Brownie's Marine Group, Inc [BWMG] Filings

10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended September 30, 2023

	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from ___________to _________

Commission file number 333-99393

BROWNIE’S 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.)

3001 NW 25th Avenue, Suite 1
Pompano Beach, Florida		33069
(Address of principal executive offices)		(Zip code)

(954) 462-5570

Registrant’s telephone number, including area code

Not applicable

Former name, former address and former fiscal year, if changed since last report

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

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 filer ☐
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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of November 14, 2023, there were 439,211,134 shares of common stock outstanding.

TABLE OF CONTENTS

		Page No.
	PART I – FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS.	4

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	24

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	35

ITEM 4.	CONTROLS AND PROCEDURES.	35

	PART II – OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS.	37

ITEM 1A.	RISK FACTORS.	37

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	37

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	37

ITEM 4.	MINE SAFETY DISCLOSURES.	37

ITEM 5.	OTHER INFORMATION.	37

ITEM 6.	EXHIBITS.	38

NOTE REGARDING FORWARD-LOOKING INFORMATION

This Quarterly 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 Quarterly 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 risk factors included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2023, which risk factors 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. FINANCIAL STATEMENTS

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current Assets
Cash	$	287,868		$	484,427
Accounts receivable – net		240,041			111,844
Accounts receivable – related parties		47,741			55,428
Accounts receivable		47,741			55,428
Inventory, net		2,046,071			2,421,885
Prepaid expenses and other current assets		230,243			192,130
Total current assets		2,851,964			3,265,714

Property, equipment and leasehold improvements, net		364,914			339,546
Operating lease assets, net		941,714			1,133,092
Intangible assets, net		592,072			646,422
Goodwill		249,986			249,986
Other assets		30,725			30,724

Total assets	$	5,031,375		$	5,665,484

Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued liabilities	$	591,197		$	829,456
Accounts payable – related parties		37,210			37,539
Customer deposits and unearned revenue		344,989			167,534
Other liabilities		346,636			372,943
Operating lease liabilities		287,555			269,046
Related party convertible demand note, net		100,880			49,147
Current portion of convertible notes		345,949			-
Current maturities long term debt		72,787			66,486
Total current liabilities		2,127,203			1,792,151

Loans payable, net of current portion		90,446			143,960
Convertible notes, net of current portion		-			342,943
Operating lease liabilities		658,597			864,057
Total liabilities		2,876,246			3,143,111

Commitments and contingent liabilities (see Note 9)		-			-

Stockholders’ equity
Preferred stock; $0.001 par value: 10,000,000 shares authorized; 425,000 issued and outstanding as of September 30, 2023 and December 31, 2022.		425			425
Common stock; $0.0001 par value; 1,000,000,000 shares authorized; 437,543,846 shares issued and outstanding at September 30, 2023 and 425,520,662 shares issued and outstanding at December 31, 2022, respectively.		43,755			42,553
Common stock payable 138,941 shares and 138,941 shares, respectively as of September 30, 2023 and December 31, 2022.		14			14
Additional paid-in capital		19,164,745			18,916,876
Accumulated deficit		(17,053,810	)		(16,437,495	)
Total stockholders’ equity	$	2,155,129		$	2,522,373

Total liabilities and stockholders’ equity	$	5,031,375		$	5,665,484

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements

BROWNIES MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

THREE AND NINE MONTHS ENDED SEPTEMBER 30

(Unaudited)


	Three months ended September 30						Nine months ended September 30
	2023			2022			2023			2022
Revenues
Revenues	$	2,027,592		$	2,591,383		$	5,321,577		$	6,403,522
Revenues - related parties		254,414			217,421			671,194			781,489
Total Revenues		2,282,006			2,808,804			5,992,771			7,185,011

Cost of revenues
Cost of revenues		1,372,755			1,667,586			3,734,350			4,121,071
Cost of revenues - related parties		116,976			106,693			325,037			365,892
Cost of revenues		116,976			106,693			325,037			365,892
Royalties expense - related parties		23,569			22,961			49,264			53,574
Royalties expense		31,335			54,708			107,308			149,024
Total cost of revenues (exclusive of depreciation and amortization shown separately below)		1,544,635			1,851,948			4,215,959			4,689,561

Gross profit		737,371			956,856			1,776,812			2,495,450
Operating expenses
Selling, general and administrative		765,683			1,194,178			2,205,047			3,410,717
Depreciation and amortization		42,106			30,540			121,343			97,342
Research and development costs		7,355			4,778			10,778			13,070

Total operating expenses		815,144			1,229,496			2,337,168			3,521,129

Loss from operations		(77,773	)		(272,640	)		(560,356	)		(1,025,679	)

Other (income) expense, net

Interest expense		(20,776	)		(11,549	)		(55,959	)		(31,265	)

Income (Loss) income before provision for income taxes		(98,549	)		(284,189	)		(616,315	)		(1,056,944	)

Provision for income taxes		-			-			-			-

Net Income (Loss)		(98,549	)		(284,189	)		(616,315	)		(1,056,944	)

Loss on foreign currency contract		-			8,633			-			-

Comprehensive loss	$	(98,549	)	$	(275,556	)	$	(616,315	)	$	(1,056,944	)

Basic income (loss) per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Basic weighted average common shares outstanding		437,196,851			411,816,671			433,169,015			407,202,475
Diluted income (loss) per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Diluted weighted average common shares outstanding		437,196,851			411,816,671			433,169,015			407,202,475

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER, 2023 AND 2022

(Unaudited)


	Preferred Stock			Common Stock			Common Stock Payable				Additional Paid-in		Accumulated Other Comprehensive Income		Accumulated			Total Stockholder’s Equity
	Shares		Amount	Shares		Amount	Shares		Amount		Capital		(Loss)		Deficit			(DEFICIT)
December 31, 2022	425,000	$	425	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	-		-	198,204		20	-		-		8,316		-		-			8,336
Stock Option Expense	-		-	-		-	-		-		11,034		-		-			11,034
Net Loss	-		-	-		-	-		-		-		-		(327,922	)		(327,922	)
March 31, 2023 (unaudited)	425,000	$	425	437,147,436	$	43,716	138,941	$	14	$	19,135,083	$	-	$	(16,765,417	)		2,413,821
Shares issued for accrued interest on convertible notes	-		-	198,205		20	-		-		8,306		-		-			8,326
Stock option expense	-		-	-		-	-		-		7,188		-		-			7,188
Net loss	-		-	-		-	-		-		-		-		(189,844	)		(189,844	)
June 30, 2023 (unaudited)	425,000	$	425	437,345,641	$	43,736	138,941	$	14	$	19,150,577	$	-	$	(16,955,261	)	$	2,239,491
Common stock Issued for Accrued Interest on Convertible Notes	-		-	198,205		19	-		-		6,983		-		-			6,983
Stock option expense											7,185							7,185
Net Income	-		-	-		-	-		-		-		-		(98,549	)		(98,549	)
September 30, 2023 (unaudited)	425,000	$	425	437,543,846	$	43,755	138,941	$	14	$	19,164,745	$	-	$	(17,053,810	)	$	2,155,129


