BIOLARGO, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Annual Report. Our procedures have been designed to ensure that the information relating to our company, including our consolidated subsidiaries, required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure. However, our Company is continuing to grow and evolve. The volume of our product sales continues to grow, increasing strain on our accounting systems. And our operations do not yet generate enough cash to fund operations, and thus we rely on financing activities to maintain our level of operations and fund our anticipated growth. In combination, these activities put stress on our overall controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that as of the evaluation date our disclosure controls and procedures were not effective, due to the material weakness identified below. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Management ’ s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Under the supervision and with the participation of our management, including our chief executive officer and the chief financial officer, we have established internal control procedures in accordance with the guidelines established in the 2013 Framework —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Management evaluated the effectiveness of our internal controls, and concluded that due to our limited financial and personnel resources, and the fact that we operate our business in three distinct locations in the U.S. and Canada, we continue to have a material weakness in our internal controls with respect to the closing our financial statements. Until the Company has the financial resources to implement more robust automated systems, or to hire additional dedicated accounting personnel, we expect this material weakness to continue. In reaching this conclusion, management considered that despite this weakness, and others identified in past years, the company has not identified material misstatements in prior financial statements and believes that the material weakness identified herein is not likely to lead to a material misstatement in the financial statements contained within this report. Management has concluded that its internal controls over financial reporting are not effective. Management identified a material weakness with respect to deficiencies in its financial closing and reporting procedures. Management believes this is due to a lack of resources. Management intends to add accounting personnel and operating staff and more sophisticated systems in order to improve its reporting procedures and internal controls, subject to available capital. A material weakness is a significant deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected. While management has recognized the material weakness, nothing additionally has changed in internal controls over financial reporting in the fourth quarter or the fiscal year ended December 31, 2025. This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this Annual Report. Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting, or any system we design or implement in the future, will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Changes in Internal Control over Financial Reporting There were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2025, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 21 Table of Contents PART III Certain information required by Part III is incorporated by reference from our definitive Proxy Statement to be filed with the SEC within 120 days of the end of the fiscal year ended December 31, 2025, in connection with the solicitation of proxies for our 2026 Annual Meeting of Stockholders (the “Proxy Statement”). ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE The information required by this section is incorporated by reference from the section titled “Proposal One—Election of Directors” in the Proxy Statement. Item 405 of Regulation S-K calls for disclosure of any known late filing or failure by an insider to file a report required by Section 16 of the Exchange Act. This disclosure is incorporated by reference to the section titled “Section 16 (a) Beneficial Ownership Reporting Compliance” in the Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION The information required by this section is incorporated by reference from the information in the section titled “Executive Compensation” in the Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this section is incorporated by reference from the information in the section titled “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this section is incorporated by reference from the information in the section titled “Certain Relationships and Related Transactions” in the Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this section is incorporated by reference from the information in the section titled “Ratification of Appointment of Independent Auditor” in the Proxy Statement. PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. The following documents are filed as a part of this report: 1. Financial Statements . The consolidated financial statements required to be filed in this report are listed on the Index to Financial Statements immediately preceding the financial statements. 2. Financial Statement Schedules . Separate financial statement schedules have been omitted either because they are not applicable or because the required information is included in the consolidated financial statements or the notes thereto. 3. Exhibits. See the Exhibit Index for a list of the exhibits being filed or furnished with or incorporated by reference into this report. 22 Table of Contents 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 Certificate of Amendment to Certificate of Incorporation, filed August 30, 2022 Form 10-Q 11/14/2022 4.1 BioLargo, Inc. 2007 Equity Incentive Plan Form 10-QSB 11/19/2007 4.2 Amendment No. 1 to BioLargo 2007 Equity Incentive Plan Def 14C (Exhibit A) 5/2/2011 4.3 Form of Stock Options issued in exchange for reduction in accounts payable. Form 10-K 3/31/2015 4.4 2018 Equity Incentive Plan Form S-8 6/22/2018 4.5 Stock Option Award Agreement under 2018 Equity Incentive Plan Form S-8 6/22/2018 4.6 Revolving Line of Credit Agreement dated June 30, 2020, between Clyra Medical and Vernal Bay Form 8-K 7/7/2020 4.7 Security Agreement dated June 30, 2020, between Clyra Medical and Vernal Bay Form 8-K 7/7/2020 4.8 Revolving Line of Credit Note issued by Clyra Medical to Vernal Bay on June 30, 2020 Form 8-K 7/7/2020 4.9 Warrant issued in BioLargo Unit Offerings Form 10-Q 8/14/2020 10.1 BioLargo license to Clyra Medical Technologies, Inc., dated March 1, 2024 Form 10-K 4/1/2024 10.2 Clyra Medical Technologies, Inc. license to BioLargo dated March 1, 2024 Form 10-K 4/1/2024 10.3 Commercial Office Lease Agreement for Westminster California Form 8-K 8/24/2016 10.4† Employment Agreement with Dennis P. Calvert dated May 2, 2017. Form 8-K 5/4/2017 10.5† Lock-Up Agreement with Dennis P. Calvert dated April 30, 2017 Form 8-K 5/4/2017 10.6† Lock-Up Agreement with Dennis P. Calvert dated May 2, 2017. Form 8-K 5/4/2017 10.7 Commercial Office Lease Agreement for Oak Ridge Tennessee Form 8-K 9/8/2017 10.8 Form of Employment Agreement for Engineering subsidiary employee (BLEST) Form 8-K 9/8/2017 10.9 Form of Option issued to founding employees of Engineering subsidiary (BLEST) Form 8-K 9/8/2017 10.10† Joseph L. Provenzano Employment Agreement dated May 28, 2019 Form 8-K 6/24/2019 10.11 Purchase Agreement, dated as of December 13, 2022, by and between BioLargo, Inc. and Lincoln Park Capital Fund, LLC. Form 8-K 12/19/2022 10.12 Form of indemnity agreement between the Company at its officers and directors Form 10-K 3/31/2022 10.13 Form of Share Exchange Agreement between BioLargo, Inc., and purchasers of Clyra Medical Series A Preferred Stock Form 10-Q 5/17/2023 10.14 Form of Share Exchange Agreement between BioLargo, Inc., and purchasers of BioLargo Energy Technologies, Inc. common stock Form 10-Q 5/17/2023 10.15† 2024 Engagement Extension Agreement with CFO Form 10-Q 8/15/2024 10.16 License Agreement between BioLargo, Inc., and Ikigai Holdings, LLC, dated May 17, 2021 Form 10-Q 8/14/2025 10.17 First amendment to License Agreement between BioLargo, Inc., and Ikigai Holdings, LLC, dated August 16, 2021 Form 10-Q 8/14/2025 10.18 Preferred Master Manufacturing Agreement between ONM Environmental, Inc., and Ikigai Holdings, LLC, dated July 9, 2021 Form 10-Q 8/14/2025 10.19 First amendment to Preferred Master Manufacturing Agreement between ONM Environmental, Inc., and Ikigai Holdings, LLC, dated June 6, 2025 Form 10-Q 8/14/2025 10.20 Form of Promissory Note issued by Clyra Medical Technologies, Inc. (2026 Guaranteed Note) filed herewith 10.21 Form of Payment Guaranty (Clyra Medical 2026 Guaranteed Note) filed herewith 14.1 Code of Ethics filed herewith 21.1* List of Subsidiaries of the Registrant filed herewith 23.1* Consent of Hacker Johnson & Smith PA filed herewith 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 filed herewith 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 filed herewith 32* Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. filed herewith 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 (embedded within the Inline XBRL and contained in Exhibit 101) * Filed herewith ** Furnished herewith † Management contract or compensatory plan, contract or arrangement 23 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BIOLARGO, INC. Date: March 4, 2026 By: /s/ Dennis P. Calvert Dennis P. Calvert President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints, jointly and severally, Dennis P. Calvert and Joseph L. Provenzano, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated: Name Title Date /s/ Dennis P. Calvert Chairman of the Board, Chief March 4, 2026 Dennis P. Calvert Executive Officer and President /s/ Charles K. Dargan II Chief Financial Officer March 4, 2026 Charles K. Dargan II (principal financial officer and principal accounting officer) /s/ Kenneth R. Code Chief Science Officer and Director March 4, 2026 Kenneth R. Code /s/ Joseph L. Provenzano Executive Vice President, Corporate March 4, 2026 Joseph L. Provenzano Secretary and Director /s/ Jack B. Strommen Director March 4, 2026 Jack B. Strommen /s/ Dennis E. Marshall Director March 4, 2026 Dennis E. Marshall /s/ Linda Park Director March 4, 2026 Linda Park /s/Christina Bray Director March 4, 2026 Christina Bray 24 Table of Contents INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB name: HACKER JOHNSON & SMITH PA and PCAOB ID: 400 ) F-2 Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 F-5 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors BioLargo, Inc. Westminster, California: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of BioLargo, Inc. and Subsidiaries (the "Company"), as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for the years then ended and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, has negative cash flow from operations and has a significant accumulated deficit. