What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-04-22 compared with 2021-03-31 · 260 added, 304 removed, 19 unchanged (97% of the section changed)

through its wholly owned subsidiaries, designs, tests, and manufactures tankless dive systems, yacht-based SCUBA air compressor

and nitrox generation fill systems and acts as 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.

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.

specifically set forth to the contrary, when used in this report references to “BWMG,” the “Company,” “we,”

“our,” “us,” and similar terms refers to Brownie’s Marine Group, Inc., a Florida corporation, and our wholly

owned subsidiaries, Trebor Industries, Inc., a Florida corporation (“Trebor”) doing business as Brownie’s Third Lung,

Brownie’s High Pressure Compressor Services, Inc.

a Florida corporation (“BHP”) doing business as LW America’s, BLU3, Inc., a Florida corporation (“BLU3”) and Submersible Systems, Inc., a Florida corporation (“SSI”), doing

business as Spare Air.

Company owns and operates a portfolio of companies with a concentration in the industrial, and recreational diving industry.

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.

Company has four subsidiaries focused on various sub-sectors of our industry:

Third Lung | Surface Supplied Air (“SSA”)

| Ultra-Portable Tankless Dive Systems

Americas | High Pressure Gas Systems

● Submersible

Systems, Inc.

| Redundant Air Tank Systems

wholly owned subsidiaries do business under their respective trade names on both a wholesale and retail basis from our headquarters and

manufacturing facility in Pompano Beach, Florida, and a manufacturing facility in Huntington Beach, California.

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 and acts as 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 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.

Our wholly owned subsidiaries and related product lines are as follows:

segment represents our surface supplied air (SSA) product line.

Trebor began its business making surface supplied

air diving systems in the late 1960s.

Our Brownie’s Third Lung systems have long been a dominant figure in gasoline powered,

high-performance, and now the battery powered surface supplied air diving systems.

Taking full advantage of the proprietary compressor

system, a complete series of traditional “fixed speed”

electric compressors were developed for the built-in-boat market

After years of inventing, testing and development, in 2010 we introduced our variable-speed battery powered hookah system

which provides divers with gasoline-free all day shallow diving experiences.

These systems provide performance and runtimes as

great as 300% better than the best devices previously on the market by utilizing a variable speed technology that controls battery

consumption based on diver demand.

Legacy SSA segment has experienced growth in units sold for fiscal 2020 as compared to fiscal 2019, as we work to expand our dealer

network and the breadth of product that each of the dealers provide.

By all appearances, in our business segment, the COVID-19

pandemic has forced the consumer to re-evaluate recreation as a family and gravitate toward activities that can be pursued together

fiscal 2020 we began focusing on breaking the seasonality curve currently experienced by this segment and began aggressive marketing

campaigns in geographic regions that experience diving season when the US market is slowing down due to weather.

Supplied Air Products

Brownie’s Third Lung systems have been a dominant figure in gasoline powered, high-performance, and more recently in the battery

powered SSA diving systems.

Taking full advantage of the proprietary compressor system, a complete series of traditional “fixed

speed” electric compressors were developed for the built-in-boat market in 2005.

In 2010, we introduced our variable-speed battery

powered hookah system which provides divers with gasoline-free all day shallow diving experiences.

These systems provide performance

and runtimes for up to 3 hours by utilizing a variable speed technology that controls battery consumption based on diver demand.

2021 we continued to expand our dealer network and our marketing efforts with both the consumer and our network of dealers.

continues to pursue dealers outside of the United States in order to diversify the seasonality as well as the geography risks.

Additionally,

we began to pursue more aggressively the boat builder market to offer our Legacy SSA systems as an option on newly built boats,

expanding our market beyond the traditional consumer markets for our products.

Legacy SSA products include:

we continue to pursue more aggressively the boat builder market to offer our SSA systems as an option on newly built boats, expanding

our market beyond the traditional consumer markets for our products.

SSA products include:

Tankless Dive Systems:

The Company produces a line of tankless dive products, commonly called hookah or recreational surface

supplied air systems.

These systems allow one to four divers to enjoy the marine environment up to a depth of up to 45 feet without

the bulk and weight of conventional SCUBA gear.

The removal of barriers to entry into the sport of diving and the reduction of

complicated and bulky SCUBA gear invites a broader range of the general public to participate more actively and enjoyably at their

own pace and schedule.

The design of our product also reduces the effort required for both its transport and continued use while

exploring, cruising or traveling.

