What changed in this filing

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Item 9A. Controls and Procedures

2023-03-30 compared with 2022-04-22 · 1374 added, 1455 removed, 875 unchanged (76% of the section changed)

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reporting described below.

A material weakness is a deficiency, or combination of deficiencies, that results in more than a remote likelihood

A material weakness is a deficiency, or combination of deficiencies, which results in more than a remote likelihood

that a material misstatement of annual or interim financial statements will not be prevented or detected.

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internal controls and enhance our current staff.

of duties will be analyzed and adjusted Company-wide as part of the internal controls implementation and documentation of those controls

and procedures that is expected to commence in 2021.

of duties will be analyzed and adjusted Company-wide, where possible.

The Company is in the process of hiring additional personnel

in the accounting department as part of the internal controls implementation and documentation of those controls and procedures.

Company plans on evaluating various accounting systems to enhance our system controls.

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in Internal Control over Financial Reporting

have been no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter that has materially

affected, or is reasonably likely to materially affect, our internal control over financial reporting.

have been no changes in our internal control over financial reporting that occurred during our fourth quarter that has materially affected,

or is reasonably likely to materially affect, our internal control over financial reporting.

Regarding Foreign Jurisdictions that Prevent Inspections.

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Constable as served as our Chief Executive Officer and a director since November 2020.

Constable also currently

sits on the board of directors of Bon Natural Life, Ltd.

BON), and serves as the Chairman of the audit committee.

Prior to joining

our company, from August 2020 through the November 2020, Mr.

Constable provided business and financial consulting services.

through February 2020 Mr.

Constable served as Chief Financial Officer of John Keeler & Co., Inc., d/b/a Blue Star Foods, a privately

held international seafood company which in 2018 merged into Blue Star Foods Corp., a Miami, Florida-based sustainable seafood company

Constable served as Chief Financial Officer and a director of Blue Star Foods Corp.

February 2020.

Prior thereto,

from 1999 to 2003, Mr.

Constable was a consultant at Gateway Capital Corp., a business consulting firm, where he analyzed the financial

and reporting capabilities of prospective lending customers with revenues from $10 to $100 million.

Constable sat

on the board of directors of Bon Natural Life, Ltd.

BON), and served as the Chairman of the audit committee until March,

Prior to joining our company, from August 2020 through the November 2020, Mr.

Constable provided business and financial

consulting services.

From 2003 through February 2020 Mr.

Constable served as Chief Financial Officer of John Keeler & Co., Inc.,

d/b/a Blue Star Foods, a privately held international seafood company which in 2018 merged into Blue Star Foods Corp., a Miami,

Florida-based sustainable seafood company (NASDAQ:

Constable served as Chief Financial Officer and a director of Blue

Star Foods Corp until February 2020.

Prior thereto, from 1999 to 2003, Mr.

Constable was a consultant at Gateway Capital Corp., a

business consulting firm, where he analyzed the financial and reporting capabilities of prospective lending customers with revenues

from $10 to $100 million.

Additionally, Mr.

Constable was involved

with loan workouts of facilities that required either liquidation or restructuring to ensure collectability for the financial institutions.

Constable was involved with loan workouts of facilities that required either liquidation

or restructuring to ensure collectability for the financial institutions.

From 1990 to 1999, Mr.

Constable was a commercial banker at Mercantile Bankshares in Baltimore, Maryland, Finova Capital Corporation

and Capital Bank, both in south Florida.

Constable received his B.S.

in Finance with an Accounting Minor from the Merrick School

of Business at the University of Baltimore in 1989.

Constable was selected to serve as a director for his experience with public

companies and over 30 years background in finance and accounting.

Constable was a commercial banker

at Mercantile Bankshares in Baltimore, Maryland, Finova Capital Corporation and Capital Bank, both in south Florida.

received his B.S.

in Finance with an Accounting Minor from the Merrick School of Business at the University of Baltimore in 1989.

Constable was selected to serve as a director for his experience with public companies and over 30 years background in finance

and accounting.

Hyatt has served as a director since March 2019.

Hyatt is involved in the automotive industry and present

owner of several franchise car dealerships in Myrtle Beach, South Carolina, including Myrtle Beach Hyundai (since 1999) and Hyatt Buick

& GMC (since 2001).

In the past his ownerships also included Myrtle Beach Suzuki (from 2004 until 2012), Sun Coast Mazda and Mitsubishi

(from 2001 until 2009), Stone Mountain Chevrolet (from 2001 until 2009.

owner of several franchise car dealerships in Myrtle Beach, South Carolina, including Myrtle Beach Hyundai (since 1999).

his ownerships also included Hyatt Buick & GMC (from 2001 to 2022), Myrtle Beach Suzuki (from 2004 until 2012), Sun Coast Mazda and

Mitsubishi (from 2001 until 2009), Stone Mountain Chevrolet (from 2001 until 2009.

From 1994 to 1997, Mr.

Hyatt served as Wholesale Purchase Director

with Lamar Ferrel Chevrolet, and from 1991 to 1994 as General Manager of Bob Harris Ford.

Hyatt served as Wholesale Purchase

Director with Lamar Ferrel Chevrolet, and from 1991 to 1994 as General Manager of Bob Harris Ford.

From 1988 to 1990, Mr.

Hyatt was the Demonstration

Director of Auto Dialysis, and from 1986 to 1998, the General Manager/Operational Partner of Ken Hyatt Dodge, Chrysler and Plymouth.

Hyatt was the

Demonstration Director of Auto Dialysis, and from 1986 to 1998, the General Manager/Operational Partner of Ken Hyatt Dodge, Chrysler

and Plymouth.

Since 2013, Mr.

Hyatt has owned and operates the Gilligan Island Funland Golf amusement park.

Hyatt sits on the American Cross Heroes

committee and is the winner of the Jefferson Award (2017) for his community involvement.

Hyatt was selected to serve on the board

of directors for his general business management experience.

Hyatt sits on the American

Cross Heroes committee and is the winner of the Jefferson Award (2017) for his community involvement.

Hyatt was selected to serve

on the board of directors for his general business management experience.

Since December 2017, Mr.

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aware of any other conflicts of interest with any of our executive officers or directors.

are not a “listed company” under SEC rules and are therefore not required to have an audit committee comprised of independent

are not a “listed company” under SEC rules and therefore are not required to have an audit committee comprised of independent

Constable is an “financial expert” within the meaning of the rules and regulations of the SEC.

following table provides information concerning the compensation paid to our independent director for services in such capacity during

the year ended December 31, 2021.

No other director received compensation for serving in such capacity in 2021.

following table provides information concerning the compensation paid to our Company’s non-employee director for services rendered

as a director during the year ended December 31, 2022.

or paid in cash

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following table provides certain information regarding compensation awarded to, earned by or paid to our Chief Executive Officer and

the other executive officer with compensation exceeding $100,000 during fiscal 2021 (each a “Named Executive Officer”).

the other executive officer with compensation exceeding $100,000 during the year ended December 31, 2022 (each a “Named Executive

Compensation Table

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Non-qualified

President and CFO (2)

the aggregate grant date fair value of the shares of our common stock, computed in accordance with ASC Topic 718.

The assumptions

made in the valuations of the stock awards are included in Note 13 of the notes to our consolidated financial statements

Carmichael served as our Chief Executive Officer from 2004 until November 2020 when Mr.

Constable joined our company.

continues to serve as Chairman, President and Chief Financial Officer.

the award of 725,087 shares of common stock issued to Mr.

Carmichael for his participation in the BLU3-VENT project.

On April 14, 2020 the Company issued Mr.

Carmichael an option to purchase

up to 125,000,000 shares of common stock at an exercise price of $0.045 subject to vesting as discussed in note 13 of the audited financial

statements attached to this report.

The Company expensed $874,022and $655,515 of the fair market value of these options in 2021 and 2020,

respectively.

On July 29, 2019 the Company issued Mr.

Carmichael five year options to purchase up to 20,761,904 shares of common stock

at an exercise price of $0.018 per share, subject to vesting over a period of six months.

We recognized stock option expense of $10,724

(i) $18,000 in director compensation (ii) $12,313 in health insurance, and (iii) an aggregate of $75,161 in royalties paid to an entity

controlled by Mr.

Robert Carmichael

Chairmen, President and CFO

Christopher Constable,

Represents the aggregate

grant date fair value of the shares of our common stock, computed in accordance with ASC Topic 718.

The assumptions made in the valuations

of the stock awards are included in Note 13 of the notes to our consolidated financial statements.

Represents (i) $18,000

in director compensation (ii) $12,313 in health insurance premiums paid on behalf of Mr.

Carmichael, and (iii) an aggregate of $75,161

in royalties paid to an entity controlled by Mr.

Carmichael under the terms of a license agreement with the Company.

(i) $18,000 in director compensation (ii) $21,720 in health insurance, and (iii) an aggregate of $67,808 in royalties paid to an

entity controlled by Mr.

Represents (i) $18,000

in director compensation (ii) $5,686 in health insurance premiums paid on behalf of Mr.

Carmichael, and (iii) an aggregate of $61,308

in royalties paid to an entity controlled by Mr.

Carmichael under the terms of a license agreement with the Company.

Constable has served as our Chief Executive Officer since November 2020.

the grant date fair value of 2,795,000 shares of common stock issued to Mr.

Constable on behalf of Brandywine, LLC for consulting

services provided to the Company prior to his employment.

On November 5, 2020 the Company entered into an option agreement with Mr.

Constable the details of which are disclosed in Note 14 of the audited financial statements included in this report.

The Company expensed

vested options of 5,434,783 shares with a fair value of $106,890 in 2020 and the Company expensed 2,000,000 with a fair market value of

$82,734 in 2021.

On November 5, 2021 the Company entered an option agreement with Mr.

Constable the details of which are disclosed in

Note 13 of the audited financial statements included in this report.

The Company expensed vested options of 2,403,846 shares with a fair

value of $98,976 which was fully expensed in 2021.

health insurance premiums paid by the Company on behalf of Mr.

Represents a five-year option to purchase 2,403,846 shares of common stock.

Represents health insurance

premiums paid by the Company on behalf of Mr.

Represents a five-year option to purchase 3,968,254 shares of common stock.

May 26, 2021, the Company adopted the Company’s Equity Compensation Plan (the “Plan”).

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Equity Awards at December 31, 2022

table below reflects all outstanding equity awards made to each Named Executive Officer that were outstanding at December 31, 2021.

table below reflects all equity awards made to each Named Executive Officer that were outstanding on December 31, 2022.

Unexercisable

Exercise Price

Expiration Date

Robert Carmichael

20,761,904 (1)

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2,403,846 (5)

fully vested in January 2020

vest based upon certain corporate milestones as discussed in Note 13 of the financial

statements included in this Annual Report.

fully vested in November 2020

vest based upon certain corporate milestones as discussed in Note 13 of the financial

statements included in this Annual Report.

fully vested in November 2021

3,968,254 (6)

Options fully vested in

Options vest based upon

certain corporate milestones as discussed in Note 13 of the financial statements included in this Annual Report.

Options fully vested in

November 2020

Options vest based upon

certain corporate milestones as discussed in Note 13 of the financial statements included in this Annual Report.

Options fully vested in

November 2021

Options fully vested in

November 2022

Constable Employment Agreement

November 5, 2020, we entered into a three-year employment agreement (the “Constable Employment Agreement”), which

agreement will automatically renew for one-year successive terms unless either party notifies the other of its desire to terminate

the agreement at least 60 days prior to the then current term.

November 5, 2020, we entered into a three-year employment agreement (the “Constable Employment Agreement”), which agreement

will automatically renew for one-year successive terms unless either party notifies the other of its desire to terminate the agreement

at least 60 days prior to the then current term.

Pursuant to the Agreement, Mr.

Constable will serve as our Chief

Executive Officer and a director.

Constable will serve as our Chief Executive Officer and

In consideration for his services, Mr.

Constable is entitled to an annual base salary of

$200,000, payable in accordance with the customary payroll practices of the Company, and upon execution of the Constable Employment

Agreement and on each anniversary thereof, a non-qualified immediately exercisable five-year stock 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

common stock on the date of issuance.

Pursuant to the Agreement, on November 5, 2020, we issued Mr.

Constable an option to purchase

5,434,783 shares of common stock at an exercise price of $0.0184 per share pursuant to an option award agreement and upon the first

anniversary we issued Mr.

Constable an option to purchase 2,403,846 shares of common stock at an exercise price of

Constable is entitled to an annual base salary of $200,000, payable in accordance

with the customary payroll practices of the Company, and upon execution of the Constable Employment Agreement and on each anniversary

thereof, a non-qualified immediately exercisable five-year stock 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 common stock on the date of issuance.

to the Agreement, on November 5, 2020, we issued Mr.

Constable an option to purchase 5,434,783 shares of common stock at an exercise

price of $0.0184 per share pursuant to an option award agreement and upon the first anniversary we issued Mr.

Constable an option to

purchase 2,403,846 shares of common stock at an exercise price of $0.0401.

addition, Mr.

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metrics as set forth in the Agreement.

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of

Certain Beneficial Owners and Management and Related Stockholder Matters

voting securities consist of our common stock and preferred stock, par value $0.001 per share, designated Series A Convertible Preferred

Stock (the “Series A Stock”).

Each share of Series A Stock is convertible into a share of our common stock at any time at

the option of the holder at a conversion price of $18.23 per share.

Holders of our common stock are entitled to one vote for each share

held, and holders of our Series A Stock are entitled to 250 votes for each share held.

Our common stock and Series A Stock vote together

as on any matters submitted to our shareholders for a vote.

Each share of Series A Stock is convertible into one share of our common stock at any time

at the option of the holder at a conversion price of $18.23 per share.

Holders of our common stock are entitled to one vote for each

share held, and holders of our Series A Stock are entitled to 250 votes for each share held.

Our common stock and Series A Stock vote

together as on any matters submitted to our shareholders for a vote.

Ownership of Certain Beneficial Owners and Management

following table sets forth, as of April 19, 2022, the number of shares of common stock and Series A Stock beneficially owned by

(i) each person, entity or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company

to be the beneficial owner of more than 5% of the outstanding common stock;

(ii) each of our Named Executive Officers and (iii) all officers

and directors as a group.

Information relating to beneficial ownership of common stock by our principal stockholders and management is

based upon information furnished by each person using “beneficial ownership” concepts under the rules of the SEC.

rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which

includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose or direct the

disposition of the security.

The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire

beneficial ownership within 60 days.

Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities,

and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest.

noted below, each person has sole voting and investment power with respect to the shares beneficially owned and each stockholder’s

address is c/o Brownie’s Marine Group, Inc., 3001 NW 25th Avenue, Suite 1, Pompano Beach, Florida 33069.

The percentages below

are calculated based on 404,656,793 issued and outstanding shares of common stock and 425,000 shares of Series A Stock outstanding

as of April 19, 2022.

and Address of

and Nature of Beneficial Ownership

Officers and Directors

following table sets forth, as of March 30, 2023, the number of shares of common stock and Series A Stock beneficially owned by (i) each

person, entity or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company to be

the beneficial owner of more than 5% of the outstanding common stock;

(ii) each of the Company’s directors (iii) each Named Executive

Officer and (iv) all officers and directors as a group.

Information relating to beneficial ownership of common stock by our principal

stockholders and management is based upon information furnished by each person using “beneficial ownership” concepts under

the rules of the SEC.

Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly

has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes

the power to dispose or direct the disposition of the security.

The person is also deemed to be a beneficial owner of any security of

which that person has a right to acquire beneficial ownership within 60 days.

Under the SEC rules, more than one person may be deemed

to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or

she may not have any pecuniary interest.

Except as noted below, each person has sole voting and investment power with respect to the

shares beneficially owned and each stockholder’s address is c/o Brownie’s Marine Group, Inc., 3001 NW 25th Avenue, Suite

1, Pompano Beach, Florida 33069.

The percentages below are calculated based on 436,949,252 issued and outstanding shares of common stock

and 425,000 shares of Series A Stock outstanding as of March 30, 2023.

Name and Address of

Beneficial Owner

Amount and Nature of Beneficial Ownership

Percent of Class

Named Executive Officers and Directors

110,006,047 (1)

Christopher H.

16,806,833 (2)

164,285,713 (3)

directors and executive officers as a group (three persons)

All directors and executive officers as a group (three persons)

228,781,648 (1)(2)(3)

5% or Greater Shareholder

135 Weston Road, Suite 328, Weston, Florida 33326

Holdings V, LLC

Summit Holdings V, LLC

3427 Bannerman Road, Suite D208

Tallahassee, Florida 32312

A Convertible Preferred Stock

Series A Convertible Preferred Stock

All directors and executive officers as a group (one person)

(i) 14,587,190 shares held by 940A Associates, Inc., a corporation over which Mr.

Carmichael is the sole owner and has voting and

dispositive power;

(ii) an aggregate of 23,320 shares issuable upon conversion of 425,000 shares of Series A Stock and (iii) options

to purchase an aggregate of 20,761,904 shares of common stock at an exercise price of $0.018 per share.

(iv) options to purchase

an aggregate of 25,000,000 shares of common stock at an exercise price of $0.045.

Does not include the voting power over 106,250,000

shares by virtue of Mr.

Carmichael beneficial ownership of 425,000 shares of Series A Stock.

(i) options to purchase an aggregate of 7,434,783 shares of common stock at an exercise price of $0.0184 per share, and (ii) options

to purchase 2,403,846 shares of common stock at an exercise price of $0.0401 per share.

3,847,065 shares of common stock held by Mr.

Hyatt’s daughter.

Relationships and Related Transactions, and Director Independence.

(i) 14,587,190

shares held by 940A Associates, Inc., a corporation over which Mr.

Carmichael is the sole owner and has voting and dispositive power;

(ii) an aggregate of 23,320 shares issuable upon conversion of 425,000 shares of Series A Stock (iii) options to purchase an

aggregate of 20,761,904 shares of common stock at an exercise price of $0.018 per share and (iv) options to purchase an aggregate of

50,000,000 shares of common stock at an exercise price of $0.045.

Does not include the voting power over 106,250,000 shares of common

stock by virtue of Mr.

Carmichael’s beneficial ownership of 425,000 shares of Series A Stock.

Includes (i) options to

purchase an aggregate of 10,434,783 shares of common stock at an exercise price of $0.0184 per share, (ii) options to purchase 2,403,846

shares of common stock at an exercise price of $0.0401 per share and (iii) options to purchase 3,968,254 shares of common stock at

an exercise price of $.0252 per share.

Includes warrants to purchase

an aggregate of 17,142,858 shares of common at an exercise price of $.0175 per share.

Certain Relationships

and Related Transactions, and Director Independence.

sell products to Brownie’s Southport Divers, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys, companies

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Accounts receivable from

Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys December 31, 2020, was

$29,443, $6,643, and $8,237, respectively.

Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at December 31, 2021,

were $50,818, $7,195 and $17,779, respectively.

also sell products to Brownie’s Global Logistics, LLC (“BGL”) and 940 Associates, Inc.

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Carmichael purchases products from us for his personal use.

Accounts receivable

from BGL, 940 A and Mr.

Carmichael totaled $897 at December 31, 2021 and $23,321, respectively, at December 31, 2020.

owed BGL $32,267 and $102,360 at December 31, 2021 and 2020, respectively, which represents purchase of inventory including batteries

for Sea Lion (battery operated unit) and Honda engines for our regular gasoline powered units.

receivable from BGL, 940 A and Mr.

Carmichael totaled $2,408 at December 31,2022 and $897 at December 31, 2021.

owed BGL $2,980 and $32,267 at December 31, 2022 and 2021, respectively, which represents purchase of inventory including batteries for

Sea Lion (battery operated unit) and Honda engines for our regular gasoline powered units.

As of December 31, 2022, the Company also

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$2,845 and $7,735 for the years ended December 31, 2022 and 2021, respectively.

of December 31, 2021 Christopher Constable had an open accounts receivable balance of $428.

April 1, 2019, the Company entered into a director agreement with Charles Hyatt pursuant to which Mr.

Hyatt is paid $1,500 per quarter

for serving as a director.

January 9, 2020, the Company entered into a director agreement with Jeffrey Guzy pursuant to which Mr.

Guzy is paid $1,000 per month

for serving as a director and received an immediately exercisable three-year option to purchase 2,000,000 shares of common stock at an

exercise price of $.0229 per share.

January 6, 2020, the Company issued 2,647,065 shares of common stock to Grace Hyatt, the daughter of Charles Hyatt, a director, in a

private offering for proceeds of $45,000.

February 23, 2020, the Company issued 12,500,000 shares of common stock upon the exercise of a warrant at an exercise price of $0.01

per share to Charles Hyatt, a director, for proceeds of $125,000.

April 2, 2020, the Company issued 10,000,000 shares of common stock upon the exercise of a warrant at an exercise price of $0.01 per

share, to Charles Hyatt, a director, for proceeds of $100,000.

April 6, 2020, the Company issued 10,000,000 shares of common stock at a purchase price of $0.025 per share to Charles Hyatt, a director,

On September 30, 2022, the Company

issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital

needs of LBI.

Interest on the note is payable in shares of common stock of the Company at a conversion price equal to the 90 day value

weighted average price (“VWAP”) of the 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.

On March 25, 2021, the Company

issued 27,500,000 shares of common stock to Charles Hyatt, a director, in a private offering for proceeds of $275,000.

On August 1, 2021, we entered

into the Blake Carmichael Employment Agreement with Blake Carmichael, Chief Executive Officer of BLU3, and son of Robert Carmichael, the

Company’s Chairman, President and a director.

On September 1, 2021, the Company

issued 10,000,000 units, each unit (“Unit”) consists of one share of common stock and a two-year warrant to purchase one share

of common stock at an exercise price of $0.025 per share to Charles Hyatt a director, in a private offering for proceeds of $250,000.

On September 1, 2021, the Company

issued 600,000 Units to Grace Hyatt, the adult child of Charles Hyatt, in a private offering for proceeds of $15,000.

February 2, 2022, the Company issued Charles Hyatt, a director, 10,000,000 shares upon the exercise of a warrant at $0.025 per share

in consideration of $250,000.

February 2, 2022, the Company issued Grace Hyatt, the adult child of Charles Hyatt, a director, 600,000 shares upon the exercise of a

warrant at $0.025 per share in consideration of $15,000.

On March 14, 2022, the Company

issued 10,000,000 shares of common stock to Charles Hyatt, a director, upon exercise of a warrant at an exercise price of $0.04 per share

for proceeds of $250,000.

August 10, 2020, the Company engaged Brandywine, LLC (“Brandywine”) to provide accounting advisory and consulting services

pursuant to a letter agreement.

As compensation for such services, Brandywine was paid an hourly rate of $125.00 and was issued a total

number of 2,795,000 shares of common stock (10,000 shares for each hour billed) in August 2020.

Christopher Constable, our Chief Executive

Officer is the owner of Brandywine.

This agreement terminated upon the execution of the Constable Employment Agreement.

November 5, 2020, we entered into the Constable Employment Agreement with Christopher Constable, our Chief Executive Officer.

March 25, 2021, the Company issued 27,500,000 shares of common stock to Charles Hyatt, a director, in a private offering for proceeds

August 1, 2021, we entered into the Blake Carmichael Employment Agreement with Blake Carmichael, Chief Executive Officer of BLU3, and

son of Robert Carmichael, the Company’s Chairman, President and a director.

September 1, 2021, the Company issued 10,000,000 units, each unit (“Unit”) consists of one share of common

stock and a two-year warrant to purchase one share of common stock at an exercise price of $0.025 per share to Charles Hyatt

a director, in a private offering for proceeds of $250,000.

September 1, 2021, the Company issued 600,000 Units to Grace Hyatt, the adult child of Charles Hyatt, in a private offering for proceeds

March 14, 2022, the Company issued 10,000,000 shares of common stock to Charles Hyatt, a director, upon exercise of a warrant at an exercise

price of $0.04 per share for proceeds of $250,000.

March 14, 2022, the Company issued 600,000 shares of common stock to Grace Hyatt, the adult daughter of Charles Hyatt, a director, upon

exercise of a warrant at an exercise price of $0.04 per share for proceeds of $15,000.

On March 14, 2022, the Company issued 600,000 shares of common stock to

Grace Hyatt, the adult daughter of Charles Hyatt, a director, upon exercise of a warrant at an exercise price of $0.04 per share for proceeds

On December 13, 2022, the Company

issued 5,714,286 shares of common stock and a two-year warrant to purchase 5,714,286 shares of common stock at an exercise price of $0.0175

per share to Charles Hyatt a director, in a private offering for proceeds of $100,000.

Carmichael, the Chief Executive Officer of BLU3 is the son of Robert Carmichael, the Company’s Chairman, President and a director.

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Marketplace Rules.

Accounting Fees and Services.

following table shows the fees that were billed for the audit and other services provided by Liggett & Webb, PA for 2021 and 2020.

Principal Accounting

Fees and Services.

following table shows the fees that were billed for the audit and other services provided by Liggett & Webb, PA for 2022 (until October

10, 2022) and 2021.

As of October 10, 2022, Liggett & Webb, P.A.

resigned as the independent registered public accounting firm engaged

to audit the financial statements of the Company.

Also on such date, the Company’s Board of Directors engaged Assurance

Dimensions, Inc.

to serve as its independent registered public accounting firm to review its Quarterly Report on Form 10-Q for

the quarter ended September 30, 2022 and year ended December 31, 2022 year end audit.

Audit-Related Fees

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on Form 10-Q.

The other fees of $37,500

consist of expenses associated with the audit of the Company’s acquisition in September, 2021.

Additionally we incurred tax related fees of $2,000 for each of the years ended December 31, 2021 and 2020.

other fees in 2021 of $37,500 consist of expenses associated with the audit of the Company’s acquisition in September, 2021.

Additionally,

we incurred tax related fees of $2,700 and $2,200 for the years ended December 31, 2022 and 2021, respectively.

Administration

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fees paid to the auditors with respect to 2022 and 2021 were pre-approved by the entire board of directors.

percentage of hours expended on Liggett & Webb, PA’s respective engagement to audit our financial statements for the most recent

percentage of hours expended on Assurance Dimensions respective engagement to audit our financial statements for the most recent

fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees

Financial Statements Schedules

Exhibits, Financial

Statements Schedules

Merger Agreement, dated June 18, 2002 by and among United Companies Corporation, Merger Co., Inc.

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Form of Stock Option Grant to Jeffrey Guzy dated January 9, 2020

$66,793 Convertible Demand Note, dated September 30, 2022

Share Exchange Agreement, dated March 23, 2004 by and among the Company, Trebor Industries, Inc.

and Robert M.

Commercial Multi-Tenant Lease, dated September 14, 2022 between Submersible Systems, Inc.

and Slater Palms LLC

Exclusive License Agreement, effective January 1, 2005, between 940 Associates, Inc.

4 unchanged sentences

Lease Agreement, dated November 11, 2018, between Liberty Property Limited Partnership and the Company

Director Agreement, dated January 9, 2020, between the Company and Jeffrey Guzy

Non-Qualified Stock Option Agreement, dated April 14, 2020, between the Company and Robert Carmichael +

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and the Company

Investor Relations Consulting Agreement, dated April 9, 2020, between HIR Holdings, LLC and the Company.

Corporate Communication Consulting Agreement dated April 9, 2020, between Impact IR Inc.

and the Company.

Note Extension and Amendment Agreement, dated May 29, 2020, for the $50,000 principal amount 6% Secured Convertible Promissory Note between Curt Martin and the Company

Note Extension and Amendment Agreement, dated May 29, 2020, for the $50,000 principal amount 6% Secured Convertible Promissory Note by and between Joe Steinbron and the Company

Employment Agreement Dated August 1, 2021, between the Company and Blake Carmichael

6 unchanged sentences

Non-Qualified Stock Option Agreement Non-Plan, dated November 5, 2020, between the Company and Christopher Constable

Note Extension and Amendment Agreement, dated December 21, 2020, for the $50,000 principal amount 6% Secured Convertible Promissory Note between Joe Steinbron and the Company

Extension and Amendment Agreement, dated December 21, 2020, for the $50,000 principal amount 6% Secured Convertible Promissory Note between

Curt Martin and the Company

First Amendment to Lease Agreement, dated December 1, 2016 between Trebor Industries, Inc.

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Investment Banking Engagement Agreement, dated August 6, 2021, between the Company and Newbridge Securities Corporation

Asset Purchase Agreement, dated May 2, 2022, among the Company, Gold Coast Scuba, LLC, LLC Members and Live Blue, Inc.