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Fair Value of Stock Options and Warrants - Critical Audit Matter Description As more fully described in Notes 2, 5 and 10 to the consolidated financial statements, the Company issues options from both BioLargo, Inc. as well as its partially-owned subsidiary, Clyra Medical. Management uses the Black-Scholes option-pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option-pricing model involves the use of significant estimates, including the following: - Risk-free interest rate; - Expected stock price volatility; - Expected dividend yield; and - Expected life of the award. In addition, management discounts the estimated fair value of the Clyra Medical stock options because the partially-owned subsidiary is a private company with no secondary market for its common stock. Given the significant estimates involved in estimating the fair value of stock options and warrants, the related audit effort in evaluating management’s estimates in determining the fair value of stock options and warrants was extensive and required a high degree of auditor judgment. F-2 Table of Contents To the Stockholders and the Board of Directors BioLargo, Inc. Page Three How the Critical Audit Matter was Addressed in the Audit We obtained an understanding over the Company's process to estimate the fair value of stock options and warrants, including how the Company develops each of the estimates required to utilize the Black-Scholes option- pricing model. We applied the following audit procedures related to testing the Company's estimates utilized in the Black-Scholes option-pricing model: - We compared the Company's risk-free interest rate used to the comparable United States Treasury yield for a term comparable to the stock options' and warrants' expected term. - We recalculated the Company's historical stock price volatility for a term comparable to the stock options' and warrants' expected term. For Clyra Medical, we recalculated a comparable public company's historical share price volatility for a term comparable to the stock options' and warrants' expected term. - We performed a look-back at the Company's previously issued dividends, noting there were none. We inquired with management of the Company who informed us that no future dividends were currently anticipated. - We agreed the expected term of stock options and warrants granted to employees and nonemployees to the original contractual term of the option as management deems it likely they will remain outstanding for the entire original term. We further noted that this was consistent with historical options granted. In addition, we reviewed management's analysis over the fair value of the common stock price and discount that was used on the estimated fair value of the Clyra Medical stock options and warrants. We noted that Clyra Medical is a private company and therefore its common stock is not actively traded. We reviewed both the common stock and preferred stock sales history of Clyra Medical, noting the last sales prices. Management concluded that both the illiquidity and lack of marketability warranted a discount to the estimated fair value calculated using the Black-Scholes option-pricing model. From our review of the common stock sales history of Clyra Medical, we noted that the infrequent common stock sales support management's assertions of both illiquidity and lack of marketability. We further researched published articles on valuation discounts and noted that the liquidity and lack of marketability discount used by management was within a reasonable range. /S/ HACKER, JOHNSON & SMITH PA Tampa, Florida We have served as the Company's auditor since 2023. March 4, 2026 F-3 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) DECEMBER 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 3,883 $ 3,548 Accounts receivable, net of allowance 615 3,168 Inventories, net of allowance 310 330 Prepaid expenses and other current assets 306 91 Total current assets 5,114 7,137 Equipment and leasehold improvements, net 1,643 1,742 Other non-current assets 106 95 Operating lease right-of-use assets, net of amortization 1,028 992 Financing lease right-of-use asset, net of amortization 338 451 Clyra Medical note receivable 82 82 Investment in South Korean joint venture — 14 Total assets $ 8,311 $ 10,513 Liabilities and stockholders’ equity Current liabilities: Accounts payable and accrued expenses $ 1,211 $ 946 Clyra Medical accounts payable and accrued expenses 1,592 867 Clyra Medical debt obligations, net of discount $ 139 and $ 80 1,395 486 Debt obligations 83 66 Contract liability 280 — Operating lease liability 210 105 Finance lease liability 103 88 Deposits 189 90 Total current liabilities 5,063 2,648 Long-term liabilities: Debt obligations, net of current 182 175 Clyra Medical debt obligations, net of current and discount $ 56 and $ 80 419 352 Operating lease liability, net of current 864 922 Finance lease liability, net of current 257 360 Total long-term liabilities 1,722 1,809 Total liabilities 6,785 4,457 CONTINGENCIES (Note 14) STOCKHOLDERS’ EQUITY: Preferred Series A, $ 0.00067 Par Value, 50,000,000 Shares Authorized, no Shares Issued and Outstanding, at December 31, 2025 and December 31, 2024 — — Common stock, $ 0.00067 Par Value, 550,000,000 Shares Authorized, 317,377,777 and 301,274,243 Shares Issued, at December 31, 2025 and December 31, 2024 213 202 Additional paid-in capital 165,316 158,332 Accumulated deficit ( 161,280 ) ( 149,500 ) Accumulated other comprehensive loss ( 207 ) ( 183 ) Total BioLargo Inc. and subsidiaries stockholders’ equity 4,042 8,851 Non-controlling interest (Note 9, 10, 11) ( 2,516 ) ( 2,795 ) Total stockholders’ equity 1,526 6,056 Total liabilities and stockholders’ equity $ 8,311 $ 10,513 See accompanying notes to consolidated financial statements and report of Independent Registered Public Accounting Firm. F-4 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except per share data) Year ended December 31, 2025 2024 Revenue Product revenue $ 5,767 $ 16,762 Service revenue 1,998 1,017 Total revenue 7,765 17,779 Cost of revenue Cost of goods sold ( 3,013 ) ( 9,065 ) Cost of service ( 1,346 ) ( 861 ) Total cost of revenue ( 4,359 ) ( 9,926 ) Gross profit 3,406 7,853 Operating expenses: Selling, general and administrative expenses 11,768 9,302 Research and development 2,593 2,882 Impairment expense 14 — Credit loss expense 3,886 — Total operating expenses 18,261 12,184 Operating loss ( 14,855 ) ( 4,331 ) Other income (expense): PPP forgiveness — 97 Finance fee — ( 106 ) Grant income 6 26 Interest income 200 38 Interest expense ( 540 ) ( 71 ) Total other expense ( 334 ) ( 16 ) Net loss ( 15,189 ) ( 4,347 ) Net loss attributable to noncontrolling interest ( 3,409 ) ( 1,945 ) Net loss attributable to common stockholders $ ( 11,780 ) $ ( 2,402 ) Net loss per share attributable to common stockholders: Loss per share attributable to stockholders – basic and diluted $ ( 0.04 ) $ ( 0.01 ) Weighted average number of common shares outstanding: 306,954,778 298,122,239 Comprehensive loss attributable to common stockholders Net loss $ ( 15,189 ) $ ( 4,347 ) Foreign currency translation adjustment ( 24 ) 94 Comprehensive loss ( 15,213 ) ( 4,253 ) Comprehensive loss attributable to noncontrolling interest ( 3,409 ) ( 1,945 ) Comprehensive loss attributable to stockholders $ ( 11,804 ) $ ( 2,308 ) See accompanying notes to consolidated financial statements and report of Independent Registered Public Accounting Firm. F-5 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY YEARS ENDED DECEMBER 31, 2025 AND 2024 (in thousands, except for share data) Accumulated Additional other Non- Total Common stock paid-in Accumulated comprehensive controlling stockholders’ Shares Amount capital deficit Loss interest equity Balance, December 31, 2023 292,945,747 $ 196 $ 154,023 $ ( 147,098 ) $ ( 277 ) $ ( 2,642 ) $ 4,202 Stock for cash, net offering costs of $ 85 2,614,895 2 592 — — — 594 Issuance of stock for services 1,107,594 1 283 — — — 284 Issuance of common stock in exchange for BETI shares 378,788 — — — — — — Warrant exercise 3,278,337 3 753 — — — 756 Stock option compensation expense — — 1,535 — — — 1,535 Stock option exercise 948,882 — 153 — — — 153 Clyra Medical stock option compensation expense — — — — — 528 528 Clyra Medical stock issued for services — — — — — 132 132 Clyra Medical dividend Series A Preferred stock — — — — — ( 345 ) ( 345 ) Clyra Medical warrant exercise — — — — — 30 30 Clyra Medical warrant fee — — — — — 106 106 Clyra Medical stock unit offering — — — — — 2,005 2,005 Clyra Medical conversion of note payable and interest — — — — — 119 119 Clyra Medcial fair value of warrants issued with note payable — — — — — 160 160 BETI unit offering — — — — — 50 50 Noncontrolling interest allocation — — 993 — — ( 993 ) — Net loss — — — ( 2,402 ) — ( 1,945 ) ( 4,347 ) Foreign translation adjustment — — — — 94 — 94 Balance, December 31, 2024 301,274,243 $ 202 $ 158,332 $ ( 149,500 ) $ ( 183 ) $ ( 2,795 ) $ 6,056 Sale of common stock for cash, net of offering costs of $ 310 12,876,702 9 2,018 — — — 2,027 Issuance of common stock for services 2,807,771 2 555 — — — 557 Stock option compensation expense — — 1,762 — — — 1,762 Stock option exercise 265,800 — — — — — — Exchange of BETI stock for Biolargo common stock 153,261 — — — — — — Clyra Medical stock option compensation expense — — — — — 1,203 1,203 Clyra Medical stock issued for services — — — — — 76 76 Clyra Medical stock issued to convert debt — — — — — 250 250 Clyra Medical sales of Series B Preferred stock — — — — — 2,145 2,145 Clyra Medical stock unit offering — — — — — 445 445 Clyra Medical dividend Series A Preferred stock — — — — — ( 347 ) ( 347 ) Clyra Medical fair value warrant issued with debt — — — — — 231 231 Clyra Medical Unit Warrant offering — — — — — 1,894 1,894 BETI unit offering — — — — — 425 425 BETI stock issued for services — — — — — 15 15 Noncontrolling interest allocation — — 2,649 — — ( 2,649 ) — Net loss — — — ( 11,780 ) — ( 3,409 ) ( 15,189 ) Foreign currency translation — — — — ( 24 ) — ( 24 ) Balance, Year Ended December 31, 2025 317,377,777 $ 213 $ 165,316 $ ( 161,280 ) $ ( 207 ) $ ( 2,516 ) $ 1,526 See accompanying notes to consolidated financial statements and report of Independent Registered Public Accounting Firm. F-6 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except for per share data) YEARS DECEMBER 31, 2025 2024 Cash flows from operating activities Net loss $ ( 15,189 ) $ ( 4,347 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock option compensation expense 2,965 2,063 Common stock issued for services 648 416 Credit loss expense 3,886 13 Operating lease right-of-use assets amortization 148 100 Finance lease right -of-use asset amortization 113 — Operating lease liabilities, net ( 137 ) ( 82 ) Finance lease liability, net ( 88 ) — Interest expense related to amortization of the discount on note payable 196 — Fair value of warrants issued for a fee and interest — 106 Loss on investment in South Korean joint venture 14 5 PPP forgiveness — ( 97 ) Depreciation expense 145 155 Changes in assets and liabilities: Accounts receivable ( 1,814 ) ( 569 ) Inventories 20 ( 177 ) Prepaid expenses and other assets ( 226 ) ( 58 ) Accounts payable and accrued expenses 266 ( 542 ) Deposits 99 ( 27 ) Clyra accounts payable and accrued expenses 377 138 Contract liabilities 280 ( 303 ) Net cash used in operating activities ( 8,297 ) ( 3,206 ) Cash flows from investing activities Equipment purchases ( 46 ) ( 1,235 ) Clyra Medical note receivable — ( 82 ) Repayment of note receivable 481 — Net cash provided by (used in) investing activities 435 ( 1,317 ) Cash flows from financing activities Proceeds from sale of common stock, net of offering costs 2,027 594 Proceeds from BioLargo stock option exercise — 153 Proceeds from BioLargo warrant exercise — 756 Proceeds (repayments) from debt obligations, net 24 ( 14 ) Proceeds from sale of preferred stock in Clyra Medical 2,145 — Proceeds from sale of common stock unit offering in Clyra Medical 445 2,005 Proceeds from Clyra Medical unit warrant exercise 1,894 30 Proceeds from Clyra Medical note payable 1,261 864 Proceeds from sale of BETI common stock 425 50 Net cash provided by financing activities 8,221 4,438 Net effect of foreign currency translation ( 24 ) 94 Net change in cash 335 9 Cash at beginning of year 3,548 3,539 Cash at end of year $ 3,883 $ 3,548 Supplemental disclosures of cash flow information Cash paid during the year for: Interest $ 344 $ 33 Income taxes $ — $ — Short-term lease payments not included in lease liability $ 51 $ 49 Non-cash investing and financing activities Conversion of accounts receivable to a note receivable $ 3,764 $ — Clyra preferred series A dividend $ 347 $ 345 Conversion of debt into shares of BioLargo common stock $ — $ 119 Conversion of Clyra note payable into Clyra shares $ 250 $ — Conversion of BETI common sotck to BioLargo common stock $ 25 $ — Fair value of warrants issued with Clyra Medical note payable $ 231 $ 160 Present value of new Clyra Medical right-of-use asset and operating lease liability $ 184 $ — Present value of new financing right of use and lease liability $ — $ 451 Allocation of noncontrolling interest $ 2,649 $ 993 See accompanying notes to consolidated financial statements and report of Independent Registered Public Accounting Firm F-7 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 . Business and Organization Description of Business BioLargo, Inc. (“BioLargo”, or the “Company”) invents, develops, and commercializes innovative platform technologies to solve challenging environmental problems like PFAS contamination (per- and polyfluoroalkyl substances), advanced water and wastewater treatment, industrial odor control, air quality control, infection control, and myriad environmental remediation challenges. Our business strategy is straightforward: we invent or acquire technologies that we believe have the potential to be disruptive in large commercial markets; we develop and validate these technologies to advance and promote their commercial success as we leverage our considerable scientific, engineering, and entrepreneurial talent; we then monetize these technical assets through a variety of business structures that may include licensure, joint venture, sale, spin off, or by deploying direct to market strategies. Liquidity / Going concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of our business. During the year ended December 31, 2025 , we generated revenues of $ 7,765,000 , had a net loss of $ 15,189,000 , and used $ 8,297,000 cash in operations. At December 31, 2025 , we had working capital of $ 51,000 , and current assets of $ 5,114,000 . We do not believe gross profits in the year ending December 31, 2026 will be sufficient to fund our current