Filed 2025-06-16 · Period ending 2024-12-31 · 43,556 words · SEC EDGAR
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# Brownie's Marine Group, Inc (BWMG) — 10-K **Filed:** 2025-06-16 **Period ending:** 2024-12-31 **Accession:** 0001641172-25-015177 **Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1166708/000164117225015177/) **Origin leaf:** 67f0c3449eaefd162e01f35535b6d4f1e3619b003b335c2ef7eb90e21ccde998 **Words:** 43,556 --- ** UNITED STATES** **SECURITIES AND EXCHANGE COMMISSION** **WASHINGTON, DC 20549** **FORM 10-K** (MARK ONE) | | Annual Report Pursuant to Section 13 or 15(d) of Securities Exchange Act of 1934 | | For the fiscal year ended December 31, 2024 | | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 | | For the transition period from _______to _______. Commission file number 333-99393 * **BROWNIES MARINE GROUP, INC.** (Exact name of registrant as specified in its charter) | Florida | | 90-0226181 | | | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | | | 4061 SW, 47th Avenue, Davie, Florida | | 33314 | | | (Address of principal executive offices) | | (Zip Code) | | Registrants telephone number, including area code (954) 462-5570 Securities registered pursuant to Section 12(b) of the Act: | Title of Each Class | | Trading Symbol(s) | | Name of each exchange on which registered | | | None | | Not applicable | | Not applicable | | Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232- 405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. | | Large accelerated filer | | | Accelerated file | | | | | Non-accelerated filer | | | Smaller reporting company | | | | | | | | Emerging growth company | | | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes No Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes No If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed fiscal quarter was approximately $5,273,810. There were 449,566,968 shares of common stock outstanding as of June 13, 2025. | | | | | | **** **TABLE OF CONTENTS** | | | Page No. | | | | Part I | 3 | | | | | | | | Item 1. | Business. | 3 | | | Item 1A. | Risk Factors. | 10 | | | Item 1B. | Unresolved Staff Comments. | 16 | | | Item 1C | Cybersecurity | 16 | | | Item 2. | Properties. | 16 | | | Item 3. | Legal Proceedings. | 16 | | | Item 4. | Mine Safety Disclosures. | 16 | | | | | | | | | Part II | 17 | | | | | | | | Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | 17 | | | Item 6. | Reserved. | 18 | | | Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations. | 18 | | | Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. | 24 | | | Item 8. | Financial Statements and Supplementary Data. | 24 | | | Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. | 24 | | | Item 9A. | Controls and Procedures. | 24 | | | Item 9B. | Other Information. | 26 | | | Item 9C. | Disclosure Regarding Foreign Jurisdictions That Prevent Inspections | 26 | | | | | | | | | Part III | 26 | | | | | | | | Item 10. | Directors, Executive Officers and Corporate Governance. | 26 | | | Item 11. | Executive Compensation. | 28 | | | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. | 29 | | | Item 13. | Certain Relationships and Related Transactions, and Director Independence. | 31 | | | Item 14. | Principal Accounting Fees and Services. | 32 | | | | | | | | | Part IV | 33 | | | | | | | | Item 15. | Exhibits, Financial Statement Schedules. | 34 | | | Item 16. | Form 10-K Summary | 34 | | | | Signatures | 35 | | | 2 | | **CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION** This Annual Report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, believe, expect, anticipate, estimate, intend, plan, targets, likely, aim, will, would, could, and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. You should read thoroughly this Annual Report with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in Part I. Item 1A. Risk Factors appearing elsewhere in this Report. Other sections of this Report include additional factors, which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by applicable law. **PART I** | Item 1. | Business. | | Unless specifically set forth to the contrary, when used in this report references to the Company, we, our, us, and similar terms refers to Brownies Marine Group, Inc., a Florida corporation, and its wholly owned subsidiaries, Trebor Industries, Inc., a Florida corporation (Trebor) doing business as Brownies Third Lung, Brownies High Pressure Compressor Services, Inc. a Florida corporation (BHP) doing business as LW Americas (LWA), BLU3, Inc., a Florida corporation (BLU3), Submersible Systems, Inc., a Florida corporation (SSI), doing business as Spare Air and Live Blue, Inc. (LBI), a Florida corporation. **Overview** The Company, through its wholly owned subsidiaries, designs, tests, manufactures and distributes tankless dive systems, rescue air systems and yacht-based self-contained underwater breathing apparatus (SCUBA) air compressor and nitrox generation fill systems and acts as the exclusive distributor in North and South America for Lenhardt & Wagner GmbH (L&W) compressors in the high-pressure breathing air and industrial gas markets. The Company is also the exclusive United States and Caribbean distributor for Chrysalis Trading CC, a South African manufacturer of fitness and dive equipment, which is doing business as Bright Weights (Bright Weights), of a dive ballast system produced in South Africa. On September 3, 2021, the Company, entered into an Agreement and Plan of Merger and Reorganization (the Merger Agreement) with Submersible Acquisition, Inc., a Florida corporation incorporated in 2017, and wholly owned subsidiary of the Company (Acquisition Sub), Submersible Systems, Inc., a Florida corporation (Submersible or SSI), and Summit Holdings V, LLC, a Florida limited liability company (Summit) and Tierra Vista Group, LLC, a Florida limited liability company (Tierra Vista and, together with Summit, the Sellers), the owners of all of the capital stock of Submersible, pursuant to which Acquisition Sub merged with and into Submersible (the Merger), and Submersible, the surviving corporation, became a wholly owned subsidiary of the Company. Submersible is a manufacturer of high-pressure tanks and redundant air systems for aviation, manned submersibles, swift water rescue, military and recreational diving industries, based in Huntington Beach, California and sells its products to governments, militaries, private companies and the dive industry throughout the world. | 3 | | On February 13, 2022 the Company formed LBI, which is being developed as a full retail, guided tour and training model utilizing the technology developed by BLU3 to provide new users and interested divers with guided tour experience, training, and the ability to purchase all of their diving and watersports needs. On May 2, 2022, the Company entered into an asset purchase agreement (the Asset Purchase Agreement) with Gold Coast Scuba, LLC, a Florida limited liability company (Gold Coast Scuba), Steven M. Gagas and William Frenier, the sole members of Gold Coast Scuba (together, the LLC Members) and LBI. Pursuant to the terms of the Asset Purchase Agreement, LBI acquired substantially all of Gold Coast Scubas assets and assumed certain non-material liabilities of the business associated with these assets. In addition, LBI assumed the lease for the premises for Gold Coast Scuba. On or about the 4th of October, 2024 LBI sold the Gold Coast Scuba tradename and other IP rights and certain related inventory to Adventure Seeker Company. The Company has five wholly owned subsidiaries focused on various sub-sectors of our industry as described below: | | | Brownies Third Lung | Surface Supplied Air (SSA) | | | | | BLU3, Inc. | Ultra-Portable Tankless Dive Systems | | | | | LW Americas | High Pressure Gas Systems | | | | | Submersible Systems, Inc. | Redundant Air Tank Systems | | | | | Live Blue, Inc. | Guided Tours | | Our wholly owned subsidiaries do business under their respective trade names on both a wholesale and retail basis from our headquarters and manufacturing facility in Pompano Beach, Florida, and a manufacturing facility in Huntington Beach, California. **Surface Supplied Air Products** Our Third Lung systems have been the market leader in gasoline powered, high-performance and more recently in battery powered surface supplied air (THIRD LUNG) diving systems. Taking full advantage of our proprietary compressor system, a series of traditional fixed speed electric compressors were developed for the built-in-boat market in 2005. In 2010, we introduced our variable-speed battery powered THIRD LUNG system which provides divers with gasoline-free all day shallow diving experiences. These systems provide performance and runtimes for up to 3 hours by utilizing a diver-sensitive variable speed technology that controls battery consumption based on diver demand. The Company continues to pursue distributors and dealers in and outside of the United States in order to diversify the seasonality as well as geography risks. Additionally, we continue to pursue more aggressively the boat builder market to offer our variable speed, battery powered THIRD LUNG systems as an option on newly built boats of all sizes, expanding our market beyond the traditional consumer markets for our products. Our SSA products include: **Tankless Dive Systems:**The Company produces a line of tankless dive products, commonly called hookah or recreational SSA systems. These systems allow one to four divers to enjoy the marine environment up to a depth of 45 feet without the bulk and weight of conventional SCUBA gear. We believe that the removal of barriers to entry into the sport of diving and the reduction of complicated and bulky SCUBA gear invites a broader range of the general public to participate more actively and enjoyably at their own pace and schedule. Our product is designed to reduce the effort required for its transport and use while exploring, cruising or traveling. A line of land-based systems is available for light-duty commercial applications that demand portability and performance. In addition to the gasoline-powered units and the variable speed battery powered units, a series of AC electric powered systems is also available for light to commercial use. Powered by battery for portability or household current for unlimited dive duration, these units are used primarily by businesses that work in aquatic maintenance and marine environments. | 4 | | **BIAS (Boat Integrated Air Systems):** The Company developed several tankless products and complimentary accessories that it believes makes boat diving easier. The BIAS battery powered tankless kit allows boat builders, dealers and end users to seamlessly install a pre-packaged kit directly into the boat and our E-Reel, a level-winding battery powered hose reel system, provides compact storage of up to 150 feet of hose. Boaters can perform their own in-water maintenance and inspections or just dive for enjoyment. In addition to supplying air to divers, BIAS may be used for supporting air horns, inflating boat fenders/water toys and activating pneumatically operated doors. **Ultra-Portable Tankless Dive Systems** Through our wholly owned subsidiary BLU3, we develop and market portable battery-powered dive systems. The BLU3 line currently consists of two models, Nomad and Nomad Mini, targeting specific performance levels and price points. The original product of BLU3, called Nemo, has been phased out and replaced by Nomad Mini. NOMAD dive system (NOMAD) began shipping in the third quarter of 2021. NOMAD MINI dive system (NOMAD MINI) began shipping in the third quarter of 2023. Both products are currently sold to consumers via our website, Amazon and through our network of dealers worldwide. The NOMAD is highly portable and has a maximum depth of 30 feet. NOMAD MINI has a maximum depth of 15 feet and is more portable than NOMAD and at a lower price point. NOMAD and NOMAD MINI have been marketed through BLU3s internet presence and marketing campaigns as well as at industry and other trade shows across the country. BLU3 products are sought after by consumers for a variety of applications that include boat maintenance, shore diving, traveling, underwater metal detecting and fossil hunting, pool leak detection and service, and more. As of January 2024, BLU3 is the exclusive distributor for North and South America of the SeaNXT Elite sea scooter, made in France. The SeaNXT Elite sea scooter is a luxury water toy that is most popular in the yachting industry. BLU3 markets the SeaNXT Elite product to end-users as well as resellers throughout North and South America. **High Pressure Gas Systems** Through our wholly-owned subsidiary LW Americas, we design, manufacture, sell and install SCUBA tank fill systems for on-board yacht use under the brand Yacht- Pro. Our systems provide complete diving solutions for yachts, including nitrox systems which allow yacht owners to fill tanks with oxygen enriched air on board. The Yacht-Pro compressor systems offer a completely marine-prepared, variable frequency drive (VFD) driven, automated alternative to other compressors on the market. We also design complete dive lockers, mixed gas production and distribution systems, and the Nitrox Maker. Nitrox is oxygen-enriched air, which reduces the effects of nitrogen on divers and is the industry standard for dive professionals. The Nitrox Maker continuously generates oxygen rich breathing gas directly from low-pressure air with no stored oxygen or other gases required onboard. Our light duty compressor, the new Yacht Pro Essential is specifically designed as a turn-key kit for the boat builders and is optimized to integrate to onboard power systems and withstand the marine environment with all components and hardware impervious to spray from the elements. The Yacht Pro series contains models for both medium-duty applications, such as recreational divers and small groups, and heavy-duty use as found on research vessels, commercial operations and live-aboard dive boats. All Yacht Pro models come with the variable speed frequency drive reducing the initial start-up power demand typically associated with high pressure compressor systems. | 5 | | August 2017, we entered into a five-year exclusive distribution agreement with L&W, which agreement automatically renews for successive five-year terms unless terminated as provided for in the agreement. Under the terms of the Exclusive Distribution Agreement, we were appointed the exclusive distributor of L&Ws complete product line in North America and South America, including the Caribbean. We are conducting this business direct to end-users and establishing sales, distribution and service centers for high pressure air and industrial gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries under the brand name L&W Americas/LWA. We are exclusively developing a sales, distribution and service capability to assist L&W with completing a worldwide network of L&Ws agencies and service centers. In addition to breathing air compressors and related peripheral equipment, L&W also offers compressors, storage and purification systems to meet the high-pressure requirements for natural gas filling stations, and high-pressure inert gases such as argon, helium and nitrogen for industrial applications including welding and laser cutting, and for general laboratory use. We believe the product lines from L&W, will allow LW Americas to offer high quality, competitive products into the first responder and industrial market that utilize compressed air. Our goal will be to build a network of jobbers, dealers, installers and high-pressure compressor distributors by leveraging our know-how, brand awareness, complimentary products and creating sustainable distribution and core product original equipment manufacturer (OEM) integration relationships. **Redundant Air Tank Systems** In September 2021, the Company acquired SSI to further expand its product offerings and manufacturing capabilities. SSI has been manufacturing redundant air systems for recreational divers, private companies and militaries throughout the world for more than 40 years. Their state-of-the-art manufacturing facility in Huntington Beach, California is equipped to add to the machining and product development capabilities of the Company. The SSI acquisition gives the Company access to a world-wide base of in excess of 400 dealers and distributors, GSA contracting capability, as well as the direct source for the redundant air needs for our Brownies Third Lung and BLU3 diving equipment and expands warehousing capabilities, reducing freight costs for both sets of customers. SSI continues to innovate their technologies to meet changing military and commercial needs and is in development of the next generation of their Helicopter Emergency Egress Device (HEED) product line, specifically designed for aircraft and military vehicle use. Additionally, SSI has found use for their products in the medical field and continues to develop customer relationships in that area to grow revenue and diversify its product and customer portfolio. | 6 | | In February 2022, the Company incorporated LBI to begin its expansion into the retail, training and guided tour market. The Companys vision for LBI is to become a fully integrated retail experience where the Companys unique products can be show-cased, training can be offered, and a tourist model created. LBI will provide experienced based activities for the consumer in the various watersport activities it sells. In addition, LBI aims to provide training in those activities with the goal of having the consumer purchase the equipment, particularly the unique technologies provided by BLU3, from its retail stores. LBI looks to provide the full Live Blue experience for those consumers ready to enjoy all things watersports. In May 2022, LBI acquired the assets of Gold Coast Scuba, a dive retail and training facility based in Lauderdale-By-The-Sea, Florida. This retail location is the base in which the Live Blue brand was initially developed. In October, 2024 LBI sold the Gold Coast Scuba tradename and other IP rights and certain related inventory to Adventure Seeker Company. Adventure Seeker Company doing business as Gold Coast Scuba continues to operate certain aspects of the Live Blue model including demonstrations, training, and selling of all BMG products in the original Gold Coast Scuba location under a new lease arrangement with the property owner. GCS maintains full access to the support teas and products lines at all divisions of BMG as a Live Blue affiliate. Diving and Snorkeling Industry* The scuba diving equipment market size has grown steadily in recent years. It was valued at $2.1 billion in 2023 and is projected to grow at a compounded annual growth rate (CAGR) of over 4% between 2024 and 2032. We believe the growth in the historic period can be attributed to post-pandemic recovery, rescue and safety equipment development, accessibility of diving courses, e-commerce penetration, the growing coastal tourism and a rise in disposable income. The Company has entered the tourist market via a guided tour program within LBI that is currently intended to act as an incubator for a scalable franchise model. The Company believes that the guided tour model is an important building block in introducing its battery powered diving products to the consumer market. Additionally, this model will not only give consumers the opportunity to try before you buy, but also provide experiential training for the consumer to increase the enjoyment and safety of our diving products. *Yachting Industry* The global luxury yacht market was valued at $7.67 billion in 2023. The market is projected to grow from $8.75 billion in 2024 to $17.33 billion by 2023, exhibiting a CAGR of 8.9% during the forecast period according to Fortune Business Insights report published in February 2025.. The Companys BIAS systems have been designed with this industry in mind. The Company markets directly to the yachting industry by leveraging its relationships with large yacht servicing companies, yacht builders and yacht brokerages. The recreational sailing and boating market and yachting industries also continue to grow. The recreational boating market was valued at $38.2 billion in 2024 and is projected to reach $65.9 billion by 2034, with a CAGR of 5.6% according to Market .us. *High Pressure Compressor Line* According to Allied Market Research report published in February 2018, the North American high pressure compressor market is $880 million growing at an estimated CAGR of 3%. | 7 | | The Company expects to continue to distribute L&W compressors through its YachtPro, and BIAS systems, while continuing to focus on the expansion of its distribution into non-marine related distribution channels that the Company believes should positively impact its market reach. **Intellectual Property** **Trade Names** The Company either owns or has licensed from entities in which Robert Carmichael, our Chairman, has an ownership interest, the following registered and unregistered trade names, trademarks and service marks: Brownies Third Lung, browniedive.com, Brownies, Brownies Third Lung oval symbol, browniedive, YachtPro, NitroxMaker, BLU3, diveBLU3.com, BLU3 Nemo, BLU3-Vent, Submersible Systems, Spare Air, HEED 3, Snorkelator, easy dive, spareair.com, HELO, RES, Gold Coast Scuba, fast float rescue harness, tankfill.com, browniestankfill, browniestankfill.com, browniespublicsafety.com, browniespublicsafety, Peleton Hose System, Twin-Trim, and Kayak Diving Hose Kit. The Company owns the following patents: | Patent number | | Description | | Issued Date | | Expiration Date | | Owned by | | | 10,758,246 | | Abdominal Aortic Tourniquet | | 9/1/2020 | | 3/17/2034 | | Trebor Industries, Inc. | | | 9,782,182 | | Abdominal Aortic Tourniquet | | 10/10/2021 | | 10/26/2033 | | Trebor Industries, Inc. | | | 9,351,737 | | Abdominal Aortic Tourniquet | | 5/31/2016 | | 3/2/2034 | | Trebor Industries, Inc. | | | 11,265,625 | | Automated Self-Contained Hooka system with unobtrusive aquatic data recording | | 3/1/2022 | | 10/30/2039 | | BLU3, Inc. | | | 11,077,924 | | System for adjusting pressure limits based on depth of diver(s) | | 8/3/2021 | | 3/20/2039 | | Brownies Marine Group, Inc. | | | 11,767,089 | | System for adjusting pressure limits based on depth of diver(s) | | 9/26/2023 | | 4/10/2041 | | Brownies Marine Group, Inc. | | | Application number | | Description | | Filed Date | | Owned by | | | 17/683,502 | | Automated Self-Contained Hooka system with unobtrusive aquatic data recording | | 3/1/2022 | | BLU3, Inc. | | **License Agreements** On April 6, 2018, the Company entered into a patent license agreement (the STS Agreement) with Setaysha Technical Solutions, LLC (STS) pursuant to which the Company licensed certain intellectual property, including patent rights, non-patent rights and know-how from STS for use in our ultra-portable tankless dive system products. Under the STS Agreement, the Company paid an initial license fee in April 2018 through the issuance of 759,422 shares of common stock with a fair value of $30,000. The STS Agreement further provides for royalties based on annual net revenues. On December 31, 2019, the Company entered into Addendum No. 1 to the STS Agreement (Addendum No. 1) which amended the payments due upon the first commercial sale of Nemo. Upon entering into Addendum No. 1, $8,250 was paid to STS in cash and $8,250 was paid on January 10, 2020. On February 6, 2020, the Company issued 828,221 shares of common stock with a fair value of $18,635 in satisfaction of $13,500 for the first commercial sale of the Nemo dive system. On June 30, 2020, the Company entered into Addendum No. 2 to the STS Agreement concerning STSs assistance related to designing and commercializing certain diving products. Addendum No. 2 provides for a minimum yearly royalty of $60,000, or $15,000 per fiscal quarter, beginning in December 2019 and increasing by 2.15% per year. With the introduction of the NOMAD in the last quarter of 2021, the Company is obligated to pay an additional annual minimum royalty of $60,000 per year for the years 2022, 2023 and 2024, which increased the quarterly minimum royalty by $15,000 per quarter. On January 24, 2024, the Company entered into Addendum No. 3 to the STS Agreement. Addendum No. 3 delays the additional minimum yearly royalty of $60,000, or $15,000 per fiscal quarter from 2024 to 2025. Therefore, no additional minimum royalty was required during 2024, but will be required beginning the fiscal first quarter of 2025. 