	Preferred Stock				Common Stock				Common Stock Payable				Additional Paid-in		Accumulated Other Comprehensive Income			Accumulated			Total Stockholder’s Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		(Loss)			Deficit			(DEFICIT)
December 31, 2021		425,000	$	425		393,850,475	$	39,386		138,941	$	14	$	17,132,434	$	-		$	(14,544,604	)	$	2,627,655
Shares issued for the exercise of warrants		-		-		10,600,000		1,060		-		-		263,940		-			-			265,000
Shares issued for service		-		-		1,206,318		120		-		-		35,380		-			-			35,500
Stock option expense		-		-		-		-		-		-		230,034		-			-			230,034
Net loss		-		-		-		-		-		-		-		-			(444,092	)		(444,092	)
Other comprehensive income		-		-		-		-		-		-		-		1,587			-			1,587
March 31, 2022 (unaudited)		425,000	$	425		405,656,793	$	40,566		138,941	$	14	$	17,661,788	$	1,587		$	(14,988,696	)	$	2,715,684
Shares issued for service		-		-		302,953		30		-		-		11,970		-			-			12,000
Shares issued for asset purchase		-		-		3,084,831		308		-		-		119,692		-			-			120,000
Shares issued for accrued interest on convertible notes		-		-		449,522		45		-		-		23,003		-			-			23,048
Shares issued for employee bonus		-		-		280,000		28		-		-		11,032		-			-			11,060
Stock option expense		-		-		-		-		-		-		290,707		-			-			290,707
Net loss																			(328,663	)		(328,663	)
Other comprehensive income		-		-		-		-		-		-		-		(10,220	)		-			(10,220	)
June 30, 2022 (unaudited)		425,000	$	425		409,774,099	$	40,977		138,941	$	14	$	18,118,192	$	(8,633	)	$	(15,317,359	)	$	2,833,616
Common Stock issued for the purchase of units		-		-		8,541,666		854						204,146								205,000
Stock Issued for Accrued Interest on Convertible Notes		-		-		136,527		14		-		-		6,986		-			-			7,000
Beneficial Conversion Feature		-		-		-		-		-		-		19,250		-			-			19,250
Stock option expense		-		-		-		-		-		-		315,152		-			-			315,152
Net Income		-		-		-		-		-		-		-		-			(284,189	)		(284,189	)
Net Income (Loss)		-		-		-		-		-		-		-		-			(284,189	)		(284,189	)
Other Comprehensive Loss		-		-		-		-		-		-		-		8,633			-			8,633
Other Comprehensive income (Loss)		-		-		-		-		-		-		-		8,633			-			8,633
September 30, 2022 (unaudited)		425,000	$	425		418,452,292	$	41,845		138,941	$	14	$	18,663,726	$	-		$	(15,601,548	)	$	3,104,462

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

(Unaudited)

	2023			2022
Cash flows provided by operating activities:
Net loss	$	(616,315	)	$	(1,056,944	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		121,343			97,342
Amortization of debt discount		7,786			2,767
Amortization of right-of-use asset		191,378			177,258
Shares issued for accrued interest in convertible notes		23,668			-
Common stock issued for services		-			47,500
Reserve for debt		-			2,978
Reserve for slow moving inventory		-			(82,446	)
Reserve for Nomad recall		(93,161	)		-
Stock based compensation - Options		25,404			835,893
Stock based compensation - stock grant		-			11,060
Changes in operating assets and liabilities
Change in accounts receivable, net		(128,197	)		(48,579	)
Change in accounts receivable - related parties		7,687			21,959
Change in inventory		375,814			(371,514	)
Change in prepaid expenses and other current assets		(101,804	)		(87,851	)
Change in other assets		-			(5,900	)
Change in accounts payable and accrued liabilities		(238,260	)		140,713
Change in customer deposits and unearned revenue		177,455			(18,894	)
Change in long term lease liability		(186,951	)		(177,732	)
Change in other liabilities		66,854			31,450
Change in accounts payable - related parties		(329	)		(18,772	)
Net cash used in operating activities		(367,628	)		(499,712	)

Cash flows acquired (used) in investing activities:
Cash used in asset acquisition		-			(30,000	)
Purchase of fixed assets		(28,671	)		(30,290	)
Net cash used in investing activities		(28,671	)		(60,290	)

Cash flows from financing activities:
Proceeds from issuance of units		200,000			205,000
Proceeds from exercise of Warrants		-			265,000
Proceeds of debt - related party		50,000			66,793
Repayment of debt		(50,260	)		(42,858	)
Net cash acquired in financing activities		199,740			493,935

Net change in cash		(196,559	)		(66,067	)

Cash, beginning balance		484,427			643,143
Cash, end of period	$	287,868		$	577,076

Supplemental disclosures of cash flow information:
Cash Paid for Interest	$	32,289		$	10,549

Supplemental disclosure of non-cash financing activities:
Operating lease obtained for operating lease liability	$	-		$	920,615
Common Stock issued for asset acquisition	$	-		$	120,000
Beneficial conversion feature on convertible note, related party	$	-		$	19,250
Common Stock issued for payment of convertible note interest	$	23,667		$	30,048
Fixed asset purchase through the issuance of debt	$	63,689		$	63,375

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023

(UNAUDITED)

Note 1. Company Overview

Brownie’s Marine Group, Inc. (the “Company”) designs, tests, manufactures and distributes recreational hookah diving, scuba and water safety products through its wholly owned subsidiary, Trebor Industries, Inc., a Florida corporation, incorporated in 1981 (“Trebor” or “BTL”), manufactures and sells high pressure air and industrial compressor packages, yacht based scuba air compressor and nitrox generation systems through its wholly owned subsidiary, Brownie’s High Pressure Compressor Services, Inc., a Florida corporation incorporated in 2017 (“BHP”) and doing business as LW Americas (“LWA”) and develops and markets portable battery powered surface supplied air dive systems through its wholly owned subsidiary BLU3, Inc., a Florida corporation (“BLU3”). 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 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 the 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.

On February 13, 2022, the Company filed with the Florida Department of State, the 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 Scuba’s 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.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The balance sheet as of December 31, 2022 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for a broader discussion of the Company’s business and the risks inherent in such business. The results of operations for the nine months ended September 30, 2023, and are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending December 31, 2023.

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 GAAP 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.

Cash and cash equivalents

Only highly liquid investments with original maturities of 90 days or less are classified as cash and equivalents. These investments are stated at cost, which approximates market value.

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 EIN. At September 30, 2023 and December 31, 2022, the Company had no amount in excess of the FDIC insured limit.

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, 1–30 days past due, 31–60 days past due, 61–90 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 September 30, 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 allowance for expected credit losses at September 30, 2023 totaled $28,558.

Inventory

Inventory consists of the following:

	September 30, 2023 (unaudited)			December 31, 2022

Raw materials	$	1,052,975		$	1,207,957
Work in process		60,006			80,727
Finished goods		1,045,156			1,302,995
Rental Equipment		55,893			55,893
Allowance reserve		(167,959	)		(225,687	)
Inventory, net	$	2,046,071		$	2,421,885

As of September 30, 2023 and December 31, 2022, the Company recorded allowances for obsolete or slow-moving inventory of $166,698 and $166,432, respectively.

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 Company’s historical experience.

A breakdown of the total revenue between related party and non-related party revenue is as follows:

	2023		2022		2023		2022
	Three months ended September 30				Nine months ended September 30
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues	$	2,027,592	$	2,591,383	$	5,321,577	$	6,403,522
Revenues - related parties		254,414		217,421		671,194		781,489
Total Revenues	$	2,282,006	$	2,808,804	$	5,992,771	$	7,185,011

See further disaggregate revenue disclosures by segment and product type in Note 10.

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 Company’s 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:

	2023		2022		2023		2022
	Three months ended September 30				Nine months ended September 30
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Cost of revenues	$	1,372,755	$	1,667,586	$	3,734,350	$	4,121,071
Cost of revenues - related parties		116,976		106,693		325,037		365,892
Cost of revenues		116,976		106,693		325,037		365,892
Royalties expense - related parties		23,569		22,961		49,264		53,574
Royalties expense		31,335		54,708		107,308		149,024
Total cost of revenues	$	1,544,635	$	1,851,948	$	4,215,959	$	4,689,561

Lease Accounting

The Company accounts for leases in accordance with ASC 842, Leases.

The lease standard requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations. The Company 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. The Company did not reassess whether any contracts entered into prior to adoption are leases or contain leases.

The Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that would allow the Company 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. The Company did not have any finance leases as of September 30, 2023. The Company’s leases generally have terms that range from three years for equipment and five to twenty years for property. The Company elected the accounting policy to include both the lease and non-lease components of its agreements as a single component and account for them as a lease.

Lease liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings available to the Company. 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. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the lease term.

When the Company has the option to extend the lease term, terminate the lease for the contractual expiration date, or purchase the leased asset, and it is reasonably certain that the Company we will exercise the option, it considers 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.