level of operations. We have been, and anticipate that we will continue to be, limited in terms of our capital resources. As of December 31, 2025 , our cash and cash equivalents totaled $ 3,883,000 , and our total liabilities included $ 2,079,000 debt, of which $ 1,814,000 was owed by Clyra Medical and of that amount, $ 1,395,000 is due within one year. Therefore, we intend to continue to raise investment capital through the sale of our securities and the securities of our subsidiaries. To meet our cash obligations during the year-ended December 31, 2025 , we (i) sold $ 2,122,000 of our common stock to Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 3 ), (ii) sold $ 215,000 of our common stock and warrants to accredited investors (see Note 3 and Note 6 ), (iii) sold $ 2,339,000 , of Clyra Medical common stock and sold $ 2,145,000 Clyra Medical Series B Preferred stock (see Note 10 ), and (iv) sold $ 425,000 of BETI common stock (see Note 9 ). To reduce our operational cash burdens, we regularly issue officers and vendors stock or options in lieu of cash and anticipate that we will continue to be able to do so in the future. Since January 1, 2026, through March 4, 2026 ( see Note 16, Subsequent Events ), Clyra Medical has received $ 1,705,000 and issued three -year promissory notes in that amount, BETI has sold $ 462,000 of its common stock, and BioLargo Inc. sold $ 170,704 of common stock to Lincoln Park (prior to the February 1, 2026 expiration of our Purchase Agreement with Lincoln Park). The foregoing factors raise substantial doubt about our ability to continue as a going concern, unless we are able to continue to rely on an institutional equity line such as our arrangement with Lincoln Park or other private financings, and in the long term, attain a reasonable threshold of operating efficiencies and achieve profitable operations by licensing or otherwise commercializing products incorporating our technologies. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Organization We are a Delaware corporation formed in 1991. We have five wholly-owned subsidiaries: BioLargo Life Technologies, Inc., organized under the laws of the State of California in 2006; ONM Environmental, Inc., organized under the laws of the State of California in 2009; BioLargo Equipment Solutions & Technologies, Inc., organized under the laws of the State of California in 2022; BioLargo Canada, Inc., organized under the laws of Canada in 2014; and BioLargo Development Corp., organized under the laws of the State of California in 2016. Additionally, we own 95 % (see Note 9 ) of BioLargo Energy Technologies, Inc. ("BETI") organized under the laws of the State of California in 2019, 48 % (see Note 10 ) of Clyra Medical Technologies, Inc. (“Clyra” or “Clyra Medical”), organized under the laws of the State of California in 2012 and redomiciled to Delaware in 2023, and 70 % (see Note 11 ) of BioLargo Engineering Science & Technologies, LLC (“BLEST”), organized under the laws of the State of Tennessee in 2017. We consolidate the financial statements of our partially owned subsidiaries (see Note 2 , subheading “Principles of Consolidation”). Note 2 . Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and partially-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Foreign Currency The Company has designated the functional currency of BioLargo Canada to be the Canadian dollar. Therefore, translation gains and losses resulting from differences in exchange rates are recorded in accumulated other comprehensive loss. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when acquired to be cash equivalents. Substantially all cash equivalents are held in short-term money market accounts at one of the largest financial institutions in the United States (“U.S.”). From time to time, our cash account balances are greater than the Federal Deposit Insurance Corporation insurance limit of $250,000 per owner per bank, and during such times, we are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the financial institution. We do not anticipate non-performance by our financial institution. Our cash balances were made up of the following (in thousands): December 31, December 31, 2025 2024 BioLargo, Inc. and subsidiaries $ 2,826 $ 3,175 Clyra Medical Technologies, Inc. 1,057 373 Total $ 3,883 $ 3,548 F- 8 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounts Receivable Accounts receivable are customer obligations that are unconditional. Accounts receivable are presented net of an allowance for credit losses for expected credit losses, which represents an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and, if necessary, provides an allowance for expected credit losses. A credit loss expense for expected credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment, and the Company’s historical experience. The Company writes off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues collection of the receivable. The Company does not have any off-balance-sheet credit exposure related to customers. As of December 31, 2025 and 2024 , the allowance for expected credit losses related to accounts receivable was $ 700,000 and $ 97,000 , respectively. Allowance for Credit Losses The Company recognizes an expected allowance for credit losses with respect to its note and accounts receivable. In addition, also at each reporting date, this estimate is updated to reflect any changes in credit risk since the receivable was initially recorded. This estimate is calculated on a pooled basis where similar risk characteristics exist. Accounts receivable are evaluated individually when they do not share similar risk characteristics which could exist in circumstances where amounts are considered at risk or uncollectible This estimate is adjusted for management's assessment of current conditions, reasonable and supportable forecasts regarding future events, and any other factors deemed relevant by the Company. The Company believes historical loss information is a reasonable starting point in which to calculate the expected allowance for credit losses. The Company writes off receivables when there is information that indicates the customer is facing significant financial difficulty and there is no possibility of recovery. If any recoveries are made from any accounts previously written off, they will be recognized in operations or an offset to note and credit loss expense in the year of recovery, in accordance with the entity's accounting policy election. On June 6, 2025, ONM Environmental entered into an amendment to the June 2021 Preferred Master Manufacturing Agreement with Ikigai Holdings, LLC and Pooph Inc. to allow Pooph Inc. to pay past due amounts of $1,378,141 in royalties and $ 2,385,468 on product invoices through a weekly payment plan bearing 10 % interest and maturing July 3, 2026 ( the “PMMA Amendment”). This amount was recorded on our consolidated balance sheet at June 30, 2025, as a note receivable. The PMMA Amendment also modified payment and invoicing terms on existing and future product purchase orders, and allowed ONM Environmental to withhold product if the payment terms were not met. On August 5, 2025, Pooph Inc. delivered a royalty report due for the second quarter of 2025, but did not pay the $ 463,520 in royalties due. On August 15, 2025, it failed to make the weekly payment required pursuant to the PMMA Amendment, and has not made a payment since. On September 19, 2025, Pooph Inc. disclosed that it had been working independently on developing a new formula for Pooph-branded products to replace BioLargo's formula, and that it was terminating the Preferred Master Manufacturing Agreement, citing ONM's refusal to deliver products. On September 24, 2025, BioLargo and ONM delivered notice to Pooph that its license grant was immediately revoked due to Pooph’s failure to pay royalties, and that it was terminating the License Agreement in its entirety with 150 days’ notice. The notice further advised that Pooph is not allowed to market or sell products that incorporate, use, or are based on, in whole or in part, BioLargo’s patents and proprietary information, including but not limited to know-how, disclosed to Pooph, and that absent reinstatement of the grant of license, Pooph must immediately stop marketing and selling any such products in its possession, custody or control (or sold through market portals or platforms such as Amazon). On November 11, 2025, BioLargo Inc. and ONM Environmental filed a lawsuit against Pooph Inc. and Ikigai Marketing Works LLC (successor entity to Ikigai Holdings LLC) in the United States District Court for the Central District of California in part to recover the amounts due for product purchases and royalties. (See Note 14 , "Legal Proceedings".) During the year ended December 31, 2025, BioLargo management determined that the note receivable and accounts receivable owed by Pooph Inc. were fully impaired, resulting in a $ 3,886,000 credit loss expense recorded on our consolidated statement of operations, which reduced operating income and current assets by that amount. There were no write-offs of accounts receivable during the years ended December 31, 2025 and 2024. During 2025 the Company had a $ 3,764,000 write off of a note receivable. Credit Concentration We have a limited number of customers that account for significant portions of our revenue. During the years ended December 31, 2025 and 2024 there was one customer that accounted for more than 10% of consolidated revenues, as follows: December 31, December 31, 2025 2024 Customer A 59 % 77 % We had one customer that accounted for more than 10% of consolidated accounts receivable at December 31, 2024 , as follows: December 31, December 31, 2025 2024 Customer A 0 % 82 % Inventory Inventories are stated at the lower of cost or net realizable value using the average cost method. There was no allowance for obsolete inventory as of December 31, 2025 and 2024 . Inventories consisted of (in thousands): December 31, December 31, 2025 2024 Raw material $ 125 $ 210 Finished goods 185 120 Total $ 310 $ 330 F- 9 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other Non-Current Assets Other non-current assets consisted of (i) security deposits related to our business offices and leases, (ii) three patents acquired on October 22, 2021 (in thousands): December 31, December 31, 2025 2024 Patents $ 34 $ 34 Security deposits 72 61 Total $ 106 $ 95 Equity Method of Accounting On March 20, 2020 , we invested $ 100,000 into a South Korean entity (Odin Co. Ltd., “Odin”) pursuant to a Joint Venture agreement we had entered into with BKT Co. Ltd. and its U.S. based subsidiary, Tomorrow Water. We received a 40 % non-dilutive equity interest, and BKT and Tomorrow Water each received 30 % equity interests for an aggregate $ 150,000 investment. We account for our investment in the joint venture under the equity method of accounting. We have determined that while we have significant influence over the joint venture through our technology license and our position on the Board of Directors, we do not control the joint venture or are otherwise involved in managing the entity and we own less than a majority of the equity. Therefore, we record the asset on our consolidated balance sheets and record an increase or decrease the recorded balance by our percentage ownership of the profits or losses in the joint venture. During the years ended December 31, 2025 and 2024 , the joint venture incurred a loss and our 40 % ownership share was determined by management to be impaired and we reduced our investment interest by $ 14,000 and $ 5,000 , respectively, such that as of December 31, 2025, it is completely written off. Impairment Long-lived and definite lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future undiscounted cash flows from the use of the asset and its eventual disposition is less than the carrying amount of the asset, then an impairment loss is recognized. The impairment loss is measured based on the fair value of the asset. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. Loss Per Share We report basic and diluted loss per share (“LPS”) for common and common share equivalents. Basic LPS is computed by dividing reported earnings by the weighted average shares outstanding. Diluted LPS is computed by adding to the weighted average shares the dilutive effect if stock options and warrants were exercised into common stock. For the years ended December 31, 2025 and 2024 , the denominator in the diluted LPS computation is the same as the denominator for basic LPS due to the Company’s net loss which creates an anti-dilutive effect of the warrants and stock options. Potentially dilutive securities are not included in the calculation of diluted LPS attributable to common stockholders because to do so would be anti-dilutive as of December 31, 2025 and 2024 , are as follows (in common stock equivalent shares): 2025 2024 Stock options 72,566,578 60,047,577 Warrants 31,244,078 31,615,616 Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the year reported. Actual results could differ from those estimates. Estimates are used when accounting for stock-based transactions, debt transactions, allowance for credit losses, asset depreciation and amortization, impairment expense, among others. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results of our consolidated financial statements. Share-Based Compensation Expense We recognize compensation expense for stock option awards on a straight-line basis over the applicable service period of the award, which is the vesting period. Fair value is determined on the grant date. Share-based compensation expense is based on the grant date fair value estimated using the Black-Scholes option pricing model. For stock and stock options issued to consultants and other non-employees for services, the Company measures and records an expense as of the earlier of the date at which either: a commitment for performance by the non-employee has been reached or the non-employee’s performance is complete. The equity instruments are measured at the current fair value, and for stock options, the instruments are measured at fair value using the Black Scholes option pricing model. The following methodology and assumptions were used to calculate share-based compensation for the years ended December 31, 2025 and 2024 : 2025 2024 Non Plan 2024 Plan Non Plan 2018 Plan 2024 Plan Risk free interest rate 4.10 - 4.23 % 3.69 - 4.58 % 3.81 - 4.34 % 4.16 % 3.75 - 4.58 % Expected volatility 87 - 91 % 73 - 91 % 95 - 117 % 99 % 91 - 96 % Expected dividend yield — — — — — Forfeiture rate — — — — — Life in years 10 5 - 10 10 10 10 F- 10 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Expected price volatility is the measure by which our stock price is expected to fluctuate during the expected term of an option. Expected volatility is derived from the historical daily change in the market price of our common stock, as we believe that historical volatility is the best indicator of future volatility. The risk-free interest rate used in the Black Scholes option pricing model calculation is based on the prevailing U.S. Treasury yield as determined by the U.S. Federal Reserve. We have never paid any cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. Warrants Warrants issued with our convertible and non-convertible debt instruments are accounted for under the fair value and relative fair value method. The warrant is first analyzed per its terms as to whether it has derivative features or not . If the warrant is determined to be a derivative and not qualify for equity treatment, then it is measured at fair value using the Black Scholes option pricing model and recorded as a liability on the consolidated balance sheets. The warrant is re-measured at its then current fair value at each subsequent reporting date (it is “marked-to-market”). If the warrant is determined to not have derivative features, it is recorded into equity at its fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the convertible note. Convertible debt instruments are recorded at fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant. The warrant relative fair values are also recorded as a discount to the convertible promissory notes. As present, these equity features of the convertible promissory notes have recorded a discount to the convertible notes that is substantially equal to the proceeds received. Non-Cash Transactions We have established a policy relative to the methodology to determine the value assigned to each intangible we acquire, and/or services or products received for non-cash consideration of our common stock. The value is based on the market price of our common stock issued as consideration, at the date of the agreement of each transaction or when the service is rendered, or product is received. Revenue Recognition We account for revenue in accordance with Accounting Standards Codification ("ASC") 606 , “Revenue from Contacts with Customers”. The guidance focuses on the core principle for revenue recognition, which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the guidance provides that an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. The Company’s products are sold through a contract with the customer and a written purchase order, in which the details of the contract are defined including the transaction price and method of shipment. The only performance obligation is to create and ship the product, and each product has separate pricing. Revenue is recognized at a point in time when the goods are shipped if the agreement is FOB manufacturer, and when goods are delivered if FOB destination. Revenue is recognized with a reduction for sales discounts, as appropriate and negotiated in the customer’s purchase order. Service contracts are performed through a written contract, which specifies the performance obligations and the rate at which the services will be billed, typically by time and materials. Each service is separately negotiated and priced. Revenue is recognized as services are performed and completed, or, for services related to product installations, at the completion of the installation. A few contracts have called for milestone or fixed cost payments, where we invoice an agreed-to amount per month for the life of the contract. In these instances, completed work, billed hourly, is recognized as revenue. If the billing amount is greater or lesser than the completed work, a receivable or payable is created. These accounts are adjusted upon additional billings as the work is completed. To date, there have been no discounts or other financing terms for the contracts. The Company has outstanding contract liability obligations of $ 280,000 and $ 0 as of December 31, 2025 and 2024 , respectively. The outstanding balance will be recognized per the terms of the contracts. BioLargo Water, our Canadian subsidiary, had a customer deposit outstanding at December 31, 2025 and 2024 , totaling $ 80,000 and $ 76,000 , that was awarded as part of a grant for a particular project that has been delayed. ONM Environmental had a customer deposit outstanding at December 31, 2025 and 2024 , totaling $ 109,000 and $ 14,000 , related to customer purchase orders not yet fulfilled. As we generate revenues from royalties or license fees from our intellectual property, a licensee will pay a license fee in one or more installments and ongoing royalties based on their sales of products incorporating or using our licensed intellectual property. We have entered into a licensing agreement for the CupriDyne Clean product, and we recognize royalty and license fees on a quarterly basis as the product is sold through to third parties and reported to us. Government Grants We have been awarded multiple research grants from the private and public Canadian research programs. Income we receive directly from grants is recorded as other income. We have been awarded over 90 grants since our first in 2 015 . Some of the funds from these grants are given directly to third parties (such as the University of Alberta or a third -party research scientist) to support research on our technology. The grants have terms generally ranging between six and eighteen months and support a majority, but not all, of the related research budget costs. This cooperative research allows us to utilize (i) a depth of resources and talent to accomplish highly skilled work, (ii) financial aid to support research and development costs, (iii) independent and credible validation of our technical claims. The grants typically provide for (i) recurring monthly amounts, (ii) reimbursement of costs for research talent for which we invoice to request payment, and (iii) ancillary cost reimbursement for research talent travel related costs. All awarded grants have specific requirements on how the money is spent, typically to employ researchers. None of the funds may be used for general administrative expenses or overhead in the United States. These grants have substantially increased our level of research and development activities in Canada. We continue to apply for Canadian government and agency grants to fund research and development activities. Not all of our grant applications have been awarded, and no assurance can be made that any pending grant application, or any future grant applications, will be awarded. F- 11 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of asset and liabilities. Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax asset and liabilities of a change in tax rates is recognized in operations in the year that includes the enactment date. We account for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. Under GAAP, the tax effects of a position are recognized only if it is “more-likely-than- not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than- not” to be sustained, then no benefits of the position are recognized. Management believes there are no unrecognized tax benefits or uncertain tax positions as of December 31, 2025 and 2024 . The Company assessed its earnings history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of December 31, 2025 . Accordingly, a valuation allowance was recorded against the net deferred tax asset. The Company recognizes interest and penalties on income taxes as a component of income tax expense, should such an expense be realized. Fair Value of Financial Instruments Management believes the carrying amounts of the Company’s financial instruments as of December 31, 2025 and 2024 approximate their respective fair values because of the short-term nature of these instruments. Such instruments consist of cash, accounts receivable, accounts payable, and line of credit. The carrying amount of debt instruments are believed to approximate fair value as the stated interest rates are reflective of the prevailing market rates. Tax Credits Our research and development activities in Canada may entitle our Canadian subsidiary to claim benefits under the “Scientific Research and Experimental Development Program”, a Canadian federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada. Benefits under the program include credits to taxable income. If our Canadian subsidiary does not have taxable income in a reporting period, we will not receive tax refund from the Canadian Revenue Authority. Leases At inception of a lease contract, we assess whether the contract is, or contains, a lease. Our assessment is based on: ( 1 ) whether the contract involves the use of a distinct identified asset, ( 2 ) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period of the contract, and ( 3 ) whether we have the right to direct the use of the asset during such time period. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases are classified as either finance leases or operating leases. A lease must be classified as a finance lease if any of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any of these criteria. We have one lease classified as finance leases. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, management estimates the incremental borrowing rate, which currently is estimated to be 18 %. Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease components are included in the measurement of the initial lease liability. Additional payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability. Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of short-term leases on our right-of-use asset and lease liability was not material. As of December 31, 2025 and 2024 , the operating lease right-of-use assets totaled $ 1,028,000 , and $ 992,000 , respectively. As of December 31, 2025 and 2024 , the operating lease liability totaled $ 1,074,000 and $ 1,027,000 , respectively, on our consolidated balance sheets related to our leases. The finance lease is related to Clyra Medical. As of December 31, 2025 and 2024 , the finance lease right-of-use asset for Clyra Medical totaled $ 338,000 and $ 451,000 , and the finance lease liability totaled $ 360,000 and $ 448,000 (see Note 10 ). Equipment and leasehold improvements Equipment and leasehold improvements is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 3 - 10 years. Additions, renewals, and betterments that significantly extend the life of the asset are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts, and any related gain or loss is reflected in operations for the year. Equipment and leasehold improvements as of December 31, 2025 and 2024 is as follows (in thousands): 2025 2024 Equipment $ 1,724 $ 1,678 Leasehold improvements 526 526 Total, at cost 2,250 2,204 Less: accumulated depreciation ( 607 ) ( 462 ) Total equipment and leasehold improvements, net $ 1,643 $ 1,742 F- 12 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Noncontrolling Interest A noncontrolling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the primary beneficiary. Noncontrolling interests are required to be presented as a separate component of equity on a consolidated balance sheets. Accordingly, the presentation of net income (loss) is modified to present the income (loss) attributed to controlling and non-controlling interests. The noncontrolling interest on the Company’s consolidated balance sheets represents equity not held by the Company. In accordance with ASC 810 - 10 - 20, “Noncontrolling Interests” BioLargo consolidates three non-wholly owned subsidiaries - Clyra, BLEST and BETI. Noncontrolling interest of Clyra represents 52 % and 47 % as of December 31, 2025 and 2024 . Noncontrolling interest of BLEST represents 30 % and 26 % as of December 31, 2025 and 2024 , respectively. Noncontrolling interest of BETI represents 5 % and 4 %as of December 31, 2025 and 2024 . Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023 - 09, “Improvements to Income Tax Disclosures.” ASU 2023 - 09 requires disclosure of specific categories in the income tax rate reconciliation and requires additional information for reconciling items that meet a quantitative threshold. The standard requires an annual disclosure of income taxes paid, net of refunds received, disaggregated by federal, state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. The standard is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted. The adoption of the standard did not have a material impact on the Company's disclosures. In November 2024, the FASB issued ASU 2024 - 03, “Expense Disaggregation Disclosures.” ASU 2024 - 03 requires disclosure to disaggregate prescribed expenses within relevant income statement captions. The standard is effective for fiscal years beginning after December 15, 2026, and for interim periods after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of the changes to its existing disclosures. In July 2025, the FASB issued ASU No. 2025 - 05, Financial Instruments – Credit Losses (Topic 326 ): Measurement of Credit Losses for Accounts Receivable and Contract Assets The ASU provides an optional practical expedient for estimating future credit losses based on current conditions as of the balance sheet date and assuming those conditions do not change over the remaining life of the accounts receivable. This standard is effective for the Company on January 1, 2026. The adoption of this ASU did not have a material impact on the consolidated results of operations and financial condition. In September 2025, the FASB issued ASU No. 2025 - 06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350 - 40 ): Targeted Improvements to the Accounting for Internal-Use Software. The ASU removes references to prescriptive software development stages and includes an updated framework for capitalizing internal software costs. This standard is effective for the Company on January 1, 2028. The Company is currently evaluating this ASU’s impact on the consolidated results of operations and financial condition. Note 3 . Sale of Stock for Cash Lincoln Park Financing On December 13, 2022, we entered into a stock purchase agreement (the “Purchase Agreement”) with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us at our request up to an aggregate of $ 10,000,000 of our common stock (subject to certain limitations) from time to time until February 1, 2026. The agreement allowed us, at our sole discretion, to direct Lincoln Park to purchase shares of our common stock, subject to limitations in both volume and dollar amount. The purchase price of the shares that may be sold to Lincoln Park under the agreement is the lower of (i) the lowest sale price on the date of purchase, or (ii) the average of the three lowest closing prices in the prior 12 business days. Concurrently with the Purchase Agreement we entered into a Registration Rights Agreement, pursuant to which we filed a registration statement on Form S- 1 with the SEC on December 23, 2022. This registration statement was declared effective on January 19, 2023. During the years ended December 31, 2025 and 2024 , we sold 11,745,123 and 766,175 shares of our common stock to Lincoln Park, and received $ 2,122,000 and $ 260,000 , respectively, in gross proceeds. Our Consolidated Statements of Stockholder Equity includes a $ 250,000 offering cost due pursuant to the Purchase Agreement that as of December 31, 2025, was outstanding. Unit Offerings During the year ended December 31, 2025 , we sold 1,131,579 shares of our common stock and received $ 215,000 and $ 155,000 in gross and net proceeds from accredited investors. During the year ended December 31, 2024 , we sold 1,848,720 shares of our common stock and received $ 419,000 and $ 334,000 in gross and net proceeds from accredited investors. (See Note 6 , “Warrants Issued in Unit Offering”.) Note 4 . Debt Obligations The following table summarizes our debt obligations outstanding as of December 31, 2025 and 2024 (in thousands). The table does not include debt obligations of our partially owned subsidiary Clyra Medical (see Note 10 , “Debt Obligations of Clyra Medical”). December 31, 2025 2024 Current portion of debt: SBA Paycheck Protection Program loan $ 43 $ 43 Vehicle loan, current portion 13 13 Term loan, current portion 17 — SBA EIDL Loan, matures July 2053, current portion 10 10 Total current portion of debt $ 83 $ 66 Long-term debt: Vehicle loan, matures March 2029 $ 29 $ 41 Term loan, matures April 2028 22 — SBA EIDL Loan, matures July 2053 131 134 Total long-term debt, net of current $ 182 $ 175 Total $ 265 $ 241 F- 13 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2025 and 2024 , we recorded $ 540,000 and $ 71,000 of interest expense related to the coupon interest from our convertible notes and lines of credit, inclusive of Clyra Medical. For the years ended December 31, 2025 and 2024 , we recorded $ 200,000 and $ 38,000 of interest income, inclusive of Clyra Medical. Vehicle loan On February 7, 2023, we entered a loan agreement with Bank of America for the purchase of a commercial vehicle used in operations totaling $ 80,000 , at 5.29 % annual interest which matures March 7, 2029. The loan agreement requires monthly payments of $ 1,000 . As of December 31, 2025 and 2024 , the balance of this loan totaled $ 42,000 and $ 54,000 . Term Loan On April 5, 2025, we entered a term loan agreement with American Express for working capital in the principal amount of $ 50,000 , at 7.98 % annual interest, which matures April 10, 2028, and requires monthly payments of $ 2,000 . As of December 31, 2025 and 2024 , the balance of this loan totaled $ 39,000 and $ 0 . SBA Program Loans On February 7, 2022, we received notice that the SBA had forgiven $ 174,000 of the ONM Environmental $ 217,000 Paycheck Protection Program (PPP) loan. As of December 31, 2025 and 2024 , the outstanding balance on this loan totaled $ 43,000 . On May 12, 2022, we received notice that the SBA had denied the forgiveness application of BLEST’s $ 97,000 PPP loan. We successfully appealed that decision and on June 28, 2024 , we received notice that the SBA had forgiven the balance of the BLEST Paycheck Protection Program (PPP) loan. In July 2020, ONM Environmental received an Economic Injury Disaster Loan from the SBA in the amount of $ 150,000 . The note has a 3.75 % annual interest rate, requires monthly payments of $ 700 , and matures July 2053. As of December 31, 2025 and 2024 , the balance of this loan totaled $ 141,000 and $ 144,000 . Note 5 . Share-Based Compensation Issuance of Common Stock in exchange for Services During the years ended December 31, 2025 and 2024 , we issued 2,807,771 and 1,107,594 shares, respectively, to officers, consultants, and other third parties as payment of amounts owed for services provided to our company, and recorded an aggregate $ 557,000 and $ 284,000 , respectively, in selling general and administrative expense related to these issuances. Payment of Officer Salaries During the year ended December 31, 2025 , certain of our officers agreed to convert an aggregate $ 237,000 of accrued and unpaid salary into 1,348,144 shares of our common stock. The unpaid salary is converted on the last day of each quarter as follows: on December 31, 2025 , officers agreed to convert $ 134,000 of accrued and unpaid salary into 808,908 shares of our common stock at $ 0.18 per share; on September 30, 2025, we issued 177,235 shares of our common at $ 0.17 per share in lieu of $ 30,000 of accrued and unpaid obligations to two officers. On June 30, 2025, we issued 350,751 shares of our common at $ 0.21 per share in lieu of $ 70,000 of accrued and unpaid obligations to two officers. On March 31, 2025, we issued 11,250 shares of our common at $ 0.28 per share in lieu of $ 3,000 of accrued and unpaid obligations to an officer. During the year ended December 31, 2024, certain of our officers agreed to convert an aggregate $ 13,000 of accrued and unpaid salary into 57,666 shares of our common stock. The unpaid salary is converted on the last day of each quarter as follows: on December 31, 2024, an officer agreed to convert $ 4,000 of accrued and unpaid salary into 16,579 shares of our common stock at $ 0.19 per share; on September 30, 2024, an officer agreed to convert an aggregate $ 9,000 of accrued and unpaid salary into 41,087 shares of our common stock at $ 0.23 per share. There were no shares of our common stock issued in exchange for unpaid salary during the three months ended June 30, 2024, or March 31, 2024. Payment of Consultant and Vendor Fees During the year ended December 31, 2025 , we issued 1,459,627 shares of our common stock in lieu of $ 320,000 accrued and unpaid obligations to consultants and vendors. The unpaid obligations were converted on the last day of each quarter as follows: on December 31, 2025 , we issued 539,236 shares of our common stock at $ 0.17 per share in lieu of $ 94,000 of accrued and unpaid obligations; on September 30, 2025, we issued 147,059 shares of our common at $ 0.18 per share in lieu of $ 25,000 of accrued and unpaid obligations to consultants and vendors. On June 30, 2025, we issued 564,252 shares of our common at $ 0.25 per share in lieu of $ 143,000 of accrued and unpaid obligations to consultants and vendors. During the three months ended March 31, 2025, we issued 209,080 shares of our common at $ 0.27 per share in lieu of $ 58,000 of accrued and unpaid obligations to consultants and vendors. During the year ended December 31, 2024, we issued 1,049,928 shares of our common stock $ 271,000 accrued and unpaid obligations to consultants and vendors. The unpaid obligations were converted on the last day of each quarter as follows: on December 31, 2024, we issued 94,126 shares of our common stock at $ 0.19 per share in lieu of $ 18,000 of accrued and unpaid obligations; on September 30, 2024, we issued 219,816 shares of our common stock at $ 0.23 per share in lieu of $ 54,000 of accrued and unpaid obligations; on June 30, 2024, we issued 446,989 shares of our common stock at $ 0.26 per share in lieu of $ 116,000 of accrued and unpaid obligations; on March 31, 2024, we issued 288,997 shares of our common stock at $ 0.35 per share in lieu of $ 83,000 of accrued and unpaid obligations. 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, or involved shares registered pursuant to our 2024 Equity Plan. F- 14 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock Option Expense During the years ended December 31, 2025 and 2024 , we recorded an aggregate $ 2,965,000 and $ 2,063,000 , respectively, in selling general and administrative expense related to the granting of stock options. We issued options through our 2024 Equity Incentive Plan, 2018 Equity Incentive Plan, and outside of these plans. Of the aggregate amount issued during the years ended December 31, 2025 and 2024 , $ 1,203,000 and $ 528,000 , respectively, were issued by our subsidiary Clyra Medical (see Note 10 ). 2024 Equity Incentive Plan On June 13, 2024, our stockholders adopted the BioLargo 2024 Equity Incentive Plan ( “2024 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 13, 2034. 