What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-30 compared with 2022-04-22 · 164 added, 133 removed, 146 unchanged (67% of the section changed)

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:

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

“us,” and similar terms refers to Brownie’s Marine Group, Inc., a Florida corporation, and its 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 Americas (“LWA”), BLU3,

Inc., a Florida corporation (“BLU3”), Submersible Systems, Inc., a Florida corporation (“SSI”), doing business

as Spare Air and Live Blue, Inc.

(“LBI”), a Florida corporation.

Company, through its wholly owned subsidiaries, designs, tests, manufactures and distributes tankless dive systems, rescue air systems

and yacht-based self-contained underwater breathing apparatus (“SCUBA”) air compressor and nitrox generation fill systems

and acts as the exclusive distributor 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.

September 3, 2021, the Company, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”)

with Submersible Acquisition, Inc., a Florida corporation incorporated in 2017, and wholly owned subsidiary of the Company (“Acquisition

Sub”), Submersible Systems, Inc., a Florida corporation (“Submersible” or “SSI”), and Summit Holdings V,

LLC, a Florida limited liability company (“Summit”) and Tierra Vista Group, LLC, a Florida limited liability company (“Tierra

Vista” and, together with Summit, the “Sellers”), the owners of all of the capital stock of Submersible, pursuant to

which Acquisition Sub merged with and into Submersible (the “Merger”), and Submersible, the surviving corporation, became

a wholly owned subsidiary of the Company.

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.

February 13, 2022 the Company formed LBI, which is being developed as a full retail, guided tour and training model utilizing the technology

developed by BLU3 to provide new users and interested divers a guided tour experience, training, and the ability to purchase all of their

diving and watersports needs.

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.

addition, LBI assumed the lease for the premises for Gold Coast Scuba.

Company has five subsidiaries focused on various sub-sectors of our industry as described below:

Third Lung | Surface Supplied Air (“SSA”)

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Americas | High Pressure Gas Systems

● Submersible

Systems, Inc.

| Redundant Air Tank Systems

| Guided Tours

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:

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.

Third Lung systems have been the market leader in gasoline powered, high-performance and more recently in the battery powered SSA diving

Taking full advantage of our proprietary compressor system, a series of traditional “fixed speed” electric compressors

were developed for the built-in-boat market in 2005.

In 2010, we introduced our variable-speed battery powered 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.

2022, 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 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.

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

Additionally, 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:

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operated doors.

Portable Tankless Dive Systems

Ultra-Portable

Tankless Dive Systems

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

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and price points.

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

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

NEMO, designed to be the world’s

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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.

dive system (“NOMAD”) began shipping in the third quarter of 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

NOMAD has been

marketed through BLU3’s internet presence and marketing campaigns as well as at industry and other trade shows across the country.

BLU3 continues to innovate in

the SSA sector and currently expects to introduce a new product to its line-up in 2023.

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

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Pressure Gas Systems

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.

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

the brand “Yacht-Pro™”.

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

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

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

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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”.

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

five-year terms unless terminated as provided for in the agreement.

Under the terms of the Exclusive Distribution Agreement, we were

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

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

industrial gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries under the brand name “L&W

Americas/LWA”.

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

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

February 2022, the Company incorporated LBI to begin its expansion into the retail, training and guided tour market.

The Company’s

vision for LBI is to become a fully integrated retail experience where the Company’s unique products can be showcased, training

can be offered, and a tourist model created.

LBI will provide experienced based activities for the consumer in the various watersport

activities it sells.

In addition, LBI aims to provide training in those activities with the goal to have the consumer purchase the equipment,

particularly the unique technologies provided by BLU3, from its retail stores.

LBI looks to provide the full Live Blue experience for

those consumers ready to enjoy all things watersports.

May 2022, LBI acquired the assets of Gold Coast Scuba, a dive retail and training facility based in Lauderdale-By-The-Sea, Florida.

This retail location is the base in which the Live Blue brand will be developed.

and Snorkeling Industry

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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.

According to a report published by SFIA in early 2023.

The study further stated that the participation rate by casual divers

increased 22% in 2022.

contrast, the SFIA study indicated that participation in snorkeling in 2022 was 7.7 million in the U.S.

Company has entered the tourist market via a guided tour program within LBI that is currently intended to act as an incubator for a

scalable franchise model.

The Company believes that the guided tour model is an important building block in introducing its battery

powered diving products to the consumer market.

