Compensation and Employee Benefit Plans [Text Block] | Note 9. Stock-Based Compensation and Other Employee Benefit Plans During the years ended December 31, 2014 and 2015, we recorded an aggregate $871,788 and $1,831,313 in selling general and administrative expense related to the issuance of stock options. We issued options through our 2007 Equity Incentive Plan and outside of our 2007 Equity Incentive Plan. On September 22, 2015, we issued 150,000 shares of our common stock to the president of our Canadian subsidiary, BioLargo Water, for services performed. The stock price on the grant date was $0.65 resulting in $97,500 of selling, general and administrative expense. 2007 Equity Incentive Plan On August 7, 2007, and as amended April 29, 2011, our Board of Directors adopted the BioLargo, Inc. 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 may be made under this plan. The Board’s Compensation Committee administers this plan. The plan allows grants of common shares or options to purchase common shares. As plan administrator, the Compensation Committee has sole discretion to set the price of the options. The Compensation Committee may at any time amend or terminate the plan. Options issued pursuant to our 2007 Equity Incentive Plan during the year ended December 31, 2015: Date Term Option Shares Exercise price Stock price on grant date Fair Value Expense June 24, 2015 (1) 10 40,000 $ 0.38 $ 0.38 $ 15,200 $ 15,200 April 20, 2015 (2) 10 700,000 0.40 0.34 238,000 59,460 September 30, 2015 (3) 10 300,000 0.57 0.57 171,000 68,400 Totals 1,040,000 $ 424,200 $ 143,060 (1) (2) (3) In addition to the foregoing, on June 24, 2015, our Board of Directors extended by five years the expiration of an option to purchase 200,000 shares of our common stock issued to our Chief Science Officer in February 2010. The option was originally issued in exchange for unpaid salary obligation at an exercise price of $0.575 and now expires February 5, 2020. The fair value of the options resulted in an additional $68,000 of selling, general and administrative expenses. On June 24, 2015, our board of directors extended by five years the expiration of options to purchase an aggregate 1,772,581 shares of our common stock issued to consultants, vendors and employees in August 2010. The options were originally issued in exchange for accrued and unpaid amounts owed to the individuals, at an exercise price of $0.30 and now expire August 4, 2020. Fair value of the options resulted in an additional $620,403 of selling, general and administrative expenses. Options issued pursuant to our 2007 Equity Incentive Plan during the year ended December 31, 2014: Date Term Option Shares Exercise Price Stock Price on grant date Fair Value Expense June 23, 2014 (1) 10 40,000 $ 0.63 $ 0.63 $ 25,200 $ 25,200 June 23, 2014 (2) 10 300,000 0.63 0.63 189,000 141,000 $ 340,000 $ 214,250 $ 166,200 (1) We recorded the issuance of options to purchase an aggregate 40,000 shares of our common stock to the non-employee members of our Board of Directors, pursuant to the terms of the 2007 Equity Plan which calls for an annual automatic issuance. (2) BioLargo, Inc. (the “Company”) and its Chief Financial Officer Charles K. Dargan, II formally agreed to extend the engagement agreement dated February 1, 2008 (the “Engagement Agreement”, which had been previously extended multiple times), pursuant to which Mr. Dargan has been serving as the Company’s Chief Financial Officer. The Engagement Extension Agreement dated as of June 23, 2014 (the “Engagement Extension Agreement”) provides for an additional term to expire January 31, 2015 (the “Extended Term”), and is retroactively effective to February 1, 2014. During the Extended Term, Mr. Dargan shall be compensated through the issuance of an option to purchase shares of the Company’s common stock which vest over the term of the engagement with 100,000 shares vested as of June 23, 2014, and the remaining shares vest 25,000 monthly through January 31, 2015. Activity for our stock options under the 2007 Plan for the years ended December 31, 2014 and 2015 is as follows: Weighted Average Options Shares Price per Outstanding Available Price per share share Balances as of December 31, 2013 8,561,086 3,438,914 $0.25 – $1.89 $ 0.44 Granted 40,000 (40,000 ) $0.28 0.28 Exercised — — — — Expired — — $— $ — Balances as of December 31, 2014 8,601,086 3,398,914 $0.25 – $1.89 $ 0.44 Granted 1,040,000 (1,040,000 ) $0.38 – $0.57 0.45 Exercised — — — — Reclassification 600,000 (600,000 ) 0.30 – 0.63 0.33 Expired — — — — Balances as of December 31, 2015 10,241,086 1,758,914 $0.25 – $1.89 $ 0.44 The following table summarizes the stock options issued under the 2007 Equity Plan outstanding at December 31, 2015. Weighted Currently Exercisable Average Weighted Options Remaining Average Number Weighted Outstanding Contractual Exercise Of Shares Average at December 31, 2015 Exercise Price Life Price December 31, 2015 Exercise Price 525,000 $0.40 - 1.89 2 $ 1.06 525,000 1.06 892,135 0.28 - 0.99 3 0.51 892,135 0.51 1,010,000 0.31 - 0.70 4 0.56 1,010,000 0.56 3,429,450 0.22 - 0.57 5 0.33 3,429,450 0.33 1,989,340 0.34 - 0.51 6 0.37 1,989,340 0.37 715,161 0.28 - 0.40 7 0.36 715,161 0.36 640,000 