For the three and nine months ended September 30, 2023, lease expenses were approximately $110,700 and approximately $327,900, respectively. For the three and nine months ended September 30, 2022, lease expenses were approximately $76,300 and approximately $205,000, respectively. Cash paid for operating liabilities for the three and nine months ended September 30, 2023 was approximately $84,000 and approximately $245,000, respectively. For the nine months ended September 30, 2022 cash paid for operating liabilities was approximately $204,500.

Supplemental balance sheet information related to leases was as follows:

Operating Leases	September 30, 2023
		(unaudited)
Right-of-use assets	$	941,714
Current lease liabilities	$	287,555
Non-current lease liabilities		658,597
Total lease liabilities	$	946,152

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation. ASC 718 requires companies to measure the cost of employee and non-employee services received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award and to recognize it as compensation expense over the period the employee and non-employee are required to provide service in exchange for the award, 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.

Derivatives

The accounting treatment of derivative financial instruments requires that the Company record certain warrants and embedded conversion options at their fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into certain note agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy, by earliest issuance date, in accordance with ASC 815-40-35-12 whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors, as long as the certain variable issuance terms in certain convertible instruments exist. As of September 30, 2023, the Company did not have any derivative liabilities.

Loss per share of common stock

Basic loss per share excludes any dilutive effects of options, warrants and convertible securities. Basic earnings 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 September 30, 2023 and September 30, 2022, 149,612,199 and 249,177,870 shares, respectively, of potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible notes, outstanding warrants, outstanding stock options and the conversion of preferred stock.

Recent 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 Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s 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 Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s 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.

Note 3. 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 these consolidated financial statements. For the nine months ended September 30, 2023, the Company incurred a net loss of $616,315. At September 30, 2023, the Company had an accumulated deficit of $17,053,810. Despite a working capital surplus of approximately $724,961 at September 30, 2023, the continued losses and cash used in operations raise substantial doubt as to the Company’s ability to continue as a going concern for the twelve months after the date the financial statements were issued. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to increase revenues, control expenses, raise capital and 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. The consolidated financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

Note 4. Related Party Transactions

The Company sells products to Brownie’s Southport Divers, Brownie’s Yacht Toys and Brownie’s Palm Beach Divers, companies owned by the brother of Robert Carmichael, the Company’s Chief Executive Officer and Chief Financial Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers with similar sales volumes. These entities accounted for 9.9% and 12.1% of the net revenues for the three months ended September 30, 2023 and September 30, 2022, respectively, and 11.2% and 12.9% for the nine months ending September 30 2023 and 2022, respectively. Accounts receivable from these entities totaled $39,477 and $53,079, at September 30, 2023 and December 31, 2022, respectively.

The Company sells products to BGL and 940 A, entities wholly-owned by Robert Carmichael. Terms of sale are more favorable than those extended to the Company’s regular customers, but no more favorable than those extended to the Company’s strategic partners. Accounts receivable from these entities totaled $8,264 and $2,349 at September 30, 2023 and December 31, 2022, respectively.

The Company had accounts payable to related parties of $37,210 and $37,539 at September 30, 2023 and December 31, 2022, respectively. The balance payable at September 30, 2023 was comprised of $23,713 due to 940 A, $8,497 due to Robert Carmichael and $5,000 due to Blake Carmichael. At December 31, 2022, the balance payable was comprised of $29,559 due to 940 A, $2,980 due to BGL and $5,000 due to Robert Carmichael.

The Company has exclusive license agreements with 940 A to license the trademark “Brownie’s Third Lung”, “Tankfill”, “Brownie’s Public Safety” and various other related trademarks as listed in the agreements. The agreements provide that the Company pay 2.5% of gross revenues per quarter as a royalty to 940A. Total royalty expense for the three months ended September 30, 2023 and September 30, 2022 was $54,904 and $77,669, respectively. For the nine months ended September 30, 2023 and September 30, 2022 the royalty expense totaled $156,572 and $202,598, respectively. The accrued royalty for September 30, 2023 was $7,513 and is included in other liabilities.

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 Company’s 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 Company’s 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. There were payments totaling $3,047 made with products in kind during the nine months ended September 30, 2023. The outstanding balance on this note was $63,746 as of September 30, 2023.

On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, a Company director, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year common stock purchase 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 weighted average price (“VWAP”) of the Company’s 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 Company’s 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 September 30, 2023.

On March 31, 2023, the Company issued 61,204 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.

Note 5. Convertible Promissory Notes and Loans Payable

Convertible Promissory Notes

Convertible promissory notes consisted of the following at September 30, 2023:

Origination Date	Maturity Date	Interest Rate			Origination Principal Balance		Original Discount Balance			Period End Principal Balance		Period End Discount Balance			Period End Balance, Net		Accrued Interest Balance		Reg.
9/03/21	9/03/24		8	%		346,500		(12,355	)	$	346,500	$	(4,010	)	$	342,490		-	(1)
9/03/21	9/03/24		8	%		3,500		(125	)		3,500		(42	)		3,458		-	(2)
9/30/22	Demand		8	%		66,793		(19,245	)		63,746		(12,865	)		50,881		-	(3)
9/14/23	Demand		8	%		50,000		-			50,000		-			50,000		-	(4)
										$	463,746	$	(16,917	)	$	446,829	$	-

A breakdown of current and long-term amounts due are as follows for the convertible promissory notes as of September 30, 2023:

	Summit Holdings V,			Tierra Vista Partners,			Robert Carmichael			Robert Carmichael
	LLC Note			LLC Note			Note			Note			Total
2023	$	-		$	-		$	63,746		$	50,000		$	113,746
2024		346,500			3,500			-			-			350,000
Discount		(4,010	)		(42	)		(12,865	)		-			(16,917	)
Total Loan Payments	$	342,490		$	3,458		$	50,881		$	50,000		$	446,829
Current Portion of Loan Payable	$	(342,490	)	$	(3,458	)	$	(50,881	)	$	(50,000	)	$	(446,829	)
Non-Current Portion of Loan Payable	$	-		$	-		$	-		$	-		$	-

(1)

On September 3, 2021, the Company issued a three-year 8% convertible promissory note in the principal amount of $346,500 to Summit Holding V, LLC as part of the acquisition of SSI. The Company is required to make quarterly payments under the note in an amount equal to 50% of the adjusted net profit of SSI. Interest is payable quarterly in shares of common stock of the Company at a conversion price of $0.051272 per share. The note holder may convert outstanding principal and interest into shares of common stock at a conversion price of $0.051272 per share at any time during the term of the note. The Company recorded $12,355 for the beneficial conversion feature. This note is classified as a current liability for this period.

	Payment Amortization
2023 (9 months)	$	-
2024		346,500
Total Note Payments	$	346,500
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% promissory note in the principal amount of $3,500 to Tierra Vista Partners, LLC as part of the acquisition of SSI. The Company is required to make quarterly payments under the note in an amount equal to 50% of the adjusted net profit of SSI. Interest is payable quarterly in common stock of the Company at a conversion price of $0.051272 per share. The note holder may convert outstanding principal and interest into shares of common stock at a conversion price of $0.051272 at any time up to the maturity date of the note. The Company recorded $125 for the beneficial conversion feature. This note is classified as a current liability for this period.

	Payment Amortization
2023 (9 months)	$	-
2024		3,500
Total Note Payments	$	3,500
Current portion of note payable		(3,500	)
Non-Current Portion of Notes Payable	$	-

(3)

(4)

(5)

Loans Payable

	Mercedes			Navitas			NFS			Navitas 2022
	BMG (1)			BLU3 (2)			SSI (3)			BLU3 (4)			Total
2023 (9 months)	$	2,792		$	3,365		$	8,379		$	4,738		$	19,274
2024		11,168			16,629			26,279			21,228			75,304
2025		8,686			18,024			12,328			23,610			62,648
2026		-			6,007			-			-			6,007
Total Loan Payments	$	22,646		$	44,025		$	46,986		$	49,576		$	163,233
Current Portion of Loan Payable	$	(10,626	)	$	(16,297	)	$	(25,193	)	$	(20,671	)	$	(72,787	)
Non-Current Portion of Loan Payable	$	12,020		$	27,728		$	21,793		$	28,905		$	90,446

(1)

On August 21, 2020, the Company executed an installment sales contract with Mercedes Benz Coconut Creek for the purchase of a 2019 Mercedes Benz Sprinter delivery van. The installment 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 Mr. Carmichael. The loan balance as of September 30, 2023 was $22,646 and $31,023 as of December 31, 2022.