Form of Subscription Agreement

Form of Common Stock Purchase Warrant

Lease Agreement, dated September 14, 2022, between Slater Palms, LLC and the Company

Sublease Agreement, dated September 20, 2022, between Camburg Engineering, Inc.

and the Company

Certification Pursuant to Rule 13a-14(a)/15d-14(a)

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Certification Pursuant to Section 1350

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Page Interactive Data File (embedded within the Inline XBRL document)

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Definition Linkbase

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (embedded within the

Inline XBRL document)

Filed herewith

Management Contract

Form 10-K Summary

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

April 22, 2022

March 30, 2023

marine group, Inc.

/s/ Christopher

Christopher H.

Executive Officer,

Executive Officer)

Financial Officer,

Financial and Accounting Officer

Chief Executive Officer,

(Principal Executive Officer)

Chief Financial Officer,

(Principal Financial and Accounting Officer

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

of the Board, President and Chief Financial Officer (Principal Executive Officer)

April 22, 2022

Chairman of the Board, President and Chief Financial

Officer (Principal Executive Officer)

March 30, 2023

Christopher H.

Executive Officer and Director

Executive Officer)

April 22, 2022

March 30, 2023

Financial Statements and Supplementary Data

Brownie’s Marine Group, Inc.

Index to Audited Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheet as of December 31, 2022 and 2021

Consolidated Statement of Operations for the years ended December 31, 2022 and 2021

Consolidated Statement of Stockholders' Equity for the years ended December 31, 2022 and 2021

Consolidated Statement of Cash Flows for the years ended December 31, 2022 and 2021

Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors of

Brownie’s Marine Group, Inc.

and Subsidiaries

on the Financial Statements

have audited the accompanying consolidated balance sheet of Brownie’s Marine Group, Inc.

and Subsidiaries (the Company) as of December

31, 2022, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the year then

ended, and the related consolidated notes (collectively referred to as the financial statements).

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations

and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Paragraph – Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in

Note 1 to the financial statements, the Company had a net loss of approximately $1,893,000 and cash used in operating activities of

approximately $678,000 for the year ended December 31, 2022 as well as an accumulated deficit of approximately $16,437,000 as of December 31, 2022.

factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard

to these matters are described in Note 1.

The financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

of Impairment

Company is required to test the carrying amount of goodwill at least annually, or more frequently upon the occurrence of certain events.

The Company is also required to assess the recoverability of its long-lived assets, including its amortizable intangible assets, whenever

certain events occur or circumstances change that may be indicators of impairment.

We identified this area as a critical audit matter

because the annual goodwill impairment test and the evaluation of recovery of long-lived assets requires significant judgment regarding

the evaluation of qualitative factors.

Additionally, these assessments also require appropriate determination of reporting units and

asset groups, including the allocation of acquired tangible and intangible assets to such groupings.

The evaluation of a certain asset

group also required comparison of future non-discounted cash flows to the carrying value of the asset group, which required estimates

of future cash flows associated with that asset group, including growth rates, profitability rates and estimates of other sources and

uses of cash such as changes in working capital and capital expenditures.

The Company engaged a third-party valuation specialist to assist

with its assessment.

audit procedures to address the risk of material misstatement relating to goodwill and intangible assets included, among others, evaluating

the appropriateness of asset groupings at the reporting unit level and asset group level.

We also evaluated management’s assessment

of qualitative factors associated with the reporting unit containing goodwill and associated with all relevant asset groups.

Our procedures

also included evaluating management’s forecast of non-discounted cash flows associated with a certain asset group where a qualitative

factor required such further analysis.

We also assessed the competence, independence, qualifications, experience, and capabilities of

the third-party valuation specialist, and evaluated the appropriateness and reasonableness of the methodology and assumptions used by

comparing them to external and historical data;

testing the calculation and forecast model for mathematical accuracy;

validating the

appropriateness and reliability of inputs and amounts used;

and evaluating the adequacy of the financial statement disclosures relating

to goodwill, intangible assets and other long-lived assets, including disclosure of key assumptions and judgments.

As a result of our

testing we did not take exception to management’s conclusion that no impairment should be recognized related to goodwill or long-lived

assets for the year ended December 31, 2022.

have served as the Company’s auditor since 2023

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors of:

Marine Group, Inc.

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Brownie’s Marine Group, Inc.

and Subsidiaries (the “Company”)

as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in stockholders’ equity

and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively

referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its

operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles

generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Brownie’s

Marine Group, Inc.

and Subsidiaries (the “Company”) as of December 31, 2021, the related consolidated statements of operations,

changes in stockholders’ equity and cash flows for the year ended December 31, 2021, and the related notes (collectively referred

to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows

for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Paragraph – Going Concern

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and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting.

Accordingly, we

express no such opinion.

W e conducte d

ou r audit s i n

ac c ordanc e

wit h th e standard s

o f th e PCAOB .

Thos e s tan d ar d s

requir e tha t w e

pla n an d perfor m

th e a udit to obta i n

r e asonable as s u r a nc e

abou t whethe r th e

fina n cial stat e m e nts

ar e fre e o f

materia l misstatement , w h eth e r

du e t o erro r

Compa n y i s

n ot require d t o

w er e w e engage d

to p erform , a n audi t

o f it s interna l

c ontrol s o ve r

financia l re p o rting .

As part of our audit, we are required to obtain an understanding of internal control over financial

reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial

Accor d ingly , w e ex p r e ss

n o suc h opini on.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

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of Stock Options

described in Note 13 to the consolidated financial statements, the Company measures fair value of stock options at fair value

using level three inputs.

To determine fair value of stock options, the Company determines the appropriate valuation methodology and

assumptions, including unobservable inputs.

Stock options are measured at fair value using a Black-Scholes valuation model that uses

significant assumptions, including the Company’s stock price, volatility, risk-free interest rate, probability of vesting and probability

of exercise occurrence through expiration date.

described in Note 13 to the consolidated financial statements, the Company measures fair value of stock options at fair value using level

three inputs.

To determine fair value of stock options, the Company determines the appropriate valuation methodology and assumptions,

including unobservable inputs.

Stock options are measured at fair value using a Black-Scholes valuation model that uses significant assumptions,

including the Company’s stock price, volatility, risk-free interest rate, probability of vesting and probability of exercise occurrence

through expiration date.

management’s estimate for the fair value of stock options was highly judgmental as it involved our assessment of the significant

4 unchanged sentences

the valuation model and the significant assumptions used by the Company.

Merger with Submersible Systems, Inc.

As described in Note 11 to the consolidated financial

statements, on September 3, 2021, the Company completed its merger with Submersible Systems, Inc.

The Company recognizes separately from

goodwill the assets acquired and the liabilities assumed at their acquisition date fair values under ASC 805, Business Combinations.

Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values

of the assets acquired and the liabilities assumed.

The Company uses its best estimates and assumptions to accurately value assets acquired

and liabilities assumed at the acquisition date.

The Company’s estimates are inherently uncertain and actual results may differ

from expectations.

The Company may record measurement period adjustments during the measurement period (one year from the acquisition

date) that result from obtaining additional information about the facts and circumstances that existed as of the acquisition date.

this additional information had been known, it would have affected the accounting for the business combination as of the acquisition

Auditing management’s estimate for the

fair value of the consideration paid, identifiable assets acquired, and liabilities assumed including an amount for goodwill was

highly judgmental as it involved our assessment of the significant assumptions used by the Company regarding certain future expected

cash flows and the valuation methodologies used by the valuation specialist engaged by the Company in determining the fair values of

these assets.

To test the fair value of consideration paid,

identifiable assets acquired, and liabilities assumed including an amount for goodwill, we performed audit procedures that included,

among others, evaluating the methodologies used in the valuation model and the significant assumptions used by the Company and the valuation

Liggett & Webb , P.A.

with Submersible Systems, Inc.

described in Note 11 to the consolidated financial statements, on September 3, 2021, the Company completed its merger with Submersible

Systems, Inc.

The Company recognizes separately from goodwill the assets acquired and the liabilities assumed at their acquisition date

fair values under ASC 805, Business Combinations.

Goodwill as of the acquisition date is measured as the excess of consideration transferred

and the net of the acquisition date fair values of the assets acquired and the liabilities assumed.

The Company uses its best estimates

and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date.

The Company’s estimates are

inherently uncertain and actual results may differ from expectations.

The Company may record measurement period adjustments during the

measurement period (one year from the acquisition date) that result from obtaining additional information about the facts and circumstances

that existed as of the acquisition date.

If this additional information had been known, it would have affected the accounting for the

business combination as of the acquisition date.

management’s estimate for the fair value of the consideration paid, identifiable assets acquired, and liabilities assumed including

an amount for goodwill was highly judgmental as it involved our assessment of the significant assumptions used by the Company regarding

certain future expected cash flows and the valuation methodologies used by the valuation specialist engaged by the Company in determining

the fair values of these assets.

test the fair value of consideration paid, identifiable assets acquired, and liabilities assumed including an amount for goodwill, we

performed audit procedures that included, among others, evaluating the methodologies used in the valuation model and the significant

assumptions used by the Company and the valuation specialist.

/s/ Liggett & Webb, P.

have served as the Company’s auditor since 2018

Beach, Florida

April 22, 2022

MARINE GROUP, INC.

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BALANCE SHEETS

receivable - net

receivable - related parties

expenses and other current assets

December 31, 2022

December 31, 2021

Current Assets

equipment and leasehold improvements, net

Accounts receivable - net

Accounts receivable - related parties

Inventory, net

Prepaid expenses and other current assets

Total current assets

Property, equipment and leasehold improvements, net

Operating lease assets

Intangible assets, net

Liabilities and stockholders’ equity

payable and accrued liabilities

payable - related parties

deposits and unearned revenue

lease liabilities

maturities long term debt

debentures, net

Current liabilities

term debt, net of current

term convertible debentures, net

lease liabilities, net of current

and contingencies (see note 15)

Stockholders’

10,000,000 shares

425,000 issued

and outstanding as of December 31, 2021 and December 31, 2020.

Accounts payable and accrued liabilities

Accounts payable - related parties

Customer deposits and unearned revenue

Other liabilities

Operating lease liabilities

Related party convertible demand note, net

Current maturities loans payable

Total current liabilities

Loans payable, net of current portion

Convertible notes, net of current portion

Operating lease liabilities

Total liabilities

Commitments and contingent liabilities (see note 15)

Stockholders’ equity

Preferred stock;

shares authorized;

issued and outstanding as of December 31, 2022 and December 31, 2021, respectively.

Common stock;

$ 0.0001 par value;

1,000,000,000 shares authorized;

393,850,475 shares issued and outstanding at December 31, 2021 and 306,185,206

shares issued and outstanding at December 31, 2020, respectively.

stock payable 138,941 shares and 138,941 shares, respectively as of December 31, 2021 and December 31, 2020.

paid-in capital

425,520,662 shares issued and outstanding at December 31, 2022 and 393,850,475 shares issued and outstanding at December 31, 2021.

Common stock payable 138,941 shares and 138,941 shares, respectively as of December 31, 2022 and December 31, 2021.

Additional paid-in capital

Accumulated deficit

( 16,437,495 )

( 14,544,604 )

stockholders’ equity

liabilities and stockholders’ equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes are an integral part of these consolidated financial statements.

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THE YEARS ENDED DECEMBER 31

revenues - related parties

of revenues - related parties

expense - related parties

Cost of revenues

general and administrative

and development costs

Operating expenses

from operations

Selling, general and administrative

Research and development costs

Total operating expenses

Loss from operations

( 1,850,397 )

( 1,852,703 )

income (expense), net

on settlement of debt

on the forgiveness of PPP loan

Other (income) expense, net

income before provision for income taxes

Gain on settlement of debt

Gain on the forgiveness of PPP loan

Interest expense

Total other (income) expense - net

Loss income before provision for income taxes

( 1,892,891 )

( 1,588,467 )

for income taxes

Provision for income taxes

$ ( 1,892,891 )

$ ( 1,588,467 )

loss per common share

Basic loss per common share

Diluted loss per common share

Basic weighted average

common shares outstanding

Diluted weighted

average common shares outstanding

Basic weighted average common shares outstanding

Diluted weighted average common shares outstanding

accompanying notes are an integral part of these consolidated financial statements.

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AND SUBSIDIARIES

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

STATEMENTS OF STOCKHOLDERS’ EQUITY

THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Stock Payable

Preferred Stock

Common Stock Payable

Shares Outstanding

Paid-in Capital

Accumulated Deficit

Stockholders’

December 31, 2019

Balance, December 31, 2020

$ ( 12,956,137 )

Units issued for cash

Shares issued for cash

Shares issued for acquisition

Debt Discount on sellers note

Shares issued for services

Stock option expense

Debentures and accrued interest

Shares issued for exclusivity

( 1,588,467 )

issued for cash

issued for exercise of warrants

issued for services

Option Expense

bonus shares to CEO

shares issued to employee

( 1,588,467 )

Balance, December 31, 2021

$ ( 14,544,604 )

December 31, 2020

$ ( 14,544,604 )

issued for cash

issued for Acquisition

Discount Sellers Note

issued for services

Option Expense

and accrued interest

issuance for exclusivity

Shares issued for the purchase of units

Shares issued for exercise of warrants

Shares issued for Asset Purchase

Shares issued for Royalty Agreement

Shares issued for accrued interest in convertible notes

Shares issued for employee bonus

Shares issued for services

Beneficial conversion feature

Stock option expense

( 1,892,891 )

$ ( 1,892,891 )

December 31, 2021

Balance, December 31, 2022

$ ( 16,437,495 )

accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

THE YEARS ENDED DECEMBER 31

Cash flows from operating activities:

Cash flows provided by operating activities:

$ ( 1,892,891 )

4 unchanged sentences

Amortization of right-of-use asset

Shares issued for services

Incentive bonus shares issued to CEO and employees

Reserve (recovery) for bad debt

Reserve for slow moving inventory

Common stock issued for services

Shares issued for royalty

Allowance (recovery) for bad debt

Allowance for slow moving inventory

Allowance for Nomad recall

Shares issued for exclusivity

Stock Based Compensation - options

Shares issued for employee bonus

Shares issued for accrued interest in convertible notes

Gain on settlement of debt

Gain on the forgiveness of the PPP loans

Gain on forgiveness of PPP loan

Changes in operating assets and liabilities

10 unchanged sentences

Net cash used in operating activities

Cash flows from investing activities:

Cash acquired from acquisition

Cash flows used in investing activities:

Cash used in asset acquisition

Cash acquired in business acquisition

Cash used in purchase of fixed assets, net of debt

Purchase of fixed assets

Net cash provided (used in) by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

2 unchanged sentences

Proceeds from exercise of warrants

Proceeds of debt

Repayment on notes payable

Repayment of debt

Proceeds of convertible note

Repayment of notes payable

Net cash provided by financing activities

Net change in cash

Cash, beginning of year

Cash, end of year

Net (decrease) Increase in cash

Cash, beginning balance

Cash, end of period

Supplemental disclosures of cash flow information:

1 unchanged sentence

Cash Paid for Income Taxes

Supplemental disclosure of non-cash investing and financing activities:

Loan payable for purchase of vehicle

Shares issued for acquisition

Convertible note issued for acquisition

Beneficial conversion feature on the convertible notes issued for acquisition

Supplemental disclosure of non-cash financing activities:

Operating lease obtained for operating lease liability

Equipment obtained through financing

Shares issued for the conversion of convertible debentures and accrued interest

Shares issued for asset acquisition

Convertible notes issued for acquisition

Beneficial conversion feature on notes issued for acquisition

Shares issued for payment of convertible note interest

Fixed asset purchase through the issuance of debt

Prepayment for equipment through financing

Shares issued for the conversion of convertible notes and accrued interest

accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

Description of business and summary of significant account policies

of business – Brownie’s Marine Group, Inc., a Florida corporation (hereinafter referred to as” the “Company,”

or “BWMG”), (1) designs, tests, manufactures and distributes recreational hookah diving, scuba and water safety products

through its wholly owned subsidiary Trebor Industries, Inc., a Florida corporation organized in 1981 (“Trebor” or “BTL”),

(2) manufactures and sells high pressure air and industrial compressor packages, yacht based scuba air compressor and nitrox generation

systems through its wholly owned subsidiary Brownie’s High Pressure Compressor Services, Inc., a Florida corporation organized

in 2017 (“BHP”), doing business as LW Americas (“LWA”)and (3) 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 organized in 2017, 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.