The Company produces a line of tankless dive products, commonly called hookah or recreational SSA systems.

These systems allow one to four divers to enjoy the marine environment up to a depth of 45 feet without the bulk and weight of conventional

We believe that the removal of barriers to entry into the sport of diving and the reduction of complicated and bulky SCUBA

gear invites a broader range of the general public to participate more actively and enjoyably at their own pace and schedule.

is designed to reduces the effort required for its transport and use while exploring, cruising or traveling.

line of land-based systems is available for light-duty commercial applications that demand portability and performance.

to the gasoline-powered units and the variable speed battery powered units, a series of AC electric powered systems is also available

for light to commercial duty.

units are used primarily by businesses that work in aquatic maintenance and marine environments.

In addition to

the gasoline-powered units and the variable speed battery powered units, a series of AC electric powered systems is also available for

light to commercial use.

by businesses that work in aquatic maintenance and marine environments.

BIAS (Boat Integrated Air Systems):

The Company developed several tankless products and complimentary accessories

that it believes makes boat diving even easier.

The BIAS battery powered tankless kit allows boat builders, dealers and end users

to seamlessly install a pre-packaged kit directly into the boat.

The E-Reel advances this idea by adding a level-winding battery

powered hose reel system to provide compact storage of up to 150 feet of hose.

Boaters can perform their own in-water maintenance

and inspections, or just dive for enjoyment.

In addition to supplying air to divers, BIAS is useful for supporting air horns,

inflating boat fenders/water toys, activating pneumatically operated doors, and more.

The company strategy is to align the easy

to install, complete kit packages with boat builders, dealer and end users through a vertically targeted sales and marketing program

initiative starting summer of 2020.

The Company developed several tankless products and complimentary accessories that

it believes makes boat diving easier.

The BIAS battery powered tankless kit allows boat builders, dealers and end users to seamlessly

install a pre-packaged kit directly into the boat and our E-Reel, a level-winding battery powered hose reel system, provides compact

storage of up to 150 feet of hose.

Boaters can perform their own in-water maintenance and inspections, or just dive for enjoyment.

addition to supplying air to divers, BIAS may be used for supporting air horns, inflating boat fenders/water toys and activating pneumatically

operated doors.

Portable Tankless Dive Systems

the continued expansion of our business, in December 2017, we formed a wholly-owned subsidiary BLU3, to develop and market a next

generation electric surface supplied air diving systems electric shallow dive system that is completely portable to the user.

The BLU3 line currently consists of two models targeting specific performance levels and price points –

NEMO and NOMAD.

The first generation, NEMO, began shipping in the fourth quarter of 2019, and through December 31, 2020 we have shipped

in excess of 1,200 units.

NOMAD is nearing the end of the design phase and it is expected to be in full production during the Spring,

This product will expand the user’s dive capability to over 30 feet and continue to drive the vertical integration

of the diving experience.

NEMO has attracted a wide audience of users and is sold through a dealer network that has expanded to more than 20 countries.

The products have gotten significant exposure via its marketing partners, who share their user experiences on YouTube, Instagram,

Facebook and Tik Tok.

These users have expanded the market for BLU3 outside of the traditional dive industry to the metal detector

and treasure hunting segments.

BLU3 takes the NEMO to market via its online store, its dealer network, and a growing following

BLU3 product lines are changing the way that people get into the water and explore the next atmosphere.

our wholly-owned subsidiary BLU3, we develop and market a next generation electric, surface supplied air shallow dive system that is

completely portable to the user.

The BLU3 line currently consists of two models, NEMO and NOMAD, targeting specific performance levels

and price points.

dive systems are currently sold in 9 countries through Amazon, and also through 54 dealers worldwide.

NEMO, designed to be the world’s

smallest dive system is capable of taking a diver to 10 feet for 60 to 90 minutes on one charge of its lithium-ion battery.

NEMO is portable

and its batteries are FAA compliant for airline travel.

dive system (“NOMAD”) began shipping in the third quarter, 2021 and is currently sold to consumers via our website,

Amazon and through our network of dealers worldwide.

The NOMAD is highly portable and expands dive capability to up to 30 feet.

has been marketed through BLU3’s internet presence and marketing campaigns as well as at industry and other trade shows across

believe the BLU3 product lines are changing the way that people get into the water and explore the next atmosphere.