(2)

On May 19, 2021, BLU3 executed an equipment finance agreement with Navitas Credit Corp. (“Navitas”) to finance the purchase of certain plastic molding equipment. The amount financed is $75,764 payable over 60 equal monthly installments of $1,611 (the “Navitas 1”). The equipment finance agreement contains customary events of default. The loan balance as of September 30, 2023 was $44,025 and $54,930 as of December 31, 2022.

(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 September 30, 2023 and December 31, 2022 was $46,986 and $60,804, 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 September 30, 2023 was $49,576 and $63,689 as of December 31, 2022.

Note 6. Business Combination

Asset acquisition Gold Coast Scuba, LLC

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 Live Blue, Inc. Pursuant to the terms of the Asset Purchase Agreement, Live Blue acquired substantially all of Gold Coast Scuba’s 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 Company’s common stock (the “Consideration Shares”) with a fair market value of $120,000; and (b) a cash payment of $30,000.

The Consideration Shares are subject to leak out agreements whereby the shareholders are unable to sell or transfer shares based upon the following:

Holding Period from Closing Date		Percentage of shares eligible to be sold or transferred
6 months		Up to 25.0%
9 months		Up to 50.0%
12 months		Up to 100.0%

The leak-out restriction may be waived by the Company, upon written request by a LLC Member, if the Company’s 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, and are included in the purchase price allocation in the table below.

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 2022, we recognized revenue of $212,876 and net loss of $75,579 associated with this business. The business combination was not material for the purpose of disclosing pro forma financial information. In connection with this transaction, we recognized the following assets and liabilities:

	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

Note 7. Goodwill and Intangible Assets, Net

The following table sets for the changes in the carrying amount of the Company’s Goodwill for the nine months ended September 30, 2023.

	2023
Balance, January 1	$	249,986
Addition:		-
Balance, September 30	$	249,986

The Company performed an evaluation of the value of goodwill at December 31, 2022. Based upon this evaluation it was determined that there should be no adjustment to goodwill. There has been nothing noted during the nine months ended September 30, 2023 that would indicate that the value of goodwill should change through that date.

The following table sets for the components of the Company’s intangible assets at September 30, 2023:

	Amortization Period (Years)		Cost		Accumulated Amortization			Net Book Value

Intangible Assets Subject to amortization
Trademarks		15	$	121,000	$	(16,761	)	$	104,239
Customer Relationships		10		600,000		(125,000	)		475,000
Non-Compete Agreements		5		22,000		(9,167	)		12,833
Total			$	743,000	$	(150,928	)	$	592,072

The aggregate amortization remaining on the intangible assets as of September 30, 2023 is a follows:

	Intangible Amortization
2023 (3 months remaining)		18,162
2024		72,466
2025		72,467
2026		71,367
2027		68,066
Thereafter		289,544
Total	$	592,072

Amortization expense for amortizable intangible assets for both the three months ended September 30, 2023 and 2022 was 18,117, respectively. Amortization expense for both the nine months ended September 30, 2023 and 2022 was 54,350, respectively.

Note 8. Stockholders’ Equity

Common Stock

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 common stock purchase 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 an aggregate of 137,000 shares of common stock to the holders of convertible notes for payment of interest for the three months ending December 31, 2022. The fair value of these shares was $7,000.

On June 30, 2023, the Company issued 61,205 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 $1,326.

On June 30, 2023, the Company issued an aggregate of 137,000 shares of common stock to the holders of convertible notes for payment of interest for the three months ending June 30, 2023. The fair value of these shares was $7,000.

On September 30, 2023, the Company issued 61,205 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 $1,326.

On September 30, 2023, the Company issued an aggregate of 137,000 shares of common stock to the holders of convertible notes for payment of interest for the three months ending September 30, 2023. The fair value of these shares was $7,000.

Preferred Stock

During the second quarter of 2010, the holders of the majority of the Company’s outstanding shares of common stock approved an amendment to the Company’s 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 the 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 as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into a share of the Company’s 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 Company’s common stock and Series A Convertible Preferred Stock vote together on any matters submitted to our shareholders. As of September 30, 2023, and December 31, 2022, the 425,000 shares of Series A Convertible Preferred Stock are owned by Robert Carmichael.

Equity Incentive Plan

On May 26, 2021 the Company adopted an Equity Incentive 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-qualified stock options, stock purchase rights, time vested and/performance invested restricted stock, and stock appreciation rights and unrestricted shares may also be granted under the Plan. 25,000,000 shares are reserved for issuance under the Plan. 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.

Equity Compensation Plan Information as of September 30, 2023:

	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		3,319,118	$	0.0401		21,680,882
Equity Compensation Plans Not Approved by Security Holders		105,971,520		0.0258		—
Total		109,290,638	$	0.0262		21,680,882

Options

The Company has issued options to purchase approximately 105,971,520 shares of its common stock at an average exercise price of $0.0262 with a fair value of approximately $37,000. For the three and nine months ended September 30, 2023, the Company issued no options to purchase shares.

For the three months ended September 30, 2023 and 2022, the Company recognized an expense of approximately $7,200 and $315,000, respectively and for the nine months ended September 30, 2023 and 2022, the Company recognized an expense of approximately $25,000 and $847,000, 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. As of September 30, 2023, the Company had approximately $1,504,700 of unrecognized pre-tax non-cash compensation expense related to performance based options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 2.7 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. The maximum contractual term of the Company’s stock options is 5 years. The Company recognizes forfeitures and expirations as they occur. Options to purchase approximately 57,877,500 shares have vested as of September 30, 2023.

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 Company’s stock price on the date of grant as well as assumptions regarding the following:

	Nine Months ended September 30,
	2023			2022
Expected volatility		172.0% - 346.4	%		172.0 – 346.4	%
Expected term		1.50 – 5.0 Years			1.5 – 5.0 Years
Risk-free interest rate		0.16% - 4.64	%		0.16% - 2.10	%
Forfeiture rate		0.17	%		0.03	%

The expected volatility was determined with reference to the historical volatility of the Company’s 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 Company’s outstanding stock options as of September 30, 2023 and December 31, 2022 and changes during the periods ending on such dates is as follows:

	Number of			Weighted Average Exercise		Weighted Average Remaining Contractual		Aggregate Intrinsic
	Options			Price		Life in Years		Value
Outstanding at December 31, 2021		233,128,266		$	0.0362		2.23
Granted		5,710,901			0.0281
Forfeited		(400,000	)		0.0354
Exercised		-			-
Cancelled		-			-
Outstanding – December 31, 2022		238,439,167		$	0.0360		1.43
Exercisable – December 31, 2022		111,558,754		$	0.0321		1.33	$	68,994

Granted		-			-
Forfeited		(129,148,529	)		0.0443
Exercised		-			-
Cancelled		-			-
Outstanding – September 30, 2023		109,290,638		$	0.0262		1.99
Exercisable – September 30, 2023		57,877,504		$	0.0217		1.54	$	36,983

The following table summarizes information about employee stock options outstanding at September 30, 2023.

Range of Exercise Price		Number outstanding at September 30, 2023		Weighted average remaining life		Weighted average exercise price		Number exercisable at September 30, 2023		Weighted average exercise price		Weighted average remaining life
$	0.0180 - $0.0225		70,730,020		1.47	$	0.0182		45,730,020	$	0.0181		1.12
$	0.0229 - $0.0325		5,018,254		3.79	$	0.0267		4,993,254	$	0.0267		3.79
$	0.0360 - $0.0425		25,457,364		2.82	$	0.0398		6,179,230	$	0.0395		2.76
$	0.0440 - $0.0531		8,085,000		2.81	$	0.0529		975,000	$	0.0520		1.96
	Outstanding options		109,290,638		1.99		0.0262		57,877,504		0.0217		1.54

At September 30, 2023, there was approximately $1,504,755 of unrecognized stock option expense which may be recognized only if the full vesting requirements for these options are met.