Description of business and summary of significant accounting policies

of business – Brownie’s Marine Group, Inc., a Florida corporation (the “Company,” or

“BWMG”), (1) designs, tests, manufactures and distributes recreational hookah diving, scuba and water safety products

through its wholly owned subsidiary Trebor Industries, Inc., a Florida corporation organized in 1981 (“Trebor” or

“BTL”), (2) manufactures and sells high pressure air and industrial compressor packages, yacht based scuba air

compressor and nitrox generation systems through its wholly owned subsidiary Brownie’s High Pressure Compressor Services,

Inc., a Florida corporation organized in 2017 (“BHP”), doing business as LW Americas (“LWA”) and (3)

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 organized in 2017, 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 filed with the Florida Department of State, articles of incorporation for a new wholly owned subsidiary,

Live Blue, Inc.

LBI utilizes technology developed by BLU3 to provide new users and interested divers a guided tour

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.

of Presentation – The consolidated financial statements of the Company have been prepared in accordance with the accounting

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of Consolidation -The consolidated financial statements include the accounts of BWMG and its wholly owned subsidiaries, Trebor, BHP,

BLU3 and SSI.

BLU3, SSI and LBI.

All significant intercompany transactions and balances have been eliminated in consolidation.

4 unchanged sentences

Actual results could differ from those estimates.

Concern – The accompanying consolidated financial

statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the

satisfaction of liabilities in the normal course of business for the twelve-month period following the date of issuance of these financial

We incurred net losses for the years ended December 31, 2021 and 2020 of $ 1,588,467

and $ 1,351,619 ,

respectively.

Concern – The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going

concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month

period following the date of issuance of these financial statements.

We incurred net losses for the years ended December 31, 2022 and

2021 of $ 1,892,891 and $ 1,588,467 , respectively.

The Company had an accumulated deficit as of December 31, 2022 of $ 16,437,495 .

March 11, 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic.

we are not able to estimate the ultimate impact of the COVID-19 pandemic on our financial condition and future results of operations.

The extent to which the coronavirus impacts our results and financial condition, however, will depend on future developments, which are

highly uncertain and cannot be predicted, including new information that may emerge and the actions to contain and treat its impacts,

among others.

Company believes that existing operational cash flow may not be sufficient to fund presently anticipated operations, this raises substantial

doubt about our ability to continue as a going concern.

Therefore, the Company will seek to continue to raise additional funds as needed

and is currently exploring alternative sources of financing including commercial banks and other lending institutions.

The Company has

issued common stock and has historically issued convertible notes to finance working capital needs and may continue to seek to raise

additional capital through sale of restricted common stock or other securities or obtaining short term loans.

The Company has no firm

commitment for any additional capital and there are no assurances it will be successful in obtaining additional funds.

BWMG fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back

Company believes that existing operational cash flow may not be sufficient to fund presently anticipated operations, this raises

substantial doubt about our ability to continue as a going concern for the twelve months after the date that the financial statements were issued.

Therefore, the Company will seek to continue to raise

additional funds as needed and is currently exploring alternative sources of financing including commercial banks and other lending

institutions.

The Company has issued common stock and has historically issued convertible notes to finance working capital needs and

may continue to seek to raise additional capital through sale of common stock or other securities or obtaining short term loans.

Company has no firm commitment for any additional capital and there are no assurances it will be successful in obtaining additional

the Company fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back

or cease operations, liquidate assets and possibly seek bankruptcy protection.

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and equivalents – Only highly liquid investments with original maturities of 90 days or less are classified as cash and equivalents.

Financial instruments that potentially subject

the Company to concentration of credit risk consist principally of cash deposits.

Accounts at each institution are insured by the Federal

Deposit Insurance Corporation (“FDIC”) up to $ 250,000

At December 31, 2021 and 2020, the Company had approximately $ 205,500

excess of the FDIC insured limit.

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 December 31, 2022

and 2021, the Company had approximately $ 0 and $ 205,500 , respectively, in excess of the FDIC insured limit.

receivable – Accounts receivable consist of amounts due from the sale of all of our products to wholesale and retail customers.

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The establishment

of reserves requires the use of judgment and assumptions regarding the potential for losses on receivable balances.

of allowances requires the use of judgment and assumptions regarding the potential for losses on receivable balances.

Though the Company

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– The Company values inventory at the lower of cost (determined using the first-in first-out method) or net realizable value.

Management’s judgment is required to determine the reserve for obsolete or excess inventory.

Management’s judgment is required to determine the allowances for obsolete or excess inventory.

Inventory on hand may exceed future

demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs.

reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the

Though the Company considers these reserve balances to be adequate, changes in economic conditions, customer inventory levels

or competitive conditions could have a favorable or unfavorable effect on required reserve balances.

allowances are estimated by the individual operating companies using standard quantitative measures based on criteria established by the

Though the Company considers these allowance balances to be adequate, changes in economic conditions, customer inventory levels

or competitive conditions could have a favorable or unfavorable effect on required allowance balances.

and equipment and leasehold improvements – Property and equipment and leasehold improvement is stated at cost less accumulated

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of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

account for our revenues in accordance with the Accounting Standard Codification topic 606, “Revenue from Contracts with Customers”

and all the related amendments.

This standards core principal is that a company should recognize revenue when it transfers promised goods

or services to customers in an amount that reflects the consideration to which the company expects to receive.

recognize the sale of products under single performance obligations upon shipment of the units as that is when ownership is transferred

and our performance is completed.

Revenues from repair and maintenance activities is recognized when the repairs are completed and the

units have been shipped.

Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets

acquired, including related tax effects.

Goodwill is not amortized;

instead, goodwill is tested for impairment on an annual basis,

or more frequently if the Company believes indicators of impairment exist.

The Company first assesses qualitative factors such as

macro-economic conditions, industry and market conditions, cost factors as well as other relevant events, to determine whether it is

more-likely-than-not that the fair value of a reporting unit is less than its carrying value.

If the Company determines that the

fair value is less than the carrying value, the Company will recognize an impairment charge based on the excess of a reporting

unit’s carrying value over its fair value.

As of December 31, 2022 and 2021, there was no such impairment.

Intangible assets are comprised

of customer relationships, trademarks and non-compete agreements acquired in a business combination.

The Company amortizes intangible

assets with a definitive life over their respective useful lives.

Assets with indefinite lives are tested for impairment on an annual

basis, or more frequently if the Company believes indicators of impairment exist.

Unlike goodwill and indefinite-lived intangible assets, the accounting

rules do not provide for an annual impairment test in determining whether fixed assets (e.g., property, plant, and equipment) and finite-lived

intangible assets (e.g., customer lists) are impaired.

Instead, they require that a triggering event occur before testing an asset for

Once a triggering event has occurred, the impairment test employed is based on whether the intent is to hold the asset for

continued use or to hold the asset for sale.

If the intent is to hold the asset for continued use, the impairment test involves a comparison

of undiscounted cash flows against the carrying value of the asset as an initial test.

If the carrying value of such asset exceeds the

undiscounted cash flow, the asset would be deemed to be impaired.

Impairment would then be measured as the difference between the fair

value of the fixed or amortizing intangible asset and the carrying value to determine the amount of the impairment.

As of December 31,

2022 and 2021, there was no such impairment.

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

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.

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

Schedule of Total Revenue between Related Party and Non-related Party Revenue

Revenues - related parties

Total Revenues

See further disaggregate

revenue disclosures by segment and product type in Note 16.

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.

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:

of Cost of Sales for Related Party and Non-Related Party as well as the Related Party and Non-Related Party Royalty Expense

Cost of revenues

Cost of revenues - related parties

Royalty expense - related parties

Royalty expense

Total cost of revenues

expenses include selling expenses such as warehousing expenses after manufacture, as well as expenses for advertising, and other marketing

Operating expenses also include such costs as payroll costs, travel costs, professional service fees (including legal fees),

depreciation and other general and administrative costs.

account for leases in accordance with ASC 842.

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are leases or contain leases.

categorize leases with contractual terms longer than twelve months as either operating or finance.

Finance leases are generally those

leases that would allow us to substantially utilize or pay for the entire asset over its estimated life.

Assets acquired under finance

leases are recorded in property and equipment, net.

categorize leases with contractual terms longer than twelve months as either operating or finance leases.

Finance leases are generally

those leases that would allow us to substantially utilize or pay for the entire asset over its estimated life.

Assets acquired under

finance leases are recorded in property and equipment, net.

All other leases are categorized as operating leases.

We did not have any finance

leases as of December 31, 2021 and 2020.

Our leases generally have terms that range from three years for equipment and three to

six years for property.

We elected the accounting policy to include both the lease and non-lease components of our agreements as a single

component and account for them as a lease.

We did not have

any finance leases as of December 31, 2022 and 2021.

Our leases generally have terms that range from three years for equipment and

three to six years for property.

We elected the accounting policy to include both the lease and non-lease components of our

agreements as a single component and account for them as a lease.

liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings

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balance sheet information related to leases was as follows:

of Supplemental Balance Sheet Information

Schedule of Supplemental Balance Sheet Information

Operating Leases

Classification

lease liabilities

operating lease liabilities

lease liabilities

operating lease liabilities

lease liabilities

December 31, 2022

December 31, 2021

Right-of-use assets

Operating lease assets

Current lease liabilities

Current operating lease liabilities

Non-current lease liabilities

Long-term operating lease liabilities

Total lease liabilities

term and discount rate were as follows:

of Operating Lease Liabilities

average remaining lease term (years)

Weighted average

discount rate

Schedule of Operating Lease Liabilities

December 31, 2022

December 31, 2021

Weighted average remaining lease term (years)

Weighted average discount rate

components of lease costs were as follows:

of Lease Cost

Schedule of Lease Cost

December 31, 2022

December 31, 2021

Operating lease cost

Variable lease cost

Total lease costs

disclosures of cash flow information related to leases were as follows:

of Cash Flow Information Related to Leases

paid for operating lease liabilities

right of use assets obtained in exchange for operating lease liabilities

Schedule of Cash Flow Information Related to Leases

December 31, 2022

December 31, 2021

Cash paid for operating lease liabilities

Operating right of use assets obtained in exchange for operating lease liabilities

of lease liabilities were as follows as of December 31, 2022:

of Maturities of Operating Lease Liabilities

Systems Lease

Schedule of Maturities of Operating Lease Liabilities

Trebor Industries

Submersible Systems Lease

Live Blue, Inc.

Imputed interest

value of lease liabilities

Present value of lease liabilities

Detailed information on leases can be found in Note

development costs – Product development expenditures are charged to expenses as incurred.

and marketing costs – The Company expenses

the costs of producing advertisements and marketing material at the time production occurs, and expenses the costs of communicating advertisements

and participating in trade shows in the period in which they occur.

Advertising and trade show expense incurred for the years ended December

31, 2021 and 2020, totaled $ 343,232

and $ 154,642

respectively.

and marketing costs – The Company expenses the costs of producing advertisements and marketing material at the time production

occurs, and expenses the costs of communicating advertisements and participating in trade shows in the period in which they occur.

and trade show expense incurred for the years ended December 31, 2022 and 2021, totaled $ 499,441 and $ 343,232 , respectively.

and development costs – The Company accounts for research and development costs in accordance with the Accounting Standards

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the years ended December 31, 2022 and 2021, the Company incurred research and development costs of $ 18,393 and $ 75,439 , respectively.

deposits and unearned revenue and returns policy – The Company typically takes a minimum 50 % deposit against custom and large

tankfill systems prior to ordering and/or building the systems.

The remaining balance due is payable upon delivery, shipment, or installation

of the system.

There is no provision for cancellation of custom orders once the deposit is accepted, nor return of the custom ordered

Additionally, returns of all other merchandise are subject to a 15 % restocking fee as stated on each sales invoice.

deposits and unearned revenue totaled $ 143,938 and $ 20,353 at December 31, 2021 and 2020, respectively.

deposits and unearned revenue and returns policy – The Company typically takes a minimum 50 %

deposit against large tankfill systems prior to ordering and/or building the systems.

It will also take deposits for

large rescue tank orders for both domestic and international customers.

The remaining balance due is payable upon delivery,

shipment, or installation of the system.

Additionally, returns of all other merchandise are subject to a 15 %

restocking fee as stated on each sales invoice.

Customer deposits totaled $ 167,534

and $ 143,938

at December 31, 2022 and 2021, respectively.

policy – Under the provisions of the Financial Accounting Standards Board (“FASB”) ASC 460, Guarantor’s

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quality programs and processes, including monitoring and evaluating the quality of its suppliers, to help minimize warranty obligations.

