 1/6/2016 4.1 2018 Equity Incentive Plan Form S-8 6/22/2018 4.2 Stock Option Award Agreement under 2018 Equity Incentive Plan Form S-8 6/22/2018 4.3 Notice of Stock Option Grant under 2018 Equity Incentive Plan Form S-8 6/22/2018 4.4 Restricted Stock Unit Award Agreement under 2018 Equity Incentive Plan Form S-8 6/22/2018 4.5 Notice of Restricted Stock Unit Award under 2018 Equity Incentive Plan Form S-8 6/22/2018 4.6 Form of Stock Options issued in exchange for reduction in accounts payable. Form 10-K 3/31/2015 4.7 Convertible Promissory Note issued to Vista Capital Investments LLC dated January 7, 2019 Form 8-K 1/11/2019 4.8 Form of Warrant issued to One Year Note holder dated December 30, 2016 Form S-1 1/25/2017 4.9 Purchase Agreement, dated as of August 25, 2017 by and between BioLargo, Inc. and Lincoln Park Capital Fund, LLC Form 8-K 8/31/2017 4.10 Promissory note issued by Clyra Medical to Scion Solutions dated September 26, 2018 Form 8-K 10/2/2018 4.11 Amendment dated March 5, 2019 to Promissory Note issued to Vernal Bay Investments, LLC on September 19, 2018 Form 8-K 3/8/2019 4.12 Amendment dated March 5, 2019 to Promissory Note issued to Chappy Bean, LLC on September 19, 2018 Form 8-K 3/8/2019 4.13 $50,000 convertible note, matures March 8, 2020 Form 10-Q 5/14/2018 4.14 Amendment dated August 12, 2019 to Promissory Note issued to Vernal Bay Investments, LLC on September 19, 2018 Form 10-Q 8/14/2019 4.15 Amended and restated note issued to Vernal August 12, 2019 Form 10-Q 8/14/2019 4.16 Form of convertible notes that mature April 20, 2021 (Spring 2018 Offering) Form 10-Q 5/14/2018 4.17 Warrant issued to Vernal August 12, 2019 Form 10-Q 8/14/2019 4.18 Revolving Line of Credit Agreement dated June 30, 2020, between Clyra Medical and Vernal Bay Form 8-K 7/7/2020   39 Table of Contents   4.19 Security Agreement dated June 30, 2020, between Clyra Medical and Vernal Bay Form 8-K 7/7/2020 4.20 Revolving Line of Credit Note issued by Clyra Medical to Vernal Bay on June 30, 2020 Form 8-K 7/7/2020 4.21 Convertible Promissory Note issued to Tangiers Global, LLC dated January 31, 2019 Form 8-K 2/11/2019 4.22 Stock Purchase Warrant Issued to Lincoln Park Capital on January 31, 2019 Form 8-K 2/11/2019 4.23 OID twelve-month promissory note Form 8-K 8/2/2019 4.24 $600,000 Promissory note dated August 9, 2019 Form 10-Q 8/14/2019 4.25 Registration Rights Agreement, dated as of March 30, 2020, by and between BioLargo, Inc. and Lincoln Park Capital Fund, LLC Form 8-K 3/31/2020 4.26 Warrant issued in 2020 Unit Offering Form 10-Q 8/14/2020 4.27 Amendment to $50,000 Convertible Note dated March 8, 2018 Form 10-K 3/30/2021 4.28 Warrant issued to $50,000 Convertible Noteholder on March 1, 2020 Form 10-K 3/30/2021 4.29 Second Amendment dated August 12, 2019 to Promissory Note issued to Vernal Bay Investments, LLC on September 19, 2018 Form 10-Q 8/14/2019 4.30 Amended and restated note issued to Vernal Bay on August 12, 2019 Form 10-Q 8/14/2019 4.31 Second Amendment dated August 12, 2019, to Promissory Note issued to Chappy Bean, LLC dated September 19, 2018 Form 8-K 5/19/2021 4.32 Amended and restated note issued to Chappy Bean on August 12, 2019 Form 8-K 5/19/2021 4.33 Third Amendment dated August 10, 2020 to Promissory Note issued to Vernal Bay Investments, LLC on September 19, 2018 Form 8-K 5/19/2021 4.34 Third Amendment dated August 10, 2020, to Promissory Note issued to Chappy Bean, LLC dated September 19, 2018 Form 8-K 5/19/2021 4.35 Final Payoff Agreement dated May 17, 2021 to Promissory Note issued to Vernal Bay Investments, LLC on September 19, 2018 Form 8-K 5/19/2021 4.36 Final Payoff Agreement dated May 18, 2021 to Promissory Note issued to Chappy Bean, LLC dated September 19, 2018 Form 8-K 5/19/2021 10.1 License Agreement to Clyra Medical Technologies, Inc., dated December 17, 2012 Form 8-K 1/6/2016 10.2 December 30, 2015 amendment to License Agreement with Clyra Medical Technologies, Inc. Form 8-K 1/6/2016 10.3 Consulting Agreement dated December 30, 2015 with Beach House Consulting LLC Form 8-K 1/6/2016 10.4 Commercial Office Lease Agreement for 14921 Chestnut St., Westminster, CA 92683 Form 8-K 8/24/2016 10.5† January 16, 2019 Engagement Extension Agreement by and between BioLargo, Inc. and Charles K. Dargan Form 8-K 1/18/2019 10.6† 2020 Engagement Extension Agreement with CFO Form 8-K 2/27/2020 10.7 Purchase Agreement, dated as of March 30, 2020 by and between BioLargo, Inc. and Lincoln Park Capital Fund, LLC. Form 8-K 3/31/2020 10.8† 2021 Engagement Extension Agreement with CFO Form 8-K 3/19/2021 31.1* Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934       40 Table of Contents   31.2* Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934     32* Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.     101.INS** Inline XBRL Instance     101.SCH** Inline XBRL Taxonomy Extension Schema     101.CAL** Inline XBRL Taxonomy Extension Calculation     101.DEF** Inline XBRL Taxonomy Extension Definition     101.LAB** Inline XBRL Taxonomy Extension Labels     101.PRE** Inline XBRL Taxonomy Extension Presentation     104 Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)       * Filed herewith   ** Furnished herewith   † Management contract or compensatory plan, contract or arrangement   SIGNATURES   Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.         BIOLARGO, INC.                   Date: August 16, 2021   By: /s/ DENNIS P. CALVERT       Dennis P. Calvert Chief Executive Officer                   Date: August 16, 2021   By: /s/ CHARLES K. DARGAN, II       Chief Financial Officer     41