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 2024 Plan increases automatically on January 1 of each year by the lesser of (a) 2 million shares, or (b) such number of shares determined by our Board. As of December 31, 2025 , 42,000,000 shares are authorized under the plan, and 25,206,986 remain available for grant. Activity for our stock options under the 2024 Plan during the years ended December 31, 2025 and 2024 , is as follows: Options outstanding Weighted average price per share Weighted average remaining life Aggregate intrinsic Value (1) Balance, December 31, 2023 — $ — Granted 5,493,920 $ 0.23 Balance, December 31, 2024 5,493,920 $ 0.23 Granted 11,299,094 $ 0.20 Balance, December 31, 2025 16,793,014 $ 0.21 9.1 32,000 Non-vested ( 4,351,214 ) $ 0.17 Vested, December 31, 2025 12,441,800 $ 0.22 9.1 32,000 ( 1 ) – Aggregate intrinsic value based on closing common stock price of $ 0.18 at December 31, 2025 . The options granted to purchase 11,299,094 shares during the year ended December 31, 2025 with an aggregate fair value of $ 1,925,000 were issued to board of directors, employees and consultants and the per share exercise price ranged between $ 0.17 and $ 0.28 : (i) we issued options to purchase 1,750,369 shares of our common stock to members of our board of directors for services performed, in lieu of cash, and the fair value of these options totaled $ 311,000 ; (ii) we issued options to purchase 4,182,205 shares of our common stock to employees as part of employee retention plans, and the fair value of employee retention plan options totaled $ 730,000 and vest over time or based on performance metrics; (iii) we issued options to purchase 5,066,520 shares of our common stock to consultants in lieu of cash for expiring options and for services performed, and the fair value of these options totaled $ 817,000 ; and (iv) we issued options to purchase 300,000 shares of our common stock to our Chief Financial Officer with a fair value of $ 67,000 for extension of agreements. All stock option expense is recorded on our consolidated statements of operations as selling, general and administrative expense. As of December 31, 2025 , there remains $ 760,000 of stock option expense to be expensed over the next four years. Extension of Agreement with Chief Financial Officer On January 31, 2025, the Engagement Agreement with our Chief Financial Officer Charles K. Dargan, II automatically extended for a one -year period to expire January 31, 2026 ( the “2025 - 26 Term”). As the sole compensation for the 2025 - 26 Term, Mr. Dargan was issued an option (“Option”) to purchase 300,000 shares of the Company’s common stock. The Option vests over the period of the extended term in monthly installments of 25,000 shares, so long as the agreement is in full force and effect. The Option is exercisable at $ 0.2536 per share, the closing price of BioLargo’s common stock on the last trading day of January 2025, expires ten years from the grant date, and was issued pursuant to the Company’s 2024 Equity Incentive Plan. On August 13, 2024, we and our Chief Financial Officer Charles K. Dargan, II agreed to extend the term of his engagement agreement dated February 1, 2008 ( the “Engagement Agreement”, which had been previously extended multiple times), pursuant to which Mr. Dargan has been and continues to serve as our Chief Financial Officer. The Engagement Extension Agreement dated as August 13, 2024 ( the “Engagement Extension Agreement”) expires January 31, 2025 ( the “Extended Term”), at which time the agreement will automatically renew for subsequent one -year periods. As the sole compensation for the Extended Term, Mr. Dargan was issued an option (“Option”) to purchase 300,000 shares of the Company’s common stock (this issuance is included in the total identified in (iv) above). The Option vested over the period of the Extended Term in monthly installments of 25,000 shares, so long as the agreement was in full force and effect. The Option was exercisable at $ 0.24 per share, the closing price of BioLargo’s common stock on the August 13, 2024, grant date, expires ten years from the grant date, and was issued pursuant to the Company’s 2024 Equity Incentive Plan. The Option was Mr. Dargan’s sole compensation for the Extended Term. As was the case in all prior terms of his engagement, there was no cash component of his compensation for the Extended Term. Mr. Dargan is eligible to be reimbursed for business expenses he incurred in connection with the performance of his services as the Company’s Chief Financial Officer (although he has made no such requests for reimbursement in the past). All other provisions of the Engagement Agreement not expressly amended pursuant to the Engagement Extension Agreement remained the same, including provisions regarding indemnification and arbitration of disputes. Upon each renewal of the agreement, Mr. Dargan will be issued an option to purchase 300,000 shares, at an exercise price equal to the closing price of the Company's common stock on the prior business day, vesting over one year. 2018 Equity Incentive Plan On June 22, 2018 , the BioLargo 2018 Equity Incentive Plan ( “2018 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 could be issued 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 had sole discretion to set the price of the options. The plan authorized 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 2018 Plan closed in June 2024 with 9,343,614 shares unissued. F- 15 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Activity for our stock options under the 2018 Plan during the years ended December 31, 2025 and 2024 , is as follows: Weighted Weighted Average Average Aggregate Options Price per remaining Intrinsic Outstanding share term Value(1) Balance, December 31, 2023 41,108,448 $ 0.19 Granted 1,547,938 $ 0.30 Exercised ( 485,000 ) $ 0.15 Balance, December 31, 2024 42,171,386 $ 0.19 Exercised ( 566,951 ) $ 0.16 Balance, December 31, 2025 41,604,435 $ 0.19 5.8 $ 499,000 Non-vested ( 1,934,723 ) $ 0.22 Vested, December 31, 2025 39,669,712 $ 0.19 5.7 $ 493,000 ( 1 ) – Aggregate intrinsic value based on closing common stock price of $ 0.18 at December 31, 2025 . During 2025, an option holder elected to exercise 566,951 options using the cashless exercise option in exchange for 265,800 shares of our common stock. As of December 31, 2025 , there remains $ 334,000 of stock option expense to be expensed over the next three years. The options granted to purchase 1,547,938 shares during the year ended December 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 exercise price on the respective grant date was $ 0.35 per share and 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 or per an employment agreement; the exercise price on the respective grant date was between $ 0.17 and $ 0.35 per share and the fair value totaled $ 173,000 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 exercise price on the respective grant date was $ 0.35 per share and the fair value of these options totaled $ 160,000 . All stock option expense is recorded on our consolidated statements of operations as selling, general and administrative expense. 2007 Equity Incentive Plan On September 7, 2007 , and as amended April 29, 2011 , we adopted the 2007 Equity Incentive Plan ( “2007 Plan”) as a means of providing our directors, key employees and consultants additional incentive to provide services. Both stock options and stock grants could be made under this plan for a period of 10 years, which expired on September 7, 2017 . The Board’s Compensation Committee administered this plan. As plan administrator, the Compensation Committee had 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 years ended December 31, 2025 and 2024 is as follows: Weighted Weighted Average Average Aggregate Options Price per remaining intrinsic Outstanding share term Value(1) Balance, December 31, 2023 1,564,085 $ 0.61 Expired ( 406,585 ) 0.61 Balance, December 31, 2024 1,157,500 $ 0.53 1.0 Expired ( 777,500 ) 0.48 Balance, December 31, 2025 380,000 $ 0.63 1.0 $ — ( 1 ) – Aggregate intrinsic value based on closing common stock price of $ 0.18 at December 31, 2025 . Non-Plan Options issued Activity of our non-plan stock options issued for the years ended December 31, 2025 and 2024 is as follows: Weighted Weighted Non-plan average Average Aggregate Options price per remaining intrinsic outstanding share term value(1) Balance, December 31, 2023 17,375,044 $ 0.39 Granted 85,251 $ 0.23 Exercised ( 463,882 ) $ 0.17 Expired ( 1,308,771 ) $ 0.46 Balance, December 31, 2024 15,687,642 $ 0.40 Granted 444,921 $ 0.19 Expired ( 2,093,434 ) $ 0.41 Balance, December 31, 2025 14,039,129 $ 0.39 1.8 35,000 Non-vested ( 250,000 ) $ 0.18 Vested, December 31, 2025 13,789,129 $ 0.39 1.8 $ 35,000 ( 1 ) – Aggregate intrinsic value based on closing common stock price of $ 0.18 at December 31, 2025 . F- 16 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the year ended December 31, 2025 , we issued options to purchase an aggregate 444,921 shares of our common stock at exercise prices ranging between $ 0.18 and $ 0.28 per share to vendors for fees for services. The fair value of the options issued totaled an aggregate $ 72,000 and is recorded in our selling, general and administrative expense. As of December 31, 2025 , there is a total of $ 39,000 unvested fair value that will expense in the next two years. During the year ended December 31, 2024, we issued options to purchase an aggregate 85,251 shares of our common stock at exercise prices ranging between $ 0.23 and $ 0.26 per share to vendors for fees for services. The fair value of the options issued totaled an aggregate $ 18,000 and is recorded in our selling, general and administrative expense. Note 6 . Warrants We have certain warrants outstanding to purchase our common stock, at various prices, issued for the years ended December 31, 2025 and 2024 is as follows: Weighted Weighted average average Aggregate Warrants price per Remaining term intrinsic outstanding share term value(1) Balance, December 31, 2023 51,590,300 $ 0.27 Granted 4,127,516 $ 0.30 Exercised ( 3,278,337 ) $ 0.23 Expired ( 20,823,863 ) $ 0.24 Balance, December 31, 2024 31,615,616 $ 0.29 Granted 2,263,160 $ 0.27 Expired ( 2,634,698 ) $ 0.22 Balance, December 31, 2025 31,244,078 $ 0.29 1.7 $ 5,000 ( 1 ) – Aggregate intrinsic value based on closing common stock price of $ 0.18 at December 31, 2025 . There were no warrants exercised during 2025. During 2024, investors exercised warrants to purchase 3,278,337 shares of our common stock, and we received $ 756,000 in proceeds. Warrants issued in Unit Offerings During the year ended December 31, 2025 , pursuant to our Unit Offerings (see Note 3 ), we issued six -month stock purchase warrants to purchase an aggregate 1,131,580 shares of our common stock at $ 0.23 per share, and five -year stock purchase warrants to purchase an aggregate 1,131,580 shares of our common stock at $ 0.29 per share. The relative fair value of the warrant component of the units sold to investors totaled $ 174,000 . 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 year ended December 31, 2024, pursuant to our Unit Offerings (see Note 3 ), we issued six -month stock purchase warrants to purchase an aggregate 1,849,284 shares of our common stock at prices ranging between $ 0.23 and $ 0.40 per share, and five -year stock purchase warrants to purchase an aggregate 2,278,232 shares of our common stock at prices ranging between $ 0.19 and $ 0.50 per share. The relative fair value of the warrant component of the units sold to investors totaled $ 230,000 . 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. Fair Value – Warrants To determine interest expense related to our outstanding warrants issued in conjunction with debt offerings, the fair value of each award grant is estimated on the date of grant using the Black-Scholes option pricing model and the relative fair values are amortized over the life of the warrant. For the determination of expense of warrants issued for services, extinguishment of debt and settlement management also uses the option-pricing model. The principal assumptions we used in applying this model were as follows: 2025 2024 Risk free interest rate 3.67 - 3.73 % 4.15 - 5.38 % Expected volatility 72 - 73 % 64 - 87 % 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. F-17 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7 . Accounts Payable and Accrued Expenses As of December 31, 2025 , accounts payable and accrued expenses included the following (in thousands): Intercompany Category BioLargo ONM BLEST BioLargo Canada BETI BEST amounts Totals Accounts payable $ 588 $ 305 $ — $ 100 $ 43 $ — $ ( 24 ) $ 1,012 Accrued payroll 10 85 73 22 — 9 — 199 Total $ 1,211 As of December 31, 2024 , accounts payable and accrued expenses included the following (in thousands): Intercompany Category BioLargo ONM BLEST BioLargo Canada BETI BEST amounts Totals Accounts payable $ 221 $ 511 $ 73 $ 24 $ 31 $ — $ ( 34 ) $ 826 Accrued payroll 12 68 40 — — — — 120 Total $ 946 See Note 10 , “Accounts Payable and Accrued Expenses”, for the accounts payable and accrued expenses of Clyra Medical. Note 8 . Provision for Income Taxes Given our historical losses from operations, income tax obligations have been limited to the minimum franchise tax assessed by the State of California. Since 2016 , we have not consolidated for tax purposes with our subsidiary Clyra Medical, as our ownership interest was less than 80% . Our subsidiary BLEST is a Tennessee limited liability company and as a pass-through entity does not pay federal taxes. However, the state of Tennessee charges franchise and excise taxes for limited liability companies, and thus BLEST will incur a nominal franchise tax and will not pay an excise tax unless and until it is profitable. Pretax loss from continuing operations is as follow (in