The Company provides our customers with an industry standard one year warranty on systems sold and recognizes a warranty reserve based

The Company provides its customers with an industry standard one year warranty on systems sold and recognizes a warranty reserve based

on gross sales multiplied by the historical warranty expense return rate.

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In the event the Company were to determine

that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an

that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, it would make an

adjustment to the valuation allowance which would reduce the provision for income taxes.

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value is determined through use of the quoted stock price.

the years ended December 31, 2021 and 2020, the Company recognized share based compensation with a fair value of $ 201,952

and $ 550,149 ,

the years ended December 31, 2022 and 2021, the Company recognized share based compensation with a fair value of $ 962,474 and $ 1,154,801 ,

respectively.

of Authorized but Unissued Shares of Common Stock - The Company has issued options, warrants and convertible promissory notes which

are convertible into shares of common stock in certain situations the total of which exceeds the current authorization.

The Company has

adopted a policy for the sequence of usage of remaining authorized but unissued shares of common stock (the “Sequencing Policy”)

which outlines the order in which the conversion of these equity-linked instruments may be settled in shares.

Under the Company’s

Sequencing Policy, the most recently issued equity-linked securities, including stock options, warrants, and convertible promissory notes,

are settled in shares first.

value of financial instruments – Fair value is defined as the exchange price that would be received for an asset or paid to

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and does not necessarily correspond to the Company’s perceived risk of that investment.

December 31, 2021, and 2020, the carrying amount of cash, accounts receivable, accounts receivable – related parties,

accounts payable and accrued liabilities, accounts payable-related parties, customer deposits and unearned revenue, other liabilities,

loans payable and convertible debentures, approximate fair value because of the short maturity of these instruments.

per common share – Basic loss per share excludes

any dilutive effects of options, warrants and convertible securities.

Basic loss per share is computed using the weighted-average number

of outstanding common shares during the applicable period.

Diluted loss per share is computed using the weighted average number of common

and dilutive common stock equivalent shares outstanding during the period.

Common stock equivalent shares are excluded from the computation

if their effect is antidilutive.

December 31, 2022, and 2021, the carrying amount of cash, accounts receivable, accounts receivable – related parties, accounts

payable and accrued liabilities, accounts payable-related parties, customer deposits and unearned revenue, other liabilities, lease

liabilities, loans payable and convertible debentures, approximate fair value because of the short maturity of these

per common share – Basic loss per share excludes any dilutive effects of options, warrants and convertible securities.

loss per share is computed using the weighted-average number of outstanding common shares during the applicable period.

per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the

Common stock equivalent shares are excluded from the computation if their effect is antidilutive.

At December 31, 2022 and December

and 210,500,305 ,

respectively, potentially dilutive shares were not recognized as their inclusion would be anti-dilutive.

These shares reflect shares

potentially issuable under convertible note agreements, outstanding warrants, outstanding stock options and the conversion of preferred

31, 2021, 266,722,242 and 254,577,924 , respectively, potentially dilutive shares were not recognized as their inclusion would be anti-dilutive.

These shares reflect shares potentially issuable under convertible note agreements, outstanding warrants, outstanding stock options and

the conversion of preferred stock.

accounting pronouncements

ASU 2019-12 Income Taxes (Topic

In December 2019, the FASB issued ASU

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to

simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in

Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years,

and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

The Company determined

that the standard has no impact on its consolidated financial statements and related disclosures.

2016-13 Current Expected Credit Loss (ASC326)

December 2021, the FASB issued and 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 is effective January 1, 2023.

Company is evaluating the changes from this standard to determine the impact on its consolidated financial statements and related disclosures.

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.

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

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.

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.

consists of the following as of:

Schedule of Inventory

In-Transit Inventory

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Finished goods

Rental Equipment

Total Inventory, net

of December 31, 2021 and 2020, the Company recorded reserves for obsolete or slow moving inventory of approximately $ 308,133

and $ 227,657

of December 31, 2022 and 2021, the Company recorded allowances for obsolete or slow moving inventory of approximately $ 166,432 and $ 308,133 ,

respectively.

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and amortization expense totaled $ 149,120

for the years ended December 31, 2021 and

2020, respectively.

Included in the depreciation and amortization expense for the year ending December 31, 2021 is $ 24,095 for amortization

of intangible assets.

for the years ended December 31, 2022 and 2021, respectively.

Included in the depreciation and amortization expense for the year

ending December 31, 2022 and 2021 is $ 80,597 and $ 24,095

for amortization of intangible assets, respectively.

assets at December 31, 2022 of $ 30,724 consisted

of refundable deposits of $ 14,098 .

Other assets at December 31, 2020 of $ 13,649 consisted

of refundable deposits of $ 6,649 and

an unamortized license fee of $ 7,000 .

of refundable deposits .

Other assets at December 31, 2021 of $ 14,098

consisted of refundable deposits.

Customer Credit and Vendor Concentrations

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Combined sales to these six entities for the years ended December 31, 2022 and 2021,

represented 17.9 %

respectively, of total net revenues.

Brownie’s Southport Divers, Inc.

represented concentration in outstanding accounts receivable of 25.3 %

of total outstanding accounts receivable as of December 31, 2021 and 19.8 %

as of December 31, 2020.

Brownie's Global Logistics, LLC represented concentration in outstanding accounts receivable of less than

10% of total outstanding accounts receivable as of December 31, 2021 and 12.8% as of December 31, 2020.

Additionally, the Company has a non-related party customer A that represented 10.6 %

of total outstanding accounts receivable as of December 31, 2021.

has a non-related party customers B that represented 10.6 % of total outstanding accounts receivable as of December 31, 2020.

The company had no customers that consisted of more than 10% of total

revenue for the years ended December 31, 2021 and 2020.

excess of 90 %

of our total net revenues are made up of product sales to customers within the state of Florida.

The Company has no vendor concentrations beyond 10% of total purchases

as of December 31, 2021 and 2020.

represented 11.4 % and 17.9 %, respectively, of total net revenues.

Southport Divers, Inc.

represented concentration in outstanding accounts receivable of 10.1 % of total outstanding accounts receivable

as of December 31, 2022 and 25.3 % as of December 31, 2021.

Brownie’s Global Logistics, LLC represented concentration in outstanding

accounts receivable of less than 10 % of total outstanding accounts receivable as of December 31, 2022 and 2021.

Additionally,

the Company has a non-related party customer, Amazon, that represented 12.0 % of total outstanding accounts receivable as of December

from Amazon accounted for 12.0 % of revenue for the twelve months ended December 31, 2022, but did not exceed 10 % of total revenue for

the year ended December 31, 2021.

Company has two vendors that for the year ended December 31, 2022 supplied more than 10% each of the Company’s overall

Tian Li He Technology supplied 11.9 %

of overall purchases and L&W supplied 11.7 %

of overall purchases for the year ended December 31, 2022.

There were no vendor concentrations beyond 10 %

of total purchases for the year ended December 31, 2021.

Related Party Transactions

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Accounts receivable from

Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys December 31, 2020, was

$ 29,443 , $ 6,643 , and $ 8,237 , respectively.

Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at December 31, 2021,

were $ 50,818 , $ 7,195 and $ 17,779 , respectively.

also sell products to Brownie’s Global Logistics, LLC (“BGL”) and 940 Associates, Inc.

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Carmichael purchases products from us for his personal use.

Accounts receivable

from BGL, 940 A and Mr.

Carmichael totaled $ 897 at December 31, 2021 and $ 23,321 , respectively, at December 31, 2020.

owed BGL $ 32,267 and

December 31, 2021 and 2020, respectively, which represents purchase of inventory including batteries for Sea Lion (battery operated unit)

and Honda engines for our regular gasoline powered units.

As of December 31, 2021, the Company also had an amount due of $ 5,000 to

receivable from BGL, 940 A and Mr.

Carmichael totaled $ 2,408 at December 31,2022 and $ 897 at December 31, 2021.

owed BGL $ 2,980 and $ 32,267 at December 31, 2022 and 2021, respectively, which represents purchase of inventory including batteries for

Sea Lion (battery operated unit) and Honda engines for our regular gasoline powered units.

As of December 31, 2022, the Company also

had an amount due of $ 5,000 to Mr.

Carmichael for an advance to BLU3,Inc.

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The agreement

provides for a royalty to be paid equal to the greater of 2.5 %

on all sales of Trebor or $ 15,000

Total royalty fees paid to 940 A in the years

ended December 31, 2021 and 2020 totaled $ 75,161

and $ 67,808 ,

respectively.

The Company had accrued royalties of $ 7,735 and $ 4,280 for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021 Christopher Constable had an open accounts

receivable balance of $ 428 .

As of December 31, 2021, two employees had open accounts receivable

balances totaling $ 184 .

provides for a royalty to be paid equal to the greater of 2.5 % on all sales of Trebor or $ 15,000 per quarter.

Total royalty fees paid

to 940 A in the years ended December 31, 2022 and 2021 totaled $ 61,308 and $ 75,161 , respectively.

The Company had accrued royalties of

$ 2,845 and $ 7,735 for the years ended December 31, 2022 and 2021, respectively.

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 $ .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.

July 29, 2019 the Company agreed to pay the members of the Company’s Board of Directors, including Mr.

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director, an annual fee of $ 18,000 for serving on the Company’s Board of Directors for the year ending December 31, 2019.

December 31, 2020, the Company has accrued $ 85,500 in Board of Directors’ fees.

December 31, 2021, the Company had accrued $ 112,500 in Board of Directors’ fees.

On August 21, 2020 the Company’s Board of

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the Company accrued an additional $ 36,000 in Board of Directors’ fees for a total of $ 148,500 in accrued fees.

December 2018, the Company issued 20,000,000

shares of common stock to Robert M.

as an incentive bonus.

As the vesting of the shares was subject to continued employment by Mr.

Carmichael through January 2, 2020, for

the years ended December 31, 2020, the Company treated the shares as issued but not as yet outstanding for the year ended December 31,

Expense for the issuance is being recognized over the full vesting period, and accordingly, the Company recognized stock compensation

expense of $ 1,280

during the year ended December 31, 2020 and was

fully expensed.

July 29, 2019 the Company issued options to purchase up to an aggregate of 10,380,952

shares of common stock to Blake Carmichael.

options were issued pursuant to a stock option grant agreements and are exercisable at $ 0.018

per share for a period of five

years from the date of issuance, subject to vesting

over a period of six months.

The fair value of the options totaled $ 43,582

using the Black-Scholes option pricing model

with the following assumptions:

(i) risk free interest rate of 2.10 %,

(ii) expected life of 5

years , (iii) dividend yield of 0 %,

(iv) expected volatility of 172 %.

Stock option expense recognized for the year ended December 31, 2020 was $ 5,362

and was fully expensed.

July 29, 2019 the Company issued Robert M.

Carmichael options to purchase up to 20,761,904

shares of common stock.

The options were issued

pursuant to a Grant Agreement and are exercisable at $ 0.018

per share for a period of five

years from the date of issuance, subject to vesting

over a period of six months.

The fair value of the options totaled $ 87,147

using the Black-Scholes option pricing model

with the following assumptions:(i) risk free interest rate of 2.10 %,

(ii) expected life of 5

years , (iii) dividend yield of 0 %,

(iv) expected volatility of 172 %.

Stock option expense of $ 10,274

was recognized for the year ended December 31,

2020 and was fully expensed.

January 2020 the Company issued 2,647,065 shares of common stock in exchange for $ 45,000 to an accredited investor and daughter of Mr.

Hyatt, a member of our Board of Directors.

February 2020 the Company issued 12,500,000 shares of common stock related to the exercise of common stock purchase warrants at an exercise

price of $ .01 , for a total conversion price of $ 125,000 .

The shares were issued to Mr.

Hyatt, a member of the Board of Directors.

April, 2020 the Company issued 10,000,000 shares of common stock related to the exercise of common stock purchase warrant at an exercise

price of $ .01 per share.

The Company received proceeds of $ 100,000 upon such exercise from Mr.

in April 2020 the Company sold an aggregate of 10,000,000

shares of its common stock at a purchase

price $ 0.025

per share to Mr.

Hyatt, resulting in proceeds

to the Company of $ 250,000 .

April 14, 2020 the Company entered into a Non-Qualified Stock Option Agreement with Mr.

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as additional compensation the Company granted Mr.

Carmichael an option to purchase up to an aggregate of 125,000,000

shares of the Company’s common stock at

an exercise price of $ .045

This option is further detailed in

Carmichael an option to purchase up to an aggregate of 125,000,000 shares of the Company’s

common stock at an exercise price of $ .045 per share.

During the years ended December 31, 2022 and December 31, 2021 the Company expensed

and $ 655,515

in relation to this option agreement, respectively.

May 21, 2020, the Company issued to Mr.

Carmichael a total 725,087

shares with a fair value of $ 31,904

for his work on the BLU3-VENT project.

August 31, 2020, September 30, 2020 and October 31, 2020 the Company issued and aggregate of 2,795,000

shares with a fair market value of $ 45,292

to Christopher Constable on behalf of Brandywine,

LLC in accordance with a consulting contract dated August 10, 2020.

This consulting agreement was terminated upon the execution of Mr.

Constable’s employment agreement.

November 5, 2020 the Company entered into a Non-Qualified Stock Option agreement with Christopher Constable as part of his employment

agreement as the Company’s Chief Executive Officer.

Under the terms of the option agreement, the Company granted Mr.

a 5-year option to purchase 5,434,783

shares of the Company’s common stock at

an exercise price of $ .0184 ,

the “Compensation Options”.

The Compensation Options were immediately vested.

The fair value of the options on the date of

the grant was $ 106,199

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .16 %,

ii) expected life of 2.5

years, iii) dividend yield of 0 %,

iv) expected volatility of 341 %.

Stock option expense recognized during the year ended December 31, 2020 for this option was $ 106,890 .

$ 655,516 and $ 874,021 in relation to this option agreement, respectively.

As of December 31, 2022, there were 50,000,000 shares vested

from this option.

on November 5, 2020 the Company entered into a Non-Qualified Option Agreement with Mr.

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as additional compensations, the Company granted an option (the “Bonus Option”) to purchase up to an aggregate of 30,000,000

shares of the Company’s common stock at

an exercise price of $ .0184

This option is further detailed in

During the year ended December 31, 2021, the company expensed $ 82,734

and $ 0 , respectively.

shares of the Company’s common stock at an exercise price of $ .0184 per share.

During the years ended December 31, 2022 and December

31, 2021, the Company expensed $ 63,267 and $ 82,734 , respectively.