At September 30, 2023, there was approximately $44,992 of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of 0.95 years.

Warrants

A summary of the Company’s warrants as of December 31, 2022 and changes during the nine months ended September 30, 2023 is presented below:

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value

Outstanding – December 31, 2022		18,255,951	$	0.0245		1.55	$	12,000
Granted		11,428,570	$	0.0175
Exercised		-
Forfeited or Expired		4,000,000-
Outstanding – September 30, 2023		25,684,521	$	0.0247		1.18
Exercisable – September 30, 2023		25,684,521	$	0.0247		1.18	$	24,000

Note 9. Commitments and contingencies

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, among other things, provides that STS provide 30 hours per week of commercialization support for its NextGen licensed products without charge. In consideration therefor, the Company agreed to an increased minimum yearly royalty payment of $60,000 for years 2022, 2023 and 2024, with a yearly 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 $334,961 for the years 2019 through 2024. Royalty recorded under the Amendment was $31,335 and $54,708 for the three months ended September 30, 2023 and 2022, respectively and $107,308 and $149,024 for the nine months ended September 30, 2023 and 2022, 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 served 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 received (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 Constable Employment Agreement and on each anniversary thereof, a non-qualified immediately exercisable five-year option to purchase that number of shares equal to $100,000 of the value of the Company’s common stock at an exercise price equal to the market price of the Company’s 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 common stock at an exercise price of $0.0184 per share, on November 5, 2021, Mr. Constable was issued an option to purchase 2,403,846 shares of the Company’s common stock at an exercise price of $0.0401 per share and on November 5, 2022, Mr. Constable was issued an option to purchase 3,968,254 shares of the Company’s common stock at an exercise price of $0.0252 per share.

In addition, Mr. Constable was entitled to receive four-year stock options to purchase shares of common stock at an exercise price of $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 Company’s 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 Company’s Net Revenues are in excess of $7,500,000, in the aggregate, for four consecutive fiscal quarters; (iii) 5,000,000 shares, if the Company’s 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 Company’s common stock is listed on the NASDAQ or New York Stock Exchange.

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. Carmichael served as Chief Executive Officer of BLU3. In consideration for his services, Blake Carmichael received (i) an annual base salary of $120,000, payable in accordance with the customary payroll practices of the Company, (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) upon execution of the Carmichael 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. In addition, Blake Carmichael shall be entitled to receive 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 that will vest upon annual financial metrics based upon a revenue measurement, expediency measurement and an EBITDA measurement. A measurement was made for the three and nine months ended September 30, 2023 resulting in no additional expense since the vesting criteria were not met.

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 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.

In addition, Mrs. Buban shall be entitled to receive a five-year 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. A measurement was made for the three and nine months ended September 30, 2023 and no expense was recorded based upon the vesting criteria not being met.

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 therefore, the Company will pay CLG a monthly flat fee of $3,000 for SEC reporting work and its normal hourly rate for other legal work and issued 1,000,000 shares of common stock with a fair market value of $27,500 to CLG.

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.

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 of a three year lease for the property located at 259 Commercial Blvd., Suites 2 and 3 in Lauderdale-By-The Sea, Florida for $2,816 per month base rent. The lease expired on March 31, 2023 and LBI is currently renting on a month to month basis. LBI has the option to renew the lease for a two year term with an increase of base rent of 3.5%.

On September 14, 2022, SSI entered into a sixty-month lease renewal for its facility in Huntington Beach, California commencing on February 1, 2022 with 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 a 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.

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 has approved the Company’s 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 an allowance of $160,500 for such costs. During the three and nine months ended September 30, 2023 the Company repaired and returned 133 and 653 units, respectively, to customers resulting in a reduction of the reserve of $-0- and $93,161 for the three and nine months ended September 30, 2023, respectively.

Note 10. Segment Reporting

The Company has five operating segments as described below:

	1.	SSA Products, which sells recreational multi-diver surface supplied air diving systems.

	2.	High Pressure Gas Systems, which sells high pressure air and industrial gas compressor packages.

	3.	Ultra-Portable Tankless Dive Systems, which sells next generation electric surface supply air diving systems and electric shallow dive systems that are battery operated and completely portable to the user.

	4.	Redundant Air Tank Systems, which manufactures and distributes a line of high pressure tanks and redundant air systems for the military and recreational diving industries.

	5.	Guided Tour and Retail, which provides guided tours using the BLU3 technology, and also operates as a retail store for the diving community.

	2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
													Three Months Ended September 30 (unaudited)
	Legacy SSA Products						High Pressure Gas Systems						Ultra Portable Tankless Dive Systems						Redundant Air Tank Systems						Guided Tour Retail						Total Company
	2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
Net Revenues	$	942,411		$	913,785		$	76,093		$	350,839		$	476,963		$	980,169		$	667,191		$	471,051		$	119,348		$	92,959		$	2,282,006		$	2,808,804
Cost of Revenue		(715,309	)		(578,234	)		(77,147	)		(254,649	)		(324,799	)		(587,997	)		(352,444	)		(321,984	)		(74,941	)		(109,083	)		(1,544,635	)		(1,851,948	)
Depreciation/Amortization		2,792			4,370			-			-			7,885			4,479			28,928			19,054			2,501			2,637			42,106			30,540
Gross Profit		227,105			335,551			(1,054	)		96,190			152,164			392,172			314,747			149,067			44,407			(16,124	)		737,371			956,856
Income (loss) from Operations	$	104,433		$	(154,667	)	$	(89,959	)	$	6,904		$	(176,477	)	$	14,699		$	92,948		$	(91,169	)	$	(7,932	)	$	(48,408	)		(77,773	)		(272,640	)

	2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
													Nine Months ended September 30 (unaudited)
	Legacy SSA Products						High Pressure Gas Systems						Ultra Portable Tankless Dive Systems						Redundant Air Tank Systems						Guided Tour Retail						Total Company
	2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
Net Revenues	$	2,005,718		$	2,291,916		$	651,579		$	897,849		$	1,540,298		$	2,659,027		$	1,539,675		$	1,192,986		$	255,501		$	143,233		$	5,992,771		$	7,185,011
Cost of Revenue		(1,612,265	)		(1,598,618	)		(441,587	)		(555,688	)		(1,045,784	)		(1,574,982	)		(953,752	)		(837,054	)		(162,571	)		(123,219	)		(4,215,959	)		(4,689,561	)
Depreciation/Amortization		11,365			13,109			-			-			15,534			13,435			87,021			68,161			7,423			2,637			121,343			97,342
Gross Profit		393,453			693,298			209,992			342,161			494,514			1,084,045			585,923			355,932			92,930			20,014			1,776,812			2,495,450
Income (loss) from operations	$	(44,897	)	$	(859,224	)	$	(81,643	)	$	89,068		$	(371,095	)		48,922		$	(10,960	)	$	(259,274	)	$	(51,761	)	$	(45,171	)		(560,356	)	$	(1,025,679	)
Total Assets	$	1,293,941		$	1,511,872		$	311,831		$	383,827		$	624,592		$	1,193,570		$	2,465,100		$	2,739,757		$	194,286		$	249,898		$	5,031,375		$	6,078,924

Note 11. Subsequent Events

On November 14, 2023, the Company borrowed funds through the issuance of a promissory note (the Note) in the principal amount of $150,000 to Charles Hyatt, a Company director, for working capital requirements and payment of certain expenses in connection with the Company’s 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.

ITEM 2. MANAGEMENT’S 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 Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly 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 management’s beliefs and assumptions only as of the date of this Quarterly 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 applicable law.

The management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Overview

The Company owns and operates a portfolio of companies with a concentration in the industrial and recreational diving industry. The Company, through its subsidiaries, designs, tests, manufactures, and distributes recreational hookah diving, yacht-based scuba air compressors and nitrox generation systems and scuba and water safety products in the United States and internationally.

The Company has five subsidiaries focused on various sub-sectors:

	●	Brownie’s 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 and Retail

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, a manufacturing facility in Huntington Beach, California, and a retail facility in Lauderdale-By-The-Sea, Florida.