2025 will be the final year of the additional minimum royalty under the STS agreement. Royalty recorded under the Amended agreement was $125,159.32 and $138,643 for the years ended December 31, 2024 and 2023, respectively. | 8 | | **Marketing** **Print Literature, Public Relations, and Advertising** We have in-house graphic design capability to create and maintain product support literature, catalogs, mailings, web-based advertising, newsletters, editorials, advertorials, and press releases. We also, from time-to-time, target specific markets by selectively advertising in journals and magazines that we believe reach our potential customers. In addition, we strive to issue press releases, newsletters, and social media postings periodically to keep the public informed of our latest products and related endeavors. **Tradeshows** In 2024, the Company was represented at The Palm Beach Boat Show, The Annapolis Motor and Sailing Shows, The Fort Lauderdale Boat show, Diving Equipment, Manufacturing show, The Seattle Boat Show, The Dubai Boat Show, Boot Dusseldorf and the HAI Heli-Expo, along with various other trade and industry shows. **Websites** We sell our products online through our and our subsidiaries websites and many of our products are marketed on some of our customers websites. In addition to these websites, numerous other websites have quick links to the Companys website. Our products are available both domestically and internationally. Internet sales and inquiries are also supported by the Company. **Product Research and Development** Research and development costs for the year ended December 31, 2024 and December 31, 2023 and were $9,992 and $13,393, respectively, none of which cost is borne directly by customers. **Government Regulation** The SCUBA industry is self-regulating; therefore, the Company is not subject to government industry specific regulation. However, SSI, our tank manufacturing company is subject to Department of Transportation (DOT) regulation and testing of each of their tanks. The Company strives to promote safe diving practices within the industry and believes it is at the forefront of self-regulation through responsible diving practices. The Company is subject to all regulations applicable to for profit companies as well as all trade and general commerce governmental regulation. All required federal and state permits, licenses, and bonds to operate its facility have been obtained. **Distribution/Customers** The Company has historically been predominantly a wholesale distributor to retail dive stores, marine stores, boat dealers, builders, and the US and international militaries. Currently, the Company generates a significant amount of direct-to-consumer sales via its websites and its relationship with Amazon via BLU3, BTL and SSI. Retail sales customers include boat owners, recreational divers, commercial divers and pilots. The Company sells products to three entities owned by the brother of Robert Carmichael, the Companys Chairman, and two companies owned by Mr. Carmichael. Combined sales to these six entities for 2023 and 2022, represented 10.6% and 11.4%, respectively, of total net revenues. The majority of L&W high pressure compressors and NitroxMaker systems have been sold to commercial dive stores, dive operators (resorts and liveaboard dive boats), yacht builders, yacht owners, and high-pressure compressor distributors. Sales of YachtPro compressor systems have been split between retail sales directly to consumers and wholesale sales to OEM boat builders/resellers/brokers. | 9 | | **Suppliers/Raw Materials** Principal raw materials for our business include machined parts such as rods, pistons, bearings, hoses, regulators, compressors, engines, high-pressure valves and fittings, sewn goods, and various plastic parts including pans, covers, intake staffs, and quick release connections which are typically purchased on a per order basis. Most materials are readily available from multiple vendors. Some materials require greater lead times than other materials. Accordingly, we strive to avoid out of stock situations through careful monitoring of these inventory lead times, and through avoiding single source vendors whenever possible. Principle suppliers include Lenhardt & Wagner GmbH, Xometry, Inc., Burgess Manufacturing Corp, Bix International, Inc., Carrol Stream Motor Company, Zhejiang Xiangyang Gear Electormechan, Co, Tian Li He Technology Co, Ltd, Xiamen Feipeng Insdustry Co. Ltd. and Catalina Cylinders, Inc. **Competition** We consider the most significant competitive factors in our business to be innovation, lifestyle, fair prices, shopping convenience, variety of available products, knowledgeable and prompt customer service and rapid and accurate order fulfillment. We currently have one significant competitor within the BTL business model, Airline by JSink, Inc. There are a variety of competitors, including Aqua Lung America, Coltri America and Bauer Compressors, Inc. in our redundant air tank systems and high-pressure compressor systems sales. In 2022 and 2023 competition has surfaced in the BLU3 business segment from companies such as AirBuddy, and a few other very low-cost Chinese manufactured competitors. Overall, we are operating in a moderately competitive environment. The price structure for all the products we distribute compares favorably with the majority of our competitors based on quality and available features. We believe that our key competitive advantage is our ability to create new products and, in some cases, new markets. **Employees** As of June, 2025, we have thirty five full-time employees, and two part-time employees. **Seasonality** Our product lines have historically been seasonal in nature in the United States. The peak season for the diving related products, BTL, BLU3, SSI and LBI is the second and third quarters of the year. The peak season for LWA high pressure products is typically the fourth and first quarters of the year. The Company continues to address the seasonality of the business by expanding its reach beyond the traditional markets in the U.S. to other areas of the world that may somewhat offset the seasonality. | Item 1A. | Risk Factors. | | *Investing in our common stock involves risks. In addition to the other information contained in this report, you should carefully consider the following risks before deciding to purchase our common stock. The occurrence of any of the following risks might cause you to lose all or a part of your investment. Some statements in this report, including statements in the following risk factors, constitute forward-looking statements. Please refer to Cautionary Statement Regarding Forward-Looking Statements for more information regarding forward-looking statements.* **FINANCIAL RISKS** **We have a history of losses.** We incurred net losses of $254,066 and $1,248,115, respectively, for the year ended December 31, 2024 and 2023. On December 31, 2024, we had an accumulated deficit of $17,940,797. Revenues increased by 8.11% for the year ended December 31, 2024, from 2023, and our gross profit margin increased from 27.8% in 2023 to 41.6% in 2024. Our gross profit is not sufficient to cover our operating expenses of $3,573,279 and $3,277,319 for the twelve months ending December 31, 2024 and 2023, respectively. Operating expenses include non-cash stock compensation expenses of $159,992 and $81,424 for the years ending December 31, 2024 and 2023, respectively. In the year ended December 31, 2024, our selling, general and administrative expenses, increased 9.2% from 2023. There are no assurances that we will be able to increase our revenues to a level which supports profitable operations and provide sufficient capital to pay our operating expenses and other obligations as they become due. | 10 | | **Our auditors have disclosed substantial doubt as to our ability to continue as a going concern.** Our independent registered public accounting firm has included an explanatory paragraph expressing substantial doubt relating to our ability to continue as a going concern in its report on our audited consolidated financial statements for the year ended December 31, 2023. We have recurring losses from operations and had a net loss of approximately $254,066 and have used approximately $299,000 in net cash used in our operations in the year ended December 31, 2024 as well as an accumulated deficit of approximately $17,941,000. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our principal sources of liquidity are sales of **equity and debt securities. We do not have any firm commitments to raise additional working capital. As we are a** small company who stock is quoted on the OTC Markets, we expect to encounter difficulty in raising working capital upon terms and conditions satisfactory to us, if at all. If we are unable to obtain sufficient funding or generate sufficient revenues, our business and results of operations will be adversely affected, and we may be unable to continue as a going concern. **Our common stock is currently traded on the OTC Expert Market and is only eligible for unsolicited quotes.** **** Our commons stock is not eligible for proprietary broker-dealer quotations. Unsolicited-only stocks have a higher risk of wider spreads, increased volatility, and price dislocations. Investors may have difficulty selling this stock. **We rely on revenues from related parties.** We generate revenues from sales to related parties, which accounted for 6.9% of our net revenues in 2024 and 11.2% of our net revenues in 2023. The loss of revenues from these related parties would have a material adverse impact on our business, results of operations and financial condition in future periods. **We depend on licenses with Robert Carmichael, our Chairman, who owns much of our intellectual property.** The Company has licensed from entities in which Robert Carmichael, our Chairman, has an ownership interest, the following registered and unregistered trade names, trademarks and service marks: Brownies Third Lung, browniedive.com, Brownies, Brownies Third Lung oval symbol, browniedive, YachtPro. Failure to maintain such licenses with Mr. Carmichael would have a material adverse effect on the Companys financial condition. **If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.** Our management has previously determined that we did not maintain effective internal controls over financial reporting. If the result of our remediation of the identified material weaknesses is not successful, or if additional material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation. **The U.S. Consumer Products Safety Commission (CPSC) has issued a voluntary recall for one of our products.** On December 22, 2022, the CPSC issued a voluntary recall notice for the Nomad tankless dive system, which is distributed by BLU3, Inc. As part of the recall procedure, the CPSC has approved the Companys proposed remedy for the recall and BLU3 will begin to receive units back from consumers to repair affected Nomad units. The Company has evaluated the costs of this recall and has deemed it necessary to set a reserve for those costs related to the recall of $160,500. In 2023 the Company finalized the recall and adjusted the reserve down to approximately $86,300 to reflect the actual impact on the Companys financial condition. There have been no further recalls on our products in 2024. **BUSINESS AND OPERATIONAL RISKS** **We are dependent upon certain key members of management and qualified employees and consultants.** Our success depends to a significant degree on the abilities and efforts of our senior management. and on our ability to attract, retain and motivate highly qualified marketing, technical, engineering and sales personnel and consultants. These people are in high demand and often have competing employment opportunities. The labor market for skilled employees is highly competitive and we may lose key employees or be forced to increase their compensation to retain these people. Employee turnover could significantly increase our recruitment, training and other related employee costs. The loss of key personnel, or the failure to attract qualified personnel, could result in delays in development or fulfillment of any current strategic and operational plans and have a material adverse effect on our business, financial condition or results of operations. | 11 | | **Our failure to obtain and enforce intellectual property protection may have a material adverse effect on our business.** Our success depends in part on our ability, and the ability of our patent and trademark licensors, and entities owned and controlled by Robert Carmichael to obtain and defend our intellectual property, including patent protection for our products and processes, preserve our trade secrets, defend and enforce our rights against infringement and operate without infringing the proprietary rights of third parties, both in the United States and in other countries. Despite our efforts to protect our intellectual proprietary rights, existing copyright, trademark and trade secret laws afford only limited protection. Our industry is characterized by frequent intellectual property litigation based on allegations of infringement of intellectual property rights. Although we are not aware of any intellectual property claims against us, we may be a party to litigation in the future. **Our intellectual property rights are valuable, and any inability to adequately protect, or uncertainty regarding validity, enforceability or scope of them could undermine our competitive position and reduce the value of our products and brand, and litigation to protect our intellectual property rights may be costly.** We attempt to strengthen and differentiate our product portfolio by developing new and innovative products and product improvements. As a result, our patents, trademarks, trade secrets, copyrights and other intellectual property rights are important assets to us. Various events outside of our control pose a threat to our intellectual property rights as well as to our products and services. For example, effective intellectual property protection may not be available in countries in which our products are sold. Also, although we have registered our trademark in various jurisdictions, our efforts to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. Litigation might be necessary to protect our intellectual property rights and any such litigation may be costly and may divert our managements attention from our core business. An adverse determination in any lawsuit involving our intellectual property is likely to jeopardize our business prospects and reputation. Although we are not aware of any of such litigation, we have no insurance coverage against litigation costs, and we would be forced to bear all litigation costs if we cannot recover them from other parties. All foregoing factors could harm our business, financial condition, and results of operations. Any unauthorized use of our intellectual property could harm our operating results. **We may be exposed to infringement or misappropriation claims by third parties, which, if determined against us, could adversely affect our business and subject us to significant liability to third parties.** Our success mainly depends on our ability to use and develop our technology and product designs without infringing upon the intellectual property rights of third parties. We may be subject to litigation involving claims of patent infringement or violations of other intellectual property rights of third parties. Holders of patents and other intellectual property rights potentially relevant to our product offerings may be unknown to us, which may make it difficult for us to acquire a license on commercially acceptable terms. There may also be technologies licensed to us and that we rely upon that are subject to infringement or other corresponding allegations or claims by third parties which may damage our ability to rely on such technologies. In addition, although we endeavor to ensure that companies that work with us possess appropriate intellectual property rights or licenses, we cannot fully avoid the risks of intellectual property rights infringement created by suppliers of components used in our products or by companies we work with in cooperative research and development activities. Our current or potential competitors may obtain patents that will prevent, limit or interfere with our ability to make, use or sell our products. The defense of intellectual property claims, including patent infringement suits, and related legal and administrative proceedings can be both costly and time consuming, and may significantly divert the efforts and resources of our technical personnel and management. These factors could effectively prevent us from pursuing some or all of our business operations and result in our customers or potential customers deferring, canceling or limiting their purchase or use of our products, which may have a material adverse effect on our business, financial condition and results of operations. | 12 | | **We may not be able to enforce our intellectual property rights throughout the world.** The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This could make it difficult for us to stop the infringement or the misappropriation of our intellectual property rights. Many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property. **We rely on third party vendors and manufacturers.** We deal with suppliers on an order-by- order basis and have no long-term purchase contracts or other contractual assurances of continued supply or pricing. In addition, we have no long-term contracts with our manufacturing sources and compete with other companies for production facility capacity. Historically, we have purchased enough inventories of products or their substitutes to satisfy demand. However, unanticipated failure of any manufacturer or supplier to meet our requirements or our inability to build or obtain substitutes could force us to curtail or cease operations. Certain of our product components are manufactured in China. Due to Covid, and the logistics challenges existing currently, we have experienced delays and may experience continued delays in our supply chain, including component products, which are manufactured in China. Our senior management will continue to monitor our situation on a daily basis; however, we expect that these factors and others we have yet to experience may materially adversely impact our company, its business and operations for the foreseeable future. **We are dependent on consumer discretionary spending.** The success of our business depends largely upon a number of factors related to consumer spending, including current and future economic conditions affecting disposable consumer income such as employment, business conditions, tax rates, and interest rates. In times of economic uncertainty, consumers tend to defer expenditures for discretionary items, which effects demand for our products. Any significant deterioration in overall economic conditions that diminishes consumer confidence or discretionary income can reduce our sales and adversely affect our financial results. The impact of weakening consumer credit markets; layoffs; corporate restructurings; higher fuel prices; declines in the value of investments and residential real estate; and increases in federal and state taxation can all negatively affect our results. There can be no assurance that in this type of environment consumer spending will not decline, thereby adversely affecting our growth, net sales and profitability or that our business will not be adversely affected by continuing or future downturns in the economy, boating industry, or dive industry. If declines in consumer spending on recreational marine accessories and dive gear are other than temporary, we could be forced to curtail or cease operations. **Government regulations may impact us.** The SCUBA industry is self-regulating, therefore, from an industry perspective the Company is not subject to government industry specific regulation. However, our tank manufacturing operation is required to comply with DOT, as well as being approved to sell in various countries outside of the United States. The Company strives to be a leader in promoting safe diving practices within the industry and is at the forefront of self-regulation through responsible diving practices. The Company is subject to all regulations applicable to for profit companies as well as all trade and general commerce governmental regulation. All required federal and state permits, licenses, and bonds to operate its facility have been obtained. There can be no assurance that our operations will not be subject to more restrictive regulations in the future, which could force us to curtail or cease operations. | 13 | | **Our failure to adequately protect personal information that is collected on our website and our third-party payment platforms could have a material adverse effect on our business.** A wide variety of local, state, national, and international laws, directives and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data (including with respect to the European Unions General Data Protection Regulation and U.S. state laws such as the California Consumer Privacy Act). These data protection and privacy-related laws and regulations continue to evolve and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions and increased costs of compliance. Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement actions against us, including fines, imprisonment of company officials and public censure, claims for damages by end-customers and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing end-customers and prospective end-customers), any of which could have a material adverse effect on our operations, financial performance, and business. Changing definitions of personal data and personal information, within the European Union, the United States, and elsewhere may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. The evolving data protection regulatory environment may require significant management attention and financial resources to analyze and modify our information technology infrastructure to meet these changing requirements all of which could reduce our operating margins and impact our operating results and financial condition. **Bad weather could have an adverse effect on operating results.** Our business is significantly impacted by weather patterns. Unseasonably cool weather, extraordinary amounts of rainfall, or unseasonably rough surf, may decrease boat use and diving, thereby decreasing sales. Accordingly, our results of operations for any prior period may not be indicative of results of any future period. **The manufacture and distribution of recreational diving equipment could result in product liability claims.** We, like any other retailer, distributor and manufacturer of products that are designed for recreational sporting purposes, face an inherent risk of exposure to product liability claims in the event that the use of our products results in injury. Such claims may include, among other things, that our products are designed and/or manufactured improperly or fail to include adequate instructions as to proper use and/or side effects, if any. We do not obtain indemnification from parties supplying raw materials**,** manufacturing our products or marketing our products. In the event that we do not have adequate insurance or contractual indemnification, product liabilities relating to defective products could have a material adverse effect on our operations and financial conditions, which could force us to curtail or cease our business operations. | 14 | | **SHAREHOLDER RISKS** **The issuance of shares of our common stock upon exercise of our outstanding options, warrants, convertible debt and Series A Convertible Preferred Stock may cause immediate and substantial dilution to our existing shareholders.** We presently have vested and unvested options, warrants, convertible debt and Series A Convertible Preferred Stock that if exercised would result in the issuance of an additional 50,824,019 shares of our common stock. The issuance of shares upon exercise of options will result in dilution to the interests of other shareholders. **Our common stock may be affected by limited trading volume and may fluctuate significantly.** The Companys common stock was quoted on the OTCPink tier of the OTC Markets under the symbol BWMG until April 15, 2025. As of April 15, 2025, the Companys common stock has traded on the Expert Market of the OTC. Our commons stock is not eligible for proprietary broker-dealer quotations on the Expert Market. Unsolicited-only stocks have a higher risk of wider spreads, increased volatility, and price dislocations. Investors may have difficulty selling our stock. There can be no assurance that we can regain quotation on a higher tier of the OTC Markets or that an active trading market for our common stock will develop. As a result, this could adversely affect our shareholders ability to sell our common stock in short time periods, or possibly at all. Thinly traded common stock can be more volatile than common stock traded in an active public market. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially **Our company is a voluntary filer with the SEC and in the event that we cease reporting under the Exchange Act, investors would have limited information available to them about the company.** While we voluntarily file reports with the SEC under Section 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), we do not have a class of securities registered under Section 12(g) of the Exchange Act. To the extent that our duty to file Exchange Act reports has automatically suspended under Section 15(d) of the Exchange Act, as a voluntary filer, we may elect to cease reporting under the Exchange Act at such time which would limit the information available to investors and shareholders about the company. **Our common stock is deemed to be penny stock, which may make it more difficult for investors to sell their shares due to suitability requirements.** Our common stock is deemed to be penny stock as that term is defined under the Exchange Act. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges. Our common stock is covered by an SEC rule that imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors, which are generally institutions with assets in excess of $5,000,000, or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline. **Our officers and directors are able to control the Company.