As of December 31, 2022, there were 5,000,000 shares vested from this

March 25, 2021, the Company issued 27,500,000 shares of common stock to Charles.

1 unchanged sentence

of $ 275,000 .

of December 31, 2021, options to purchase 25,000,000

shares of common stock held by Mr.

vested in accordance with Carmichael Option agreement as further discussed in Note 13 of these financial statements.

August 1, 2021 as part of the Blake Carmichael Agreement (see Note 15) the Company entered into a Non-Qualified Stock Option

2 unchanged sentences

option to purchase 3,759,400

shares of the Company’s common stock at

an exercise price of $ 0.0399

shares of the Company’s common stock at an exercise price of $ 0.0399

(the “BC Compensation Options”), 33.3%

of the shares subject to the Option vest upon the execution of the agreement, 33% at the first anniversary date and 33% upon the second

anniversary date and (ii)(ii) a 5 -year

of the shares subject to the Option vest upon the execution of the agreement, 33% at the first anniversary date and 33% upon the

second anniversary date and (ii)(ii) a 5 -year

option to purchase up to 18,000,000

shares to vest annually on a contract year basis,

based upon the achievement of certain financial metrics tied to revenue and EBITDA.

For the year ended December 31, 2021

the company expensed a total of $ 21,810 .

September 1, 2021, the Company issued Charles Hyatt, a member of our Board of Directors, 10,000,000 units of the securities of the Company,

with the unit consisting of 1 share of common stock and 1 two year common stock purchase warrants exercisable at $ 0.025 per share in

consideration of $ 250,000 .

September 1, 2021, the Company issued Grace Hyatt, the adult child of a member of our Board of Directors, 600,000 units of the securities

of the Company, with the unit consisting of 1 share of common stock and 1 two year common stock purchase warrants exercisable at $ 0.025

shares to vest annually on a contract year basis, based upon the achievement of certain financial metrics tied to revenue and

EBITDA, which for the years ended December 31, 2022 and December 31, 2021 the Company expensed $ 49,692

and $ 21,810 , respectively.

September 1, 2021, the Company issued Charles Hyatt, a member of the Company’s Board of Directors, 10,000,000

units, with each unit consisting of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise

price of $ 0.025

per share in consideration of $ 250,000 .

September 1, 2021, the Company issued Grace Hyatt, the adult child of Charles Hyatt, 600,000

units of the securities of the Company, with each unit consisting of one share of common stock and a two-year warrant to purchase

one share of common stock at an exercisable at $ 0.025

per share in consideration of $ 15,000 .

November 5, 2021 the Company entered into a Non-Qualified Stock Option agreement with Christopher Constable as part of his

employment agreement as the Company’s Chief Executive Officer.

Under the terms of the option agreement, the Company granted

Constable a five -year

option to purchase 2,403,846

shares of the Company’s common stock at an exercise price of $ .0416 ,

the “Compensation Options”.

The Compensation Options were immediately vested.

The fair value of the options on the date

of the grant was $ 98,976

using the Black-Scholes option pricing model with the following assumptions:

(i) risk free interest rate of .53 %,

(ii) expected life of 2.5

years, (iii) dividend yield of 0 %,

and (iv) expected volatility of 324.5 %.

Stock option expense recognized during the year ended December 31, 2021 for this option was $ 98,976 .

February 2, 2022, the Company issued Charles Hyatt, a director, 10,000,000 shares upon the exercise of a warrant at $ 0.025 per share

in consideration of $ 250,000 .

February 2, 2022, the Company issued Grace Hyatt, the adult child of Charles Hyatt, a director, 600,000 shares upon the exercise of a

warrant at $ 0.025 per share in consideration of $ 15,000

November 5, 2022 the Company entered into a Non-Qualified Stock Option agreement with Christopher Constable as part of his

employment agreement as the Company’s Chief Executive Officer.

Under the terms of the option agreement, the Company granted

Constable a five -year

option to purchase 3,968,254

shares of the Company’s common stock at an exercise price of $ .0252

the “Compensation Options”.

The Compensation Options were immediately vested.

The fair value of the options on the date

of the grant was $ 95,969

using the Black-Scholes option pricing model with the following assumptions:

(i) risk free interest rate of .

(ii) expected life of 2.5

years, (iii) dividend yield of 0 %

and (iv) expected volatility of 256 %.

Stock option expense recognized during the year ended December 31, 2022 for this option was $ 95,969 .

December 13, 2022, the Company issued 5,714,285

units, each unit consists of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise

price of $ 0.0175

per share to Charles Hyatt a director, in a private offering for proceeds of $ 100,000 .

Accounts Payable and Accrued Liabilities

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December 31, 2021

Asset purchase agreement payable

Accrued expenses

Accrued recall reserve fee

Accrued Board of Directors fees

Convertible Debentures, and Loans Payable

debentures consist of the following at December 31, 2021:

Further information regarding the recall reserve fee

can be found in note 15.

Convertible Promissory Notes and Loans Payable

Promissory Notes

Promissory Notes consist of the following at December 31, 2022:

Schedule of Convertible Debentures

debentures consist of the following at December 31, 2021:

Company borrowed $ 10,000

in exchange for a convertible

note (the “Hoboken Convertible Note”).

The holder at its option may convert all or part of the note plus accrued

interest into common stock at a price of 30 %

discount as determined from the average four highest closing bid prices over the preceding five trading days.

The Company valued

the beneficial conversion feature of the convertible debenture at $ 4,286 ,

which was accreted to interest expense over the period of the note.

On February 22, 2021, this note and accrued interest of $ 4,777

were converted by the

holder for 422,209

shares of common stock

in accordance with the terms of the note.

December 1, 2017, the Company issued a $ 50,000

principal amount 6 %

secured convertible promissory note, initially due December

1, 2018 , subject to extension.

The note is secured with such assets of the Company equal to the principal and accrued interest, is guaranteed by the Company’s

wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Mr.

conversion price under the note initially ranged from $ 0.02 per share if converted in the first year to $ 0.125 per share if converted

in year five.

The lender may convert at any time until the note plus accrued interest is paid in full.

Various other fees and penalties

apply if payments or conversions are not done timely by the Company.

The lender will be limited to maximum conversion of 9.99 % of

the outstanding common stock of the Company at any one time.

In 2019, the maturity date of the note was extended for one additional

year to December 31, 2019 with a reduction in the conversion price to $ 0.01 per share.

The Company recorded a loss on extinguishment

of debt of $ 32,000 upon the modification of conversion price.

On June 10, 2021, this note and accrued interest of $ 10,554 were converted

by the holder for 6,055,358 shares of common stock in accordance with the terms of the note.

December 5, 2017, the Company issued a $ 50,000

principal amount 6 %

secured convertible promissory note, initially due December

4, 2018 , subject to extension.

The Company borrowed $ 10,000

in exchange for a convertible note (the “Hoboken Convertible Note”).

The holder at its option may convert all or part

of the note plus accrued interest into common stock at a price of 30 % discount as determined from the average four highest closing

bid prices over the preceding five trading days.

The Company valued the beneficial conversion feature of the convertible debenture

at $ 4,286 , which was accreted to interest expense over the period of the note.

On February 22, 2021, this note and accrued interest

of $ 4,777 were converted by the holder into 422,209 shares of common stock in accordance with the terms of the note.

On December 1, 2017, the

Company issued a $ 50,000 principal amount 6 % secured convertible promissory note, initially due December 1, 2018 , subject to extension.

The note is secured with such assets of the Company equal to the principal and accrued interest, is guaranteed by the Company’s

wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Mr.

conversion price under the note initially ranged from $ 0.02 per share if converted in the first year to $ 0.125 per share if converted

in year five.

The lender may convert at any time until the note plus accrued interest is paid in full.

Various other fees and penalties

apply if payments or conversions are not done timely by the Company.

The lender will be limited to maximum conversion of 9.99 % of

the outstanding common stock of the Company at any one time.

In 2019, the note was extended for one additional year to December 31,

The conversion price under

the note initially ranged from $ 0.02 per share if converted in the first year to $ 0.125 per share if converted in year five.

lender may convert at any time until the note plus accrued interest is paid in full.

Various other fees and penalties apply if payments

or conversions are not done timely by the Company.

The lender will be limited to maximum conversion of 9.99 % of the outstanding common

stock of the Company at any one time.

In 2019, the maturity date of the note was extended for one additional year to December 31,

2019 with a reduction in the conversion price to $ 0.01 per share.

1 unchanged sentence

upon the modification of conversion price.

On June 10, 2021, this note and accrued interest of $ 10,554 were converted by the holder

into 6,055,358 shares of common stock in accordance with the terms of the note.

On December 5, 2017, the

Company issued a $ 50,000 principal amount 6 % secured convertible promissory note, initially due December 4, 2018 , subject to extension.

The note is secured with such assets of the Company equal to the principal and accrued interest, is guaranteed by the Company’s

wholly owned subsidiaries, Trebor and BHP and the personal guarantee of Mr.

The conversion price under

the note initially ranged from $ 0.02 per share if converted in the first year to $ 0.125 per share if converted in year five.

lender may convert at any time until the note plus accrued interest is paid in full.

Various other fees and penalties apply if payments

or conversions are not done timely by the Company.

The lender will be limited to maximum conversion of 9.99 % of the outstanding common

stock of the Company at any one time.

In 2019, the note was extended for one additional year to December 31, 2019 with a reduction

in the conversion price to $ 0.01 per share.

The Company recorded a loss on extinguishment of debt of $ 99,000 upon the modification

of conversion price.

The maturity date was further extended to December 31, 2021.

On August 18, 2021, this

note and accrued interest of $ 11,145 were converted by the holder for 6,114,516 shares of common stock in accordance with the terms

September 3, 2021, the Company issued a $ 346,500

note payable to Summit

Holding V, LLC as part of the acquisition of SSI.

The note carries 8 %

unsecured convertible

promissory note, due September 3, 2024.

Payments on the note are to be equivalent to 50 %

of the adjusted net profit

of Submersible Systems, Inc., payable calendar quarterly commencing on December 31, 2021.

Interest is payable in company

stock at the conversion price of $ .051272

and shall be paid quarterly.

The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $ .051272

at any time up to the

maturity date of the note.

The Company recorded $ 12,355

for the beneficial conversion

September 3, 2021, the Company issued a three-year 8 %

unsecured convertible

promissory note for $ 3,500

to Tierra Vista Partners,

LLC as part of the acquisition of SSI.

Payments on the note are to be equivalent to 50 %

of the adjusted net profit

of SSI, payable calendar quarterly commencing on December 31, 2021.

Interest is payable quarterly in common

stock of the Company at the conversion price of $ .051272

The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $ .051272

at any time up to the

maturity date of the note.

The Company recorded $ 125

for the beneficial conversion

Company entered into a non-interest-bearing loan agreement of $ 200,000 with Tom Gonzales on July 1, 2013.The loan is payable upon demand.

During the years ended December 31, 2020 and 2020, the Company repaid $ 40,000 and $ 60,000 respectively.

The loan balance was $0 and $40,000

as of December 31, 2021 and 2020, respectively.

Company issued an unsecured, non-interest-bearing note of $ 10,000

with Hoboken Street Association on October 15,

The note was forgiven as part of the conversion of the Hoboken Convertible Note on February 22, 2021 as described above.

recorded a gain on settlement of debt of $ 10,000 .

The note balance as of December 31, 2021 and December 31, 2020 was $ 0

and $ 10,000 ,

September 30, 2019, BLU3 financed the purchase of certain plastic molding equipment through Marlin Capital Solutions (“Marlin

The loan amount at inception was $ 96,725 .

Company entered into an Equipment Finance Agreement with Marlin Capital pursuant to which it agreed to make 36 equal

monthly installments of $ 3,143.80 .

The Equipment Finance Agreement contains customary events of default.

The loan balance was $ 25,079

as of December 31, 2021 and $ 60,070

as of December 31, 2020.

of Future Amortization of Loans Payable

Payment Amortization

2025 and thereafter

Total Loan Payments

Current portion of Loan payable

Non-Current Portion of Loan Payable

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.

The loan balance as of December 31, 2021 was $ 43,122

and $ 52,118 as of December 31, 2020.

of Future Amortization of Loans Payable

On August 18, 2021, this note and accrued interest

of $ 11,145 were converted by the holder into 6,114,516 shares of common stock in accordance with the terms of the note.

On September 3, 2021, the

Company issued a $ 346,500 note payable to Summit Holding V, LLC as part of the acquisition of SSI.

The note carries 8 % unsecured

convertible promissory note, due September 3, 2024 .

Payments on the note are to be equivalent to 50 % of the adjusted net profit of

Submersible Systems, Inc., payable calendar quarterly commencing on December 31, 2021.

Interest is payable in company stock at the

conversion price of $ 0.051272 and shall be paid quarterly.

The note holder may convert any outstanding principal and unpaid interest

at a conversion rate of $ 0.051272 at any time up to the maturity date of the note.

The Company recorded $ 12,355 for the beneficial

conversion feature.

of Future Amortization of Notes Payable

Payment Amortization

2025 and thereafter

Total Note Payments

1 unchanged sentence

Non-Current Portion of Notes Payable

May 19, 2021, the Company, through its wholly owned subsidiary BLU3, executed an equipment finance agreement to finance the purchase

of certain plastic molding equipment through Navitas Credit Corp.

The amount financed is $ 75,764

payable over 60

equal monthly installments of $ 1,611

(the “Navitas Note”).

The equipment

finance agreement contains customary events of default.

The agreement was fully funded as of December 31, 2021.

Schedule of Future Amortization of Loans Payable

On September 3, 2021, the

Company issued a three-year 8 % unsecured convertible promissory note for $ 3,500 to Tierra Vista Partners, LLC as part of the acquisition

Payments on the note are to be equivalent to 50 % of the adjusted net profit of SSI, payable calendar quarterly commencing

on December 31, 2021.

Interest is payable quarterly in common stock of the Company at the conversion price of $ 0.051272 per share.

The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $ 0.051272 at any time up to the

maturity date of the note.

The Company recorded $ 125 for the beneficial conversion feature.

Schedule of Future Amortization

of Notes Payable

Payment Amortization

1 unchanged sentence

Current portion of note payable

Non-Current Portion of Note Payable

Non-Current Portion of Notes Payable

On September 30, 2022,

the Company issued a convertible demand 8 % promissory note in the principal amount of $ 66,793 to Robert Carmichael for funds to meet

the working capital needs of LBI.