The Company, through its wholly owned subsidiaries, designs, tests, and manufactures tankless dive systems, rescue air systems and yacht-based self-contained underwater breathing apparatus (“SCUBA”) air compressor and nitrox generation fill systems. In addition, the Company is the exclusive distributor for 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 building a guided tour operation that includes dive retail. Lastly, The Company is the exclusive United States and Caribbean distributor for Chrysalis Trading CC, a South African manufacturer of fitness and dive equipment, doing business as Bright Weights (“Bright Weights”), of a dive ballast system produced in South Africa.

Results of Operations

Net Revenues, Costs of Net Revenues and Gross Profit

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Net revenues decreased 18.8% for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 as a result of a decrease in revenues in LWA and BLU3. Net revenue for BLU3 decreased 51.3% as a direct result of the recall of the NOMAD dive system during the fourth quarter of 2022 and the loss of sales momentum as well as a soft demand in many areas of BLU3’s market. The decrease in LWA’s revenue can be attributed to manufacturing delays in production. The decrease in LWA and BLU3’s revenues was partially offset by increased revenues in LBI, BTL and SSI. SSI’s increase can be attributed to the continued momentum of the Company’s newest product, HEED3 as well as increased demand from international users of their Spare Air product line.

For the three months ended September 30, 2023, cost of net revenues was 67.7% as compared with the cost of net revenues of 65.9% for the three months ended September 30, 2022. The cost increase as a percentage of revenue, can be directly attributed to the cost of direct labor, which accounted for a larger portion of costs and significantly impacted the profit margin. Included in cost of net revenues are royalty expenses paid to Robert Carmichael which decreased 2.6% for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Gross profit margin was 32.3% for the three months ended September 30, 2023 as compared to gross profit margin of 34.1% for the three months ended September 30, 2022. The reduction in gross margin, is directly attributable to BTL’s margin of 27.3% and LWA’s margin of (6.4)%.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Net revenues decreased 16.6% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 as a result of a decrease in revenues in BTL, LWA and BLU3. Net revenues for BLU3 decreased 42.1% as a direct result of the recall of the NOMAD dive system during the fourth quarter of 2022 and the slow ramp in production while repairing recalled units as well as the loss of sales momentum due to the recall. Both BLU3 and BTL’s sales showed weakness due to soft demand at the distribution levels as we believe their customer base was in a conservative posture over concerns for the US and world economy. BTL’s revenue decreased 12.5% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. LWA’s revenue decreased 27.4% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease in LWA’s revenues can be attributed to delays in production by our manufacturer which has impacted LWA’s ability to deliver certain lines of product. The decrease in revenues in BLU3, LWA and BTL was partially offset by increased revenue in LBI and SSI attributable to the continued momentum of the Company’s newest product, HEED3 as well as increased demand from international users of their Spare Air product line.

For the nine months ended September 30, 2023, cost of net revenues was 70.4% as compared with the cost of net revenues of 65.3% for the nine months ended September 30, 2022. The cost increase as a percentage of revenue, can be directly attributed to the cost of direct labor, which accounted for a larger portion of costs and significantly impacted the profit margin. Included in cost of net revenues are royalty expenses paid to Robert Carmichael which decreased 8.0% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Gross profit margin was 29.6% for the nine months ended September 30, 2023 as compared to gross profit margin of 34.7% for the nine months ended September 30, 2022. The reduction in gross margin is directly attributable to reduced margins across all companies primarily attributed to reduced sales volume thereby increasing the weight of manufacturing labor negatively impacting gross margin.

The following tables provides net revenues, total costs of net revenues and gross profit margins for our segments for the periods presented.

Revenues

	Three Months Ended							Nine Months Ended
	September 30,				% of			September 30,				% of
	2023		2022		Change			2022		2021		Change
	(unaudited)							(unaudited)
Legacy SSA Products	$	942,411	$	913,785		3.1	%	$	2,005,718	$	2,291,916		(12.5	)%
High Pressure Gas Systems		76,093		350,839		(78.3	)%		651,579		897,849		(27.4	)%
Ultra-Portable Tankless Dive Systems		476,963		980,169		(51.3	)%		1,540,298		2,659,027		(42.1	)%
Redundant Air Tank Systems		667,191		471,051		41.6	%		1,539,675		1,192,986		29.1	%
Guided Tour Retail		119,348		92,959		28.4	%		255,501		143,233		78.4	%
Total net revenues	$	2,282,006	$	2,808,803		(18.8	)%	$	5,992,771	$	7,185,011		(16.6	)%

Cost of revenues as a percentage of net revenues

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
	(unaudited)						(unaudited)
Legacy SSA Products		75.9	%		63.3	%		80.4	%		69.8	%
High Pressure Gas Systems		101.4	%		72.6	%		67.8	%		61.9	%
Ultra-Portable Tankless Dive Systems		68.1	%		60.0	%		67.9	%		59.2	%
Redundant Air Tank Systems		52.8	%		68.4	%		61.9	%		70.2	%
Guided Tour Rental		62.8	%		117.3	%		63.6	%		86.0	%

Gross profit (loss) margins

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
	(unaudited)						(unaudited)
Legacy SSA Products		24.1	%		36.7	%		19.6	%		30.2	%
High Pressure Gas Systems		(1.4	)%		27.4	%		32.2	%		38.1	%
Ultra-Portable Tankless Dive Systems		31.9	%		40.0	%		32.1	%		40.8	%
Redundant Air Tank Systems		47.2	%		31.6	%		38.1	%		29.8	%
Guided Tour Rental		37.2	%		(17.3	)%		36.4	%		14.0	%

SSA Products

Revenues decreased 12.5% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease in revenue can be attributed to both the dealer and direct to consumer revenue channels decreasing 20.2% and 4.2% for the nine months ended September 30, 2023 and September 30, 2022, respectively. This decrease may likely be attributable to economic concerns that were lingering from late 2022. Our dealers have indicated that they were taking a conservative approach in the offseason to conserve cash for the season. BTL was able to stimulate some demand during the nine months ended September 30, 2023 with a discounting program. Affiliate sales, while the smallest segment of revenue increased 40.8% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

The costs of revenues as a percentage of net revenues in this segment increased from 69.8% to 80.4% for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 due to a decrease in margins in the Direct to Consumer and Dealer revenue channels, as a result of the discounting to stimulate revenue.

A breakdown of the revenue channels for this segment are below. Direct to Consumer represents items sold via our website, trade shows and walk-ins to our factory store. Dealer revenue represents sales to customers under dealer agreements which typically have lower margins. Affiliates are resellers of our products with which we do not have formal dealer arrangements.

	Net Revenue							Cost of Sales as a % of Net Revenue						Margin
	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022		% change			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
Dealers	$	515,868	$	514,566		0.3	%		75.2	%		70.3	%		24.8	%		29.7	%
Direct to Consumer (website included)		404,636		375,680		7.2	%		81.7	%		55.3	%		18.3	%		44.7	%
Affiliates		21,907		23,539		(6.9	)%		48.9	%		36.5	%		51.1	%		63.5	%
Total	$	942,411	$	913,785		3.1	%		64.1	%		63.3	%		35.9	%		36.7	%

	Net Revenue							Cost of Sales as a % of Net Revenue						Margin
	Nine months ended September 30,		Nine months ended September 30,		%			Nine months ended September 30,			Nine months ended September 30,			Nine months ended September 30,			Nine months ended September 30,
	2023		2022		change			2023			2022			2023			2022
Dealers	$	1,103,526	$	1,383,321		(20.2	)%		88.1	%		74.8	%		11.9	%		25.2	%
Direct to Consumer (website included)		801,693		837,214		(4.2	)%		72.2	%		59.4	%		27.8	%		40.6	%
Affiliates		100,499		71,381		40.8	%		67.0	%		92.3	%		33.0	)%		7.7	%
Total	$	2,005,718	$	2,291,916		(12.5	)%		78.9	%		69.8	%		21.1	%		30.2	%

High Pressure Gas Systems

Sales of high-pressure breathing air compressors decreased 27.4% for the nine months ended September 30, 2023 from the nine months ended September 30, 2022, with the three months ended September 30, 2023 decreaseing 78.3% from the three months ended September 30, 2022. The decrease in revenues can be directly attributed to delays in the manufacturing from our supply chain.