Additionally, this model will not only give consumers the opportunity to “try

before you buy”, but also provide experiential training for the consumer to increase enjoyment and safety of our diving

global luxury yacht market is estimated to be $8.91 billion in 2022 and expected to reach $9.38 billion in 2023 according to Allied Market

Research and is poised to grow at a compound annual growth rate (“CAGR”) of 5.4% from 2022 to 2030 to reach $13.6 billion,

according to Research and Markets.com, a market research firm, in their industry report dated April, 2022.

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.

Grandview Research estimates that the recreational

boating market was valued at $44.5 billion in 2022 and is expected to grow at a CAGR of 5.4% through 2030.

Pressure Compressor Line

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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.

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

Company either owns or has licensed from entities in which Robert Carmichael, our Chairman, has an ownership interest, the following

registered and unregistered trade names, trademarks and service marks:

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, Gold Coast Scuba, fast float rescue harness, tankfill.com,

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

Company owns the following patents:

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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.

On April 6, 2018, the Company entered into a patent license agreement (the

“STS Agreement”) with Setaysha Technical Solutions, LLC (“STS”) pursuant to which the Company licensed certain

intellectual property, including patent rights, non-patent rights and know-how from STS for use in our ultra-portable tankless dive system

Under the STS Agreement, the Company paid an initial license fee in April 2018 through the issuance of 759,422 shares of common

stock with a fair value of $30,000.

The STS Agreement further provides for royalties based on annual net revenues.

On December 31, 2019,

the Company entered into Addendum No.

1 to the STS Agreement (“Addendum No.

1”) which amended the payments due upon the first

commercial sale of Nemo.

Upon entering into Addendum No.

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

and $8,250 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.

1, $8,250 was paid to STS in cash and $8,250 was paid on January 10, 2020.

February 6, 2020, the Company issued 828,221 shares of common stock with a fair value of $18,635 in satisfaction of $13,500 for the first

commercial sale of the Nemo dive system.

On June 30, 2020, the Company entered into Addendum No.

2 to the STS Agreement concerning STS’s

assistance related to designing and commercializing certain diving products.

2 provides for a minimum yearly royalty of $60,000,

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

With the introduction of the NOMAD in the

last quarter of 2021, the Company is obligated to pay an additional annual minimum royalty of $60,000 per year for the years 2022, 2023

and 2024, which increased the quarterly minimum royalty by $15,000 per quarter.

On November 1, 2022 the Company issued to the designees

of STS 1,155,881 shares of common stock with a fair value of $30,000 in accordance with the STS Agreement.

Literature, Public Relations, and Advertising

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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.

In 2022, the Company expanded 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

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

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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.

and development costs for the year ended December 31, 2022 and December 31, 2021 and were $18,393 and $75,439, respectively, none of

which cost is borne directly by customers.

SCUBA industry is self-regulating;

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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.

The Company strives to promote safe diving practices within the industry and believes it is at the forefront of self-regulation through

responsible diving practices.

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

trade and general commerce governmental regulation.

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

have been obtained.

Distribution/Customers

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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.

Retail sales customers include boat owners, recreational divers, commercial divers

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

two companies owned by Mr.

Combined sales to these six entities for 2022 and 2021, represented 11.4% and 17.9%, 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.

(resorts and liveaboard dive boats), yacht builders, yacht owners, and high-pressure compressor distributors.

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

raw materials for our business include machined parts such as rods, pistons, bearings, hoses, regulators, compressors, engines, high-pressure

valves and fittings, sewn goods, and various plastic parts including pans, covers, intake staffs, and quick release connections which

are typically purchased on a per order basis.

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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.

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

Li He Technology Co, Ltd, Xiamen Feipeng Insdustry Co.

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.

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

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

We currently have one significant

competitor within the BTL business model, Airline by JSink, Inc.

There are a variety of competitors, including Aqua Lung America, Coltri

America and Bauer Compressors, Inc.

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

Currently, we

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

In 2022 competition

has surfaced in the BLU3 business segment from companies such as AirBuddy, and a few other very low-cost Chinese manufactured competitors.

we are operating in a moderately competitive environment.

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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.

currently have thirty-six full-time employees, and four part-time employees.

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.

The peak season for the diving related products, BTL, BLU3,

SSI and LBI is the second and third quarters of the year.

The peak season for high pressure products is typically the fourth and first

quarters of the year.

The Company continues to address the seasonality of the business by expanding its reach beyond the traditional

markets in the U.S.

to other areas of the world that may somewhat offset the seasonality.

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