The units are ultra-portable

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Pressure Gas Systems

this segment, we design, manufacture, sell and install SCUBA tank fill systems for on-board yacht use under the brand “Yacht-Pro™”.

Our systems provide complete diving solutions for yachts, including Nitrox systems which allow yacht owners to fill tanks with

oxygen enriched air on board.

The Yacht-Pro™

compressor systems offer a completely marine-prepared, VFD (variable frequency

drive)-driven, automated alternative to other compressors on the market.

We also design complete dive lockers, mixed gas production

and distribution systems, and the unique Nitrox Maker™.

Nitrox is oxygen-enriched air, which reduces the effects of nitrogen

it is the industry standard for dive professionals.

The Nitrox Maker™

continuously generates the oxygen rich

breathing gas directly from low-pressure air;

no stored oxygen or other gases are required onboard.

our wholly-owned subsidiary LW America’s, we design, manufacture, sell and install SCUBA tank fill systems for on-board yacht use

under the brand “Yacht-Pro™”.

Our systems provide complete diving solutions for yachts, including nitrox systems which

allow yacht owners to fill tanks with oxygen enriched air on board.

The Yacht-Pro™ compressor systems offer a completely marine-prepared,

variable frequency drive(“VFD”) driven, automated alternative to other compressors on the market.

We also design complete

dive lockers, mixed gas production and distribution systems, and the Nitrox Maker™.

Nitrox is oxygen-enriched air, which reduces

the effects of nitrogen on divers and is the industry standard for dive professionals.

The Nitrox Maker™ continuously generates

oxygen rich breathing gas directly from low-pressure air with no stored oxygen or other gases required onboard.

Our light duty compressor,

the new Yacht Pro Essential is specifically designed as a turn-key kit for the boat builder optimized to integrate to onboard

the new Yacht Pro Essential is specifically designed as a turn-key kit for the boat builders and is optimized to integrate to onboard

power systems and withstand the marine environment with all components and hardware impervious to spray from the elements.

Yacht Pro™

series contains models for both medium-duty applications, such as recreational divers and small groups, and heavy-duty

use as found on research vessels, commercial operations and live-aboard dive boats.

All Yacht Pro™

models come with the

Variable Speed Frequency Drive reducing the initial start-up power demand typically associated with high pressure compressor systems.

August 2017, we entered into an Exclusive Distribution Agreement with L&W.

Under the terms of the Exclusive Distribution Agreement,

we were appointed the exclusive distributor of L&W’s complete product line in North America and South America, including

the Caribbean.

Our wholly-owned subsidiary BHPCS, is party to the agreement.

Through BHPCS we are conducting business direct to

end-users and establishing sales, distribution and service centers for high pressure air and industrial gas systems in the dive,

fire, CNG, military, scientific, recreational and aerospace industries under the brand name “L&W Americas/LWA”.

We have experienced encouraging penetration in the diving and yachting markets.

Our objective is to maintain that momentum and

expand into other markets including industrial gases, fuel gases and specialty gas applications.

Our goal is to build a network

of jobbers, dealers, installers and high-pressure compressor distributors throughout the territory by leveraging our know-how,

brand awareness, complimentary products and creating sustainable distribution and core product OEM integration relationships.

is one of the leading product development companies in the global market of high-pressure gas applications.

We are exclusively

developing a sales, distribution and service capability to assist L&W with completing a worldwide network of L&W’s

agencies and service centers to further leverage the innovation and value inherent to L&W products.

the last three decades the range of L&W products has advanced as new markets developed by leveraging streamlined and vertically

integrated capabilities.

In addition to breathing air compressors and related peripheral equipment, L&W also offers compressors,

storage and purification systems to meet the high-pressure requirements for natural gas filling stations.

High-pressure inert

gases such as argon, helium or nitrogen for industrial applications including welding and laser cutting, and for general laboratory

use are also among the L&W product and custom engineering capabilities.

2021 we look to expand this segment of our business’s

customer base beyond that of the diving community.

We believe the product lines from Lenhardt & Wagner GmbH, will allow

LW Americas to put high quality, competitive products into the first responder and industrial market that utilize compressed air

for many applications.

Our goal will be to build a network of jobbers, dealers, installers and high-pressure compressor distributors

throughout the territory by leveraging our know-how, brand awareness, complimentary products and creating sustainable distribution

and core product OEM integration relationships.

and Boating Markets

diving and boating markets are key to the expansion of the Company’s brands.