Costs of revenues as a percentage of net revenues in this segment increased to 63.3% for the nine months ended September 30, 2023 from 61.9% for the nine months ended September 30, 2022. This increase in cost as a percentage of revenue can be attributed to volume discounting for the large reseller in Mexico, which caused reseller cost of sales for the three months ended September 30, 2023 to decreased to 70.5% as compared to 72.5% for the three months ended September 30, 2022.

	Net Revenue								Cost of Sales as a % of Net Revenue						Margin
	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022		% change			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
Resellers	$	8,579		$	316,914		(97.3	)%		72.0	%		76.1	%		28.0	%		23.9	%
Direct to Consumers		85,657			20,903		309.8	%		64.0	%		28.1	%		36.0	%		71.9	%
Original Equipment Manufacturers		(18,143	)		12,022		(250.9	)%		68.4	%		57.4	%		31.6	%		42.6	%
Total	$	76,093		$	349,839		(78.3	)%		70.5	%		72.6	%		29.5	%		27.4	%

	Net Revenue							Cost of Sales as a % of Net Revenue						Margin
	Nine months ended September 30,		Nine months ended September 30,		%			Nine months ended September 30,			Nine months ended September 30,			Nine months ended September 30,			Nine months ended September 30,
	2023		2022		change			2023			2022			2023			2022
Resellers	$	372,760	$	556,454		(33.0	)%		69.3	%		65.6	%		30.7	%		34.4	%
Direct to Consumers		196,516		216,148		(9.1	)%		40.5	%		55.3	%		59.5	%		44.7	%
Original Equipment Manufacturers		82,303		125,247		(10.5	)%		66.8	%		57.0	%		33.2	%		43.0	%
Total	$	651,579	$	897,849		(27.4	)%		63.3	%		61.9	%		36.7	%		38.1	%

Ultra Portable Tankless Dive Systems

Revenue for the nine months ended September 30, 2023 in the Ultra Portable Tankless Dive System segment decreased 42.1% as compared to the nine months ended September 30, 2022 as a result of the loss of sales momentum from the recall of the NOMAD dive system in the fourth quarter of 2022. Revenue was down across all channels with the largest lost to the dealer channel with a drop of 64.6% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Cost of revenues from this segment as a percentage of net revenues for the nine months ended September 30, 2023 increased to 67.8% from 59.2% for the nine months ended September 30, 2022. The increase in cost of revenue as compared to revenue was impacted by increased direct labor costs in connection with the recalled product. In addition, BLU3 discounted its selling price in order to stimulate demand in all of its diving systems during the nine months ended September 30, 2023.

	Net Revenue							Cost of Sales as a % of Net Revenue						Margin
	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022		% change			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
Direct to Consumer	$	140,153	$	366,178		(61.7	)%		74.2	%		67.3	%		25.8	%		32.7	%
Dealers		49,857		410,513		(87.9	)%		53.6	%		44.6	%		46.4	%		55.4	%
Amazon		286,953		203,478		41.0	%		55.9	%		78.0	%		44.1	%		22.0	%
Total	$	476,963	$	980,169		(51.3	)%		64.2	%		60.0	%		35.8	%		40.0	%

	Net Revenue							Cost of Sales as a % of Net Revenue						Margin as a % of Net Revenue
	Nine months ended September 30, 2023		Nine months ended September 30, 2022		% change			Nine months ended September 30, 2023			Nine months ended September 30, 2022			Nine months ended September 30, 2023			Nine months ended September 30, 2022
Direct to Consumer	$	770,727	$	906,133		(14.9	)%		71.2	%		57.6	%		28.8	%		42.4	%
Dealers		304,109		859,633		(64.6	)%		76.0	%		54.1	%		24.0	%		45.9	%
Amazon		465,462		893,261		(47.9	)%		56.4	%		65.8	%		43.6	%		34.2	%
Total	$	1,540,298	$	2,659,027		(42.1	)%		67.8	%		59.2	%		32.2	%		40.8	%

Redundant Air Tank Systems

Revenue in the Redundant Air Tank Systems System segment increased 29.1% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. This increase can be attributed to increases in the Commercial, Government and Repairs sales channels increasing 203.4%, 81.8% and 93.3%, respectively, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. These channels are drivers of sales volume for the new HEED3 product line and have also seen increased quantity orders from the scuba related dealer base on the Spare Air product. These increases were offset by a decrease in the direct to consumer channel of 31.4% for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

The margins for the nine months ended September30, 2023 increased to 38.1% as compared to 29.8% for the nine months ended September 30, 2022 as the margins across all channels improved. This improvement can be attributed to the increased revenue from the HEED3 product which provides higher margins than SSI’s traditional product Spare Air, as well as a price increase implemented for 2023.

SSI has a worldwide customer base that includes (1) commercial accounts with aircraft requiring redundant air systems for their pilots and passengers, such as helicopters flying to oil rigs located in bodies of water (2) government accounts that are typically domestic and international military customers with egress systems (3) dealer accounts that are resellers including, international distributors to the military, commercial account or dive shops, including domestic and international dive shops that carry a spare air product (4) direct to consumer sales which are online sales and sales via trade shows direct to consumer and (5) Company provided repairs and warranty repairs to all segments.

	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022		% change			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
Commercial	$	390,681	$	73,691		430.2	%		47.1	%		45.8	%		55.8	%		54.2	%
Dealers		206,482		329,739		(37.4	)%		69.6	%		69.1	%		36.5	%		30.9	%
Government		32,205		14,017		129.8	%		29.9	%		76.5	%		64.3	%		23.5	%
Repairs		5,316		2,620		50.7	%		257.4	%		569.6	%		(139.2	)%		(469.6	)%
Direct to Consumers (Website)		32,507		50,984		(36.2	)%		36.0	%		68.0	%		64.0	%		32.0	%
Total	$	667,191	$	471,051		41.6	%		54.3	%		68.4	%		45.7	%		31.6	%

	Revenue							Cost of Revenue as a % of Revenue						Margin
	Nine months ended September 30,		Nine months ended September 30,		%			Nine months ended September 30,			Nine months ended September 30,			Nine months ended September 30,			Nine months ended September 30,
	2023		2022		change			2023			2022			2023			2022
Commercial	$	536,566	$	176,847		203.4	%		47.0	%		44.5	%		53.0	%		55.5	%
Dealers		747,534		792,081		(5.6	)%		68.6	%		74.3	%		31.4	%		25.7	%
Government		121,282		66,729		81.8	%		29.5	%		45.1	%		70.5	%		54.9	%
Repairs		41,510		21,478		93.3	%		267.3	%		276.8	%		(167.3	)%		(176.8	)%
Direct to Consumers (Website)		93,156		135,851		(31.4	)%		45.9	%		59.2	%		54.1	%		40.8	%
Total	$	1,540,048	$	1,192,986		29.1	%		61.9	%		70.2	%		38.1	%		29.8	%

Guided Tours and Retail

The guided tour and retail segment is a new segment and is derived from LBI. Revenue in this segment currently primarily includes retail sales, and tours and lessons. Retail sales represent the sales of product at the retail facility, while tours and lessons represent revenue derived from diving excursions and lessons.

Revenue for this segment for the nine months ended September 30, 2023 increased 78.4% as compared to the nine months ended September 30, 2022. This increase is attributable to the inclusion of two months’ revenue included in the nine months ending September 30, 2023, as the GCS acquisition was completed in May 2022. For the three months ended September 30, 2023 revenue increased 28.4% as compared to the three months ended September 30, 2022, primarily from the service segment which includes lessons and charters.

The increasing margin for the three and nine months ended September 30, 2023 to 21.5% and 35.6%, respectively, is attributable to the normalization of the retail product costing in the GCS inventory to reflect a more accurate cost of goods.