** Our officers and directors and their affiliates own or have the right to vote a majority of the common stock of our company. As a result, they have significant influence over the management and affairs of the Company and control over matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets. Their interests may differ from the interests of other shareholders and thus result in corporate decisions that are disadvantageous to other shareholders. This concentration of ownership and influence in management and board decision-making could also harm the price of our capital stock by, among other things, discouraging a potential acquirer from seeking to acquire shares of our capital stock (whether by making a tender offer or otherwise) or otherwise attempting to obtain control of our company. | 15 | | | Item 1B. | Unresolved Staff Comments | | Not applicable to smaller reporting companies. | Item 1C. | Cybersecurity | | The Company engages a third-party provider to maintain our systems and management participates in the assessment to identify any risks from cybersecurity threats. Our third-party provider monitors our firewall, network, system security and internal and external backups and reports any issues to the Company. The Companys Board, together with management, is engaged in our cybersecurity monitoring managed by our third-party provider and it is constantly changing. Any issues are appropriately addressed timely. To date, we have not experienced any cybersecurity incidents that materially affected our business strategy, results of operations or financial condition. | Item 2. | Properties. | | *Davie, Florida* ** Until November 2024, the Companys executive offices were located in Pompano Beach, Florida. The Company moved its facilities to Davie, Florida where it leases 19,065 square feet of production, warehouse, showroom and office space. under a 45 month sub-lease which commenced on November 1, 2024. The lease provides for an initial base monthly rent of $26,000 through September 30, 2025 and$31,000 thereafter for the balance of the term. The landlord has agreed to a monthly rent abatement of $3,639 per month through October 2026. The lease is considered a triple-net lease and is subject to additional rent which is comprised of the landlords operating costs, real estate taxes and insurance in accordance with the terms of the master lease. The Company paid a security deposit of $26,000 upon entering the sub-lease agreement. *Huntington Beach, California* Our Huntington Beach, California facility is comprised of a leased 13,000 square foot free standing building of which the bulk of the square footage is warehouse and manufacturing space. The initial lease, signed in January, 2013 was for five years with a base rent of $7,410. On January 4, 2018, the Company entered into a sixty-one month term lease renewal for its facility in Huntington Beach, California, commencing on February 1, 2018. Base rent is approximately $9,300 per month for the first 12 months with a 2.5% annual escalation throughout the term. The Company paid a security deposit of $8,450 with the initial lease that the landlord continues to hold. On September 14, 2022, SSI entered into a sixty-month lease renewal for its facility in Huntington Beach, California commencing on February 1, 2023. Base rent is approximately $17,550 per month for the first 24 months with an annual escalation clause of 3.0% thereafter. Obligations under the lease are guaranteed by the Company. The Company paid an additional security deposit of $10,727 upon entering into the lease. On September 30, 2022, SSI entered into a sublease of its facility in Huntington Beach, California with Camburg Engineering, Inc.(Tenant). The term of the sublease is through December 31, 2023 with a base monthly rent of $2,247 for the first twelve months and 3% annual escalation thereafter. The Tenant also pays a monthly common area maintenance of $112. The Tenant provided a security deposit of $2,426 upon entering into the sublease. This sub-lease continues on a month to month basis. | Item 3. | Legal Proceedings. | | There are no pending legal proceedings to which we are a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us. | Item 4. | Mine Safety Disclosure. | | Not applicable. | 16 | | **PART II** | Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | | The Companys common stock was quoted on the OTCPink tier of the OTC Markets under the symbol BWMG since April 15, 2025. As of April 15, 2025, the Company common stock has traded on the Expert Market of the OTC. On June, 2025, the closing sale price of our common stock was $0.012 per share. **Holders of Common Stock** As of March 31, 2025, the Company had approximately 386 shareholders of record. **Dividends** We have not paid any dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. We intend to retain any earnings, if any, to finance the growth of the business. We cannot assure you that we will ever pay cash dividends. Whether we pay any cash dividends in the future will depend on our financial condition, results of operations and other factors that the board of directors will consider. **Securities Authorized for Issuance under Equity Compensation Plans** The following table provides information regarding our equity compensation plans as of December 31, 2024: **Equity Compensation Plan Information** | Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted average exercise price of outstanding options, warrants and rights ($) | | | Number of securities remaining available for future issuance under equity compensation plans | | | | | | | | | | | | | | | | Plans approved by our shareholders (1) | | | 1,800,000 | | | | .0447 | | | | 23,200,000 | | | | Plans not approved by shareholders (2) | | | 28,869,400 | | | | .0448 | | | | - | | | (1) Represents stock options granted to employees under the Equity Compensation Plan. 25,000,000 shares are reserved for issuance under such Plan. (2) Represents (i) a five-year option to purchase an aggregate of 21,759,400 shares of common stock at $0.0399 per share issued to Blake Carmichael, and (ii) a five-year option to purchase 7,110,000 shares of common stock at $0.0531 per share issued to Christeen Buban, President of SSI. | 17 | | **Recent Sales of Unregistered Securities** There were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company. | Item 6. | Reserved | | | Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations. | | You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Forward-looking statements represent our managements beliefs and assumptions only as of the date of this Annual Report. Actual future results may be materially different from what we expect. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law. The managements discussion and analysis of our financial condition and results of operations are based upon our audited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). **Reserve for Nomad Recall** On December 22, 2022, the CPSC issued a recall notice for the Nomad tankless dive system, which is distributed by BLU3, Inc. As part of the recall procedure, the CPSC has approved the Companys proposed remedy for the recall and BLU3 will begin to receive units back from consumers to repair affected Nomad units. Additionally, BLU3 will re-start its manufacturing process for the Nomad tankless dive system utilizing the material and design changes approved during the recall process, and immediately re-establish the product in all of its sales channels. The Company has set an allowance for expenses related to this recall of $160,500. As of December 31, 2024 the company deemed that all units effected by the recall have been serviced or are no longer in service and has reduced the recall allowance to $0. | 18 | | **Results of Operations** **Years Ended December 31, 2024 and 2023** Overall, our net revenues increased 7.88% in 2024 from 2023, which included a decrease of 29.8% in sales to related parties. Our cost of revenues in 2024 was 58.4% of our total net revenues as compared to 72.2% in 2023. Included in our cost of revenues are royalty expenses we pay to Robert Carmichael which decreased 10.6% in 2024 from 2023. We reported a gross profit margin of 41.6% in 2024 as compared to 27.8% in 2023. **Net Revenues** The following tables provide net revenues, costs of revenues, and gross profit margins for our segments for 2024 and 2023. | | | Year Ended December 31, | | | | | | | | | 2024 | | | 2023 | | | % change | | | | | | | | | | | | | | | | Legacy SSA Products | | $ | 1,897,358 | | | $ | 2,312,122 | | | | (17.9 | )% | | | High Pressure Gas Systems | | | 723,935 | | | | 996,040 | | | | (27.3 | )% | | | Ultra-Portable Tankless Dive Systems | | | 2,466,550 | | | | 1,904,687 | | | | 29.5 | % | | | Redundant Air Tank Systems | | | 2,948,262 | | | | 2,065,224 | | | | 42.8 | % | | | Guided Tour Retail | | | 141,942 | | | | 302,724 | | | | (53.1 | ))% | | | Total revenue | | $ | 8,178,047 | | | $ | 7,580,798 | | | | 7.88 | % | | **Cost of revenues as a percentage of net revenues** | | | Year Ended December 31, | | | | | | 2024 | | | 2023 | | | | | | | | | | | | | Legacy SSA Products | | | 84.4 | % | | | 85.6 | % | | | High Pressure Gas Systems | | | 63.3 | % | | | 66.5 | % | | | Ultra-Portable Tankless Dive Systems | | | 67.8 | % | | | 72.6 | % | | | Redundant Air Tank Systems | | | 68.9 | % | | | 59.9 | % | | | Guided Tour Retail | | | 64.4 | % | | | 62.7 | % | | | 19 | | **Gross profit margins** | | | Year Ended December 31, | | | | | | 2024 | | | 2023 | | | | | | | | | | | | | Legacy SSA Products | | | 15.6 | % | | | 14.4 | % | | | High Pressure Gas Systems | | | 36.7 | % | | | 33.5 | % | | | Ultra-Portable Tankless Dive Systems | | | 32.2 | % | | | 27.4 | % | | | Redundant Air Tank Systems | | | 31.1 | % | | | 40.1 | % | | | Guided Tour Retail | | | 35.6 | % | | | 37.3 | % | | **Operating Expenses** Operating expenses, consisting of selling, general and administrative (SG&A) expenses and research and development costs, are reported on a consolidated basis for our operating segments. Aggregate operating expenses increased 9.0% for the year ended December 31, 2024 as compared to the year ended December 31, 2023. *Selling, General & Administrative Expenses (SG&A)* SG&A increased 9.2% for the year ended December 31, 2024 as compared to the year ended December 31, 2023. SG&A during those years were as follows: | Expense Item | | 2024 | | | 2023 | | | % Change | | | | Payroll | | $ | 1,887,910 | | | $ | 1,788,890 | | | | 5.5 | % | | | Non-Cash Stock based compensation options | | | 151,492 | | | | 81,424 | | | | 86.1 | % | | | Professional Fees | | | 204,829 | | | | 269,621 | | | | (24.0 | )% | | | Advertising | | | 427,037 | | | | 365,604 | | | | 16.8 | % | | | All Others | | | 902,105 | | | | 757,899 | | | | 19.0 | % | | | Total SG&A | | $ | 3,573,373 | | | $ | 3,263,439 | | | | 9.7 | % | | | 20 | | Payroll increased by 8.9% for the year ended December 31, 2024 as compared to the year ended December 31, 2023 The increase can be attributed to a cost of living increase and year end bonuses. . Non-Cash Stock based compensation expenses increased 12.4% for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The increase can be attributed to the vesting of incentive based options for the President of SSI. Professional fees, representing legal, accounting and other professional fees, which we paid in a combination of cash, common stock, or stock options, decreased 24.0% for the year ended December 31, 2024 as compared to the year ended December 31, 2023. Accounting fees increased 31.83% in 2024, due to a substantial increase in audit fees during the first three quarters of 2024, and legal fees decreased by 23.0% due to fewer stock awards for legal fees in 2024. Advertising expense increased 16.8% for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The increase is attributed to increased expenses associated with trade shows , and increased direct and internet advertising by BTL, BLU3 and SSI in 2024. Other expenses increased 19.0% for the year ended December 31, 2024 as compared the year ended December 31, 2023. primarily as a result of increase in repair and maintenance cost at the SSI facility in California. *Research & Development Expenses (R&D Expenses)* R&D expenses for the year ended December 31, 2024 decreased 28.0% as compared to the year ended December 31, 2023. The decrease can be primarily attributed to the focus on products that are not proprietary. **Other Expense** For the year ended December 31, 2024 interest expenses totaled approximately $79,600 as compared to approximately $78,700 in interest expense for the year ended December 31, 2023. This small increase can be attributed to a slight increase in interest bearing debt. **Liquidity and Capital Resources** We had cash of $417,678 on December 31, 2024.The following table summarizes total current assets, total current liabilities and working capital at December 31, 2024 as compared to December 31, 2023. | | | December 31, 2024 | | | December 31, 2023 | | | % of Change | | | | Total Current Assets | | $ | 3,030,924 | | | $ | 2,736,601 | | | | 12.2 | % | | | Total Current Liabilities | | $ | 2,860,749 | | | $ | 2,502,787 | | | | 18.5 | % | | | Working Capital | | $ | 170,175 | | | $ | 233,814 | | | | (55.0 | )% | | | 21 | | The increase in our current assets on December 31, 2024 from December 31, 2023 primarily reflects increases in accounts receivable, prepaid expenses and inventory of approximately $336,000. The increase in our total current liabilities for the year ended December 31, 2024 as compared to the year ended December 31, 2023 reflects an increase in customer deposits of approximately $212,699, an increase of approximately $307,915 related party demand debt with the increase in loans from the Companys chief executive officer, an increase in the operating lease liabilities in connection with the lease for the Davie, Florids facility. These increases are offset by decreases in accounts payable of $102,491, current maturities of long term debt of $64,136, accounts payable related parties of $33,103 and other liabilities of 31,184, and the release of the reserve for Nomad recall expenses of approximately $86,000. **Summary Cash Flows** | | | Years Ended December 31, | | | | | | 2024 | | | 2023 | | | | | | | | | | | | | Net cash used in operating activities | | $ | (299,093 | ) | | $ | (374,827 | ) | | | Net cash used in investing activities | | $ | (21,1400 | ) | | $ | (29,955 | ) | | | Net cash provided by financing activities | | $ | 307,305 | | | $ | 351,467 | | | Net cash used in operating activities for 2024 was primarily the result of a net loss of $254,066, as well as the decrease in long term lease liability of $290,363, the reduction of accounts payable of $157,533, the increase of accounts receivable of $135, 455, and the increase in prepaid expenses of $137,770. The cash used related to net loss was offset by $124,930 in depreciation and amortization, and $151,492 in stock related compensation expense during the year ended December 31, 2024. Net cash used in investing activities for the year ended December 31, 2024 of $21,140 was for the leasehold improvements for the Companys new Davie, Florida facility. Net cash provided by financing activities for the year ended December 31, 2024 reflects $307,915 in proceeds from related party demand notes. **Going Concern** Our audited consolidated financial statements included in this Annual Report were prepared assuming we will continue as a going concern, and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. The report of our independent registered public accounting firm on our audited consolidated financial statements for the year ended December 31, 2024 includes an explanatory paragraph stating the Company has net losses and an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. If the Company is unable to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back, delay or cease operations, liquidate assets and possibly seek bankruptcy protection. We have a history of losses, and an accumulated deficit of $17,949,435 as of December 31, 2024. Despite a working capital surplus of $105,210 at December 31, 2024, the continued losses and cash used in operations raise substantial doubt as to the Companys ability to continue as a going concern. The Companys ability to continue as a going concern is dependent upon the Companys ability to continue to increase revenues, control expenses, raise capital, and to continue to sustain adequate working capital to finance its operations. The failure to achieve the necessary levels of profitability and cash flows would be detrimental to the Company. We are continuing to engage in discussions with potential sources for additional capital, however, our ability to raise capital is somewhat limited based upon our revenue levels, net losses and limited market for our common stock. If we fail to raise additional funds when needed, or if we do not have sufficient cash flows from operations, we may be required to scale back or cease certain of our operations. | 22 | | **Critical Accounting Estimates** The Companys management discussion and analysis of its financial condition and results of operations are based upon the Companys consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of its assets, liabilities, sales and expenses, and related footnote disclosures. On an on-going basis, the Company evaluates its estimates for product returns, bad debts, inventories, income taxes, warranty obligations, litigation and other subjective matters impacting the financial statements. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements. **Allowance for Doubtful Accounts** Allowances for doubtful accounts are estimated based on estimates of losses related to customer accounts receivable balances. Estimates are developed by using standard quantitative measures based on historical losses, adjusting for current economic conditions and, in some cases, evaluating specific customer accounts for risk of loss. The establishment of reserves requires the use of judgment and assumptions regarding the potential for losses on receivable balances. Though the Company considers these balances adequate and proper, changes in economic conditions in specific markets in which the Company operates and any specific customer collection issues the Company identifies could have a favorable or unfavorable effect on required allowance balances. **Inventories** The Company values inventory at the lower of cost (determined using the first-in first-out method) or net realizable value. Managements judgment is required to determine the allowance for obsolete or excess inventory. Inventory on hand may exceed future demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs. Inventory allowances are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. Though the Company considers these reserve balances to be adequate, changes in economic conditions, customer inventory levels, or competitive conditions could have a favorable or unfavorable effect on required allowance balances. **Deferred Taxes** The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made. Likewise, should the Company determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made. **Warranties** The Company accrues a warranty reserve for estimated costs to provide warranty services. Warranty reserves are estimated using standard quantitative measures based on criteria established by the Company. Estimates of costs to service its warranty obligations are based on historical experience, expectation of future conditions and known product issues. To the extent the Company experiences increased warranty claim activity or increased costs associated with servicing those claims, revisions to the estimated warranty reserve would be required. The Company engages in product quality programs and processes, including monitoring and evaluating the quality of its suppliers, to help minimize warranty obligations. | 23 | | **Off balance Sheet Arrangements** We currently have no off-balance sheet arrangements. | Item 7A. | Quantitative and Qualitative Disclosures about Market Risk. | | Not required for smaller reporting companies. | Item 8. | Financial Statements and Supplementary Data. | | Our consolidated financial statements appear beginning on page F-1 of the Annual Report. | Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. | | None. | Item 9A. | Controls and Procedures. | | **Evaluation of Disclosure Controls and Procedures** We maintain disclosure controls and procedures as such term is defined in Rule 13a-15(e) under Exchange Act. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. The design of any disclosure controls and procedures also 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. Based on their evaluations as of the end of the period covered by this report, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses in our internal control over financial reporting described below. A material weakness is a deficiency, or combination of deficiencies, which results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. Our management, including our Principal Executive Officer and Principal Financial Officer, have evaluated the effectiveness of the design and operations of our disclosure controls and procedures (defined in Exchange Act Rules 13a-15(c) and 15d-15(e)) as of December 31, 2024 and based upon the such evaluation, have concluded that the disclosure controls and procedures as of December 31, 2024 were not effective due to the material weaknesses identified below. To address these material weaknesses, management performed additional procedures to ensure the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. **Managements Report on Internal Control over Financial Reporting** Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Companys management and board regarding the preparation and fair presentation of published financial statements, but because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. | 24 | | Our management assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2024. The framework used by management in making that assessment was the criteria set forth in the documents entitled 2014 Internal Controls Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management concluded that, during the period covered by this report, such internal controls and procedures were not effective as of December 31, 2024 and that material weaknesses in internal controls over financial reporting described below existed. A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (PCOAB) Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Companys annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses: | | | There are an insufficient number and lack of qualified accounting department and administrative personnel and support; | | | | | There are insufficient written policies and procedures to ensure the correct application of accounting and financial reporting with respect to GAAP and SEC disclosure requirements; | | | | | There is insufficient segregation of duties, oversight of work performed and lack of controls in our finance and accounting functions due to limited personnel; | | | | | The Companys systems that impact financial information and disclosures have ineffective information technology controls; | | | | | There are inadequate controls surrounding revenue recognition, to ensure that all material transactions and developments impacting the financial statements are reflected and properly recorded; and | | | | | Evaluation of disclosure controls and procedures was not sufficiently comprehensive due to limited personnel. | | **Internal Control Remediation Efforts**. Subject to sufficient resources, management expects to remediate the material weaknesses identified above as follows: | | | Management has leveraged and will continue to leverage experienced consultants to assist with ongoing GAAP and SEC compliance requirements. We intend to expand our finance department through the hiring of a certified public accountant to strengthen the segregation of duties, internal controls and enhance our current staff. | | | | | Segregation of duties will be analyzed and adjusted Company-wide, where possible. The Company is in the process of hiring additional personnel in the accounting department as part of the internal controls implementation and documentation of those controls and procedures. | | | | | The Company plans on evaluating various accounting systems to enhance our system controls. | | We will continue to monitor and evaluate the effectiveness of our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. We do not, however, expect that the material weaknesses in our disclosure controls will be remediated until such time as we have added to our accounting and administrative staff allowing improved internal control over financial reporting. This Annual Report does not include an attestation report of our registered public accounting firm regarding our internal control over financial reporting. Managements report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that exempt smaller reporting companies from this requirement. | 25 | | **Changes in Internal Control over Financial Reporting** There have been no changes in our internal control over financial reporting that occurred during our fourth quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. | Item 9B. | Other Information. | | None. | Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. | | Not applicable. **PART III** | Item 10. | Directors, Executive Officers, and Corporate Governance. | | The following are the names, ages and positions of our current executive officers and directors. | Name | | Age | | Position | | | Robert M. Carmichael | | 62 | | Chief Executive Officer, Chairman, President, and Chief Financial Officer and Director | | | Charles F. Hyatt | | 58 | | Director | | | Key Employee | | | | | | | Blake Carmichael | | 29 | | Chief Executive Officer and President of BLU3 | | | | | | | | | Our directors are elected for a term of one year and serve until such directors successor is duly elected and qualified. Each executive officer serves at the pleasure of the board of directors. **Robert M. Carmichael.