0.30 – 0.65 8 0.48 640,000 0.48 740,000 0.38 – 0.40 9 0.40 233,333 0.40 300,000 0.57 10 0.57 165,000 0.57 10,241,086 $0.22 – 1.89 4 $ 0.44 9,599,419 $ 0.44 Options issued Outside of the 2007 Equity Incentive Plan At our June 2013 Board of Directors meeting, in an effort to preserve our cash and reduce outstanding payables, our Board adopted a plan to offer employees, board members, consultants and vendors the opportunity to convert outstanding payable amounts into either (i) an option to purchase common stock in lieu of cash payment at the then market price of our common stock, expiring ten years from the date of issuance, and containing “cashless” exercise provisions (each, an “Option”), the number of shares purchasable to be calculated based on the amount converted times 1.5, or (ii) our common stock at market price. Options issued outside of the 2007 Equity Incentive Plan during the year ended December 31, 2015 are (those issued pursuant to this Accounts Payable Conversion Plan are so noted): Date Term Option S hares Exercise Price Stock Price on grant date Fair Value Expense December 31, 2015 (1) 10 124,000 $ 0.50 $ 0.50 $ 62,000 $ 62,000 December 31, 2015 (2) 10 58,500 0.50 0.50 29,250 29,250 September 22, 2015 (3) 10 103,846 0.65 0.65 67,500 67,500 September 22, 2015 (4) 10 125,770 0.65 0.65 81,750 81,750 September 22, 2015 (5) 10 200,000 0.35 0.65 130,000 110,500 June 29, 2015 (6) 10 218,143 0.35 0.35 76,350 76,350 June 29, 2015 (7) 10 192,857 0.35 0.35 67,500 67,500 April 20, 2015 (8) 10 75,000 0.34 0.34 25,500 25,500 April 19, 2015 (9) 10 200,000 0.37 0.34 74,000 74,000 March 31, 2015 (10) 10 387,676 0.36 0.36 139,563 139,563 March 30, 2015 (11) 10 190,142 0.36 0.36 68,451 68,451 February 5, 2015 (12) 10 200,000 0.33 0.33 66,000 66,000 2014 and prior (13) __ __ 74,145 Total 2015 2,075,934 $ 952,509 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) Options issued outside of the 2007 Equity Incentive Plan during the year ended December 31, 2014 are: Date Term Option Shares Exercise price Stock price on grant date Fair Value Expense December 26, 2014 (1) 10 192,857 $ 0.35 $ 0.35 $ 67,500 $ 67,500 December 26, 2014 (2) 10 250,715 0.35 0.35 87,750 87,750 September 29, 2014 (3) 10 143,617 0.47 0.47 67,500 67,500 September 29, 2014 (4) 10 193,511 0.47 0.47 90,950 90,950 June 24, 2014 (5) 10 103,847 0.65 0.65 67,501 67,501 June 24, 2014 (6) 10 148,848 0.65 0.65 96,750 96,750 March 31, 2014 (7) 10 156,888 0.43 0.43 67,461 67,461 March 31, 2014 (8) 10 78,488 0.43 0.43 33,750 33,750 February 20, 2014 (9) 10 40,000 0.35 0.35 14,000 14,000 2013 and prior (10) __ __ 40,160 Total 633,332 (1) (2) (3) (4) (5) We issued options to purchase shares of our common stock to our board of directors in lieu of $45,000 in accrued and unpaid fees pursuant to our Accounts Payable Conversion Plan . (6) (7) (8) (9) (10) Activity for our stock options issued outside of the 2007 Plan for the years ended December 31, 2014 and 2015 is as follows: Weighted Average Options Price per Outstanding Exercise Price share Balances as of December 31, 2013 16,398,395 $0.18 – $1.00 $ 0.39 Granted 1,608,771 $0.25 – 0.30 $ 0.50 Exercised (41,875 ) — — Expired — — — Balances as of December 31, 2014 17,965,294 $0.18 – $1.00 $ 0.40 Granted 2,075,931 $0.25 – 0.65 $ 0.40 Exercised — 0.33 – 0.65 0.40 Reclassification (600,000 ) 0.30 – 0.63 0.33 Expired (46,250 ) 0.30 0.30 Balances as of December 31, 2015 19,394,975 $0.18 – $1.00 $ 0.40 The following table summarizes the stock options issued outside of the 2007 Equity Incentive Plan outstanding at December 31, 2015. Weighted Currently Exercisable Average Weighted Number of Options Remaining Average Shares at Weighted Outstanding at Contractual Exercise December 31, Average December 31, 2015 Exercise Price Life Price 2015 Exercise Price 7,733,259 $0.18 1 $ 0.18 7,733,259 $ 0.18 2,400,000 0.99 1 0.99 2,400,000 0.99 691,975 0.55 3 0.55 691,975 0.55 800,000 1.00 6 1.00 483,333 1.00 168,750 0.40 7 0.40 168,750 0.40 1,456,110 0.30 7 0.30 1,456,110 0.30 3,288,246 0.25 – 0.65 8 0.28 3,288,246 0.28 1,833,518 0.33 – 0.47 9 0.40 1,833,518 0.40 1,023,112 0.35 – 0.65 10 0.40 1,013,112 0.40 19,394,972 $0.18 – 1.00 8 $ 0.40 19,068,303 $ 0.40 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. Share-based compensation expense is based on the grant date fair value estimated using the Black-Scholes Option Pricing Model. The following methodology and assumptions were used to calculate share based compensation for each of the years ended December 31, 2014 and 2015: 2014 2015 Non Plan 2007 Plan Non Plan 2007 Plan Risk free interest rate 2.25 – 2.76% 2.63 % 1.83 – 2.33% 1.60 – 2.38% Expected volatility 837 – 935% 927 % 794 – 821% 322 – 807% Expected dividend yield — — — — Forfeiture rate — — — — Expected life in years 7 7 7 3 - 7 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 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. Historically, we have not had significant forfeitures of unvested stock options granted to employees and Directors. A significant number of our stock option grants are fully vested at issuance or have short vesting provisions. Therefore, we have estimated the forfeiture rate of our outstanding stock options as zero. |