Each of these industries has experienced growth

over the past several decades, but we believe each industry also has significant weaknesses.

The dive industry has focused on

the initial certification of SCUBA divers for revenue.

According to industry data, many newly certified SCUBA divers fail to continue

in the sport.

Brownie’s and many industry professionals believe this is the result of divers progressing from zero or limited

underwater environment experience to full SCUBA too rapidly.

We believe that introducing novices to the 5 to 10 foot dive environment

through our Ultra-Portable Tankless Dive systems first with limited equipment encumbrances is key to building a sustainable participant

base of comfortable.

Brownie’s Third Lung and BLU3 are creating product, training and easy access “resort”

dive solutions to address the emerging 10 foot to 30 foot diving market.

continue to work with boaters to make diving easy and enhance their on-water experience by exploiting the many ways our subsidiaries’

innovation can add to their investment in boating.

Company either owns or has licensed from entities in which Robert M.

Carmichael, our Chief Executive Officer, has an ownership

interest, the use of the following registered and unregistered trade names, trademarks and service marks for the terms of their

indefinite lives:

Brownie’s Third Lung™, browniedive.com, Brownie’s, Brownie’s Third Lung oval symbol,

browniedive, YachtPro, NitroxMaker™, BLU3, diveBLU3.com, BLU3 Nemo, BLU3-Vent, HELO, RES, fast float rescue harness, tankfill.com,

browniestankfill, browniestankfill.com, browniespublicsafety.com, browniespublicsafety, Peleton Hose System, Twin-Trim, Kayak

Diving Hose Kit, Bell Bottom Flag Bag, Brownie’s Dogsnare, SHERPA, BC Keel, Garment integrated personal flotation device

operates under the published name LW Americas and LWA.

Company owns multiple patents issued, pending, and in process related to the following:

safety and survival;

integrated flotation devices or life jacket;

for improved life jacket performance;

signaling and ballast for personal flotation device;

dive marker and collection bag;

dimensional dive flag;

dive raft and float system for divers;

weight Cummerbelt;

harness or like garment with adjustable one size component for use by a wide range of individuals;

control releasable ballast.

April 2018 the Company entered into a Patent License Agreement (the “STS Agreement”) with Setaysha Technical Solutions,

LLC (“STS”) pursuant to which the Company licensed certain intellectual property, including patent rights, non-patent

rights and know how from STS for use in our Ultra-Portable Tankless Dive system products.

Under the STS Agreement, the Company

paid an initial license fee in April 2018 through the issuance of 759,422 shares of common stock with a fair value of $30,000

which is being amortized on a straight-line basis over its five year term.

The STS Agreement further provides for royalties to

be paid based on annual net revenues achieved.

In December 2019, the Company entered into Addendum No.

1 to the Patent License

Agreement (“Addendum No.

1”) which amended the payments due upon the first commercial sale of Nemo.

In accordance

with Addendum No.

1, $8,250 was paid in cash and $8,250 which was accrued as of December 31, 2019 and paid in 2020.

The Company issued 828,221 shares of common stock with a fair value of $18,635 in satisfaction of $13,500 for the first commercial

The Company accrued $13,828 in December 2019 as royalty payments for the fourth quarter commercial sales of Nemo .

In June 2020, the Company entered into Amendment No.

2 to the Patent License Agreement (“Addendum No.

2”) which set

certain limits and expectations of the assistance from STS related to designing and commercializing certain diving products, and

revised the royalty payments due to STS as consideration for uncompensated services.

The Company is obligated to pay STS a minimum

yearly royalty of $60,000, or $15,000 per fiscal quarter, beginning in December 2019 and increasing by 2.15% per year.

royalty was temporarily increased to $60,000 for fiscal years 2022, 2023 and 2024, with a fourth quarter true up against earned

Royalty recorded in relation to this agreement totaled $53,929 and $48,963 for the years ended December 31, 2020 and

Pro™ series contains models for both medium-duty applications, such as recreational divers and small groups, and heavy-duty use

as found on research vessels, commercial operations and live-aboard dive boats.

All Yacht Pro™ models come with the variable speed

frequency drive reducing the initial start-up power demand typically associated with high pressure compressor systems.

August 2017, we entered into a five-year exclusive distribution agreement with L&W, which agreement renews for successive one-year

terms unless terminated as provided for in the agreement.