**Since April 2004, Mr. Carmichael has served as our Chairman and President, and from April 2004 until November 2020 served as our Chief Executive Officer. Mr. Carmichael has served as our Chief Financial Officer since 2017 and a director since 2005. Mr. Carmichael was selected to serve as a director for his general business management experience with specific experience in the diving industry. | 26 | | **Charles F. Hyatt***.*Mr. Hyatt has served as a director since March 2019. Mr. Hyatt is involved in the automotive industry and present owner of several franchise car dealerships in Myrtle Beach, South Carolina, including Myrtle Beach Hyundai (since 1999). In the past his ownerships also included Hyatt Buick & GMC (from 2001 to 2022), Myrtle Beach Suzuki (from 2004 until 2012), Sun Coast Mazda and Mitsubishi (from 2001 until 2009), Stone Mountain Chevrolet (from 2001 until 2009. From 1994 to 1997, Mr. Hyatt served as Wholesale Purchase Director with Lamar Ferrel Chevrolet, and from 1991 to 1994 as General Manager of Bob Harris Ford. From 1988 to 1990, Mr. Hyatt was the Demonstration Director of Auto Dialysis, and from 1986 to 1998, the General Manager/Operational Partner of Ken Hyatt Dodge, Chrysler and Plymouth. Since 2013, Mr. Hyatt has owned and operates the Gilligan Island Funland Golf amusement park. Mr. Hyatt sits on the American Cross Heroes committee and is the winner of the Jefferson Award (2017) for his community involvement. Mr. Hyatt was selected to serve on the board of directors for his general business management experience. There are no family relationships between any of the executive officers and directors. *Key Employee* **Blake Carmichael**. Since December 2017, Mr. Carmichael has served as Chief Executive Officer of BLU3. He joined our company in May 2017 as an electrical engineer with a primary focus to develop new battery powered hookah diving products. Mr. Carmichael graduated from Florida Atlantic University in May 2017 with a Bachelor of Science in Electrical Engineering. During college, he worked in 2014 and 2015 as a participant in the University of Central Florida / Lockheed Martin College Work Experience Program as a systems engineer with a focus on testing for infrared imaging systems used in military aircraft. In the summer of 2016, he participated in the Naval Surface Warfare Centers Naval Research Enterprise Intern Program with a focus on integrating underwater vehicles for survey and recovery at the South Florida Ocean Measurement Facility. **Committees of the Board of Directors** We have not established an Audit Committee, Compensation Committee or a Nominating Committee The entire Board participates in the nomination and audit oversight processes and considers executive and director compensation. Given the size of the Company, the entire Board is involved in such decision-making processes. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors. We are not a listed company under SEC rules and therefore are not required to have an audit committee comprised of independent directors. **Compensation of Directors** The following table provides information concerning the compensation paid to our Companys non-employee director for services rendered as a director during the year ended December 31, 2024. | | | Fees earned or paid in cash | | | Stock awards | | | Option awards | | | Non-equity incentive plan compensation | | | Nonqualified deferred compensation earnings | | | All other compensation | | | Total | | | | Name | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Charles Hyatt | | | 18,000 | | | | - | | | | | | | | - | | | | - | | | | - | | | | 18,000 | | | | Chris Constable (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1) | Mr. Constable resigned as a director on May 21, 2024. | | **Delinquent Section 16(a) Reports** Not applicable. | 27 | | **Code of Ethics** The Company has not as yet adopted a code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions as required by the Sarbanes-Oxley Act of 2002 due to our small size and limited resources and because managements attention has been focused on matters pertaining to business operations. **Shareholder Communications** Although we do not have a formal policy regarding communications with our Board, shareholders may communicate with the Board by writing to us at Brownies Marine Group, Inc., 4061 SW , 47th Ave , Davie, Florida 33314, Attention: Robert Carmichael. Shareholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate. **Insider Trading Policies** **** The Company has adopted insider trading policies and procedures governing the purchase, sales or other dispositions of its securities by directors, officers, employees, or the Company that we believe are reasonably designed to promote compliance with insider trading laws, rules, and regulations, and any listing standards applicable to the Company. A copy of the Insider Trading Policy is filed as Exhibit 19 to this Annual Report on Form 10-K. | Item 11. | Executive Compensation | | The following table provides certain information regarding compensation awarded to, earned by or paid to our Chief Executive Officer and the other executive officer with compensation exceeding $100,000 during the year ended December 31, 2023 (each a Named Executive Officer). **** **Summary Compensation Table** | | | | | | | | | No equity | | | Non- qualified | | | | | | | | | | | | Stock | | | Option | | | incentive plan | | | deferred compensation | | | All other | | | | | | | Name and | | | | | Salary | | | Bonus | | | Awards | | | Awards | | | compensation | | | earnings | | | compensation | | | Total | | | | Principal Position | | Year | | | ($) | | | ($) | | | ($)(1) | | | ($)(1) | | | ($) | | | ($) | | | ($) | | | ($) | | | | Robert Carmichael | | | 2023 | | | | 127,464 | | | | | | | | - | | | | - | | | | - | | | | - | | | | 89,937 | (1) | | | 217,401 | | | | CEO, Chairmen, President and CFO | | | 2024 | | | | 160,564 | | | | | | | | | | | | - | | | | - | | | | - | | | | 80,389 | (2) | | | 240,953 | | | | Christopher Constable, | | | 2023 | | | | 119,074 | (6) | | | | | | | | | | | - | | | | - | | | | - | | | | 10,954 | (3) | | | 130,028 | | | | CEO | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1) | Represents (i) $18,000 in director compensation (ii) $13,305 in health insurance premiums paid on behalf of Mr. Carmichael, and (iii) an aggregate of $58,632 in royalties paid to an entity controlled by Mr. Carmichael under the terms of a license agreement with the Company. | | | (2) | Represents (i) $18,000 in director compensation (ii) $15,872 in health insurance premiums paid on behalf of Mr. Carmichael, and (iii) an aggregate of $46,517 in royalties paid to an entity controlled by Mr. Carmichael under the terms of a license agreement with the Company. | | | (3) | Represents (i) $7,500 in director compensation (ii) $3,454 health insurance premiums paid by the Company on behalf of Mr. Constable. | | | | | | | (4) | Mr. Constable resigned as Chief Executive Officer on June 24, 2023. | | | 28 | | **Equity Plan** On May 26, 2021, the Company adopted the Companys Equity Compensation Plan (the Plan). The Plan provides for the award of stock options (incentive and non-qualified), stock awards and stock appreciation rights to officers, directors, employees and consultants who provide services to the Company. The terms of awards under the Plan are made by the Administrator of the Plan appointed by the Companys Board of Directors, or in the absence of an Administrator, by the Board. The Company has reserved 25,000,000 for issuance under the Plan. The term of the Plan is ten years. **Outstanding Equity Awards at December 31, 2024** There was no equity awards made to the Named Executive Officer that were outstanding on December 31, 2024. **Blake Carmichael Employment Agreement** On August 1, 2021, we entered into a three-year employment agreement with Blake Carmichael (the Blake Carmichael Employment Agreement) pursuant to which Mr. Carmichael will continue to serve as Chief Executive Officer of BLU3. In consideration for his services, Blake Carmichael will receive (i) an annual base salary of $120,000, payable in accordance with the customary payroll practices of the Company, and (ii) a cash bonus equal to 5% of the net income of BLU3 payable quarterly, beginning with the first full calendar quarter after the execution of the agreement, and (iii) a non-qualified five-year stock option to purchase 3,759,400 shares of common stock at an exercise price $0.0399, 33.3% of which stock subject to the option vested immediately upon grant, 33.3% vests on the second anniversary and 33.3% vests on the third anniversary of the agreement. In addition, Blake Carmichael was granted a five-year stock option to purchase up to 18,000,000 shares of common stock at an exercise price of $0.0399 per share which vests upon the achievement of certain annual financial metrics as set forth in the Agreement. This agreement includes a provision for automatic renewal at the end of the initial term with each party required to provide a notice of intent not to renew no less than 30 days prior to the end of the term. | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | Our voting securities consist of our common stock and preferred stock, par value $0.001 per share, designated Series A Convertible Preferred Stock (the Series A Stock). Each share of Series A Stock is convertible into one share of our common stock at any time at the option of the holder at a conversion price of $18.23 per share. Holders of our common stock are entitled to one vote for each share held, and holders of our Series A Stock are entitled to 250 votes for each share held. Our common stock and Series A Stock vote together as on any matters submitted to our shareholders for a vote. | 29 | | **Security Ownership of Certain Beneficial Owners and Management** The following table sets forth, as of March 30, 2024, the number of shares of common stock and Series A Stock beneficially owned by (i) each person, entity or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each of the Companys directors (iii) each Named Executive Officer and (iv) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using beneficial ownership concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest. Except as noted below, each person has sole voting and investment power with respect to the shares beneficially owned and each stockholders address is c/o Brownies Marine Group, Inc., 4061 SW 47th Avenue, Davie, Florida, 33314 based on 437,742,050 issued and outstanding shares of common stock and 425,000 shares of Series A Stock outstanding as of May 19, 2025. | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | | Percent of Class | | | | Named Executive Officers and Directors | | | | | | | | | | | Robert M. Carmichael | | | 45,299,847 | (1) | | | 9.2 | % | | | Charles F. Hyatt | | | 147,142,855 | | | | 30.1 | % | | | All directors and executive officers as a group (three persons) | | | 192,422,702 | (1) | | | 39.3 | % | | | 5% or Greater Shareholder | | | | | | | | | | | Joseph Perez 135 Weston Road, Suite 328, Weston, Florida 33326 | | | 50,000,000 | | | | 10.2 | % | | | Summit Holdings V, LLC 3427 Bannerman Road, Suite D208 Tallahassee, Florida 32312 | | | 35,587,553 | (2) | | | 7.5 | % | | | | | | | | | | | | | | Series A Convertible Preferred Stock | | | | | | | | | | | Robert M. Carmichael | | | 425,000 | | | | 100 | % | | | (1) | Includes: (i) 14,587,190 shares held by 940A Associates, Inc., a corporation over which Mr. Carmichael is the sole owner and has voting and dispositive power; (ii) an aggregate of 23,320 shares issuable upon conversion of 425,000 shares of Series A Stock (iii) 1,861,327 shares related to the conversion option of the convertible note to LBI with an outstanding balance of $39,088 with a conversion price of $0.021, and (iv) 3,700,962 shares related to the conversion option of the note to BLU3 with an outstanding principal balance of $50,000 at a conversion rate of $0.01351. Does not include the voting power over 106,250,000 shares of common stock by virtue of Mr. Carmichaels beneficial ownership of 425,000 shares of Series A Stock. | | | (2) | Includes 6,758,075 shares related to the conversion option of the convertible note to SSI with a balance of $346,500 with a conversion price of $0.051272. | | | 30 | | | Item 13. | Certain Relationships and Related Transactions, and Director Independence. | | We sell products to Brownies Southport Divers, Inc., Brownies Palm Beach Divers, and Brownies Yacht Toys, companies owned by the brother of Robert Carmichael. Combined net revenues from these entities for the years December 31, 2023 and 2022, totaled $806,824 and $977,145, respectively. Accounts receivable from Brownies SouthPort Divers, Inc., Brownies Palm Beach Divers, and Brownies Yacht Toys at December 31, 2023, were $5,901, $11,927 and $-0-, respectively. Accounts receivable from Brownies SouthPort Divers, Inc., Brownies Palm Beach Divers, and Brownies Yacht Toys at December 31, 2022, were $16,875, $6,773 and $15,532, respectively. We also sell products to Brownies Global Logistics, LLC (BGL) and 940 Associates, Inc. (940 A), entities wholly-owned by Robert Carmichael. Combined net revenues from these three entities for the years ended December 31, 2023 and 2022 were $1,799 and $4,646, respectively. In addition, from time to time Mr. Carmichael purchases products from us for his personal use. Accounts receivable from BGL, 940 A and Mr. Carmichael totaled $647 at December 31, 2023 and $2,408 at December 31, 2022. We owed BGL $-0- and $2,980 at December 31, 2023 and 2022, respectively, which represents purchase of inventory including batteries for Sea Lion (battery operated unit) and Honda engines for our regular gasoline powered units. As of December 31, 2022, the Company also had an amount due of $5,000 to Mr. Carmichael for an advance to BLU3,Inc. The Company also had an amount due of $441 to Robert Carmichael and $476 to Blake Carmichael as of December 31, 2023. We are a party to an exclusive license agreement, dated February 22, 2005, with 940 A to license the trademark Brownies Third Lung, Tankfill, Brownies Public Safety and various other related trademarks as listed in the agreement. The agreement provides for a royalty to be paid equal to the greater of 2.5% on all sales of Trebor or $15,000 per quarter. Total royalty fees paid to 940 A in the years ended December 31, 2023 and 2022 totaled $31,993 and $61,308, respectively. The Company had accrued royalties of $2,238 and $2,845 for the years ended December 31, 2023 and 2022, respectively. On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. Interest on the note is payable in shares of common stock of the Company at a conversion price equal to the 90 day value weighted average price (VWAP) of the Companys stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.021 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Companys stock as of the date of the note. On September 14, 2023, The Company issued an on-demand note to Robert Carmichael, Companys Chief Executive Officern the principal amount of $50,000. The note bears no interest and is payable upon request. On November 7, 2023, the Company issued a promissory note to Charles Hyatt, a director of the Company in the principal amount of $150,000. The note bears interest at the rate of 9.9% per annum, is payable in monthly installments,. Pursuant to an amendment dated November 13, 2024, the date of note was extended from August 7, 2024 toMay 5, 2025. On December 18, 2023, The Company issued a-demand note to Robert Carmichael, in the principal amount of $25,000. The on-demand note bears no interest and is payable upon request. On February 5, 2024, , the Company issued a promissory note to Charles Hyatt, a director, in the principal amount of $280,000. The note bears interest at the rate of 9.9% per annum, is payable on demand. Pursuant to an amendment dated November 13, 2024, the maturity date of the note was extended from August 6, 2024 to May 5, 2025. Blake Carmichael, the Chief Executive Officer of BLU3 is the son of Robert Carmichael, the Companys Chairman, President and a director. **Director Independence** The Company has one independent director, Charles Hyatt, who is considered independent as defined under Rule 5605 of the Nasdaq Marketplace Rules. | 31 | | | Item 14. | Principal Accounting Fees and Services. | | The following table shows the fees that were billed for the audit and other services provided by Assurance Dimensions, Inc. (Assurance) for the year ended December 31, 2023 prior to the engagement on October 4, 2024 of Bush & Associates CPA, LLC (Bush) as the Companys. independent registered public accounting firm engaged to audit the financial statements of the Company. for the year ended December 31, 2024. The following table shows the fees billed for the audit and other services for 2024 and 2023. | | | 2024 | | | 2023 | | | | Audit Fees | | $ | 65,059 | | | $ | 69,817 | | | | Audit-Related Fees | | | | | | | - | | | | Tax Fees | | | | | | 5,000 | | | | Other | | | - | | | | - | | | | Total | | $ | 65,059 | | | $ | 74,817 | | | **Audit Fees** Audit fees consist of fees for professional services rendered for the audit of the Companys consolidated financial statements included in the Companys Annual Report on Form 10-K and the review of financial statements included in the Companys Quarterly Reports on Form 10-Q. We incurred tax related fees of $5,500 and $5,000 with Liggett & Webb, P.A. for the years ended December 31, 2024 and 2023. **Administration of the Engagement; Pre-Approval of Audit and Permissible Non-Audit Services** We have not yet established an audit committee. Until then, there are no formal pre-approval policies and procedures. The audit and tax fees paid to the auditors with respect to 2024 and 2023were pre-approved by the entire board of directors. The percentage of hours expended on Bush and Associates respective engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountants full-time, permanent employees was 0%. | 32 | | **PART IV** | Item 15. | Exhibits, Financial Statements Schedules | | | | | | | Incorporated by Reference | | | | No. | | Exhibit Description | | Form | | Date Filed | | Exhibit Number | | | | 2.4 | | Agreement and Plan of Merger and Reorganization, dated September 3, 2021, among the Company, Submersible Acquisition, Inc., Submersible Systems, Inc. and the Shareholders of Submersible Systems, Inc. | | 8-K | | 9/9/21 | | 10.1 | | | | 2.4 | | Plan of Conversion | | 8-K | | 10/28/15 | | 2.1 | | | | 3.1 | | Articles of Conversion (Nevada) | | 8-K | | 10/28/15 | | 3.1 | | | | 3.2 | | Certificate of Conversion (Florida) | | 8-K | | 10/28/15 | | 3.2 | | | | 3.3 | | Articles of Incorporation (Florida) | | 8-K | | 10/28/15 | | 3.3 | | | | 3.5 | | Articles of Amendment | | 8-K | | 12/16/15 | | 3.5 | | | | 3.6 | | Bylaws | | 8-K | | 10/28/15 | | 3.4 | | | | 4.1 | | 2021 Equity Compensation Plan | | 10-Q | | 8/16/21 | | 4.1 | | | | 4.2 | | Form of 2017 Secured Convertible Promissory Note | | 10-K | | 4/17/18 | | 4.2 | | | | 4.3 | | 10% Unsecured Convertible Debenture dated May 3, 2011 | | 8-K | | 11/20/18 | | 4.3 | | | | 4.5 | | Form of Stock Option Grant to Robert Carmichael dated July 29, 2019 + | | 8-K | | 8/1/19 | | 4.5 | | | | 4.6 | | Form of Stock Option Grant to Jeffrey Guzy dated January 9, 2020 | | 8-K | | 1/10/20 | | 4.1 | | | | 4.7 | | $66,793 Convertible Demand Note, dated September 30, 2022 | | 8-K | | 10/12/22 | | 4.1 | | | | 4.8 | | Amendment to $150,000 Promissory Note, dated November 13, 2024 | | 8-K | | 11/19/24 | | 4.1 | | | | 4.9 | | Amendment to $280,000 Promissory Note, dated November 13, 2024 | | 8-K | | 11/19/24 | | 4.2 | | | | 10.1 | | Share Exchange Agreement, dated March 23, 2004 by and among the Company, Trebor Industries, Inc. and Robert M. Carmichael | | 8-K | | 4/9/04 | | 16.1 | | | | 10.2 | | Commercial Multi-Tenant Lease, dated September 14, 2022 between Submersible Systems, Inc. and Slater Palms LLC | | 8-K | | 10/12/22 | | 10.1 | | | | 10.3 | | Exclusive License Agreement, effective January 1, 2005, between 940 Associates, Inc. and Trebor Industries Inc. | | 10-QSB | | 8/15/05 | | 10.20 | | | | 10.4 | | Lease Agreement, dated September 1, 2014, between Liberty Property Limited Partnership and Trebor Industries, Inc. | | 10-K | | 4/17/18 | | 10.11 | | | | 10.5 | | Lease Amendment, dated December 1, 2016, between Liberty Property Limited Partnership and Trebor Industries, Inc. | | 10-K | | 4/22/22 | | 10.5 | | | | 10.6 | | Exclusive Distribution Agreement, dated August 7, 2017, between and Lenhardt & Wagner GmbH | | 10-K | | 6/7/19 | | 10.15 | | | | 10.7 | | Lease Agreement, dated November 11, 2018, between Liberty Property Limited Partnership and the Company | | 10-K | | 6/7/19 | | 10.16 | | | | 10.9 | | Non-Qualified Stock Option Agreement, dated April 14, 2020, between the Company and Robert Carmichael + | | 8-K | | 4/17/20 | | 10.1 | | | | 10.10 | | Form of Restricted Stock Award Agreement | | 8-K | | 4/30/20 | | 10.1 | | | | 10.11 | | Promissory Note, dated May 12, 2020, in the principal amount of $159,600 issued to South Atlantic Bank | | 8-K | | 5/13/20 | | 10.1 | | | | 10.12 | | Patent License Agreement, dated April 6, 2018 between Setaysha Technical Solutions, Inc. and the Company | | 10-K | | 6/29/20 | | 10.17 | | | | 10.13 | | Addendum No. 1 to Patent License Agreement dated December 31, 2019, between Setaysha Technical Solutions, Inc. and the Company | | 10-K | | 6/29/20 | | 10.18 | | | | 10.18 | | Employment Agreement Dated August 1, 2021, between the Company and Blake Carmichael | | 10-Q | | 11/22/21 | | 10.22 | | | | 10.19 | | Director Agreement, dated April 1, 2019, between the Company and Charles Hyatt | | 8-K | | 4/4/19 | | 10.1 | | | | 10.20 | | Employment Agreement dated September 3, 2021, between the Company and Christeen Buban | | 8-K | | 11/22/21 | | 10.23 | | | | 33 | | | 10.21 | | Form of letter agreement for incentive compensation + | | 8-K | | 6/1/20 | | 10.1 | | | | 10.22 | | Addendum No. 2 to Patent License Agreement, dated June 30, 2020, between Setaysha Technical Solutions, Inc. and the Company | | 10-Q | | 8/26/20 | | 10.1 | | | | 10.23 | | Employment Agreement, dated November 5, 2020, between Christopher Constable and the Company. + | | 8-K | | 11/12/20 | | 10.2 | | | | 10.24 | | Non-Qualified Stock Option Agreement Non-Plan, dated November 5, 2020, between the Company and Christopher Constable | | 8-K | | 11/12/20 | | 10.1 | | | | 10.27 | | First Amendment to Lease Agreement, dated December 1, 2016 between Trebor Industries, Inc. and Liberty Property Limited Partnership | | 10-K | | 4/22/22 | | 10.27 | | | | 10.28 | | 8% Convertible Promissory Note, dated September 3, 2021 | | 8-K | | 9/9/21 | | 4.1 | | | | 10.29 | | Confidentiality, Non-Competition And Non-Solicitation Agreement, dated September 3, 2021, between the Company and Richard S. Kearney | | 8-K | | 9/9/21 | | 10.2 | | | | 10.30 | | Investment Banking Engagement Agreement, dated August 6, 2021, between the Company and Newbridge Securities Corporation | | 10-Q | | 11/22/21 | | 10.21 | | | | 10.31 | | Asset Purchase Agreement, dated May 2, 2022, among the Company, Gold Coast Scuba, LLC, LLC Members and Live Blue, Inc. | | 8-K | | 5/3/22 | | 10.67 | | | | 10.32 | | Form of Subscription Agreement | | 8-K | | 9/12/22 | | 10.1 | | | | 10.33 | | Form of Common Stock Purchase Warrant | | 8-K | | 9/12/22 | | 10.2 | | | | 10.34 | | Lease Agreement, dated September 14, 2022, between Slater Palms, LLC and the Company | | * | | | | | | | | 10.35 | | Sublease Agreement, dated September 20, 2022, between Camburg Engineering, Inc. and the Company | | * | | | | | | | | 21 | | Subsidiaries | | * | | | | | | | | 31.1 | | Certification Pursuant to Rule 13a-14(a)/15d-14(a) | | * | | | | | | | | 31.2 | | Certification Pursuant to Rule 13a-14(a)/15d-14(a) | | * | | | | | | | | 32.1 | | Certification Pursuant to Section 1350 | | * | | | | | | | | 101.INS | | Inline XBRL Instance Document | | | | | | | | | | 101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | | | | | | | | | 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | | | 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | | | 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | | | 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | | | 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) | | | | | | | | | * Filed herewith + Management Contract | Item 16. | Form 10-K Summary | | None. | 34 | | **SIGNATURES** Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | Date: June 16, 2025 | Brownies marine group, Inc. | | | | | | | | | By: | /s/ Robert M. Carmichael | | | | | Robert M. Carmichael | | | | | Chief Executive Officer, | | | | | (Principal Executive Officer) | | | | | | | | | By: | /s/ Robert M. Carmichael | | | | | Robert M. Carmichael | | | | | Chief Financial Officer, | | | | | (Principal Financial and Accounting Officer) | | 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 registrant and in the capacities and on the dates indicated. | | /s/ Robert M. Carmichael | | | | Robert M. Carmichael | | | | Chairman of the Board, President, Chief Executive Officer, Director, and Chief Financial Officer (Principal Executive Officer) | | | | | | | | Date: June 16, 2025 | | | | | | | | /s/ Charles F. Hyatt | | | | Charles F. Hyatt | | | | Director | | | | | | | | Date: June 16, 2025 | | | 35 | | Financial Statements and Supplementary Data Brownies Marine Group, Inc. Index to Audited Financial Statements | | Page | | | Report of Independent Registered Public Accounting Firm (PCAOB ID No. 6797) | F-2 | | | Report of Independent Registered Public Accounting Firm (PCAOB ID No. 5036) | F-4 | | | Consolidated Balance Sheet as of December 31, 2024 and 2023 | F-6 | | | Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 | F-7 | | | Consolidated Statements of Changes in Stockholders Equity for the years ended December 31, 2024 and 2023 | F-8 | | | Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 | F-9 | | | Notes to Consolidated Financial Statements | F-10 | | | F-1 | | **Report of Independent Registered Public Accounting Firm** **** To the Board of Directors and Shareholders of Brownies Marine Group, Inc. and Subsidiaries 4061 SW, 47th Avenue, Davie, Florida 33314 **Opinion on the Financial Statements** We have audited the accompanying consolidated balance sheets of Brownies Marine Group, Inc. and Subsidiaries (the Company) as of December 31, 2024, and the related consolidated statements of operations, changes in stockholders equity, and cash flow for the year then ended and the related consolidated notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of Brownies Marine Group, Inc. and Subsidiaries as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. **Substantial doubt about the Companys ability to continue as going concern** **** The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in Note 1 of the financial statements, the Company had a net loss of approximately $240,599 and cash used in operating activities of approximately $292,314 for the year ended December 31, 2024, as well as an accumulated deficit of approximately $17,927,329 as of December 31, 2024. These factors raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. **Basis for Opinion** ** These financial statements are the responsibility of the entitys management. Our responsibility is to express an opinion on these financial statements based on our audit. 