There is no amortization schedule for the note, and interest is payable in shares of common stock

of the Company at a conversion price equal to the 90 day VWAP of the Company’s stock prior to the quarterly interest payment

This note is classified as a current liability as the note holder may demand payment or convert the outstanding principal at

a conversion rate of $ 0.021 per share at any time.

The Company recorded $ 19,250 for the beneficial conversion feature.

of Future Amortization of Loans Payable

Capital BLU3 (1)

Total Loan Payments

Current Portion of Loan Payable

Non-Current Portion of Loan Payable

September 30, 2019, BLU3 financed the purchase of certain plastic molding equipment through Marlin Capital Solutions (“Marlin

The loan amount at inception was $ 96,725 .

The Company entered into an Equipment Finance Agreement with Marlin Capital

pursuant to which it agreed to make 36 equal monthly installments of $ 3,143.80 .

The Equipment Finance Agreement contains customary

events of default.

The loan balance was $ 0 as of December 31, 2022 and $ 25,079 as of December 31, 2021.

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.

The loan balance as of December 31, 2022 was $ 31,023 and $ 43,122 as

of December 31, 2021.

May 19, 2021, subsidiary BLU3, executed an equipment finance agreement to finance the purchase of certain plastic molding equipment

through Navitas Credit Corp.

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

December 31, 2022 was $ 54,930 and $ 70,157 as of December 31, 2021.

May 12, 2020, we received an unsecured loan from South Atlantic Bank in the principal amount of $ 159,600 (the “SBA Loan”),

3 unchanged sentences

The intent and purpose

of the PPP is to support companies, during the COVID-19 pandemic, by providing funds for certain specified business expenses, with a

focus on payroll.

As a qualifying business as defined by the SBA, we used the proceeds from this loan to primarily help maintain our

payroll and cover our rent and utilities as we navigated our business through the lockdowns associated with the COVID-19 pandemic until

our return to normal operations earlier in 2020.

of the PPP is to support companies, during the COVID-19 pandemic, by providing funds for certain specified business expenses, with

a focus on payroll.

As a qualifying business as defined by the SBA, we used the proceeds from this loan to primarily help maintain

our payroll and cover our rent and utilities as we navigated our business through the lockdowns associated with the COVID-19 pandemic

until our return to normal operations earlier in 2020.

term of the note is two years , though it may be payable sooner in connection with an event of default under the note.

The SBA Loan carries

a fixed interest rate of one percent per year, and a monthly payment of $ 8,983 , with the first payment due seven months from the date

of initial cash receipt.

Under the CARES Act and the PPP, certain amounts of loans made under the PPP may be forgiven if the recipients

use the loan proceeds for eligible purposes, including payroll costs and certain rent or utility costs, and meet other requirements regarding,

among other things, the maintenance of employment and compensation levels.

We used the SBA Loan for qualifying expenses and have applied

for forgiveness of the SBA Loan in accordance with the terms of the CARES Act.

On April 28, 2021, the Company was notified by South Atlantic

Bank that the SBA Loan was forgiven in full under the terms of the CARES Act.

The company recorded the forgiveness as a gain on the forgiveness

of the PPP loan of $ 159,600 on our consolidated income statement.

carries a fixed interest rate of one percent per year, and a monthly payment of $ 8,983 , with the first payment due seven months from

the date of initial cash receipt.

Under the CARES Act and the PPP, certain amounts of loans made under the PPP may be forgiven if

the recipients use the loan proceeds for eligible purposes, including payroll costs and certain rent or utility costs, and meet other

requirements regarding, among other things, the maintenance of employment and compensation levels.

We used the SBA Loan for qualifying

expenses and have applied for forgiveness of the SBA Loan in accordance with the terms of the CARES Act.

On April 28, 2021, the Company

was notified by South Atlantic Bank that the SBA Loan was forgiven in full under the terms of the CARES Act.

The company recorded

the forgiveness as a gain on the forgiveness of the PPP loan of $ 159,600 on our consolidated income statement.

note balance as of December 31, 2022 and December 31, 2021 was $ 0 .

and $ 159,600 ,

respectively.

Loan – Submersible Systems, Inc.

May 12, 2020, SSI received an unsecured loan from City National Bank in the principal amount of $ 116,160 (the “Submersible SBA

Loan”), under the CARES Act.

term of the note is two years , though it may be payable sooner in connection with an event of default under the note.

The Submersible

SBA Loan carries a fixed interest rate of one percent per year , and a monthly payment of $ 6,925 , with the first payment due seven months

from the date of initial cash receipt.

As part of the forgiveness application and directly related to the acquisition of SSI by the Company,

SSI was required to place $ 121,953 in an escrow account until forgiveness is determined and City National Bank has been paid in full

On October 15, 2021, the Company was notified by City National Bank that the Submersible SBA Loan was forgiven in full under

the terms of the CARES Act.

May 12, 2020, SSI received an unsecured loan from City National Bank in the principal amount of $ 116,160 (the “Submersible

SBA Loan”), under the CARES Act.

term of the note is two

years , but may become due and payable upon an event of default under the note.

The Submersible SBA

Loan carries a fixed interest rate of 1% per year , and a monthly payment of $ 6,925 ,

with the first payment due seven months from the date of initial cash receipt.

As part of the forgiveness application and directly

related to the acquisition of SSI by the Company, SSI was required to place $ 121,953

in an escrow account until forgiveness is determined and City National Bank has been paid in full by the SBA.

On October 15, 2021,

the Company was notified by City National Bank that the Submersible SBA Loan was forgiven in full under the terms of the CARES Act.

The restricted cash in escrow was released in full by the bank as a result of this forgiveness on November 8, 2021.

note balance as of December 31, 2022 and December 31, 2021 was $ 0 .

and $ 116,160

respectively.

June 29, 2022, SSI executed an equipment financing agreement with NFS Leasing (“NFS Leasing”) to secure replacement production

The total purchase price of the molds was $ 84,500 of which $ 63,375 was financed by NFS Leasing on August 15, 2022.

The financing

agreement has a 33 month term beginning in August 2022 with a monthly payment of $ 2,571 .

The financing agreement contains customary

events of default, is guaranteed by the Company and NFS Leasing has a lien on all of the assets of SSI.

The loan balance as of December

31, 2022 and December 31, 2021 was $ 60,804 and $ 0 , respectively.

December 12, 2022, BLU3 executed an equipment finance agreement to finance the purchase of certain plastic molding equipment through

Navitas Credit Corp.

The amount financed is $ 63,689 payable over 36 equal monthly installments of $ 2,083

(“Navitas 2”).

The equipment finance agreement contains customary events of default.

The loan balance as of December

31, 2022 was $ 63,689 and $ 0 as of December 31, 2021.

Business Combinations

with Submersible Systems, Inc.

September 3, 2021, the Company completed its merger with Submersible Systems, Inc.

Under the terms of the Merger Agreement, the

Company paid $ 1.79

million in consideration consisting of the issuance

of 27,305,442

shares of its common stock (valued at $ 1.4

million), the issuance of $ 350,000

unsecured convertible promissory notes in exchange for all of the equity of Submersible.

The 27,305,442

shares of the Company’s common stock issued

for the $ 1.44

million in consideration are subject to leak

out agreements whereby the shareholders are unable to sell or transfer based upon the following:

of Holding Period and Shares Eligible to be Sold

Under the terms of the Merger Agreement, the Company

paid $ 1.79 million in consideration consisting of the issuance of 27,305,442 shares of its common stock (valued at $ 1.4 million), the

issuance of $ 350,000 in 8 % unsecured convertible promissory notes in exchange for all of the equity of Submersible.

The 27,305,442 shares

of the Company’s common stock issued for the $ 1.45 million in consideration are subject to leak out agreements whereby the shareholders

are unable to sell or transfer shares based upon the following:

of Holding Period and Shares Eligible To Sold

Holding Period from Closing Date

3 unchanged sentences

Leak-Out provision may be waived by the Company, upon written request by the holder of the common stock, if the Company is trading on

either 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 by a holder;

and (ii) the holder can only sell

through executing trades “On the Offer.”

either 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 by a holder;

and (ii) the holder can only sell through

executing trades “On the Offer.”

transaction costs associated with the Merger were $ 65,000 in legal fees paid $ 40,000 in cash, and 1,190,476 shares of the Company’s

15 unchanged sentences

Total purchase price

determining the number of shares of the common stock issued, the Company considered the value of the stock as defined the Merger Agreement

to be the calculated based on the volume weighted average price of a share of the Company’s common stock on the OTC Markets (“VWAP”)

for (i) 180 days prior to the date of the parties’ execution and delivery of the binding term sheet for the Merger or (ii) 180

days prior to the closing date of the Merger, whichever results in a lower VWAP.

Based on this calculation, the Company utilized calculation

(i) resulting in a conversion price of $ .051271831 .

This conversion price resulted in the issuance of 27,305,442 shares of common stock

with a fair value of $ 1,449,919 on the closing date.

determining the number of shares of the common stock issued, the Company considered the value of the stock as defined the Merger

Agreement to be the calculated based on the volume weighted average price (“VWAP”) of a share of the Company’s

common stock on the OTC Markets for (i) 180 days prior to the date of the parties’ execution and delivery

of the binding term sheet for the Merger or (ii) 180 days prior to the closing date of the Merger, whichever results in a lower

Based on this calculation, the Company utilized calculation (i) resulting in a conversion price of $ .051271831 .

This conversion price resulted in the issuance of 27,305,442

shares of common stock with a fair value of $ 1,449,919

on the closing date.

was assessed at the time of closing as to its fair value, and it was determined that a step-up analysis was necessary in order to evaluate

6 unchanged sentences

The goodwill is not expected to be deductible for tax purposes.

December 31, 2021, the Company has recorded an estimated fair value of the intangible assets and goodwill of $ 992,986 based on a preliminary

purchase price allocation prepared by management.

As a result, during the preliminary purchase price allocation period, which may be

up to one year from the business combination date, we may record adjustments to the assets acquired and liabilities assumed, with the

corresponding offset to goodwill.

After the preliminary purchase price allocation period, we record adjustments to assets acquired or

liabilities assumed subsequent to the purchase price allocation period in our operating results in the period in which the adjustments

were determined

Forma Information

following is the unaudited pro forma information assuming all business acquisitions occurred on January 1, 2021.

For all of the business

acquisitions depreciation and amortization have been included in the calculation of the below pro forma information based upon the actual

acquisition costs.

Pro Forma Information

The following unaudited pro forma information assumes

all business combinations occurred on January 1, 2021.

For all of the business acquisitions depreciation and amortization have been included

in the calculation of the below pro forma information based upon the actual acquisition costs.

Schedule of Business Acquisition, Pro Forma Information

Year ended December 31, 2021

$ ( 1,560,900 )

December 31, 2021

Basic and Diluted Loss per Share

1 unchanged sentence

information included in the pro forma amounts is derived from historical information obtained from the sellers of the businesses.

pro forma amounts above for basic and diluted weighted average shares outstanding have been adjusted to include the stock issued in connection

with the acquisition of SSI.

The pro forma amounts above for basic and diluted weighted average common shares outstanding have been adjusted to include the stock

issued in connection with the acquisition of SSI.

Coast Scuba, LLC Asset Acquisition

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.

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 .

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

of Holding Period and Shares Eligible To Sold

Holding Period

from Closing Date

Percentage of shares

eligible to be sold or transferred

Up to 100.0 %

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 .”

transaction costs associated with the acquisition were $ 10,000 in legal fees paid in cash.

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 purposes of disclosing pro forma financial information.

In connection with this transaction, we recognized the following assets and liabilities:

Summary of Asset Acquisition

Rental Inventory

Retail Inventory

Right of use asset

Lease liability

Net Assets Acquired

Goodwill and Intangible Assets, Net

following table sets for the changes in the carrying amount of the Company’ Goodwill for the year ended December 31, 2021

of Changes in Goodwill

following table sets forth the changes in the carrying amount of the Company’ Goodwill for the years ended December 31, 2022 and

Summary of Changes in Goodwill

Balance, January 1

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Balance, December 31

following table sets for the components of the Company’s intangible assets at December 31, 2021:

following table sets forth the components of the Company’s intangible assets at December 31, 2022:

Summary of Intangible Assets

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Intangible Amortization

Shareholders’ Equity

Company had 393,850,475 and 306,185,206 common shares outstanding at December 31, 2021 and December 31, 2020, respectively.

December 2018, the Company issued 20,000,000

shares of common stock to Robert M.

as an incentive bonus with a fair value of $ 200,000 .

As the shares are subject to continued employment by Mr.

Carmichael through January 2, 2020.

Expense for the issuance was recognized

over the full vesting period, and accordingly, the Company recognized stock compensation expense of $ 1,280

year ended December 31, 2020 and was fully

January 2020 the Company issued 2,647,065 shares of common stock in exchange for $ 45,000 to an accredited investor and daughter of Mr.

Hyatt, a member of our Board of Directors.

February 2020 the Company issued 12,500,000 shares of common stock related to the exercise of common stock purchase warrants at an exercise

price of $.01, for a total conversion price of $ 125,000 .

The shares were issued to Mr.

Hyatt, a member of the Board of Directors.

June 9, 2020 the Company issued an aggregate of 330,636 shares of common stock to an employee for services performed in December 2019

and the first five months of 2020.

The fair value of these shares was $ 9,520 .

April 2, 2020 the Company issued 10,000,000 shares of common stock related to the exercise of common stock purchase warrant at an exercise

price of $ .01 per share.

The Company received proceeds of $ 100,000 upon such exercise from Mr.

Hyatt, a member of our Board of Directors.

April 10, 2020 the Company sold an aggregate of 20,000,000 shares of its common stock at a purchase price $ 0.025 per share to two accredited

investors, including Mr.

Hyatt, in a private transaction, resulting in proceeds to the Company of $ 500,000 .

April 9, 2020, the Company issued to an investor relations consultant, 3,000,000 shares of common stock, with a fair market value of

April 9, 2020, the Company issued, to a corporate communications consultant 2,000,000 shares of its common stock with a fair market value

of $ 89,000 .

April 28, 2020, the Company issued 1,333,333 shares of its common stock as incentives to two employees.

The fair value of the stock was

May 21, 2020, the Company issued 3,658,633 shares of common stock with a fair market value of $ 160,980 to six individuals for compensation

related to the BLU3-VENT project.

Of the shares issued, Mr.

Carmichael received a total 725,087 shares with a fair value of $ 31,904 and

Blake Carmichael, CEO of BLU3, Inc.

who is also Mr.