Under the terms of the Exclusive Distribution Agreement, we were appointed

the exclusive distributor of L&W’s complete product line in North America and South America, including the Caribbean.

conducting this business direct to end-users and establishing sales, distribution and service centers for high pressure air and industrial

gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries under the brand name “L&W Americas/LWA”.

are exclusively developing a sales, distribution and service capability to assist L&W with completing a worldwide network of L&W’s

agencies and service centers.

addition to breathing air compressors and related peripheral equipment, L&W also offers compressors, storage and purification systems

to meet the high-pressure requirements for natural gas filling stations, and high-pressure inert gases such as argon, helium and nitrogen

for industrial applications including welding and laser cutting, and for general laboratory use.

believe the product lines from L&W, will allow LW Americas to offer high quality, competitive products into the first responder and

industrial market that utilize compressed air.

Our goal will be to build a network of jobbers, dealers, installers and high-pressure

compressor distributors by leveraging our know-how, brand awareness, complimentary products and creating sustainable distribution and

core product original equipment manufacturer (“OEM”) integration relationships.

Air Tank Systems

September 2021, the Company acquired SSI to further expand its product offerings and manufacturing capabilities.

SSI has been manufacturing

redundant air systems for recreational divers, private companies and militaries throughout the world for more than 40 years.

Their state-of-the-art

manufacturing facility in Huntington Beach, California is equipped to add to the machining and product development capabilities of the

SSI acquisition gives the Company access to a world-wide base of in excess of 400 dealers and distributors, GSA contracting capability,

as well as the direct source for the redundant air needs for our Brownie’s Third Lung and BLU3 diving equipment and expands warehousing

capabilities, reducing freight costs for both sets of customers.

continues to innovate their technologies to meet changing military and commercial needs and is in development of the next generation

of their Helicopter Emergency Egress Device (“HEED”) product line, specifically designed for aircraft and military vehicle

Additionally, SSI has found use for their products in the medical field and continues to develop customer relationships in that

area to grow revenue and diversify its product and customer portfolio.

and Snorkeling Industry

Sports, Fitness Industry Association (“SFIA”) estimated there were 2.6 million participants in the U.S.

scuba diving market

According to a report published by the Dive Equipment Manufacturing Association (“DEMA”) in first quarter 2021,

there were approximately 87,000 new participants in U.S.

diving market in 2020 as compared to approximately 151,000 in 2019.

DEMA attributes

the drop in new open water certifications in 2020 primarily to the pandemic.

contrast, the SFIA study indicated that participation in snorkeling increased by nearly 1% in 2020 as compared to 2019 with estimated

participation of 7.7 million in the U.S.

Company intends to enter the tourist market via a guided tour program that is currently intended to be launched in the second quarter

The Company sees the guided tour model as an important building block in introducing its battery powered diving products to

the consumer market.

Additionally, this model will not only give consumers the opportunity to “try before you buy”, but also

provide experiential training for the consumer to increase enjoyment and safety of our diving products.

global luxury yacht market is estimated to reach $6.5 billion and is poised to grow at a compound annual growth rate (“CAGR”)

of 11% from 2020 to 2024, according to Technavio, a market research firm, in their industry report dated November 2020.

The Company’s

BIAS systems have been designed with this industry in mind.

The Company markets directly to the yachting industry, by leveraging its

relationships with large yacht servicing companies, yacht builders and yacht brokerages.

recreational sailing and boating market and yachting industries also continue to grow.

Allied Market Research estimates that the recreational

boating market is growing at a CAGR of 5.1% through 2027 reaching total revenues of $35.4 billion.

Pressure Compressor Line

to Allied Market Research report published in February 2018, the North American high pressure compressor market is $880 million growing

at an estimated CAGR of 3%.

Company expects to continue to distribute L&W compressors through its YachtPro, and BIAS systems, while continuing to focus on the

expansion of its distribution into non-marine related distribution channels that the Company believe should positively impact its market

Company either owns or has licensed from entities in which Robert Carmichael, our Chief Executive Officer, has an ownership interest,

the following registered and unregistered trade names, trademarks and service marks:

Brownie’s Third Lung™, browniedive.com,

Brownie’s, Brownie’s Third Lung oval symbol, browniedive, YachtPro, NitroxMaker™, BLU3, diveBLU3.com, BLU3 Nemo, BLU3-Vent,

Submersible Systems, Spare Air, HEED 3, Snorkelator, easy dive, spareair.com, HELO, RES, fast float rescue harness, tankfill.com, browniestankfill,

browniestankfill.com, browniespublicsafety.com, browniespublicsafety, Peleton Hose System, Twin-Trim, and Kayak Diving Hose Kit.