thousands): 2025 2024 Domestic $ ( 14,661 ) $ ( 3,843 ) Foreign ( 528 ) ( 504 ) Total $ ( 15,189 ) $ ( 4,347 ) A reconciliation of income tax expense (benefit) computed at the statutory federal tax rates to income taxes as reflected in the financial statements is as follows (in thousands): 2025 2024 Amount Rate Amounts Rate Statutory U.S. federal tax rate $ ( 3,188 ) ( 21.0 %) $ ( 913 ) ( 21.0 %) Permanent differences: State and local income taxes, net of federal benefit — 0.0 % — 0.0 % Stock compensation 623 4.1 % 433 10 % Other 5,079 33.5 227 5.2 % Valuation Allowance ( 2,514 ) ( 16.6 %) 253 5.8 % Total $ — 0.0 % $ — 0.0 % As of December 31, 2025 and 2024 , management was not aware of any uncertain tax positions that could have a material adverse effect on the Company's consolidated financial statements. There were no cash paid for taxes in December 31, 2025 and 2024 Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 are comprised of the following (in thousands): 2025 2024 Net operating loss carryforwards $ 19,994 $ 22,508 Valuation allowance ( 19,994 ) ( 22,508 ) Total net deferred tax assets $ — $ — The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which are comprised primarily of net operating loss carryforwards. Management has considered the Company’s history of cumulative net losses in the United States, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its U.S. federal and state deferred tax assets. Accordingly, a full valuation allowance has been established against these net deferred tax assets as of December 31, 2025 and 2024 , respectively. The Company reevaluates the positive and negative evidence at each reporting period. F- 18 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS At December 31, 2025 , the Company had utilizable federal net operating loss carry forwards of approximately $ 95.2 million. The federal operating losses prior to 2005 have expired. As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $ 62.8 million that expire at various dates beginning in 2026 until 2037, as well as net operating loss carryforwards of approximately $ 32.4 million generated after 2017 that do not expire but are subject to an annual utilization limitation of 80% of taxable income. Utilization of the U.S. federal and state net operating loss may be subject to a substantial annual limitation under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss that can be utilized annually to offset future taxable income and tax liabilities, respectively. The Company has not completed a study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. The Company is subject to tax in the U.S. and files income tax returns in the U.S. Federal jurisdiction and several states and local jurisdictions where the Company has determined it has tax nexus. The Company is subject to U.S. Federal, state and local income tax examinations by tax authorities for periods after 2021. The Company currently is not under examination by any tax authority. Note 9. Noncontrolling Interest – BioLargo Energy Technologies, Inc. (BETI) BioLargo Energy Technologies, Inc. (“BETI”) was formed for the purpose of commercializing a liquid sodium battery technology. BioLargo purchased 9,000,000 shares of BETI common stock upon its formation and was initially its sole stockholder. During the year ended December 31, 2025, and 2024, BETI sold 114,865 and 20,000 shares of its common stock and received $ 425,000 and $ 50,000 , respectively. Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its shares of BETI common stock into shares of BioLargo common stock, at a price equal to a 20 % discount of the volume weighted average price over the 20 trading days prior to the election to exchange. As of December 31, 2025 , BETI had 9,605,826 issued and outstanding shares, of which BioLargo holds 9,095,000 . Note 10 . Noncontrolling Interest – Clyra Medical As discussed in Note 2 above, we consolidate the operations of our partially owned subsidiary Clyra Medical, of which we owned 48 % of its outstanding shares as of December 31, 2025 . 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 in two years, and require interest-only payments until maturity. During 2025, 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 may be 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 December 31, 2025, and December 31, 2024, the balance outstanding totaled $ 1,300,000 and $ 864,000 . Convertible Promissory Notes During 2025, Clyra issued convertible promissory notes in the aggregate amount of $ 250,000 . The notes bear interest at the rate of 15% per annum, mature two years after the issuance date, require interest-only payments until maturity, and may be 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 $ 7.50 per share, expiring August 1, 2027. Warrants to purchase 41,667 shares of Clyra common stock were issued. The fair value of these warrants issued totaled $ 52,000 and is recorded as a debt discount and will be amortized to interest expense over the term of the convertible promissory note. During the year ending December 31, 2025, these notes were converted into 41,667 shares of Clyra common stock. Guaranteed Note Offering During 2025, 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. The notes may be converted at $ 6.00 per share by the holder at any time, and by Clyra upon the occurrence of certain events which have been satisfied as of May 15, 2025. 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 December 31, 2025, the balance outstanding totals $ 575,000 . 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 21 - 43 %. Because Clyra is a private company with no secondary market for its common stock, the resulting fair value was discounted by 30 %. F- 19 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 indefinitely and 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 has not been further extended, and Clyra continues to provide monthly reporting and make interest payments to Vernal as required. As of December 31, 2025 and 2024 , the balance outstanding on this line of credit totaled $ 134,000 . Equity Transactions As of December 31, 2025 , Clyra had an aggregate 11,375,860 shares outstanding, of which 746,418 and 330,000 were Series A and Series B Preferred shares, respectively. As of December 31, 2024 , Clyra had an aggregate 10,544,527 shares outstanding, of which 746,418 were Series A Preferred shares. As of December 31, 2025 and 2024 , BioLargo owned 5,470,921 shares, of which 165,765 were Series A Preferred shares. Sales of Series A Preferred Stock Shares of Series A Preferred Stock earn a dividend of 15 % each year, compounding annually; the company is under no 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 for one 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 may be converted to common stock at a conversion rate of $ 3.10 per share. Each investor also entered into an agreement with BioLargo whereby the investor may exchange some or all of its Series A Preferred stock, plus accrued dividends, into shares of BioLargo common stock, at a price equal to a 20% discount of the volume weighted average price over the 30 prior trading days. Elections may be made during the period beginning January 1, 2025, and ending on June 30, 2026. There were no sales of Series A Preferred Stock during the years ended December 31, 2025 and 2024. 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 During the year ended December 31, 2025 , Clyra sold 72,244 shares of its common stock, and issued 36,122 warrants to purchase shares of its common stock at $ 7.50 per share, expiring February 28, 2027, from six accredited investors. In exchange, it received $ 445,000 in gross proceeds. The relative fair value of these warrants totaled $ 45,000 . During the year ended December 31, 2024, Clyra sold 373,875 shares of its common stock, from 29 accredited investors. In exchange, it received $ 2,005,000 in gross and net proceeds. The fair value of these warrants issued total $ 163,000 and is limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the Clyra stock. BioLargo Conversion of Intercompany Balances In June 2024, BioLargo converted $ 741,000 owed to it by Clyra into 148,156 shares of Clyra common stock. Common Stock issued for services During 2025, Clyra issued 37,582 shares of its common stock to vendors for services performed in lieu of cash totaling $ 100,000 and issued a warrant to purchase 5,707 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 $ 7,000 . During 2024, Clyra issued 11,331 shares of its common stock to vendors for services performed in lieu of cash totaling $ 29,000 . Warrant issued for accounts payable During 2025, Clyra issued a warrant to purchase 13,847 shares of common stock to a vendor in exchange for services. The warrant has an exercise price is $ 7.50 , expires three years from the date of grant, and the fair value totaled $ 8,000 . Warrant Holder Unit Offering During 2025, Clyra allowed existing warrant holders to purchase up to two times the number of warrants they held at their current exercise price and receive, in addition to the shares exercised, an additional warrant equal the number of shares purchased with an exercise price is $ 7.50 per share to expire June 30, 2028. Clyra received $ 1,894,000 in gross and net proceeds and issued warrants to purchase 336,916 shares of its common stock from 26 accredited investors. The relative fair value of these warrants totaled $ 212,000 . F- 20 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock Options Weighted Weighted Clyra average average Options price per remaining Outstanding share term Balance, December 31, 2023 1,478,921 $ 0.31 Granted 497,942 $ 0.85 Balance, December 31, 2024 1,976,863 $ 1.12 Granted 1,036,829 $ 4.41 Balance, December 31, 2025 3,013,692 $ 2.17 7.3 Non-vested ( 854,685 ) $ 3.97 Vested Balance, December 31, 2025 2,159,007 $ 1.46 8.6 Clyra issues options to its employees and consultants in lieu of compensation owed on a regular basis. During the years ended December 31, 2025 and 2024 , Clyra issued options to purchase 1,036,829 and 497,942 shares of its common stock, respectively. Each option vests per the terms of the issuance and has an expiration date 10 years from the date of grant. Of the 1,036,829 options granted during the year ended December 31, 2025 , the exercise price of 965,930 shares are $4.50 per share, and 70,899 shares are exercisable at $3.10 per share. The fair value of the options issued in the year ended December 31, 2025 and 2024 totaled $ 1,760,000 and $ 528,000 , respectively; we used the Black-Scholes model to calculate the initial fair value, assuming a stock price on date of grant of $ 4.50 and $ 3.10 per share, respectively. Because Clyra is a private company with no secondary market for its common stock, the resulting fair value was discounted by 30 %. During the year ended December 31, 2025 , we used a risk-free rate ranging between 3.48 % - 4.45 % and volatility of 21 - 49 %, compared to the year-ended December 31, 2024, we used a risk-free rate ranging between 3.95 % - 4.34 % , a volatility of 43 % - 49 % and an expected life of 10 years. As of December 31, 2025 , there remains $ 1,490,000 of stock option expense to be expensed over the next three years. Warrants Clyra Warrants Outstanding Weighted average price per share Weighted average remaining Balance, December 31, 2023 749,911 $ 3.74 Granted 441,336 $ 6.70 Exercised ( 8,065 ) $ 3.72 Balance, December 31, 2024 1,183,182 $ 4.84 Granted 760,387 $ 7.15 Exercised ( 241,073 ) $ 6.55 Balance at December 31, 2025 1,702,496 $ 5.39 1.6 During 2024, Clyra issued warrants to purchase an aggregate 441,336 shares. Included as part of entering in to the Clyra promissory notes, Clyra issued warrants to purchase an aggregate 177,333 shares at $ 6.00 per share that expire 5 years from the issue date. The fair value of these warrants totaled $ 160,000 and is recorded as a discount which will be amortized to interest expense over the term of the note. As an incentive to enter into the leaseback, Clyra issued warrants for the purchase of 58,333 shares of Clyra common stock at $ 6.00 per share, expiring five years after grant date. The fair value of these warrants totaled $ 106,000 , recorded as a financing fee in the consolidated statements of operations. Clyra sold stock for cash in a unit offering and as part of the unit offering issued warrants to purchase 205,670 shares of its common stock at $ 7.50 per share, expiring February 28, 2027, or August 1, 2027. Because Clyra is a private company with no secondary market for its common stock, the resulting fair value was discounted by 30 %. For the year-ended December 31, 2025, we used a risk-free rate ranging between 3.48 % - 4.45 %, compared to the year-ended December 31, 2024, we used a risk-free rate ranging between 3.95 % - 4.34 % , a volatility of 21 % - 49 % and an expected lives of .5 - 5 years. 