	Net Revenue							Cost of Sales as a % of Net Revenue						Margin
	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022		% change			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
Retail Sales	$	53,099		55,693		(4.7	)%		83.2	%		119.4	%		16.8	%		(19.4	)%
Tours and Lessons		66,249		37,267		77.8	%		74.7	%		114.3	%		25.3	%		(14.3	)%
Total	$	119,348		92,960		28.4	%		78.5	%		117.3	%		21.5	%		(17.3	)%

	Net Revenue							Cost of Sales as a % of Net Revenue						Margin as a % of Net Revenue
	Nine months ended September 30,		Nine months ended September 30,		%			Nine months ended September 30,			Nine months ended September 30,			Nine months ended September 30,			Nine months ended September 30,
	2023		2022		change			2023			2022			2023			2022
Retail Sales	$	132,982		90,241		47.4	%		65.3	%		77.1	%		34.7	%		22.9	%
Tours and Lessons		122,519		52,992		193.5	%		61.8	%		101.3	%		38.2	%		(1.3	)%
Total	$	255,501		143,233		78.4	%		64.4	%		86.0	%		35.6	%		14.0	%

Operating Expenses

Operating expenses consist of selling, general and administrative (“SG&A”) expenses and research and development costs and are reported on a consolidated basis for our operating segments. Operating expenses decreased 31.9% and 32.9%, respectively, for the three and nine months ended September 30, 2023 as compared to the same periods in the prior year.

Selling, General & Administrative Expenses (SG&A Expenses)

SG&A decreased by 34.0% for the three months ended September 30, 2023 and 33.7% for the nine months ended September 30, 2023 when compared to the same periods in the prior year. SG&A expenses were comprised of the following:

Expense Item	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022		% Change			Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022		% Change
Payroll, Selling & Administrative	$	459,444	$	536,383		(14.3	)%	$	1,336,543	$	1,476,868		(9.5	)%
Stock Compensation Expense		7,185		315,152		(97.7	)%		25,404		894,453		(97.2	)%
Professional Fees		20,568		72,144		(71.5	)%		120,427		297,175		(59.5	)%
Advertising		129,970		125,456		3.6	%		330,989		383,029		(13.6	)%
All Other		190,622		175,583		8.6	%		513,027		456,534		12.4	%
Total SG&A	$	807,789	$	1,224,718		(34.0	)%	$	2,326,390	$	3,508,059		(33.7	)%

Payroll for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022 decreased 14.3% and 9.5%, respectively. The decrease reflects reductions in production personnel in BLU3, as well as a reallocation of SSI direct labor from payroll expense to cost of sales for the nine months ended September 30, 2023.

Non-Cash Stock Compensation expenses decreased by 97.7% and 97.2%, for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022, as a result of vesting milestones not being met due to the reduction in revenue for the three months and nine months ended September 30, 2023.

Professional fees, including legal, accounting and other professional fees decreased 71.5% and 59.5%, respectively, for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022. The decrease for the nine months ended September 30, 2023 can be attributed to a decrease in legal fees of 59.9% and other professional fees of 73.3% and a decrease in accounting fees of 36.4%. The decrease in the Company’s acquisition activities in 2023 resulted in a decrease in legal fees. Additionally, the decrease in professional fees is attributable to the conversion of consultants to employees late in 2022 and the decrease in accounting fees can be attributed to new auditors who offer fixed priced services.

Advertising expenses increased by 3.6% for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, respectively. The decrease in advertising expense for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 was 13.6%, respectively. This decrease is attributable to BLU3’s decrease in advertising during its recall process. BLU3’s decrease in advertising expense was offset slightly by an increase in advertising expense for SSI.

Other expenses increased by 8.6% and 12.4% for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, due primarily to a decrease in the reserve for recall expenses.

Research & Development Expenses (R&D Expenses)

R&D expenses for the three months ended September 30, 2023, increased 53.9% as compared to the three months ended September 30, 2022, respectively. R&D expenses for the nine months ended September 30, 2023, decreased by 17.5%, as compared to the nine months ended September 30, 2022, respectively. The decrease was attributable to a decrease in new product development activity.

Other Income/Expense

For the three and nine months ended September 30, 2023 and 2022, other income/expense consisted solely of interest expense. For the three months ended September 30, 2023, interest expense increased 79.9% from the three months ended September 30, 2022 to approximately $20,800 as compared to approximately $11,500 in the three months ended September 30, 2022. The increase in interest expense can be attributed to the NFS loan, the Navitas 2022 loan, and the convertible demand note from Robert Carmichael that were funded in the third and fourth quarters of 2022.

Liquidity and Capital Resources

We had cash of $287,868 as of September 30, 2023. The following table summarizes total current assets, total current liabilities and working capital at September 30, 2023 as compared to December 31, 2022.

	September 30, 2023		December 31, 2022		% change
	(unaudited)
Total current assets	$	2,851,964	$	3,265,714		(12.7	)%
Total current liabilities	$	2,127,203	$	1,792,151		(18.1	)%
Working capital	$	724,761	$	1,473,563		(50.8	)%

The decrease in our current assets at September 30, 2023 from December 31, 2022 primarily reflected by a decrease in inventory as the Company decreased its inventory purchases to match the reduction in current demand. The decrease in current liabilities reflects a decrease in accounts payable and accrued liabilities.

Summary Cash Flows

	Nine Months Ended September 30,
	2023			2022
	(unaudited)
Net cash used in operating activities	$	(367,628	)	$	(499,712	)
Net cash used in investing activities	$	(28,671	)	$	(60,290	)
Net cash provided by financing activities	$	199,740		$	493,935

Net cash used in operating activities for the nine months ended September 30, 2023 was due to the net loss of approximately $616,315. Net cash used in operating activities is also the result of a decrease in current assets, including inventory, offset by an increase in accounts receivable and accounts receivable related party which generated approximately $129,000. A net decrease in liabilities which generated approximately $29,500 primarily from an increase in customer deposits offset by a decrease in accounts payable, and related party accounts payable.

Net cash used in investing activities for the nine months ended September 30, 2023 of approximately $52,000 consists of fixed asset purchases.

Net cash provided by financing activities for the nine months ended September 30, 2023 reflects proceeds of $223,000 from the sale of units, and issuance of debt to related party, partially offset by the payment of debt of approximately $50,260.

Going Concern

Our unaudited consolidated financial statements included in this Quarterly Report were prepared assuming we 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 consolidated financial statements. The report of our independent registered public accounting firm on our audited consolidated financial statements for the year ended December 31, 2022 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 $17,053,810 as of September 30, 2023. Despite a working capital surplus of $724,761 at September 30, 2023, the continued losses and cash used in operations raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to continue to increase revenues, control expenses, raise capital, and 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.

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition, valuation of inventory, allowance for doubtful accounts, and equity-based transactions. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our unaudited consolidated financial statements contained in this Quarterly Report.

Recent Accounting Pronouncements

There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company’s operations, financial position or cash flows.

These recent accounting pronouncements are described in Note 2 to our unaudited consolidated financial statements contained in this Quarterly Report.

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is a smaller reporting company and is not required to provide this information.

ITEM 4. 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 September 30, 2023, 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, that 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 September 30, 2023 and based upon the such evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to the material weaknesses set forth below.

	●	Insufficient number and lack of qualified accounting department and administrative personnel and support;

	●	Insufficient written policies and procedures to ensure the correct application of accounting and financial reporting with respect to GAAP and SEC disclosure requirements;

	●	Insufficient segregation of duties, oversight of work performed and lack of controls in our finance and accounting functions due to limited personnel;

	●	Company’s systems that impact financial information and disclosures have ineffective information technology controls;

	●	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.

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 is being analyzed and adjusted Company-wide, where possible. The Company intends to hire additional personnel in the accounting department, as well as the documentation of controls and procedures.

	●	The Company plans on evaluating various accounting systems to enhance its 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.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEEDINGS

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 1A. RISK FACTORS

The Company is a smaller reporting company and is not required to provide this information.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit
Number		Exhibit
31.1		Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

101.INS		Inline XBRL INSTANCE DOCUMENT
101.SCH		Inline XBRL TAXONOMY EXTENSION SCHEMA
101.CAL		Inline XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF		Inline XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB		Inline XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE		Inline XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 20, 2023	BROWNIE’S 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)