Company owns the following patents:

Aortic Tourniquet

Industries, Inc.

Aortic Tourniquet

Industries, Inc.

Aortic Tourniquet

Industries, Inc.

Self-Contained Hooka system with unobtrusive aquatic data recording

for adjusting pressure limits based on depth of diver(s)

Marine Group, Inc.

Self-Contained Hooka system with unobtrusive aquatic data recording

for adjusting pressure limits based on depth of diver(s)

Marine Group, Inc.

April 6, 2018, the Company entered into a patent license agreement (the “STS Agreement”) with Setaysha Technical Solutions,

LLC (“STS”) pursuant to which the Company licensed certain intellectual property, including patent rights, non-patent rights

and know how from STS for use in our ultra-portable tankless dive system products.

Under the STS Agreement, the Company paid an initial

license fee in April 2018 through the issuance of 759,422 shares of common stock with a fair value of $30,000 which is being amortized

on a straight-line basis over its five-year term.

The STS Agreement further provides for royalties to be paid based on annual net revenues

On December 31, 2019, the Company entered into Addendum No.

1 to the Patent License Agreement (“Addendum No.

which amended the payments due upon the first commercial sale of Nemo.

Upon entering into Addendum No.

1, $8,250 was paid to STS in cash

and $8,250 which was accrued and paid on January 10, 2020.

On February 6, 2020, the Company issued 828,221 shares of its common stock

with a fair value of $18,635 in satisfaction of $13,500 for the first commercial sale.

On June 30, 2020, the Company entered into Amendment

2 to the STS Agreement which set forth STS’s assistance related to designing and commercializing certain diving products, and

provides for a minimum yearly royalty of $60,000, or $15,000 per fiscal quarter, beginning in December 2019 and increasing by 2.15% per

With the introduction of the NOMAD in the last quarter of 2021, the Company is obligated to pay an additional annual minimum

royalty of $60,000 per year for the years 2022, 2023 and 2024, also increasing the quarterly minimum royalty by $15,000 per quarter.

Literature, Public Relations, and Advertising

1 unchanged sentence

newsletters, editorials, advertorials, and press releases.

We also, from time-to-time, target specific markets by selectively

advertising in journals and magazines that we believe reach our potential customers.

In addition, we strive to issue press releases,

newsletters, and social media postings periodically to keep the public informed of our latest products and related endeavors.

In May 2020, we engaged a professional marketing agency to modernize the Brownie’s Third Lung customer acquisition capabilities

with Sea Lion and BIAS products as key objectives.

Through the fiscal year end, the marketing firm continues to

develop and implement strategies to leverage our existing browniedive.com web site and related support materials for

the current summer season while a completely new digital strategy is being developed in time for the fall season.

Leveraging the

range of new battery powered tankless diving technologies and boat builder OEM kits to move the product reach beyond the current

regional scope to a global brand is central to the goal.

2020, the Company was represented at The Fort Lauderdale International Boat Show.

Due to the COVID-19 pandemic, most tradeshows

in 2020 were cancelled.

For 2021, the company’s product will be directly or indirectly represented at the Palm Beach Boat

Show, The Annapolis Motor and Sailing Shows, The Fort Lauderdale Boat show, and Diving Equipment and Manufacturing show.

parent Company’s main website is www.browniesmarinegroup.com.

Each of our subsidiaries and certain of our products have

a unique website:

www.BrownieDive.com , www.diveBLU3.com , www.LWAmericas.com , www.Tankfill.com , Additionally,

many of our products are marketed on some of our customers’

In addition to these websites, numerous other websites

have quick links to the Company’s website.

Our products are available both domestically and internationally.

Internet sales

and inquiries are also supported by the Company.

products are distributed to our customers primarily by common carrier.

Research and Development (R&D)

continuously work to provide our customers with both new and improved products.

We offer research and development services to

not only the related entities we license our patents and trademarks from, but also to other customers as well.

for customers and the related entities are invoiced in the normal course of business.

In addition, we are working on internal

research and development projects as well as collaborating with others toward the goal of developing some of our own patentable

Research and development costs for 2020 and 2019, were $115,156 and $67,161, respectively.

We also, from time-to-time, target specific markets by selectively advertising

in journals and magazines that we believe reach our potential customers.