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 Brownies Marine Group, Inc. and Subsidiaries 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Brownies Marine Group, Inc. and Subsidiaries is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, 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 entitys internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. ** **Critical Audit Matters** Critical audit matters are matters arising from the current period audit of the 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 financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the 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. | F-2 | | *Description of the Matter* **** The Company is required to test the carrying amount of goodwill at least annually, or more frequently upon the occurrence of certain events. The Company is also required to assess the recoverability of its long-lived assets, including its amortizable intangible assets, whenever certain events occur, or circumstances change that may be indicators of impairment. We identified this area as a critical audit matter because the annual goodwill impairment test and the evaluation of recovery of long-lived assets requires significant judgment regarding the evaluation of qualitative factors. Additionally, these assessments also require appropriate determination of reporting units and asset groups, including the allocation of acquired tangible and intangible assets to such groupings. The evaluation of a certain asset group also required comparison of future non-discounted cash flows to the carrying value of the asset group, which required estimates of future cash flows associated with that asset group, including growth rates, profitability rates and estimates of other sources and uses of cash such as changes in working capital and capital expenditures. *How we addressed the matter in our audit* Our audit procedures to address the risk of material misstatement relating to goodwill and intangible assets included, among others, evaluating the appropriateness of asset groupings at the reporting unit level and asset group level. We also evaluated managements assessment of qualitative factors associated with the reporting unit containing goodwill and associated with all relevant asset groups. Our procedures also included evaluating managements forecast of non-discounted cash flows associated with a certain asset group where a qualitative factor required such further analysis. We also assessed the competence, independence, qualifications, experience, and capabilities of the third-party valuation specialist, and evaluated the appropriateness and reasonableness of the methodology and assumptions used by comparing them to external and historical data; testing the calculation and forecast model for mathematical accuracy; validating the appropriateness and reliability of inputs and amounts used; and evaluating the adequacy of the financial statement disclosures relating to goodwill, intangible assets and other long-lived assets, including disclosure of key assumptions and judgments. As a result of our testing, we did not take exception to managements conclusion that no impairment should be recognized related to goodwill or long-lived assets for the year ended December 31, 2024. */s/* Bush and Associates CPA LLC We have served as Brownies Marine Group, Inc. auditor since 2024 Henderson, Nevada June 13, 2025 | F-3 | | ***** **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Stockholders and Board of Directors of Brownies Marine Group, Inc. and Subsidiaries **** **Opinion on the Financial Statements** We have audited the accompanying consolidated balance sheet of Brownies Marine Group, Inc. and Subsidiaries (the Company) as of December 31, 2023, and the related consolidated statements of operations, stockholders equity, and cash flow for the year ended December 31, 2023, and the related consolidated notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flow for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. **** **Explanatory Paragraph Going Concern** The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had a net loss of approximately $1,248,115 and cash used in operating activities of approximately $374,827 for the year ending December 31, 2023 as well as an accumulated deficit of approximately $17,685,610 as of December 31, 2023. These factors raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. **** **Basis for Opinion** These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys 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 audit to obtain reasonable assurance about whether the 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 Companys 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 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 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 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 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 financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the 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. * ** | F-4 | | ** *Description of the Matter* The Company is required to test the carrying amount of goodwill at least annually, or more frequently upon the occurrence of certain events. The Company is also required to assess the recoverability of its long-lived assets, including its amortizable intangible assets, whenever certain events occur or circumstances change that may be indicators of impairment. We identified this area as a critical audit matter because the annual goodwill impairment test and the evaluation of recovery of long-lived assets requires significant judgment regarding the evaluation of qualitative factors. Additionally, these assessments also require appropriate determination of reporting units and asset groups, including the allocation of acquired tangible and intangible assets to such groupings. The evaluation of a certain asset group also required comparison of future non-discounted cash flows to the carrying value of the asset group, which required estimates of future cash flows associated with that asset group, including growth rates, profitability rates and estimates of other sources and uses of cash such as changes in working capital and capital expenditures. The Company engaged a third-party valuation specialist to assist with its assessment. *How we addressed the matter in our audit* Our audit procedures to address the risk of material misstatement relating to goodwill and intangible assets included, among others, evaluating the appropriateness of asset groupings at the reporting unit level and asset group level. We also evaluated managements assessment of qualitative factors associated with the reporting unit containing goodwill and associated with all relevant asset groups. Our procedures also included evaluating managements forecast of non-discounted cash flows associated with a certain asset group where a qualitative factor required such further analysis. We also assessed the competence, independence, qualifications, experience, and capabilities of the third-party valuation specialist, and evaluated the appropriateness and reasonableness of the methodology and assumptions used by comparing them to external and historical data; testing the calculation and forecast model for mathematical accuracy; validating the appropriateness and reliability of inputs and amounts used; and evaluating the adequacy of the financial statement disclosures relating to goodwill, intangible assets and other long-lived assets, including disclosure of key assumptions and judgments. As a result of our testing, we did not take exception to managements conclusion that no impairment should be recognized related to goodwill or long-lived assets for the year ended December 31, 2023. *Assurance Dimensions, LLC. We have served as the Companys auditor since 2022 Margate, Florida May 9, 2024 **** | F-5 | | **** **BROWNIES MARINE GROUP, INC. AND SUBSIDIARIES** **CONSOLIDATED BALANCE SHEETS** | | | December 31, 2024 | | | December 31, 2023 | | | | ASSETS | | | | | | | | | | | Current Assets | | | | | | | | | | | Cash | | $ | 417,678 | | | $ | 431,112 | | | | Accounts receivable - net | | | 180,496 | | | | 84,140 | | | | Accounts receivable - related parties | | | 41,686 | | | | 32,130 | | | | Accounts receivable | | | 41,686 | | | | 32,130 | | | | Inventory, net | | | 2,062,279 | | | | 1,998,807 | | | | Prepaid expenses and other current assets | | | 328,785 | | | | 190,412 | | | | Total current assets | | | 3,030,924 | | | | 2,736,601 | | | | | | | | | | | | | | | Property, equipment and leasehold improvements, net | | | 303,498 | | | | 342,681 | | | | Operating lease assets | | | 1,629,192 | | | | 844,083 | | | | Intangible assets, net | | | 501,489 | | | | 573,955 | | | | Goodwill | | | 249,986 | | | | 249,986 | | | | Other assets | | | 51,826 | | | | 30,724 | | | | Total assets | | $ | 5,766,915 | | | $ | 4,778,030 | | | | Liabilities and stockholders equity | | | | | | | | | | | Current liabilities | | | | | | | | | | | Accounts payable and accrued liabilities | | $ | 675,950 | | | $ | 789,702 | | | | Accounts payable - related parties | | | 18,448 | | | | 46,578 | | | | Customer deposits and unearned revenue | | | 410,636 | | | | 255,740 | | | | Other liabilities | | | 386,402 | | | | 451,954 | | | | Operating lease liabilities | | | 394,672 | | | | 259,154 | | | | Related party convertible demand note, net | | | 38,772 | | | | 52,484 | | | | Convertible notes | | | 360,561 | | | | 346,871 | | | | Current maturities long term debt | | | 70,308 | | | | 75,304 | | | | Related party notes payable | | | 505,000 | | | | 225,000 | | | | Total current liabilities | | | 2,860,749 | | | | 2,502,787 | | | | Loans payable, net of current portion | | | 46,763 | | | | 64,656 | | | | Convertible notes, net of current portion | | | | | | | - | | | | Operating lease liabilities | | | 1,279,444 | | | | 615,915 | | | | Total liabilities | | | 4,186,956 | | | | 3,183,358 | | | | Commitments and contingent liabilities | | | - | | | | - | | | | Stockholders equity | | | | | | | | | | | Preferred stock; $0.001 par value: 10,000,000 shares authorized; 425,000 issued and outstanding as of Dec 31, 2024 and December 31, 2023. | | | 425 | | | | 425 | | | | Common stock; $0.0001 par value; 1,000,000,000 shares authorized; 447,561,949 shares issued and outstanding at December 31, 2024 and 437,742,050 shares issued and outstanding at December 31, 2023, respectively. | | | 44,951 | | | | 43,775 | | | | Common stock payable 138,941 shares and 138,941 shares, respectively as of December 31, 2024 and December 31, 2023. | | | 14 | | | | 14 | | | | Additional paid-in capital | | | 19,461,898 | | | | 19,236,068 | | | | Accumulated deficit | | | (17,927,329 | ) | | | (17,685,610 | ) | | | Total stockholders equity | | $ | 1,579,960 | | | $ | 1,594,672 | | | | Total liabilities and stockholders equity | | $ | 5,766,915 | | | $ | 4,778,030 | | | The accompanying notes are an integral part of these consolidated financial statements | F-6 | | **BROWNIES MARINE GROUP, INC. AND SUBSIDIARIES** **CONSOLIDATED STATEMENTS OF OPERATIONS** **FOR THE YEARS ENDED DECEMBER 31** | | | 2024 | | | 2023 | | | | Net revenues | | | | | | | | | | | Net revenues | | $ | 7,603,378 | | | $ | 6,773,974 | | | | Net revenues - related parties | | | 566,291 | | | | 806,824 | | | | Net revenues | | | 566,291 | | | | 806,824 | | | | Total net revenues | | | 8,169,669 | | | | 7,580,798 | | | | Cost of net revenues | | | | | | | | | | | Cost of net revenues | | | 4,461,167 | | | | 4,889,769 | | | | Cost of net revenues - related parties | | | 227,668 | | | | 387,160 | | | | Cost of net revenues | | | 227,668 | | | | 387,160 | | | | Royalties expense - related parties | | | 51,256 | | | | 57,320 | | | | Royalties expense | | | 125,159 | | | | 138,643 | | | | Total cost of net revenues | | | 4,865,250 | | | | 5,472,892 | | | | Gross profit | | | 3,304,419 | | | | 2,107,906 | | | | Operating expenses | | | | | | | | | | | Selling, general and administrative | | | 3,441,130 | | | | 3,263,439 | | | | Research and development costs | | | 9,992 | | | | 13,880 | | | | Total operating expenses | | | 3,451,122 | | | | 3,277,319 | | | | Loss from operations | | | (146,703 | ) | | | (1,169,413 | ) | | | Other (income) expense, net | | | | | | | | | | | Other income | | | (6,522 | ) | | | - | | | | Interest expense | | | (87,374 | ) | | | (78,702 | ) | | | Total other (income) expense - net | | | (93,896 | ) | | | (78,702 | ) | | | Loss income before provision for income taxes | | | (240,599 | ) | | | (1,248,115 | ) | | | Provision for income taxes | | | - | | | | - | | | | Net loss | | $ | (240,599 | ) | | $ | (1,248,115 | ) | | | Other Comprehensive Income | | | | | | | | | | | Unrealized gain on foreign currency contract | | | - | | | | - | | | | Total Other Comprehensive income | | | - | | | | - | | | | Comprehensive loss | | | (240,599 | ) | | | (1,248,115 | ) | | | Basic loss per common share | | $ | (0.00 | ) | | $ | (0.00 | ) | | | Diluted loss per common share | | $ | (0.00 | ) | | $ | (0.00 | ) | | | Basic weighted average common shares outstanding | | | 438,937,858 | | | | 436,199,516 | | | | Diluted weighted average common shares outstanding | | | 438,937,858 | | | | 436,199,516 | | | The accompanying notes are an integral part of these consolidated financial statements | F-7 | | **BROWNIES MARINE GROUP, INC. AND SUBSIDIARIES** **CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY** **FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023** | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Income (Loss) | | | Deficit | | | (DEFICIT) | | | | | | Preferred Stock | | | Common Stock | | | Common Stock Payable | | | Additional Paid-in | | | Accumulated Other Comprehensive | | | Accumulated | | | Total Stockholders Equity | | | | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Income (Loss) | | | Deficit | | | (DEFICIT) | | | | December 31, 2022 | | | 425,000 | | | $ | 425.00 | | | | 425,520,662 | | | $ | 42,553 | | | | 138,941 | | | $ | 14 | | | $ | 18,916,876 | | | $ | - | | | $ | (16,437,495 | ) | | $ | 2,522,373 | | | | Shares issued for the purchase of units | | | - | | | | - | | | | 11,428,570 | | | | 1,143 | | | | - | | | | - | | | | 198,857 | | | | - | | | | - | | | | 200,000 | | | | Shares issued for accrued interest on convertible notes | | | - | | | | - | | | | 792,818 | | | | 79 | | | | - | | | | - | | | | 38,911 | | | | - | | | | - | | | | 38,990 | | | | Stock Option Expense | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 81,424 | | | | - | | | | - | | | | 81,424 | | | | Net Loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,248,115 | ) | | | (1,248,115 | ) | | | December 31, 2023 | | | 425,000 | | | $ | 425.00 | | | | 437,742,050 | | | $ | 43,775 | | | | 138,941 | | | $ | 14 | | | $ | 19,236,068 | | | $ | - | | | $ | (17,686,610 | ) | | $ | 1,594,672 | | | | Balance | | | 425,000 | | | $ | 425.00 | | | | 437,742,050 | | | $ | 43,775 | | | | 138,941 | | | $ | 14 | | | $ | 19,236,068 | | | $ | - | | | $ | (17,686,610 | ) | | $ | 1,594,672 | | | | Shares issued for accrued interest on convertible notes | | | - | | | | - | | | | 731,634 | | | | 73 | | | | - | | | | - | | | | 33,265 | | | | - | | | | - | | | | 33,338 | | | | Shares issued for Professional Services | | | | | | | | | | | 850,000 | | | | 85 | | | | | | | | | | | | 8,415 | | | | | | | | | | | | 8,500 | | | | Shares issued for salary reduction | | | | | | | | | | | 8,241,759 | | | | 824 | | | | | | | | | | | | 59,176 | | | | | | | | | | | | 60,000 | | | | Stock Option Expense | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 91,492 | | | | - | | | | - | | | | 91,492 | | | | To record Shares issued in error | | | | | | | | | | | 1,865,492 | | | | 187 | | | | | | | | | | | | 32,370 | | | | | | | | | | | | 32,557 | | | | Net Loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (240,599 | ) | | | (240,599 | ) | | | December 31, 2024 (unaudited) | | | 425,000 | | | $ | 425 | | | | 449,430,935 | | | $ | 44,951 | | | | 138,941 | | | $ | 14 | | | $ | 19,460,785 | | | $ | - | | | $ | (17,927,329 | ) | | $ | 1,579,960 | | | | Balance | | | 425,000 | | | $ | 425 | | | | 449,430,935 | | | $ | 44,951 | | | | 138,941 | | | $ | 14 | | | $ | 19,460,785 | | | $ | - | | | $ | (17,927,329 | ) | | $ | 1,579,960 | | | The accompanying notes are an integral part of these consolidated financial statements | F-8 | | **BROWNIES MARINE GROUP, INC. AND SUBSIDIARIES** **CONSOLIDATED STATEMENT OF CASH FLOWS** **FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023** | | | 2024 | | | 2023 | | | | Cash flows provided by operating activities: | | | | | | | | | | | Net loss | | $ | (240,599 | ) | | | (1,248,115 | ) | | | Adjustments to reconcile net loss to cash used in operating activities: | | | | | | | | | | | Depreciation and amortization | | | 111,649 | | | | 162,976 | | | | Amortization of debt discount | | | (22 | ) | | | 10,312 | | | | Amortization of right-of-use asset | | | 304,301 | | | | 289,009 | | | | Common stock issued for services | | | 41,057 | | | | - | | | | Shares issued for royalty | | | - | | | | - | | | | Reserve (recovery) for bad debt | | | - | | | | 25,870 | | | | Reserve for slow moving inventory | | | - | | | | 21,694 | | | | Reserve for Nomad recall | | | (86,300 | ) | | | (160,500 | ) | | | Shares issued for exclusivity | | | - | | | | - | | | | Stock Based Compensation - Options | | | 91,492 | | | | 81,424 | | | | Stock based compensation - stock grant | | | 60,000 | | | | - | | | | Shares issued for accrued interest in convertible notes | | | 33,338 | | | | 38,990 | | | | Gain on Settlement of Debt | | | - | | | | - | | | | Gain on forgiveness of PPP loan | | | - | | | | - | | | | Changes in operating assets and liabilities | | | | | | | | | | | Change in accounts receivable, net | | | (96,356 | ) | | | 1,834 | | | | Change in accounts receivable - related parties | | | (9,556 | ) | | | 23,298 | | | | Change in inventory | | | (63,472 | ) | | | 401,385 | | | | Change in prepaid expenses and other current assets | | | (138,373 | ) | | | (61,971 | ) | | | Change in other assets | | | (21,102 | ) | | | - | | | | Change in ROU assets | | | (1,089,410 | ) | | | | | | | Change in accounts payable and accrued liabilities | | | (136,641 | ) | | | (39,755 | ) | | | Change in customer deposits and unearned revenue | | | 154,896 | | | | 88,206 | | | | Change in long term lease | | | 799,047 | | | | (258,034 | ) | | | Change in other liabilities | | | 20,747 | | | | 239,511 | | | | Change in accounts payable - related parties | | | (28,130 | ) | | | 9,039 | | | | Net cash used in operating activities | | | (293,434 | ) | | | (374,827 | ) | | | | | | | | | | | | | | Cash flows acquired (used) in investing activities: | | | | | | | | | | | Cash used in asset acquisition | | | - | | | | - | | | | Cash Acquired in acquisition | | | - | | | | - | | | | Cash used in purchase of fixed assets, net of debt | | | - | | | | - | | | | Purchase of fixed assets | | | (22 | ) | | | (29,955 | ) | | | Net cash acquired (used) in investing activities | | | (22 | ) | | | (29,955 | ) | | | Cash flows from financing activities: | | | | | | | | | | | Proceeds from issuance of common stock | | | - | | | | - | | | | Proceeds from issuance of units | | | - | | | | 200,000 | | | | Proceeds from exercise of Warrants | | | - | | | | - | | | | Proceeds of related party demand note | | | 280,000 | | | | 225,000 | | | | Proceeds of note | | | - | | | | - | | | | Repayment on notes payable | | | - | | | | - | | | | Repayment of debt | | | 22 | | | | (73,533 | ) | | | Net cash from financing activities | | | 280,022 | | | | 351,467 | | | | | | | | | | | | | | | Net change in cash | | | (13,434 | ) | | | (53,315 | ) | | | | | | | | | | | | | | Cash, beginning balance | | | 431,112 | | | | 484,427 | | | | Cash, end of period | | $ | 417,678 | | | | 431,112 | | | | | | | | | | | | | | | Supplemental disclosures of cash flow information: | | | | | | | | | | | Cash Paid for Interest | | $ | 54,036 | | | | 39,712 | | | | Cash Paid for Income Taxes | | $ | - | | | | - | | | | | | | | | | | | | | | Supplemental disclosure of non-cash financing activities: | | | | | | | | | | | Cash paid for interest | | $ | - | | | $ | - | | | | Common Stock issued for asset acquisition | | $ | - | | | $ | - | | | | Convertible notes issued for acquisition | | $ | - | | | $ | - | | | | Beneficial conversion feature on notes issued for acquisition | | $ | - | | | $ | - | | | | Common Stock issued for payment of convertible note interest | | $ | 33,338 | | | | | | | | Equipment obtained through financing | | $ | - | | | | | | | | Shares issued for royalty agreement | | $ | - | | | $ | - | | | The accompanying notes are an integral part of these financial statements | F-9 | | **BROWNIES MARINE GROUP, INC. AND SUBSIDIARIES** **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** **DECEMBER 31, 2024 AND 2023** Note 1. Description of business and summary of significant accounting policies Description of business Brownies Marine Group, Inc., a Florida corporation (the Company, (1) designs, tests, manufactures and distributes recreational hookah diving, scuba and water safety products through its wholly owned subsidiary Trebor Industries, Inc., a Florida corporation organized in 1981 (Trebor or BTL), (2) manufactures and sells high pressure air and industrial compressor packages, yacht based scuba air compressor and nitrox generation systems through its wholly owned subsidiary Brownies High Pressure Compressor Services, Inc., a Florida corporation organized in 2017 (BHP), doing business as LW Americas (LWA) (3) develops and markets portable battery powered surface supplied air dive systems through its wholly owned subsidiary BLU3, Inc., a Florida corporation (BLU3) and (4) manufactures and markets high-pressure tanks and redundant air systems for the military and recreational diving industries through its wholly owned subsidiary Submersible Systems, Inc (SSI). On February 13, 2022 the Company filed with the Florida Department of State, articles of incorporation for a new wholly owned subsidiary, Live Blue, Inc. (LBI). LBI utilizes technology developed by BLU3 to provide new users and interested divers a guided tour experience. On May 2, 2022, the Company entered into an asset purchase agreement (the Asset Purchase Agreement) with Gold Coast Scuba, LLC, a Florida limited liability company (Gold Coast Scuba), Steven M. Gagas and William Frenier, the sole members of Gold Coast Scuba (together, the LLC Members) and LBI. Pursuant to the terms of the Asset Purchase Agreement, LBI acquired substantially all of Gold Coast Scubas assets and assumed certain non-material liabilities of the business associated with these assets. In addition, LBI assumed the lease for the premises for Gold Coast Scuba as part of this asset acquisition. On September 17, 2024, the Company entered into an intellectual property rights and transfer agreement with a buyer of the IP assets of Gold Coast Scuba which resulted in the sale of the retail portion of the LBI business. Basis of Presentation The consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP). Definition of fiscal year The Companys fiscal year end is December 31. Principles of Consolidation -The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Trebor, BHP, BLU3, SSI and LBI. All significant intercompany transactions and balances have been eliminated in consolidation. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of issuance of these financial statements. We incurred net losses for the years ended December 31, 2024 and 2023 of $240,599 and $1,248,115, respectively. The Company had an accumulated deficit as of December 31, 2024 of $17,927,329. The Company believes that existing operational cash flow may not be sufficient to fund presently anticipated operations, this raises substantial doubt about our ability to continue as a going concern for the twelve months after the date that the financial statements were issued. Therefore, the Company will seek to continue to raise additional funds as needed and is currently exploring alternative sources of financing including commercial banks and other lending institutions. The Company has issued common stock and has historically issued convertible notes to finance working capital needs and may continue to seek to raise additional capital through sale of common stock or other securities or obtaining short term loans. The Company has no firm commitment for any additional capital and there are no assurances it will be successful in obtaining additional funds or on terms favorable to the Company. If the Company fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back or cease operations, liquidate assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties. Cash and equivalents Only highly liquid investments with original maturities of 90 days or less are classified as cash and equivalents. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per entity. At December 31, 2024 and 2023, the Company had approximately $85,000 and $25,000, respectively, in excess of the FDIC insured limit. | F-10 | | Accounts receivable The Company manufactures and sells its products to a broad range of customers, primarily retail stores. Few customers are provided with payment terms of 30 days. The Company has tracked historical loss information for its trade receivables and compiled historical credit loss percentages for different aging categories (current, 130 days past due, 3160 days past due, 6190 days past due, and more than 90 days past due). In accordance with ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at December 31, 2023, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its lending practices have not changed significantly over time). As a result, management applied the applicable credit loss rates to determine the expected credit loss estimate for each aging category. Accordingly, the allowances for doubtful accounts totaled $23,490 and $54,427 at December 31, 2024 and 2023, respectively. Inventory The Company values inventory at the lower of cost (determined using the first-in first-out method) or net realizable value. Managements judgment is required to determine the allowances for obsolete or excess inventory. Inventory on hand may exceed future demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs. Inventory allowances are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. Though the Company considers these allowance balances to be adequate, changes in economic conditions, customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required allowance balances. Property and equipment and leasehold improvements Property and equipment and leasehold improvement is stated at cost less accumulated depreciation or amortization. Depreciation and amortization is provided principally on the straight-line method over the estimated useful lives of the assets or term of the lease, which are primarily 3 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense). The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability. Goodwill The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors such as macro-economic conditions, industry and market conditions, cost factors as well as other relevant events, to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company determines that the fair value is less than the carrying value, the Company will recognize an impairment charge based on the excess of a reporting units carrying value over its fair value. As of December 31, 2024 and 2023, there was no such impairment. Intangible assets Intangible assets are comprised of customer relationships, trademarks and non-compete agreements acquired in a business combination. The Company amortizes intangible assets with a definitive life over their respective useful lives. Assets with indefinite lives are tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. Unlike goodwill and indefinite-lived intangible assets, the accounting rules do not provide for an annual impairment test in determining whether fixed assets (e.g., property, plant, and equipment) and finite-lived intangible assets (e.g., customer lists) are impaired. Instead, they require that a triggering event occur before testing an asset for impairment. Once a triggering event has occurred, the impairment test employed is based on whether the intent is to hold the asset for continued use or to hold the asset for sale. If the intent is to hold the asset for continued use, the impairment test involves a comparison of undiscounted cash flows against the carrying value of the asset as an initial test. If the carrying value of such asset exceeds the undiscounted cash flow, the asset would be deemed to be impaired. Impairment would then be measured as the difference between the fair value of the fixed or amortizing intangible asset and the carrying value to determine the amount of the impairment. As of December 31, 2024 and 2023, there was no such impairment. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606 Revenue from Contracts with Customers*. The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due upon receipt of the invoice and the contracts do not have significant financing components. Product sales occur once control or title is transferred based on the commercial terms. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Product sales are recorded net of variable consideration, such as provisions for returns, discounts and promotional allowances. Such provisions are calculated based on the actual allowances given. Management believes that adequate provision has been made for cash discounts, returns, spoilage and promotional allowances based on the Companys historical experience. A breakdown of the total revenue between related party and non-related party revenue is as follows: Schedule of Related Party and Non-related Party Revenue | | | 2024 | | | 2023 | | | | Revenues | | $ | 7,611,755 | | | $ | 6,773,974 | | | | Revenues - related parties | | | 566,291 | | | | 806,824 | | | | Total Revenues | | $ | 8,178,046 | | | $ | 7,580,798 | | | | F-11 | | Cost of Sales Cost of sales consists of the cost of the components of finished goods, the costs of raw materials utilized in the manufacture of products, in-bound and out-bound freight charges, direct manufacturing labor as well as certain internal transfer costs, warehouse expenses incurred prior to the manufacture of the Companys finished products, inventory allowance for excess and obsolete products, and royalties paid on licensing agreements. Components account for the largest portion of the cost of sales. Components include plastic molded parts, gas powered engines, aluminum pressure bottles, electronic parts, batteries and packaging materials. The breakdown of cost of sales to include cost of sales for related party and non-related party as well as the related party and non-related party royalty expense is as follows: Schedule of Related Party and Non-Related Party Cost of Revenue | | | 2024 | | | 2023 | | | | Cost of revenues | | $ | 4,461,167 | | | $ | 4,889,769 | | | | Cost of revenues - related parties | | | 227,668 | | | | 387,160 | | | | Cost of revenues | | | 227,668 | | | | 387,160 | | | | | | | | | | | | | | | Royalty expense - related parties | | | 51,256 | | | | 57,320 | | | | Royalty expense | | | 125,159 | | | | 138,643 | | | | Total cost of revenues | | $ | 4,865,250 | | | $ | 5,472,892 | | | Operating Expenses Operating expenses include selling expenses such as warehousing expenses after manufacture, as well as expenses for advertising, and other marketing expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees (including legal fees), depreciation and other general and administrative costs. Lease Accounting We account for leases in accordance with ASC 842. The lease standard requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations. We elected the practical expedients permitted under the transition guidance of the new standard that retained the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. We did not reassess whether any contracts entered into prior to adoption are leases or contain leases. We categorize leases with contractual terms longer than twelve months as either operating or finance leases. Finance leases are generally those leases that would allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. We did not have any finance leases as of December 31, 2024 and 2023. Our leases generally have terms that range from three years for equipment and three to six years for property. We elected the accounting policy to include both the lease and non-lease components of our agreements as a single component and account for them as a lease. | F-12 | | Lease liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the leases. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the lease term. When we have the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that we will exercise the option, we consider these options in determining the classification and measurement of the lease. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease. Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Balance Sheet Information | Operating Leases | | Classification | | December 31, 2024 | | | December 31, 2023 | | | | Right-of-use assets | | Operating lease assets | | $ | 1,629,192 | | | $ | 844,083 | | | | | | | | | | | | | | | | | Current lease liabilities | | Current operating lease liabilities | | $ | 394,672 | | | $ | 259,154 | | | | Non-current lease liabilities | | Long-term operating lease liabilities | | | 1,279,444 | | | | 615,915 | | | | Total lease liabilities | | | | $ | 1,674,116 | | | $ | 875,069 | | | Lease term and discount rate were as follows: Schedule of Operating Lease Liabilities | | | December 31, 2024 | | | December 31, 2023 | | | | Weighted average remaining lease term (years) | | | 3.43 | | | | 3.47 | | | | Weighted average discount rate | | | 7.63 | % | | | 6.59 | % | | The components of lease costs were as follows: Schedule of Lease Cost | | | December 31, 2024 | | | December 31, 2023 | | | | Operating lease cost | | $ | - | | | $ | 109,125 | | | | Variable lease cost | | | - | | | | - | | | | Total lease costs | | $ | - | | | $ | 109,125 | | | Supplemental disclosures of cash flow information related to leases were as follows: Schedule of Cash Flow Information Related to Leases | | | December 31, 2024 | | | December 31, 2023 | | | | Cash paid for operating lease liabilities | | $ | 373,390 | | | $ | 468,138 | | | | Operating right of use assets obtained in exchange for operating lease liabilities | | $ | 1,629,429 | | | $ | 844,083 | | | | F-13 | | Maturities of lease liabilities were as follows as of December 31, 2024: Schedule of Maturities of Operating Lease Liabilities | | | BMG Office | | | Submersible Systems Lease | | | Total lease | | | | 2025 | | $ | 283,332 | | | $ | 216,397 | | | $ | 499,729 | | | | 2026 | | | 335,610 | | | | 222,886 | | | | 558,496 | | | | 2027 | | | 372,000 | | | | 229,566 | | | | 601,566 | | | | 2028 | | | 217,000 | | | | 19,177 | | | | 236,177 | | | | Thereafter | | | - | | | | - | | | | 0 | | | | Total | | $ | 1,207,942 | | | $ | 688,026 | | | $ | 1,895,968 | | | | Less: Imputed interest | | | (150,638 | ) | | | (71,214 | ) | | | (221,852 | ) | | | Present value of lease liabilities | | $ | 1,057,304 | | | $ | 616,812 | | | $ | 1,674,116 | | | Detailed information on leases can be found in Note 15. Product development costs Product development expenditures are charged to expenses as incurred. Advertising and marketing costs The Company expenses the costs of producing advertisements and marketing material at the time production occurs, and expenses the costs of communicating advertisements and participating in trade shows in the period in which they occur. Advertising and trade show expense incurred for the years ended December 31, 2024 and 2023, totaled $427,037 and $365,604, respectively. Research and development costs The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, *Research and Development*(ASC 730-10). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. During the years ended December 31, 2024 and 2023, the Company incurred research and development costs of $9,992 and $13,880, respectively. Customer deposits and unearned revenue and returns policy The Company typically takes a minimum 50% deposit against large tankfill systems prior to ordering and/or building the systems. It will also take deposits for large rescue tank orders for both domestic and international customers. The remaining balance due is payable upon delivery, shipment, or installation of the system. Additionally, returns of all other merchandise are subject to a 15% restocking fee as stated on each sales invoice. Customer deposits totaled $410,636 and $255,740 at December 31, 2024 and 2023, respectively. Warranty policy Under the provisions of the Financial Accounting Standards Board (FASB) ASC 460, *Guarantors Guarantees*, the Company accrues a liability for estimated warranty policy costs based on standard quantitative measures based on criteria established by the Company. Estimates of costs to service its warranty obligations are based on historical experience, expectation of future conditions and known product issues. To the extent the Company experiences increased warranty claim activity or increased costs associated with servicing those claims, revisions to the estimated warranty reserve would be required. The Company engages in product quality programs and processes, including monitoring and evaluating the quality of its suppliers, to help minimize warranty obligations. The Company provides its customers with an industry standard one year warranty on systems sold and recognizes a warranty allowance based on gross sales multiplied by the historical warranty expense return rate. The warranty allowance charged to cost of net revenues and is included in accrued expenses and is deemed sufficient to absorb any material or labor costs that might be incurred on sales recorded during the period. The Company recorded a allowance for warranty work of $40,468 and $40,468 at December 31, 2024 and 2023, respectively. Income taxes The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. | F-14 | | The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, it would make an adjustment to the valuation allowance which would reduce the provision for income taxes. The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Stock-based compensation The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes valuation model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued on the effective date of the agreement in accordance with generally accepted accounting principles, which includes determination of the fair value of the share-based transaction. The fair value is determined through use of the quoted stock price. During the years ended December 31, 2024 and 2023, the Company recognized share based compensation with a fair value of $151,492 and $81,424, respectively. Usage of Authorized but Unissued Shares of Common Stock - The Company has issued options, warrants and convertible promissory notes which are convertible into shares of common stock in certain situations the total of which exceeds the current authorization. The Company has adopted a policy for the sequence of usage of remaining authorized but unissued shares of common stock (the Sequencing Policy) which outlines the order in which the conversion of these equity-linked instruments may be settled in shares. Under the Companys Sequencing Policy, the most recently issued equity-linked securities, including stock options, warrants, and convertible promissory notes, are settled in shares first. Fair value of financial instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model- derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. An investments level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes observable requires significant judgment by the Company. Management considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the Companys perceived risk of that investment. At December 31, 2024, and 2023, the carrying amount of cash, accounts receivable, accounts receivable related parties, accounts payable and accrued liabilities, accounts payable-related parties, customer deposits and unearned revenue, other liabilities, lease liabilities, loans payable and convertible debentures, approximate fair value because of the short maturity of these instruments. | F-15 | | Loss per common share Basic loss per share excludes any dilutive effects of options, warrants and convertible securities. Basic loss per share is computed using the weighted- average number of outstanding common shares during the applicable period. Diluted loss per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. At December 31, 2024 and December 31, 2023, 50,824,019 and 107,761,177, respectively, potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible note agreements, outstanding warrants, outstanding stock options and the conversion of preferred stock. New accounting pronouncements ASU 2016-13 Current Expected Credit Loss (ASC326) In December 2021, the FASB issued an update to ASU No. 2016-13 the Current Expected Credit Losses (CECL) standard (ASC 326), which is designed to provide greater transparency and understanding of credit risk by incorporating estimated, forward-looking data when measuring lifetime Estimated Credit Losses (ECL) and requires enhanced financial statement disclosures. This guidance was adopted on January 1, 2023, with no effect to the financial statements. ASU 2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entitys Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entitys Own Equity. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entitys Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entitys Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption or are not applicable*.* | F-16 | | Note 2. Inventory Inventory consists of the following as of: Schedule of Inventory | | | 2024 | | | 2023 | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | | | | | | | | | | Raw materials | | $ | 1,379,819 | | | $ | 1063,888 | | | | Work In Process | | | 40,978 | | | | 63,258 | | | | Finished goods | | | 821,912 | | | | 1,004,160 | | | | Rental Equipment | | | - | | | | 55,893 | | | | Allowance for Obsolete or Excess Inventory | | | (198,430 | ) | | | (188,392 | ) | | | Total Inventory, net | | $ | 2,062,279 | | | $ | 1,998,807 | | | As of December 31, 2024 and 2023, the Company recorded allowances for obsolete or slow moving inventory of approximately $198,430 and $188,392, respectively. Note 3. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following as of: Schedule of Prepaid Expenses and Other Current Assets | | | 2024 | | | 2023 | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | | | | | | | | | | Prepaid inventory | | $ | 251,226 | | | $ | 109,943 | | | | Prepaid expenses and other current assets | | | 77,559 | | | | 80,469 | | | | Total prepaid expenses and other current assets | | $ | 328,785 | | | $ | 190,412 | | | Note 4. Property and Equipment, Net Property and equipment consist of the following as of: Schedule of Property and Equipment | | | 2024 | | | 2023 | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | | | | | | | | | | Tooling and equipment | | $ | 621,871 | | | $ | 661,951 | | | | Computer equipment and software | | | 57,765 | | | | 51,770 | | | | Vehicles | | | 61,341 | | | | 79,557 | | | | Leasehold improvements | | | 136,369 | | | | 62,927 | | | | Total property and equipment | | | 877,346 | | | | 856,205 | | | | Less: accumulated depreciation and amortization | | | (573,848 | ) | | | (513,524 | ) | | | Total property and equipment, net | | $ | 303,498 | | | $ | 342,681 | | | Depreciation and amortization expense totaled $ 171,535 and $155,837 for the years ended December 31, 2024 and 2023, respectively. Included in the depreciation and amortization expense for the year ending December 31, 2024 and 2023 is $119,071 and $76,394 for amortization of intangible assets, respectively. Note 5. Other Assets Other assets at December 31, 2024 of $51,825 consisted of refundable deposits and a prepaid licensing fee and $30,724 consisted of refundable deposits and at December 31, 2023, which consisted of refundable deposits. Note 6. Customer Credit and Vendor Concentrations The Company sells products to three entities owned by the brother of Robert M. Carmichael and three companies owned by Robert Carmichael as further discussed in Note 7 - Related Parties Transactions. Combined sales to these six entities for the years ended December 31, 2024 and 2023, represented 6.9% and 10.6%, respectively, of total net revenues. Related Parties represented concentration in outstanding accounts receivable of 16.0% of total outstanding accounts receivable as of December 31, 2024 and 8.6% as of December 31, 2023. Brownies Global Logistics, LLC represented concentration in outstanding accounts receivable of less than 10% of total outstanding accounts receivable as of December 31, 2024 and 2023. | F-17 | | Additionally, Amazon a non-related party customer, represented 1.0% of total outstanding accounts receivable as of December 31, 2024. Revenue from Amazon accounted for 7.02.% of revenue for the twelve months ended December 31, 2024, and 10.5% of total revenue for the year ended December 31, 2023. The Company has one vendor for the year ended December 31, 2024, and two vendors for the year ended December 31, 2023, that supplied more than 10% each of the Companys overall purchases. L&W supplied 14.84% and CM Batteries supplied 10.1% of overall purchases for the year ended December 31, 2024. Tian Li He Technology supplied 11.9% % and L&W supplied 14.4% of overall purchases for the year ended December 31, 2023. Note 7. Related Party Transactions We sell products to Brownies Southport Divers, Inc., Brownies Palm Beach Divers, and Brownies Yacht Toys, companies owned by the brother of Robert Carmichael. Combined net revenues from these entities for the years December 31, 2024 and 2023, totaled $566,291 and $806,824, respectively. Accounts receivable from Brownies SouthPort Divers, Inc., Brownies Palm Beach Divers, and Brownies Yacht Toys at December 31, 2024, were $29,840, $6,318 and $3,138, respectively. Accounts receivable from Brownies SouthPort Divers, Inc., Brownies Palm Beach Divers, and Brownies Yacht Toys at December 31, 2023, were $12,766, $11,927 and $6,790, respectively. We also sell products to Brownies Global Logistics, LLC (BGL) and 940 Associates, Inc. (940 A), entities wholly-owned by Robert Carmichael. Combined net revenues from these two entities for the years ended December 31, 2024 and 2023 were $0 and $1,799, respectively. In addition, from time to time Mr. Carmichael purchases products from us for his personal use. Accounts receivable from BGL, 940 A and Mr. Carmichael totaled $0 at December 31, 2024 and $647 at December 31, 2023. As of December 31, 2024, the Company had an amount due of $5,000 to Robert Carmichael for an advance to BLU3,Inc. The Company also had an amount due of $441 to Robert Carmichael as of December 31, 2024. We are a party to an exclusive license agreement, dated February 22, 2005, with 940 A to license the trademark Brownies Third Lung, Tankfill, Brownies Public Safety and various other related trademarks as listed in the agreement. The agreement provides for a royalty to be paid equal to the greater of 2.5% on all sales of Trebor or $15,000 per quarter. Total royalty fees paid to 940 A in the years ended December 31, 2024 and 2023 totaled $51,256 and $57,320, respectively. The Company had accrued royalties of $6,974 and $2,238 for the years ended December 31, 2024 and 2023, respectively. On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day value weighted average price (VWAP) of the Companys stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $.021 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Companys stock as of the date of the note. The Company recorded $19,250 for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. Mr. Carmichael has agreed to waive interest payments on this note effective April, 1, 2024. Effective July 29, 2019 the Company agreed to pay the members of the Companys board of Directors, including Mr. Carmichael, a management director, an annual fee of $18,000 for serving on the Companys board of Directors for the year ending December 31, 2019. As of December 31, 2021, the Company had accrued $112,500 in such fees. On August 21, 2020 the Companys Board of Directors approved the continuation of the 2019 Board compensation policy for the year ending December 31, 2024. As of December 31, 2024, the Company accrued an additional $36,000 in fees for a total of $220,500 in accrued fees. | F-18 | | On April 14, 2020 the Company entered into a Non-Qualified Stock Option Agreement with Robert. Carmichael. Under the terms of the option agreement, as additional compensation the Company granted Mr. Carmichael an option to purchase up to an aggregate of 125,000,000 shares of the Companys common stock at an exercise price of $.045 per share. During the years ended December 31, 2024 and December 31, 2023 the Company nothing was expenses in relation with this option agreement, respectively. Such option expired unexercised April 30, 2023. On November 5, 2020 the Company entered into a Non-Qualified Option Agreement with Mr. Constable. Under the terms of this option agreement, as additional compensations, the Company granted an option (the Bonus Option) to purchase up to an aggregate of 30,000,000 shares of the Companys common stock at an exercise price of $0.0184 per share. During the years ended December 31, 2024 and December 31, 2023, the Company nothing was expensed. As of December 31, 2023, 5,000,000 shares subject to option were vested. These options have been forfeited upon Mr. Constables resignation as Chief Executive Officer of the Company in June 2023. On August 1, 2021 as part of the Blake Carmichael Agreement (see Note 15) the Company entered into a Non-Qualified Stock Option Agreement with Blake Carmichael. Under the terms of the Blake Carmichael agreement, Blake Carmichael is entitled to (i) a five-year option to purchase 3,759,400 shares of the Companys common stock at an exercise price of $0.0399 per share (the BC Compensation Options), 33.3% of the shares subject to the option vested upon the execution of the agreement, 33% at the first anniversary date and 33% upon the second anniversary date and (ii) a five-year option to purchase up to 18,000,000 shares of common stock which vest annually on a contract year basis, based upon the achievement of certain revenue and EBITDA based financial metrics tied to revenue and EBITDA, which for the years ended December 31, 2024 and December 31, 2023 the Company expensed $49,448 and $49,448, respectively. On November 5, 2022 the Company entered into a Non-Qualified Stock option agreement with Christopher Constable as part of his employment agreement as the Companys Chief Executive Officer. Under the terms of the option agreement, the Company granted Mr. Constable a five-year 5 immediately exercisable option to purchase 3,968,254 shares of the Companys common stock at an exercise price of $0.0252 the Compensation Options. The fair value of the options on the date of the grant was $95,969 using the Black-Scholes option pricing model with the following assumptions: (i) risk free interest rate of .4.64%, (ii) expected life of 2.5 years, (iii) dividend yield of 0% and (iv) expected volatility of 256%. Stock option expense recognized during the years ended December 31, 2024 and December 31, 2023 for this option was $-0- and $95,969, respectively. The option was forfeited unexercised 90 days after Mr. Constables resignation as Chief Executive Officer On December 13, 2022, the Company issued 5,714,285 units, each unit consists of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise price of $0.0175 per share to Charles Hyatt a director, in a private offering for proceeds of $100,000. On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, a director, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise price of $0.0175 per share in consideration of $200,000. On September 14, 2023, the Company issued a convertible demand 8% promissory note in the principal amount of $50,000 to Robert Carmichael for funds to meet the working capital needs of BLU3. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day value VWAP of the Companys common stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal into shares of common stock at a conversion rate of $0.01351 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Companys stock as of the date of the note. The Company recorded $-0- for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. The outstanding balance on the note was $50,000 as of December 31, 2024 and December 31, 2023. Mr. Carmichael has waived interest payments on the note effective as of September 14, 2023. On November 14, 2023, the Company issued a promissory note in the principal amount of $150,000 to Charles Hyatt, a director, for working capital requirements and payment of certain expenses in connection with the Companys business. The note bears interest at a rate of 9.9% per annum, and a default interest of 18% per annum. Interest payments are due and payable on a monthly basis. The Company may prepay the note in whole or in part, at any time without premium or penalty. The balance of $280,000 was outstanding under the note as of December 31, 2024. Pursuant to an amendment date November 13, 2004 the maturity date was extended from Mat 7, 2024 to May 5, 2025. On February 5, 2024, the Company borrowed funds through the issuance of a promissory note in the principal amount of $280,000 to Charles Hyatt, a Company director, for working capital requirements and payment of certain expenses in connection with the Companys business combinations. The maturity date of the note was August 6, 2024. The note bears interest at a rate of 9.9% per annum, and has a default interest rate of 18% per annum. Interest payments are and payable on a monthly basis. The Company may prepay the note in whole or in part, at any time without premium or penalty. The balance of $280,000 was outstanding as of December, and the due date was extended to a due date of May 5, 2025, pursuant to an amendment dated November 13, 2024. On December 18, 2023, the Company issued a $25,0000 to Robert Carmichael for BLU3 working capital needs. The note bears no interest and is payable on demand. On March 31, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending March 31, 2023. The fair value of these shares was $1,336. On June 30, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending June 30, 2023. The fair value of these shares was $1,287. On September 30, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending September 30, 2023. The fair value of these shares was $1,287. On December 31, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending December 31, 2023. The fair value of these shares was $1,287. On March 31, 2024, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending March 31, 2023. The fair value of these shares was $1,287. On December 9, 2024 the Company issued 8,241,759 shares of commons stock to Blake Carmichael as compensation for a reduction in salary. The fair value of these shares was $60,000. Note 8. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consists of the following as of: Schedule of Accounts Payable and Accrued Liabilities | | | December 31, 2024 | | | December 31, 2023 | | | | | | | | | | | | | Accounts payable trade and other | | $ | 293,706 | | | $ | 491,424 | | | | Accrued payroll and fringe benefits | | | 313,099 | | | | 236,590 | | | | Accrued warranty expense | | | 40,468 | | | | 40,468 | | | | | | | | | | | | | | | Accrued Sales Tax | | | 39,938 | | | | 21,220 | | | | Accrued interest | | | - | | | | - | | | | Total | | $ | 687,211 | | | $ | 789,702 | | | Balances due certain vendors are in arrears to varying degrees. The Company is handling all delinquent accounts on a case-by-case basis. Note 9. Other Liabilities Other liabilities consist of the following as of: Schedule of Other Liabilities | | | December 31, 2024 | | | December 31, 2023 | | | | | | | | | | | | | Accrued expenses | | $ | 247,939 | | | $ | 267,454 | | | | Accrued Board of Directors fees | | | 220,500 | | | | 184,500 | | | | Total | | $ | 468,439 | | | $ | 451,954 | | | | F-19 | | Note 10. Convertible Promissory Notes, Demand Notes and Loans Payable Convertible Promissory Notes Convertible Promissory Notes consist of the following at December 31, 2024: Schedule of Convertible Debentures | | | | | | | | Origination | | | Original | | | Period End | | | Period End | | | Period End | | | Accrued | | | | | | | Origination | | Maturity | | Interest | | | Principal | | | Discount | | | Principal | | | Discount | | | Balance, | | | Interest | | | | | | | Date | | Date | | Rate | | | Balance | | | Balance | | | Balance | | | Balance | | | Net | | | Balance | | | Reg. | | | | 9/03/21 | | 9/03/24 | | | 8 | % | | $ | 346,500 | | | $ | (12,355 | ) | | $ | 346,500 | | | $ | 550 | | $ | 347,050 | | | | - | | | | (1 | ) | | | 9/03/21 | | 9/03/24 | | | 8 | % | | $ | 3,500 | | | $ | (125 | ) | | | 3,500 | | | | 11 | | | 3,511 | | | | - | | | | (2 | ) | | | 9/30/22 | | Demand | | | 8 | % | | $ | 66,793 | | | $ | (19,250 | ) | | | 58,654 | | | | (19,250 | ) | | | 39,404 | | | | - | | | | (3 | ) | | | 09/14/2023 | | Demand | | | | | | | | | | | | | | | 50,000 | | | | | | | | 50,000 | | | | | | | | (4 | ) | | | | | | | | | | | | | | | | | | | $ | 458,654 | | | $ | (18,689 | ) | | $ | 439,965 | | | $ | - | | | | | | | | (1) | On September 3, 2021, the Company issued a $346,500 note payable to Summit Holding V, LLC as part of the acquisition of SSI. The note carries 8% unsecured convertible promissory note, due September 3, 2024. Payments on the note are to be equivalent to 50% of the adjusted net profit of Submersible Systems, Inc., payable calendar quarterly commencing on December 31, 2021. Interest is payable in company stock at the conversion price of $0.051272 and shall be paid quarterly. The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $0.051272 at any time up to the maturity date of the note. The Company recorded $12,355 for the beneficial conversion feature.The due date on this note has been extended by the lender while the Company works through a restructure of the note. | | | (2) | On September 3, 2021, the Company issued a three-year 8% unsecured convertible promissory note for $3,500 to Tierra Vista Partners, LLC as part of the acquisition of SSI. Payments on the note are to be equivalent to 50% of the adjusted net profit of SSI, payable calendar quarterly commencing on December 31, 2021. Interest is payable quarterly in common stock of the Company at the conversion price of $0.051272 per share. The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $0.051272 at any time up to the maturity date of the note. The Company recorded $125 for the beneficial conversion feature.The due date on this note has been extended by the lender while the Company works through a restructure of the note. | | | (3) | On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day VWAP of the Companys stock prior to the quarterly interest payment date. This note is classified as a current liability as the note holder may demand payment or convert the outstanding principal at a conversion rate of $0.021 per share at any time. The Company recorded $19,250 for the beneficial conversion feature. | | | (4) | On September 14, 2023, the Company issued a convertible demand 8% promissory note in the principal amount of $50,000 to Robert Carmichael for funds to meet the working capital needs of BLU3. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day value weighted average price (VWAP) of the Companys stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.01351 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Companys stock as of the date of the note. The Company recorded $-0- for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. The outstanding balance on this note was $50,000 as of December 31, 2024 and December 31, 2023. Mr. Carmichael has waived interest payments on this note effective September 14, 2023. | | A breakdown of current and long-term amounts due are as follows for the convertible promissory notes as of December 31, 2024: Schedule of Breakdown Current and Long-term Amounts | | | Summit Holdings V, | | | Tierra Vista Partners, | | | Robert Carmichael | | | Robert Carmichael | | | | | | | | | LLC Note | | | LLC Note | | | LBI Note | | | BLU3 Note | | | Total | | | | 2024 | | $ | 346,500 | | | $ | 3,500 | | | $ | 58,338 | | | $ | 50,000 | | | $ | 433,338 | | | | Discount | | | (3,087 | ) | | | (42 | ) | | | (19,250 | ) | | | ( - | ) | | | (22,379 | ) | | | Total Loan Payments | | $ | 343,413 | | | $ | 3,458 | | | $ | 39,088 | | | $ | 50,000 | | | $ | 410,959 | | | | Current Portion of Loan Payable | | $ | (343,413 | ) | | $ | (3,458 | ) | | $ | (39,088 | ) | | $ | (50,000 | ) | | $ | (410,959 | ) | | | Non-Current Portion of Loan Payable | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | | (1) | On September 3, 2021, the Company issued an $346,500 8% unsecured convertible promissory note payable to Summit Holding V, LLC as part of the acquisition of SSI. The note carries 8% unsecured convertible promissory note, due September 3, 2024. Payments on the note are payable quarterly commencing on December 31, 2021 at a rate equal to or to be equivalent to 50% of the adjusted net profit of Submersible Systems, Inc., payable calendar quarterly commencing on December 31, 2021. Interest is payable in company common stock at the conversion price rate of $0.051272 per share. and shall be paid quarterly. The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $0.051272 at any time. up to the maturity date of the note. The Company recorded $12,355 for the beneficial conversion feature. The maturity due date of the note has been extended by the lender from September 3, 2024 to______________ while the Company works through a determines a restructure of the note. | | Schedule of Future Amortization of Notes Payable | | | Payment Amortization | | | | 2024 | | $ | 346,500 | | | | Total Note Payments | | $ | 0 | | | | Current portion of note payable | | | (346,500 | ) | | | Non-Current Portion of Notes Payable | | $ | - | | | | (2) | On September 3, 2021, the Company issued a three-year 8% unsecured convertible promissory note for $3,500 to Tierra Vista Partners, LLC as part of the acquisition of SSI. Payments on the note are to be equivalent to 50% of the adjusted net profit of SSI, payable calendar quarterly commencing on December 31, 2021. Interest is payable quarterly in common stock of the Company at the conversion price of $0.051272 per share. The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $0.051272 at any time up to the maturity date of the note. The Company recorded $125 for the beneficial conversion feature.The due date on this note has been extended by the lender while the Company works through a restructure of the note. | | Schedule of Future Amortization of Notes Payable | | | Payment Amortization | | | | 2024 | | $ | 3,500 | | | | Total Note Payments | | $ | 0 | | | | Current portion of note payable | | | (3,500 | ) | | | Non-Current Portion of Notes Payable | | $ | - | | | | (3) | On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds of LBI. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day VWAP of the Companys stock prior to the quarterly interest payment date. This note is classified as a current liability as the note holder may demand payment or convert the outstanding principal at a conversion rate of $0.021 per share at any time. The Company recorded $19,250 for the beneficial conversion feature. | | | (4) | On September 14, 2023, the Company issued a convertible demand 8% promissory note in the principal amount of $50,000 to Robert Carmichael for working capital needs of BLU3. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day (VWAP) of the Companys common stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.01351 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Companys stock as of the date of the note. The Company recorded $-0- for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. The outstanding balance on this note was $50,000 as of December 31, 2024 and December 31, 2023. Mr. Carmichael has waived interest payments on this note effective September 14, 2023. | | | F-20 | | Demand Notes On November 14, 2023, the Company issued a promissory note in the principal amount of $150,000 to Charles Hyatt, a director, for working capital requirements and payment of certain expenses in connection with the Companys business combinations. The maturity date of the Note is May 7, 2024 (the Maturity Date). The Note bears interest at a rate of 9.9% per annum, and a default interest of 18% per annum. Interest payments shall be due and payable on a monthly basis. The Company may prepay the Note in whole or in part, at any time without premium or penalty. The balance of $280,000 was outstanding as of December 31, 2024, and the due date was extended to a due date of May 5, 2025, pursuant to an amendment dated November 13, 2024. On February 5, 2024, the Company borrowed funds through the issuance of a promissory note in the principal amount of $280,000 to Charles Hyatt, a Company director, for working capital requirements and payment of certain expenses in connection with the Companys business combinations. The maturity date of the note was August 6, 2024. The note bears interest at a rate of 9.9% per annum, and has a default interest rate of 18% per annum. Interest payments are and payable on a monthly basis. The Company may prepay the note in whole or in part, at any time without premium or penalty. The balance of $280,000 was outstanding as of December, and the due date was extended to a due date of May 5, 2025, pursuant to an amendment dated November 13, 2024. Loans Payable Schedule of Future Amortization of Loans Payable | | | Mercedes BTL (1) | | | Navitas 2021 BLU3 (2) | | | NFS SSI (3) | | | Navitas 2022 BLU3 (4) | | | Navitas 2024 BLU3 (5) | | | Navitas 2024 BTL (6) | | | Total | | | | | | | | | | | - | | | | - | | | | - | | | | | | | | | | | | - | | | | 2025 | | | 8,686 | | | | 18,145 | | | | 12,329 | | | | 21,735 | | | | 5,604 | | | | 3,890 | | | | 70,389 | | | | 2026 | | | - | | | | 4,769 | | | | - | | | | - | | | | 6,304 | | | | 4,411 | | | | 15,484 | | | | 2027 | | | - | | | | - | | | | - | | | | - | | | | 7,091 | | | | 5,002 | | | | 12,093 | | | | 2028 | | | - | | | | - | | | | - | | | | - | | | | 7,977 | | | | - | | | | 7,977 | | | | Thereafter | | | - | | | | - | | | | - | | | | - | | | | 708 | | | | 10,419 | | | | 11,127 | | | | Total Loan Payments | | | 8,686 | | | | 22,914 | | | | 12,329 | | | | 21,735 | | | | 27,685 | | | | 23,722 | | | | 117,070 | | | | Current Portion of Loan Payable | | | (8,686 | ) | | | (18,145 | ) | | | (12,329 | ) | | | (21,735 | ) | | | (5,604 | ) | | | (3,809 | ) | | | (70,308 | ) | | | Non-Current Portion of Loan Payable | | | - | | | | 4,769 | | | | - | | | | - | | | | 22,081 | | | | 19,912 | | | | 46,762 | | | | | (1) | On August 21, 2020, the Company executed an instalment sales contract with Mercedes Benz Coconut Creek for the purchase of a 2019 Mercedes Benz Sprinter delivery van. The instalment agreement is for $55,841 with a zero interest rate payable over 60 months with a monthly payment of $931 and is personally guaranteed by Robert Carmichael. The loan balance as of December 31, 2024 was $8,686 and $19,855 as of December 31, 2023. | | | | | | | | | (2) | On May 19, 2021, subsidiary BLU3, executed an equipment finance agreement to finance the purchase of certain plastic molding equipment through Navitas Credit Corp. (Navitas). The amount financed is $75,764 payable over 60 equal monthly instalments of $1,611 (the Navitas 1). The equipment finance agreement contains customary events of default. The loan balance as of December 31, 2024 was $24,362 and $38,841 as of December 31, 2023. | | | | | | | | | (3) | On June 29, 2022, SSI executed an equipment financing agreement with NFS Leasing (NFS Leasing) to secure replacement production molds. The total purchase price of the molds was $84,500 of which $63,375 was financed by NFS Leasing on August 15, 2022. The financing agreement has a 33 month term beginning in August 2022 with a monthly payment of $2,571. The financing agreement contains customary events of default, is guaranteed by the Company and NFS Leasing has a lien on all of the assets of SSI. The loan balance as of December 31, 2024 and December 31, 2023 was $12,329 and $38,607, respectively. | | | | | | | | | (4) | On December 12, 2022, BLU3 executed an equipment finance agreement to finance the purchase of certain plastic molding equipment through Navitas Credit Corp. (Navitas). The amount financed is $63,689 payable over 36 equal monthly installments of $2,083 (Navitas 2). The equipment finance agreement contains customary events of default. The loan balance as of December 31, 2024 was $21,735 and $44,839 as of December 31, 2023. | | | | | | | | | (5) | On February 12, 2024, BLU3 executed an inventory finance agreement to finance the purchase of certain equipment stock through Navitas. The amount financed is $32,274 payable over 60 equal monthly installments of $715. The inventory finance agreement contains customary events of default. The loan balance as of December 31, 2024 was $27,685. | | | | | | | | | (6) | On September 4, 2024, BLU3 executed an inventory finance agreement to finance the purchase of certain equipment stock through Navitas. The amount financed is $24,620 payable over 60 equal monthly installments of $602. The inventory finance agreement contains customary events of default. The loan balance as of September 30, 2024 was $23,722. | | | F-21 | | Note 11. Business Combinations *Gold Coast Scuba, LLC Asset Acquisition* On May 2, 2022, the Company entered into an asset purchase agreement (the Asset Purchase Agreement) with Gold Coast Scuba, LLC., Steven M. Gagas and William Frenier, the sole members of Gold Coast Scuba (together, the LLC Members) and Live Blue, Inc. Pursuant to the terms of the Asset Purchase Agreement, Live Blue, Incacquired substantially all of Gold Coast Scubas assets and assumed certain non-material liabilities of the business associated with these assets. In addition, LBI assumed the lease for the premises for Gold Coast Scuba as part of this asset acquisition. In consideration for the assets purchased, the Company paid $150,000 to the LLC Members. The purchase price was paid by (a) the issuance to the LLC Members of an aggregate of 3,084,831 shares of the Companys common stock (the Consideration Shares) with a fair market value of $120,000; and (b) a cash payment of $30,000. The Consideration Shares were subject to leak out agreements whereby the shareholders are unable to sell or transfer shares based upon the following: Summary of Holding Period and Shares Eligible To Sold | Holding Period from Closing Date | | Percentage of shares eligible to be sold or transferred | | | | 6 months | | | Up to 25. | % | | | 9 months | | | Up to 50. | % | | | 12 months | | | Up to 100 | % | | The leak-out restriction may be waived by the Company upon written request by a LLC Member, if the Companys common stock is trading on the NYSE American or Nasdaq, and has a rolling 30-day average trading volume of 50,000 shares per day; *provided, however*, that (i) only up to 5% of the previous days total volume can be sold in one day and (ii) only through executing trades On the Offer. The transaction costs associated with the acquisition were $10,000 in legal fees paid in cash. While the agreement was structured as an asset purchase agreement, we also assumed the operations of Gulf Coast Scuba resulting in the recognition of a business combination. During 2023 we recognized revenue of $302,724 and net loss of ($88,561) associated with this business. The business combination was not material for purposes of disclosing pro forma financial information. In connection with this transaction, we recognized the following assets and liabilities: Summary of Asset Acquisition | | | Fair Value | | | | Rental Inventory | | $ | 48,602 | | | | Fixed Assets | | | 50,579 | | | | Retail Inventory | | | 60,819 | | | | Right of use asset | | | 29,916 | | | | Lease liability | | | (29,916 | ) | | | Net Assets Acquired | | $ | 160,000 | | | On September 17, 2024, the Company entered into an intellectual property rights purchase and transfer agreement with a buyer for the purpose of purchasing the IP assets, fixed assets and inventory of Gold Coast Scuba from LBI for $118,989 which includes $18,500 IP assets and $100,489 for the fixed assets and inventory of LBI. As of December 31, 2024 approximately $10,000 remains outstanding related to this agreement. | F-22 | | Note 12. Goodwill and Intangible Assets, Net The following table sets forth the changes in the carrying amount of the Company Goodwill for the years ended December 31, 2024 and 2023: Summary of Changes in Goodwill | | | 2024 | | | 2023 | | | | Balance, January 1 | | $ | 249,986 | | | $ | 249,986 | | | | Balance, December 31 | | $ | 249,986 | | | $ | 249,986 | | | The following table sets forth the components of the Companys intangible assets at December 31, 2024: Summary of Intangible Assets | | | Amortization Period (Years) | | | Cost | | | Accumulated Amortization | | | Net Book Value | | | | Intangible Assets Subject to amortization | | | | | | | | | | | | | | | | | | | Trademarks | | | 15 | | | $ | 121,000 | | | $ | (26,845 | ) | | $ | 94,155 | | | | Customer Relationships | | | 10 | | | | 600,000 | | | | (200,000 | ) | | | 400,000 | | | | Non-Compete Agreements | | | 5 | | | | 22,000 | | | | (14,666 | ) | | | 7,334 | | | | Total | | | | | | $ | 743,000 | | | $ | (241,511 | ) | | $ | 501,489 | | | The aggregate amortization remaining on the intangible assets as of December 31, 2024 is a follows: Schedule of Estimated Intangible Assets Amortization Expenses | | | Intangible Amortization | | | | 2025 | | $ | 72,466 | | | | 2026 | | | 71,366 | | | | 2027 | | | 68,067 | | | | 2028 | | | 68,067 | | | | Thereafter | | $ | 221,522 | | | | Total | | $ | 501,488 | | | Note 13. Stockholders Equity Common Stock On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, a director, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise price of $0.0175 per share in consideration of $200,000. On March 31, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending March 31, 2023. The fair value of these shares was $1,336. On June 30, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending June 30, 2023. The fair value of these shares was $1,287. On September 30, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending September 30, 2023. The fair value of these shares was $1,287. On December 31, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending December 31, 2023. The fair value of these shares was $1,287. On March 31, 2024, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending March 31, 2024. The fair value of these shares was $4,007. On March 31, 2024, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending March 31, 2024. The fair value of these shares was $7,000. On June 30, 2024, the Company issued 123,354 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending June 30, 2024. The fair value of these shares was $2,672. On June 30, 2024, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending June 30, 2024. The fair value of these shares was $4,328. On August 15, 2024 the Company issued 850,000 shares of common stock to the holders of convertible notes for payment of professional services. The fair market value of these shares was $8,500. On September 30, 2024, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending June 30, 2024. The fair value of these shares was $7,000. On December 9, 2024, the Company issued 8,241,759 shares to Blake Carmichael as compensation related to a salary reduction. The fair market value of these shares was $60,000. On December 31, 2024, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending June 30, 2024. The fair value of these shares was $7,000. Preferred Stock During the second quarter of 2010, the holder of the majority of the Companys outstanding shares of common stock approved an amendment to the Companys Articles of Incorporation authorizing the issuance of 10,000,000 shares of blank check preferred stock. The blank check preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by our Board of Directors of the Company from time to time in accordance with the provisions of the Florida Business Corporation Act. In April 2011 the Board of Directors designated 425,000 shares of the blank check preferred stock as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into a share of the Companys common stock at any time at the option of the holder at a conversion price of $18.23 per share. Holders of shares of Series A Convertible Preferred Stock are entitled to 250 votes for each share held. The Companys common stock and Series A Convertible Preferred Stock vote together as on any matters submitted to our shareholders for a vote. As and December 31, 2024 and 2023, the 425,000 shares of Series A Convertible Preferred Stock are owned by Robert Carmichael. Equity Compensation Plan On May 26, 2021 the Company adopted an Equity Compensation Plan (the Plan). Under the Plan, stock options may be granted to employees, directors, and consultants in the form of incentive stock options or non-statutory stock options, stock purchase rights, time vested and/performance invested restricted stock, and stock appreciation rights and unrestricted shares. The maximum number of shares that may be issued under the Plan is 25,000,000 shares. The term of the Plan is ten years. The Company also issued options outside of the plan that were not approved by the security holders. These options may be granted to employees, directors, and consultants in the form of incentive stock options or non-qualified stock options. | F-23 | | Equity Compensation Plan Information as of December 31, 2024: Schedule of Equity Compensation Plan Information | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | Weighted average exercise price of outstanding options, warrants and rights (b) | | | Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a) (c) | | | | Equity Compensation Plans Approved by Security Holders | | | 1,800,000 | | | $ | .0447 | | | | 23,200,000 | | | | Equity Incentive Options issued outside of the Equity Compensation Plan | | | 28,869,400 | | | | .0432 | | | | | | | | Total | | | 30,669,400 | | | $ | .0432 | | | | 23,200,000 | | | Options For the years ended December 31, 2024 and 2023, the Company has issued no options. Upon exercise, shares of new common stock are issued by the Company. For the years ended December 31, 2024 and 2023, the Company recognized an expense of approximately $91,492 and $81,424, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying Consolidated Statement of Operations) determined by application of a Black-Scholes option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility. The Company uses straight-line amortization of compensation expense over the requisite service period for time-based options. For performance-based options the Company evaluates the likelihood of a vesting qualification being met, and will establish the expense based on that evaluation. The maximum contractual term of the Companys stock options is 5 years. The Company recognizes forfeitures as they occur. There are options to purchase approximately 5,806,266 shares that have vested as of December 31, 2024. The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances. The calculation of the fair value of the awards using the Black-Scholes option-pricing model is affected by the Companys stock price on the date of grant as well as assumptions regarding the following: Schedule of Valuation Assumptions of Options | | | Year ended December 31, | | | | | | 2024 | | | 2023 | | | | Expected volatility | | | 266.0% - 346.4 | % | | | 172.0% 346.4 | % | | | Expected term | | | 1.5 5.0 Years | | | | 1.5- 5.0 Years | | | | Risk-free interest rate | | | 0.21% - 3.18 | % | | | 0.16% - 4.64 | % | | | Forfeiture Rate | | | 2.2 | % | | | 0.17 | % | | The expected volatility was determined with reference to the historical volatility of the Companys stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant. A summary of the status of the Companys outstanding stock options as of December 31, 2024 and 2023 and changes during the periods ending on that date is as follows | F-24 | | Schedule of Outstanding Stock Option Activity | | | | | | | | | Weighted | | | | | | | | | Weighted | | | | | | Average | | | | | | | | | Average | | | | | | Remaining | | | Aggregate | | | | | | Number of | | | Exercise | | | Contractual | | | Intrinsic | | | | | | Options | | | Price | | | Life in Years | | | Value | | | | Outstanding at December 31, 2022 | | | 238,439,167 | | | $ | 0.0362 | | | | 1.43 | | | | | | | | Granted | | | - | | | | - | | | | | | | | | | | | Forfeited | | | (170,999,530 | ) | | | 0.0379 | | | | | | | | | | | | Exercised | | | - | | | | - | | | | | | | | | | | | Expired | | | (35,295,237 | ) | | | 0.0180 | | | | | | | | | | | | Cancelled | | | - | | | | - | | | | | | | | | | | | Outstanding December 31, 2023 | | | 67,439,637 | | | $ | 0.0362 | | | | 1.43 | | | | | | | | Exercisable December 31, 2023 | | | 41,057,753 | | | $ | 0.0321 | | | | 1.33 | | | $ | 68,994 | | | | | | | | | | | | | | | | | | | | | | | Granted | | | - | | | | - | | | | | | | | | | | | Forfeited | | | (1,475,000 | ) | | | 0.0379 | | | | | | | | | | | | Exercised | | | - | | | | - | | | | | | | | | | | | Expired | | | (35,295,237 | ) | | | 0.0180 | | | | | | | | | | | | Cancelled | | | - | | | | - | | | | | | | | | | | | Outstanding December 31, 2024 | | | 30,669,400 | | | $ | 0.0432 | | | | 1.68 | | | | | | | | Exercisable December 31, 2024 | | | 5,806,266 | | | $ | 0.0448 | | | | 2.01 | | | $ | - | | | The following table summarizes information about employee stock options outstanding at December 31, 2024 Schedule of Exercise Price of Employee Stock Options Outstanding | Range of Exercise Price | | Number outstanding at December 31, 2024 | | | Weighted average remaining life | | | Weighted average exercise price | | | Number exercisable at December 31, 2024 | | | Weighted average exercise price | | | Weighted average remaining life | | | | $ 0.0229 - $0.0325 | | | 50,000 | | | | 1.62 | | | $ | 0.0302 | | | | 50,000 | | | $ | 0.0302 | | | | 1.62 | | | | $ 0.0360 - $0.0425 | | | 22,659,400 | | | | 1.55 | | | $ | 0.0398 | | | | 4,659,400 | | | $ | 0.0395 | | | | 1.42 | | | | $ 0.0440 - $0.0531 | | | 7,960,000 | | | | 1.60 | | | $ | 0.0530 | | | | 2,350,000 | | | $ | 0.0530 | | | | 1.44 | | | | Outstanding options | | | 30,669,400 | | | | 1.68 | | | $ | 0.0360 | | | | 5,806,266 | | | $ | 0.0448 | | | | 2.01 | | | As of December 31, 2024, the Company had approximately $987,800 of unrecognized pre-tax non-cash compensation expense related to options to performance based options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 2.1 years. The Company uses straight-line amortization of compensation expense over the requisite service period for time-based options. For performance-based options the Company evaluates the likelihood of a vesting qualification being met, and will establish the expense based on that evaluation. Stock option expense recognized during the year ended December 31, 2024 and December 31, 2023 was $91,492 and $81,424, respectively. | F-25 | | Warrants On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise price of $0.0175 per share in consideration of $200,000. A summary of the Companys warrants as of December 31, 2024 and 2023, and changes during the years ended December 31, 2024 and 2023 is presented below: Schedule of Warrant Activity | | | | | | | | | Weighted | | | | | | | | | | | | Weighted | | | Average | | | | | | | | | | | | Average | | | Remaining | | | Aggregate | | | | | | Number of | | | Exercise | | | Contractual | | | Intrinsic | | | | | | Warrants | | | Price | | | Life in Years | | | Value | | | | Outstanding at December 31, 2023 | | | 18,255,951 | | | $ | .0245 | | | | 1.55 | | | | | | | | Granted | | | 11,428,570 | | | | 0.0175 | | | | | | | | | | | | Forfeited | | | (4,000,000 | ) | | | - | | | | | | | | | | | | Exercised | | | - | | | | - | | | | | | | | | | | | Cancelled | | | - | | | | - | | | | | | | | | | | | Outstanding December 31, 2024 | | | 25,684,521 | | | $ | 0.0247 | | | | 1.55 | | | | | | | | Exercisable December 31, 2024 | | | 25,684,521 | | | $ | 0.0247 | | | | 1.55 | | | $ | 12,000 | | | | | | | | | | | | | | | | | | | | | | | Granted | | | - | | | | - | | | | | | | | | | | | Forfeited | | | (14,255,952 | ) | | | - | | | | | | | | | | | | Exercised | | | - | | | | - | | | | | | | | | | | | Cancelled | | | - | | | | - | | | | | | | | | | | | Outstanding December 31, 2024 | | | 11,428,570 | | | $ | 0.0175 | | | | 0.09 | | | | | | | | Exercisable December 31, 2024 | | | 11,428,570 | | | $ | 0.0175 | | | | 0.09 | | | $ | - | | | Note 14. Income Taxes The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made. Likewise, should the Company determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made. | F-26 | | The components of the provision for income tax expense are as follows for the years ended: Schedule of Provision for Income Tax Expense | | | 2024 | | | 2023 | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | Current taxes | | | | | | | | | | | Federal | | $ | | | | $ | | | | | State | | | | | | | | | | | Current taxes | | | | | | | | | | | Change in deferred taxes | | | 62,146 | | | | 347,400 | | | | Change in valuation allowance | | | (62,146 | ) | | | (347,400 | ) | | | | | | | | | | | | | | Provision for income tax expense | | $ | | | | $ | | | | The following is a summary of the significant components of the Companys deferred tax assets and liabilities at December 31, 2024 and 2023: Summary of Significant Components of Deferred Tax Assets and Liabilities | | | 2024 | | | 2022 | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | Deferred tax assets: | | | | | | | | | | | Equity based compensation | | $ | 416,237 | | | $ | 416,237 | | | | Allowance for doubtful accounts | | | 5,954 | | | | 13,800 | | | | Deferred Rent | | | (1,796 | ) | | | - | | | | Reserves for slow moving inventory | | | 50,292 | | | | 47,800 | | | | Depreciation | | | 52,867 | | | | 23,800 | | | | Reserve for recall | | | 0 | | | | 3,200 | | | | Net operating loss carry forward | | | 2,027,000 | | | | 2,027,000 | | | | Total deferred tax assets | | | 2,550,554 | | | | 2,531,837 | | | | Deferred tax liabilities | | | | | | | | | | | Reserve for recall | | | - | | | | - | | | | Total deferred tax asset (liability) | | | - | | | | - | | | | Total deferred tax | | | 2,550,554 | | | | 2,531,837 | | | | Valuation allowance | | | (2,550,554 | ) | | | (2,531,837 | ) | | | | | | | | | | | | | | Deferred tax assets, net of valuation allowance | | $ | - | | | $ | - | | | The effective tax rate used for calculation of the deferred taxes as of December 31, 2024 was 26.35. The Company has established a 100% valuation allowance against deferred tax assets of approximately $2,550,500, due to the uncertainty regarding realization reserve against the deferred tax assets. The change in valuation allowance was an increase of $18,717. The Company has approximately $3,346,650 of net loss carryforward that expire through 2037 and $4,497,364 that carryforward indefinitely but is limited to 80% of taxable income in any one year. The effective tax rate used for calculation of the deferred taxes as of December 31, 2023 was 21.39%. The Company has established a 100% valuation allowance against deferred tax assets of $2,531,800 due to the uncertainty regarding realization reserve against the deferred tax assets. The change in valuation allowance was an increase of $347,400. The significant differences between the statutory tax rate and the effective tax rates for the Company for the years ended are as follows: Schedule of Differences Between Statutory Tax Rate and Effective Tax Rate | | | December 31, | | | | | | 2024 | | | 2023 | | | | Statutory tax rate | | | (21.00 | )% | | | (21.00 | )% | | | State tax, net of Federal benefits | | | (4.28 | )% | | | (4.28 | )% | | | Permanent differences | | | 0.11 | % | | | 0.21 | % | | | Temporary differences | | | (1.18 | )% | | | 3.68 | % | | | Change in valuation allowance | | | 26.35 | % | | | 21.39 | % | | | Effective tax rate | | | | % | | | | % | | The Companys income tax returns for 2020 through 2024 remain subject to examination by the Internal Revenue Services and state tax authorities. | F-27 | | Note 15. Commitments and Contingencies *Leases* On August 14, 2014, the Company entered into a thirty-seven 37 month lease for its facilities in Pompano Beach, Florida, commencing on September 1, 2014. Terms included payment of a $5,367 security deposit; base rent of approximately $4,000 per month over the term of the lease plus sales tax; and payment of 10.76% of annual operating expenses (common areas maintenance), which was approximately $2,000 per month subject to periodic adjustment. On December 1, 2016, the Company entered into an amendment to the initial lease agreement, commencing on October 1, 2017, extending the term of the lease for an additional eighty-four months, expiring September 30, 2024. The base rent was increased to $4,626 per month with a 3% annual escalation throughout the amended term. On January 4, 2018, the Company entered into a sixty-one month 61 lease renewal for its facility in Huntington Beach, California commencing on February 1, 2018. Terms included base rent of approximately $9,300 per month for the first 12 months with an annual escalation clause of 2.5% thereafter. The Company paid a security deposit of $8,450 upon entering into the lease. The Company did not renew this lease at expiration. On November 11, 2018, the Company entered a sixty-nine 69 month lease commencing on January 1, 2019 for approximately 8,025 square feet adjoining its existing facility in Pompano Beach, Florida. Terms of the new lease include a $6,527 security deposit; initial base rent of approximately $4,848 per month escalating at 3% per year during the term of the lease plus Florida state sales tax and 10.11% of the buildings annual operating expenses (common area maintenance) which is approximately $1,679 per month, subject to adjustment as provided in the lease. The Company did not renew this lease at expiration. On May 2, 2022, LBI entered into a lease assignment agreement with Gold Coast Scuba, LLC and Vicnsons Realty Group, LLC whereby LBI is the assignee to the remainder of the lease for the property located at 259 Commercial Blvd., Suites 2 and 3 in Lauderdale-By-The Sea, Florida. The lease is in its third year of a three-year term and has a $2,816 per month base rent. The lease provides an option to renew for an additional term of two years with an increase of base rent by 3.5%. On September 14, 2022, SSI entered into a sixty-month lease renewal for its facility in Huntington Beach, California effective February 1, 2022. Terms included base rent of approximately $17,550 per month for the first 24 months with an annual escalation clause of 3.0% thereafter. Obligations under the lease are guaranteed by the Company. The Company paid an additional security deposit of $10,727 upon entering into the lease. On September 30, 2022, SSI entered into a sublease of its facility in Huntington Beach, California with Camburg Engineering, Inc.(Tenant) commencing October 1, 2022, The term of the sublease is through December 31, 2023 with a base monthly rent of $2,247 for the first twelve months with an 3% annual escalation thereafter. The Tenant also pays a monthly common area maintenance of $112. The Tenant provided a security deposit of $2,426 upon entering into the sublease. This lease has expired but the tenant remains on a month to month basis. *Royalty Agreement* On June 30, 2020, the Company entered into Amendment No. 2 to its Patent License Agreement with Setaysha Technical Solutions, LLC (STS). The amendment set certain limits and expectations of the assistance from STS related to designing and commercializing certain diving products and revised the royalty payments due to STS as consideration for uncompensated services. The Company is obligated to pay STS a minimum yearly royalty of $60,000, or $15,000 per fiscal quarter, beginning in December 2019 and increasing by 2.15% per year. The minimum royalty was temporarily increased to $60,000 for fiscal years 2022, 2023 and 2024, with a fourth quarter true up against earned royalties. In addition, if the Company terminates the Agreement with STS prior to December 31, 2023, the Company is obligated to pay STS $180,000, less cumulative royalties paid in excess of $200,174 for the years 2019 through 2024. In accordance with the amendment, the Company will pay additional minimum royalties of $60,000 per year or $15,000 per quarter for the years 2022 through 2024. On January 24, 2024, the Company entered into Addendum No. 3 to the STS Agreement. Addendum No. 3 delays the additional minimum yearly royalty of $60,000, or $15,000 per fiscal quarter from 2024 to 2025. Therefore, no additional minimum royalty was required during 2024, but will be required beginning the fiscal first quarter of 2025. 2025 will be the final year of the additional minimum royalty under the STS agreement. On November 1, 2022 the Company issued to the designees of STS 1,155,881 shares of common stock with a fair value of $30,000 in accordance with the Patent License Agreement. Royalty recorded under the Amended agreement was $125,159.32 and $138,643 for the years ended December 31, 2024 and 2023, respectively. As included in other liabilities, accrued royalties under this agreement were $35,020 and $41,151 at December 31, 2024 and 2023, respectively. *Consulting and Employment Agreements* On November 5, 2020, the Company entered into a three-year employment agreement with Christopher Constable (the Constable Employment Agreement) pursuant to which Mr. Constable serves as Chief Executive Officer of the Company. Previously, Mr. Constable had provided advisory services to the Company through an agreement with Brandywine LLC. In consideration for his services, Mr. Constable shall receive (i) an annual base salary of $200,000, payable in accordance with the customary payroll practices of the Company, and (ii) upon execution of the Employment Agreement and on each anniversary of the date of the Agreement during the term, a non-qualified immediately exercisable five-year option to purchase that number of shares equal to $100,000 of the value of the Companys common stock at an exercise price equal to the market price of the Companys common stock on the date of issuance. Accordingly, on November 5, 2020, Mr. Constable was issued an option to purchase 5,434,783 shares of the common stock at an exercise price of $0.0184 per share and on November 5, 2021, Mr. Constable was issued an option to purchase 2,403,846 shares of the Companys common stock at an exercise price of $0.0401 per share. | F-28 | | In addition, Mr. Constable shall be entitled to receive four-year 4 stock options to purchase shares of common stock at an exercise price equal to $0.0184 per share in the following amounts based upon the following performance milestones during the term of the Constable Employment Agreement: (i) 2,000,000 shares if the Companys total net revenues, as reported in its statement of operations in its financial statements in its filings with the SEC, including as a result of a stock or asset acquisition of a third party (Net Revenues) are in excess of $5,000,000, in the aggregate, for four consecutive fiscal quarters; (ii) 3,000,000 shares if the Companys Net Revenues are in excess of $7,500,000, in the aggregate, for four consecutive fiscal quarters; (iii) 5,000,000 shares if the Companys Net Revenues are in excess of $10,000,000, in the aggregate, for four consecutive fiscal quarters; and (iv) 20,000,000 shares if the Companys common stock is listed on the NASDAQ or New York Stock Exchange. On June 24, 2023, Mr. Constable resigned as Chief Executive Officer of the Company effective July 7, 2023. On August 1, 2021, the Company and Blake Carmichael entered into a three-year employment agreement (the Blake Carmichael Employment Agreement) pursuant to which Mr. Blake Carmichael shall serve as Chief Executive Officer of BLU3. In consideration for his services, Blake Carmichael shall receive (i) an annual base salary of $120,000, payable in accordance with the customary payroll practices of the Company, and (ii) a cash bonus equal to 5% of the net income of BLU3 payable quarterly, beginning with the first full calendar quarter after the execution of the agreement. (iii) upon execution of the Employment Agreement, a non-qualified five-year stock option to purchase 3,759,400 shares at $0.0399, 33.3% of which shares vest immediately, 33.3% vest on the second anniversary, and 33.3% vest on the third anniversary of the agreement. This agreement automatically renews for one year term unless either party give a 30 day notice. In addition, Blake Carmichael shall be entitled to receive a five-year 5 stock option to purchase up to 18,000,000 shares of common stock at an exercise price of $0.0399 per share that will vest upon annual financial metrics based upon a revenue measurement, expediency measurement and an EBITDA measurement. On September 3, 2021, SSI and Christeen Buban entered into a three-year employment agreement (the Buban Employment Agreement) pursuant to which Ms. Buban shall serve as the President of SSI. In consideration for her services, Mrs. Buban shall receive (i) an annual base salary of $110,000, payable in accordance with the customary payroll practices of the Company, (ii) a car allowance and cell phone allowance of $10,800 per year, (iii) a five-year 5 option issued under the Plan to purchase 300,000 shares of common stock of the Company at $0.0531 per share, which option vests quarterly over the eight calendar quarters for one year term unless either party give a 30 day notice. In addition, Mrs. Buban shall be entitled to receive a five-year 5 stock option to purchase up to 7,110,000 shares of common stock of the Company at an exercise price of $0.0531 per share, which vests upon the attainment of certain defined annual financial metrics, as set forth in the Buban Employment Agreement. On May 2, 2022, the Company entered into a two-year employment agreement with Steven Gagas (the Gagas Employment Agreement) pursuant to which Mr. Gagas shall serve as the General Manager of the dive shop currently operating within LBI. In consideration for his services Mr. Gagas shall receive an annual salary of $50,000. The agreement terminated upon Mr. Gagas retirement in January 2024. On January 17, 2022, the Company entered into an agreement with The Crone Law Group, PC (CLG) for the provision of legal services. In consideration therefor, the Company will pay CLG a monthly flat fee of $3,000 for the SEC reporting work, and its normal hourly rate for any other legal work and issued 1,000,000 shares of common stock with a fair market value of $27,500 to CLG. Mr. Gagas retired in January, 2024 On December 22, 2022, the U.S. Consumer Products Safety Commission (the CPSC) issued a voluntary recall notice for the Nomad tankless dive system, which is distributed by BLU3, Inc. As part of the recall procedure, the CPSC approved the Companys proposed remedy for the recall and BLU3 began to receive units back from consumers for repair in [provide month and year].. The Company has evaluated the costs of this recall and has deemed it necessary to set an allowance of $160,500 for such costs. In 2024, the Company finalized the recall and adjusted the reserve down to zero reflecting that all expenses related to the recall had been realized.. *Legal* There are no outstanding legal issues as of May 30, 2025 Note 16. Subsequent Events The maturity due date of the convertible notes has been verbally extended by the lender while the Company works through to determines a restructure of the notes. | F-29 | |