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 $ 450,000 . Year ending, Total December 31, 2026 $ 150 December 31, 2027 150 December 31, 2028 150 Total minimum lease payments 450 Less imputed interest ( 90 Total financing lease liability $ 360 F- 21 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounts Payable and Accrued Expenses At December 31, 2025 and 2024 , Clyra had the following accounts payable and accrued expenses (in thousands): Category 2025 2024 Accounts payable $ 634 $ 247 Accrued payroll 21 30 Accrued dividend 937 590 Total $ 1,592 $ 867 Note 11 . Noncontrolling Interest – BioLargo Engineering, Science & 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 a three -year office lease in the Knoxville, Tennessee area, and entered into employment agreements with six scientists and engineers. (See Note 12 “Business Segment Information”.) BLEST was capitalized with two classes of membership units: Class A, 100 % owned by BioLargo, and Class B, held by management of BLEST, and which initially have no “profit interest,” as that term is defined in Tennessee law. However, over the succeeding five years, the Class B members can earn up to a 30 % profit interest. They also have been granted options to purchase up to an aggregate 1,750,000 shares of BioLargo, Inc. common stock. The profit interest and option shares are subject to a five year vesting schedule tied to the performance of the subsidiary, including gross revenue targets that increase over time, obtaining positive cash flow by March 31, 2018 ( which was not met), collecting 90 % of its account receivables, obtaining a profit of 10 % in its first year (and increasing in subsequent years), making progress in the scale-up and commercialization of our AOS system, and using BioLargo research scientists (such as our Canadian team) for billable work on client projects. These criteria are to be evaluated annually by BLEST’s compensation committee (which includes BioLargo’s president, CFO, and BLEST’s president), beginning September 2018 . Given the significant performance criteria, the Class B units and the stock options will only be recognized in compensation expense if or when the criteria are satisfied. The BLEST Compensation Committee has met regularly since the subsidiary commenced operations. In December 2025 , the committee determined that a portion of the performance metrics were met and issued additional profit interests would be vested ( 30 % in the aggregate) and vested additional option interests ( 1,750,000 option shares in the aggregate). In December 2024 , the committee determined that a portion of the performance metrics were met and issued additional profit interests would be vested ( 26.25 % in the aggregate) and vested additional option interests. The vesting of option shares during the years ended December 31, 2025 and 2024 resulted in a fair value totaling $ 55,000 each year and is recorded on our consolidated statements of operations as selling, general and administrative expense . Note 12 . Business Segment Information For the years ended December 31, 2025 and 2024 , BioLargo had six operating business segments, plus its corporate entity which is responsible for general corporate operations, including administrative functions, finance, human resources, marketing, legal, etc. The six operational business segments are: 1. ONM Environmental -- which sells odor and volatile organic control products and services, located in Westminster, California; 2. BLEST - which provides professional engineering services on a time and materials basis for outside clients and supports our internal operations as needed., located in Oak Ridge, Tennessee; 3. Clyra Medical Technologies (“Clyra Medical”) -- which develops and sells medical products based on our technologies; 4. BioLargo Energy Technologies, Inc. ("BETI") - which is developing our proprietary battery technology; 5. BioLargo Equipment Solutions & Technologies ("BEST") - which sells our water treatment equipment; and 6. BioLargo Canada - the main hub of our scientists researching and developing our technologies, located in Edmonton, Alberta Canada. Other than ONM Environmental, none of our operating business units have operated at a profit, and therefore each required additional cash to meet its monthly expenses, funded through sales of debt or equity, research grants, and tax credits. Clyra Medical and BETI have been funded by third party investors who invest directly in in these entities in exchange for equity ownership in that entity. F- 22 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The segment information for the years December 31, 2025 and 2024 , is as follows (in thousands): 2025 2024 Revenues ONM Environmental $ 5,905 $ 15,597 BLEST 2,545 3,197 Clyra Medical — — BioLargo Canada 86 72 Intersegment revenue ( 771 ) ( 1,087 Total $ 7,765 $ 17,779 Research and development BioLargo corporate $ ( 865 ) $ ( 1,173 BLEST ( 617 ) ( 1,158 Clyra Medical ( 1,168 ) ( 827 BETI ( 274 ) ( 379 BioLargo Canada ( 440 ) ( 432 Intersegment research and development 771 1,087 Total $ ( 2,593 ) $ ( 2,882 Operating income (loss) BioLargo corporate $ ( 3,933 ) $ ( 4,027 ONM Environmental ( 2,317 ) 5,920 BLEST ( 1,091 ) ( 1,453 Clyra Medical ( 6,065 ) ( 3,324 BETI ( 639 ) ( 642 BEST ( 276 ) ( 273 BioLargo Canada ( 534 ) ( 532 Total $ ( 14,855 ) $ ( 4,331 Depreciation expense BioLargo corporate $ ( 38 ) $ ( 42 ONM Environmental ( 41 ) ( 33 BLEST ( 48 ) ( 71 Clyra Medical ( 9 ) ( 9 BETI ( 9 ) — Total $ ( 145 ) $ ( 155 Stock option expense BioLargo corporate $ ( 1,762 ) $ ( 1,535 Clyra Medical ( 1,203 ) ( 528 Total $ ( 2,965 ) $ ( 2,063 Interest income (expense) BioLargo corporate $ 10 $ ( 6 ONM Environmental 90 31 Clyra Medical ( 499 ) ( 60 BLEST 59 — BioLargo Canada — 2 Total $ ( 340 ) $ ( 33 Net income (loss) BioLargo corporate $ ( 3,923 ) $ ( 4,033 ONM Environmental ( 2,227 ) 5,951 BLEST ( 1,032 ) ( 1,356 Clyra Medical ( 6,564 ) ( 3,490 BETI ( 639 ) ( 642 BEST ( 276 ) ( 273 BioLargo Canada ( 528 ) ( 504 Consolidated net loss $ ( 15,189 ) $ ( 4,347 F- 23 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2025 BioLargo ONM Clyra BLEST BETI BioLargo Canada Elimination Total Tangible assets $ 694 $ 2,331 $ 2,650 $ 1,169 $ 4 $ 321 $ ( 224 ) $ 6,945 Operating lease right-of-use 238 — 175 615 — — — 1,028 Finance lease right-of-use — — 338 — — — — 338 Total $ 932 $ 2,331 $ 3,163 $ 1,784 $ 4 $ 321 $ ( 224 ) $ 8,311 As of December 31, 2024 BioLargo ONM Clyra BLEST BETI BioLargo Canada Elimination Total Tangible assets $ 775 $ 5,879 $ 1,696 $ 790 46 $ 104 $ ( 234 ) $ 9,056 Operating lease right-of-use 333 — — 659 — — — 992 Finance lease right-of-use — — 451 — — — — 451 Investment in South Korean joint venture 14 — — — — — — 14 Total $ 1,122 $ 5,879 $ 2,147 $ 1,449 $ 46 $ 104 $ ( 234 ) $ 10,513 Note 13 . 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 Consolidated Statement of Operations and Comprehensive Loss on a straight-line basis over the term of the operating lease agreement. Short-term leases less than one -year are not included in our analysis. For the years ended December 31, 2025 and 2024 , rental expense was $ 404,000 and $ 365,000 , respectively. The lease of our Canadian facility is less than one 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 do not contain other terms and conditions of use, such as variable lease payments, residual value guaranties or other restrictive financial terms. Since there is no explicit interest rate in our leases, management used its incremental borrowing rate, which is estimated to be 18 % to determine lease liability. As of December 31, 2025 , our weighted average remaining lease term is five years, and the total remaining operating lease payments is $ 1,686,000 . Payments over the remaining lease terms is as follows: Year ending BioLargo Corp / ONM CLYRA BLEST Total December 31, 2026 $ 166 $ 58 $ 160 $ 384 December 31, 2027 113 59 163 335 December 31, 2028 — 60 166 226 December 31, 2029 — 61 170 231 December 31, 2030 — 25 173 198 Thereafter — — 312 312 Total minimum lease payments $ 279 $ 263 $ 1,144 $ 1,686 Less imputed interest ( 40 ) ( 79 ) ( 493 ) ( 612 ) Total operating lease liabilities $ 239 $ 184 $ 651 $ 1,074 Note 14 . Legal Proceedings. On November 11, 2025, BioLargo Inc. and ONM Environmental Inc. filed a lawsuit against Pooph Inc. (and related party Ikigai Marketing Works LLC) in the United States District Court, Central District of California, case number 8:25 -cv- 02516, alleging patent infringement ( 35 U.S.C. 271 ), false advertising ( 15 U.S.C. 1125 ), and state law claims including breach of contract, false promise, unfair and fraudulent business practices, and constructive fraud. In the suit, we seek (i) an order that the defendants have infringed on our patents, an injunction enjoining defendants from further infringing on our patents, and accounting for defendants' gains and profits; (ii) an order that defendants have violated Section 43 (a) of the Lanham Act, an injunction preventing defendants from using product reviews based on our proprietary technology with their newly formulated products, and an accounting and damages for these violations; (iii) compensatory damages for unpaid royalties of $1,667,292; (iv) compensatory damages for unpaid product purchased from ONM Environmental of $2,154,110, (v) compensatory damages in an amount according to proof for false promises and unfair and fraudulent business practices; (vi) treble and/or exemplary damages; and (vii) costs and attorneys fees. Also on November 11, 2025, Pooph Inc. served ONM Environmental with a lawsuit venued in the Orange County, California Superior Court filed September 11, 2025, case number 30 - 2025 - 01511009, alleging ONM Environmental breached the terms of, and the implied covenant of good faith and fair dealing of, the Preferred Master Manufacturing Agreement, seeking damages in an amount to be determined, as well as unjust enrichment, interest, and attorneys fees and costs, arising out of the manufacture and sale of the Pooph-branded products, including the Litterizer cat-litter additive, and ONM Environmental's refusal to fill purchase orders while Pooph Inc. was in breach of contract for failure to pay past due monies. ONM Environmental disputes the allegations and intends to vigorously defend the lawsuit. While the outcomes of the lawsuits are uncertain, management believes that the resolutions of these proceedings will not 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. Note 15 . Related Party Transactions. Management performed an internal review and inspection and noted there are no material transactions with related parties as defined in ASC 850, except those disclosed in Note 5 Share-based compensation to officers. F-24 Table of Contents BIOLARGO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 16 . Subsequent Events. Management has evaluated subsequent events through the date of the filing of this Annual Report and management noted the following for disclosure. CFO Extension On January 31, 2026, the Engagement Agreement with our Chief Financial Officer Charles K. Dargan, II automatically extended for a one -year period to expire January 31, 2027 ( the “2026 - 27 Term”). As the sole compensation for the 2026 - 27 Term, and in accordance with his contract, Mr. Dargan was issued an option (“Option”) to purchase 300,000 shares of the Company’s common stock. The Option vests over the period of the extended term in monthly installments of 25,000 shares, so long as the agreement is in full force and effect. The Option is exercisable at $ 0.179 per share, the closing price of BioLargo’s common stock on the last trading day of January 2026, expires ten years from the grant date, and was issued pursuant to the Company’s 2024 Equity Incentive Plan. Clyra Medical From January 1, 2026, through March 4, 2026, Clyra Medical received $ 1,705,000 and issued unsecured promissory notes in the aggregate principal amount of $ 1,705,000 , bearing interest at the rate of 15 % per annum, which mature February 28, 2029, and require interest-only payments until maturity (titled its 2026 Guaranteed Note). Clyra Medical also issued the investors warrants allowing for the purchase of an aggregate 133,282 shares of its common stock at $ 7.50 per share, expiring February 28, 2031. Payment of the promissory notes are guaranteed by BioLargo Inc. BioLargo Energy Technologies, Inc. ("BETI") From January 1, 2026, through March 4, 2026, BETI sold 124,867 shares of its common stock and received $ 462,000 from seven investors. Each investor also entered into an agreement with BioLargo Inc. whereby the investor may exchange some or all of its shares of BETI common stock into shares of BioLargo common stock, at a price equal to a 20 % discount of the volume weighted average price over the 20 trading days prior to the date of election. Stock Issuances From January 1, 2026, through March 4, 2026, we sold 984,188 shares of our common stock to Lincoln Park (see Note 3 ), and received $ 170,704 in gross and net proceeds. F-25