In addition, we strive to issue press releases, newsletters,

and social media postings periodically to keep the public informed of our latest products and related endeavors.

2021, the Company was represented directly or indirectly at The Palm Beach Boat Show, The Annapolis Motor and Sailing Shows, The Fort

Lauderdale Boat show, Diving Equipment and Manufacturing show.

In 2022, the Company currently intends to expand its marketing reach via

tradeshows by attending all shows attended in 2021, The Seattle Boat Show, The Dubai Boat Show, and the HAI Heli-Expo, along with various

other trade and industry shows.

sell our products online through our and our subsidiaries websites and many of our products are marketed on some of our customers’

In addition to these websites, numerous other websites have quick links to the Company’s website.

Our products are available

both domestically and internationally.

Internet sales and inquiries are also supported by the Company.

Research and Development

and development costs for the year ended December 31,2021 and December 31, 2020, were $75,439 and $115,156, respectively, none of which

cost is borne directly by customers.

SCUBA industry is self-regulating;

therefore, the Company is not subject to government industry specific regulation.

Nevertheless,

the Company strives to be a leader in promoting safe diving practices within the industry and believes it is at the forefront

of self-regulation through responsible diving practices.

The Company is subject to all regulations applicable to “for profit”

companies as well as all trade and general commerce governmental regulation.

All required federal and state permits, licenses,

and bonds to operate its facility have been obtained.

There can be no assurance that the Company’s operation and profitability

will not be subject to more restrictive regulation or increased taxation by federal, state, or local agencies in the future.

have historically been predominantly a wholesale distributor to retail dive stores, marine stores, boat dealers and builders.

This includes more than 100 active independent Brownie’s and L&W dealers.

In response to modern trends influenced by

the “Amazon affect”

over the last few years and now more recently with COVID-19, a greater mix of consumer direct

engagement is occurring.

We anticipate the continuation of consumer direct sales growth stimulated in part by the new marketing

efforts and broader consumer appeal of the battery-powered tankless dive systems.

We retail our products to include, but not limited

to, boat owners, recreational divers and commercial divers.

The Company sells to three entities owned by the brother of Robert

Carmichael, the Company’s Chief Executive officer, and three companies owned by him.

Combined sales to these six entities

for 2020 and 2019, represented 18% and 22%, respectively, of total net revenues.

majority of L&W high pressure compressors and NitroxMaker™

systems have been sold to commercial dive stores, dive operators

(resorts and liveaboard dive boats) and to law enforcement agencies.

of YachtPro™

compressor systems have been split between retail sales directly to consumers and wholesale sales to OEM boat

builders/resellers/brokers.

However, SSI, our

tank manufacturing company is subject to Department of Transportation (“DOT”) regulation and testing of each of their tanks.

The Company strives to be a leader in promoting safe diving practices within the industry and believes it is at the forefront of self-regulation

through responsible diving practices.

The Company is subject to all regulations applicable to “for profit” companies as well

as all trade and general commerce governmental regulation.

All required federal and state permits, licenses, and bonds to operate its

facility have been obtained.

Distribution/Customers

Company has historically been predominantly a wholesale distributor to retail dive stores, marine stores, boat dealers builders, and

the US and international militaries.

Currently, the Company generates a significant amount of direct to consumer sales via its websites

and its relationship with Amazon via BLU3, BTL and SSI.

Our retail sales customers include boat owners, recreational divers, commercial

divers, and pilots.

The Company sells products to three entities owned by the brother of Robert Carmichael, the Company’s Chief

Executive Officer, and three companies owned by Mr.

Combined sales to these six entities for 2021 and 2020, represented 17.9%

and 18.4%, respectively, of total net revenues.

majority of L&W high pressure compressors and NitroxMaker™ systems have been sold to commercial dive stores, dive operators

(resorts and liveaboard dive boats), yacht builders, yacht owners and high pressure compressor distribution partners.

of YachtPro™ compressor systems have been split between retail sales directly to consumers and wholesale sales to OEM boat builders/resellers/brokers.

Suppliers/Raw

raw materials for our business include machined parts such as rods;

high-pressure valves and fittings;

and various plastic parts including pans, covers, intake staffs, and quick release

connections which are typically purchased on a per order basis.

high-pressure

valves and fittings;

and various plastic parts including pans, covers, intake staffs, and quick release connections which

are typically purchased on a per order basis.

Most materials are readily available from multiple vendors.

materials require greater lead times than other materials.

Accordingly, we strive to avoid out of stock situations through careful

monitoring of these inventory lead times, and through avoiding single source vendors whenever possible.

consider the most significant competitive factors in our business to be innovation, lifestyle, fair prices, shopping convenience,

the variety of available products, knowledgeable and prompt customer service, rapid and accurate fulfillment of orders.

recognize one significant competitor in gasoline powered hookah sales and a variety of competitors in high-pressure tankfill systems

Products from the gasoline powered hookah competitor and those from one of the tankfill competitors appear to be very similar

to ours at first glance, but seemingly lack forward moving innovation.

The competitors in the high pressure tankfill market are

typically focused on traditional dive stores and fire department air service with several being large multi-national companies.

We compete with the large multi-national companies by constantly adapting to the yacht market or Nitrox integration.

there is limited competition for our BLU3, Sea Lion and BIAS systems products.

Some materials require greater

lead times than other materials.

Accordingly, we strive to avoid out of stock situations through careful monitoring of these inventory

lead times, and through avoiding single source vendors whenever possible.

Principle suppliers include Lenhardt & Wagner GmbH, Xometry,

Inc., Burgess Manufacturing Corp, Bix International, Inc., Carrol Stream Motor Company, Zhejiang Xiangyang Gear Electormechan, Co, Xiamen

Feipeng Insdustry Co.

and Catalina Cylinders, Inc.

consider the most significant competitive factors in our business to be innovation, lifestyle, fair prices, shopping convenience, the

variety of available products, knowledgeable and prompt customer service, rapid and accurate fulfillment of orders.

We currently recognize

one significant competitor Airline by JSink, Inc.in gasoline powered hookah sales and a variety of competitors, including Aqua Lung America,

Colti America and Bauer Compressors, Inc.

in our redundant air tank systems and high-pressure compressor systems sales.

Currently, we

believe there is limited competition for our BLU3, Sea Lion and BIAS systems products.

we are operating in a moderately competitive environment.

The price structure for all the products we distribute compares favorably

with the majority of our competitors based on quality and available features.

Our key advantage is in our ability to create new

products that are separating us from others in the market and in some cases creating new markets.

of December 31, 2020, our full-time count for our and our subsidiaries’

employees was 20.

Additionally, we employ

3 full time contract employees.

To date, we have not experienced any work stoppages as a result of labor disputes, and we consider

our relationship with our employees to be good.

None of our employees are subject to collective bargaining agreements or represented

Our key human capital objectives in managing our business include attracting, developing and retaining top talent.

want to attract a pool of diverse and innovative candidates and support their career growth once they become employees.

we seek to hire based on talent rather than solely on educational pedigree.

product lines have historically been seasonal in nature in the U.S.

The peak season for Legacy Products is the second and third

quarters of the year.

The peak season for High Pressure products is the fourth and first quarters of the year.

We are able to

shift cross-trained factory and warehouse personnel between the two product categories as needed to flatten the seasonal impact.

The new BLU3 product line may emerge as less seasonally influenced enterprise due to the global appeal.

The Company is able to

minimize the down time normally associated with seasonal business cycles.

The Company continues to address the seasonality of

the business by expanding its reach beyond the traditional markets in the U.S.

and reaching to other areas of the world

that may somewhat offset the seasonality.

on the history of our company can be found in Note 1 to the notes to our consolidated financial statements appearing later in

file annual and quarterly reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information with the Securities

and Exchange Commission (“SEC”

or the “Commission”).

The Commission also maintains an Internet site at

http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that

file electronically with the Commission.

information about the Company can be found on our website www.browniesmarinegroup.com .

Reference in this document to that

website address does not constitute incorporation by reference of the information contained on the website.

The price structure for all the products we distribute compares favorably with

the majority of our competitors based on quality and available features.

We believe that our key competitive advantage is our ability

to create new products and in some cases, new markets.

currently have four full-time employees.

Our subsidiaries have 31 full-time and 1 part-time employee, in the aggregate.

product lines have historically been seasonal in nature in the United States.

The peak season for Legacy Products and Redundant Air Tank

Systems is the second and third quarters of the year.

The peak season for High Pressure products is typically the fourth and first quarters

The BLU3 product line is emerging as a less seasonally influenced enterprise due to the global appeal.

The Company continues

to address the seasonality of the business by expanding its reach beyond the traditional markets in the U.S.

and reaching to other areas

of the world that may somewhat offset the seasonality.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business