Carmichael’s adult son, received a total of 849,305 shares with a fair value

of $ 37,369 .

The balance of the shares were received by employees of the Company and independent contractors.

the third quarter of 2020 the Company issued 280,038 shares of its common stock to an employee for services performed from June 2020

to August 2020.

The fair value of these shares was $ 5,890 .

the third and fourth quarters of 2020 the Company issued 2,795,000 shares of its common stock to Christopher Constable under the consulting

agreement with Brandywine, LLC.

The aggregate fair value of these shares was $ 45,659 .

December 15, 2020, the Company issued 2,100,000 shares of its common stock with a fair value of $ 40,320 related to an agreement with

Newbridge Securities to provide investment banking and business advisory services.

February 22, 2021, the Company issued 422,209 shares of common stock related to the conversion of a convertible debenture and accrued

Stockholders’ Equity

February 22, 2021, the Company issued 422,209 shares of common stock related to the conversion of a convertible note and accrued

interest of $ 14,777 .

1 unchanged sentence

of $ 120,000 .

March 25, 2021, the Company issued 27,500,000 shares of common stock to Mr.

March 25, 2021, the Company issued 27,500,000 shares of common stock to Charles F.

Hyatt, a member of our Board of Directors, in

1 unchanged sentence

February 28, 2021, the Company issued 116,279 shares of common stock to a consultant with a fair value of $ 5,000 for professional business

June 10, 2021, the Company issued 6,055,358 shares of common stock related to the conversion of a convertible debenture and accrued interest

June 10, 2021, the Company issued 6,055,358 shares of common stock related to the conversion of a convertible note and accrued interest

of $ 60,554 .

August 18, 2021, the Company issued 6,114,516 shares of common stock related to the conversion of a convertible debenture and accrued

August 18, 2021, the Company issued 6,114,516 shares of common stock related to the conversion of a convertible note and accrued

interest of $ 61,145 .

September 1, 2021, the Company issued Mr.

Hyatt, a member of our Board of Directors, 10,000,000 units of the securities of

the Company, with the unit consisting of 1 share of common stock and 1 two year common stock purchase warrants exercisable at $ 0.025

per share in consideration of $ 250,000 .

On September 1, 2021, the Company issued Charles Hyatt, a member of our Board of Directors, 10,000,000 units of the Company, with the unit consisting of one share of

common stock and a two- year warrant to purchase one share of common stock at an exercise price of $ 0.025 per share in consideration of

The Company did not pay any fees or commissions in connection with the sale of the unit.

September 1, 2021, the Company issued Ms.

Grace Hyatt, the adult child of a member of our Board of Directors, 600,000 units of the securities

of the Company, with the unit consisting of 1 share of common stock and 1 two year common stock purchase warrants exercisable at $ 0.025

September 1, 2021, the Company issued Grace Hyatt, the adult child Charles Hyatt, 600,000

units of the Company, with each unit consisting of one share of common stock and a two- year warrant to purchase one share of

common stock at an exercise price of $ 0.025

per share in consideration of $ 15,000 .

1 unchanged sentence

September, 2021, the Company issued 4,000,000

units of the securities of the Company to three

accredited investors, with the unit consisting of 1 share of common stock and 1 24 month common stock purchase warrants exercisable at

units of the Company to three accredited investors, with each unit consisting of one share of common stock and a two-year warrant to

purchase one share of common stock at an exercise price of $ 0.025

per share in consideration of $ 100,000 .

13 unchanged sentences

distribution of its product line in the US and Caribbean.

January 17, 2022, the Company issued a law firm 1,000,000 shares of common stock with a fair value of $ 27,500 as part of the agreed upon

compensation for a representation agreement.

January 31, 2022, the Company issued a consultant 121,212 shares of common stock with a fair value of $ 4,000 for consulting services

related to the dive industry.

February 2, 2022, the Company issued Charles Hyatt, a director, 10,000,000 shares from the exercise of a warrant at $ 0.025 per share

in consideration of $ 250,000 .

February 2, 2022, the Company issued Grace Hyatt, the adult child of Charles Hyatt, a director, 600,000 shares from the exercise of a

warrant at $ 0.025 per share in consideration of $ 15,000 .

February 28, 2022, the Company issued a consultant, 85,106 shares of common stock with a fair value of $ 4,000 for consulting services

related to the dive industry.

May 3, 2022, the Company issued 3,084,831 shares of common stock pursuant to the asset purchase agreement with Gold Coast Scuba, LLC

with a fair value of $ 120,000 .

May 31, 2022, the Company issued a consultant, 302,953 shares of common stock with a fair value of $ 12,000 for consulting services related

to the dive industry.

June 17, 2022, the Company issued 280,000 shares of common stock to an employee as a retirement gift.

The fair value of this stock was

June 30, 2022, the Company issued 449,522 shares of common stock to the holders of convertible notes for payment of interest through

June 30, 2022.

The fair value of these shares was $ 23,048 .

September 7, 2022, the Company issued to two accredited investors, 8,541,666 units of the Company, 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 $ 0.024 per

share in consideration of $ 205,000 .

The Company did not pay any fees or commissions in connection with the sale of the units.

September 30, 2022, the Company issued 136,527 shares of common stock to the holders of convertible notes for payment of interest for

the three months ending September 30, 2022.

The fair value of these shares was $ 7,000 .

On November 1, 2022, the Company issued an aggregate

of 1,155,881 shares to the designated shareholders in accordance with the amended STS Agreement.

The fair value of these shares was $ 30,000 .

December 13, 2022, the Company issued 5,714,286 units, each unit consists of one share of common stock and a two-year

warrant to purchase one share of common stock at an exercise price of $ 0.0175 per share to Charles Hyatt a director, in a private offering

for proceeds of $ 100,000 .

On December 31, 2022, the Company issued 198,204 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 $ 8,336 .

the second quarter of 2010, the holder of the majority of the Company’s outstanding shares of common stock approved an amendment

14 unchanged sentences

Compensation Plan

May 26, 2021 the Company adopted an Equity Compensation Plan (the “Plan”).

Under the Plan, Stock Options may be granted to

Employees, Directors, and Consultants in the form of Incentive Stock Options or Non-statutory Stock Options, Stock Purchase Rights, time

vested and/performance invested Restricted Stock, and Stock Appreciation Rights and Unrestricted Shares may also be granted under the

The maximum number of shares that may be issued under the Plan shall be 25,000,000 shares.

Common Stock to be issued under the

Plan may be either authorized and unissued or shares held in treasury by the Company.

The term of the Plan shall be ten years.

On May 26, 2021 the Company adopted an Equity Compensation Plan (the “Plan”).

Under the Plan, stock options may be granted to employees, directors, and consultants in the form of incentive stock options or non-statutory

stock options, stock purchase rights, time vested and/performance invested restricted stock, and stock appreciation rights and unrestricted

The maximum number of shares that may be issued under the

Plan is 25,000,000 shares.

The term of the Plan is ten years.

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.

Compensation Plan Information as of December 31, 2022:

4 unchanged sentences

Equity Compensation Plans Approved by Security Holders

Equity Compensation Plans Not Approved by Security Holders

July 29, 2019 the Company issued options to purchase up to an aggregate of 10,380,952 shares of common stock to Blake Carmichael.

options were issued pursuant to a stock option grant agreements and are exercisable at $ 0.018 per share for a period of five years from

the date of issuance, subject to vesting over a period of six months.

The fair value of the options totaled $ 43,582 using the Black-Scholes

option pricing model with the following assumptions:

i) risk free interest rate of 2.10 %, ii) expected life of 5 years, iii) dividend

yield of 0 %, iv) expected volatility of 172 %.

Stock option expense recognized during the year ended December 31, 2020 $ 5,362 , fully expensing

this option agreement.

July 29, 2019 the Company issued Robert M.

Carmichael options to purchase up to 20,761,904 shares of common stock.

The options were issued

pursuant to a Grant Agreement and are exercisable at $ 0.018 per share for a period of five years from the date of issuance, subject to

vesting over a period of six months.

The fair value of the options totaled $ 87,147 using the Black-Scholes option pricing model with

the following assumptions:

i) risk free interest rate of 2.10 %, ii) expected life of 5 years , iii) dividend yield of 0 %, iv) expected

volatility of 172 %.

Stock option expense recognized for the year ended December 31, 2020 was $ 10,724 , fully expensing this option agreement.

January 6, 2020 the Company issued options to purchase up to 2,000,000

shares of common stock to Mr.

Jeffrey Guzy.

options were issued pursuant to a stock option grant agreement and is exercisable at $ 0.0229

per share for a period of three

years from the date of issuance.

The options were

immediately vested.

The fair value of the options on the date of the grant was $ 40,107

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of 1.55 %,

ii) expected life of 1.5

years, iii) dividend yield of 0 %,

iv) expected volatility of 250 %.

Stock option expense recognized during the year ended December 31, 2020 for this option was $ 40,107

and was fully expensed at grant date.

January 11, 2020 the Company issued options to purchase up to 2,000,000

shares of common stock to BizLaunch Advisors,

The options were issued pursuant to a professional services agreement and are exercisable at $ 0.0229

per share for a period of three

years from the date of issuance.

The options were

immediately vested.

The fair value of the options on the date of the grant was $ 40,097

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of 1.54 %,

ii) expected life of 1.5

years, iii) dividend yield of 0 %,

iv) expected volatility of 250 %.

Stock option expense recognized during the year ended December 31, 2020 for this option was $ 40,097

and was fully expensed at grant date.

April 14, 2020 the Company entered into a Non-Qualified Stock Option Agreement with Mr.

Carmichael (the “Carmichael Option Agreement”).

Under the terms of the Carmichael Option Agreement, as additional compensation the Company granted Mr.

Carmichael an option (the “Carmichael

Option”) to purchase up to an aggregate of 125,000,000 shares of the Company’s common stock at an exercise price of $ .045

per share, of which the right to purchase 75,000,000 shares of common stock is subject to vesting upon the achievement of the net revenue

milestones set forth below (the “Net Revenue Portion of the Option”) and the right to purchase 50,000,000 shares of common

stock is subject to vesting upon official notice of the listing of the Company’s common stock on The Nasdaq Stock Market, the NYSE

American LLC or similar stock exchange.

The Net Revenue Portion of the Option shall vest as follows:

right to purchase 25,000,000 shares of the Company’s common stock shall vest at such time as the Company reports cumulative

consolidated net revenues, including revenues from related parties and revenues recognized by the Company arising out of any subsequent

acquisitions, mergers, or other business combinations following the closing date of such transaction (the collectively, “Net

Revenues”), in excess of $ 3,500,000 in the aggregate over four consecutive fiscal quarters commencing May 1, 2020 and ending

on April 30, 2023 (the “Net Revenue Period”);

right to purchase an additional 25,000,000 shares of common stock shall vest at such time as the Company reports cumulative Net Revenues

in excess of $ 7,000,000 in the aggregate over four consecutive fiscal quarters during the Net Revenue Period;

right to purchase an additional 25,000,000 shares of common stock shall vest at such time as the Company reports cumulative Net Revenues

in excess of $ 10,500,000 in the aggregate over four consecutive quarters during the Net Revenue Period.

Carmichael Option Agreement provides that the Carmichael Option is exercisable by Mr.

Carmichael on a cashless basis.

The Carmichael

Option is not transferrable by Mr.

Carmichael, and he must remain an employee of the Company as an additional term of vesting.

portion of the Carmichael Option vests, it is exercisable by Mr.

Carmichael for 90 days.

Any portion of the Carmichael Option which does

not vest during the Net Revenue Period lapses and Mr.

Carmichael has no further rights thereto.

fair value of the Carmichael Option on the date of the grate was $ 4,370,109 using the Black-Scholes option pricing model with the following

i) risk free interest rate of .26 %, ii) expected life of 1.5 years, iii) dividend yield of 0 %, iv) expected volatility of

The Company analyzed the likelihood that the vesting qualifications would be met, and as of December 31, 2021 deemed that there

was a 35% chance that the options would vest.

Therefore, stock option expense recognized during the years ended December 31, 2021 and

December 31, 2020 was $ 874,022 and $ 655,515 respectively.

November 5, 2020 the company entered into a Non-Qualified Stock Option agreement with Christopher Constable the “Constable Option

Agreement” as part of his employment agreement.

Under the terms of the option agreement, the Company granted Mr.

Constable a 5

year option to purchase 5,434,783

shares of the Company’s common stock at

an exercise price of $ .0184 ,

the “Compensation Options”.

The Compensation Options were immediately vested.

The fair value of the options on the date of

the grant was $ 106,199

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .16 %,

ii) expected life of 2.5

years, iii) dividend yield of 0 %,

iv) expected volatility of 341 %.

Stock option expense recognized during the year ended December 31, 2020 for this option was $ 106,890

and was fully expensed on grant date.

part of the Constable Option Agreement the company also granted Mr.

Constable an option (the “Bonus Option”) to purchase

up to an aggregate of 30,000,000 shares of the Company’s common stock at an exercise price of $ .0184 per share, of which the right

to purchase 10,000,000 shares of common stock is subject to vesting upon the achievement of the net revenue milestones set forth below

(the “Net Revenue Portion of the Option”) and the right to purchase 20,000,000 shares of common stock is subject to vesting

upon official notice of the listing of the Company’s common stock on The Nasdaq Stock Market, the NYSE American LLC or similar

stock exchange.

The Net Revenue Portion of the Option shall vest as follows:

right to purchase 2,000,000 shares of the Company’s common stock shall vest at such time as the Company reports cumulative

consolidated net revenues, including revenues from related parties and revenues recognized by the Company arising out of any subsequent

acquisitions, mergers, or other business combinations following the closing date of such transaction (the collectively, “Net

Revenues”), in excess of $ 5,000,000 in the aggregate over four consecutive fiscal quarters commencing January 1, 2021 and ending

on April 30, 2023 (the “Net Revenue Period”);

right to purchase an additional 3,000,000 shares of common stock shall vest at such time as the Company reports cumulative Net Revenues

in excess of $ 7,500,000 in the aggregate over four consecutive fiscal quarters during the Net Revenue Period;

right to purchase an additional 5,000,000 shares of common stock shall vest at such time as the Company reports cumulative Net Revenues

in excess of $ 10,000,000 in the aggregate over four consecutive quarters during the Net Revenue Period.

Constable Option Agreement provides that the Compensation Options and Bonus Options are exercisable by Mr.

Constable on a cashless basis.

The Carmichael Option is not transferrable by Mr.

Constable, and he must remain an employee of the Company as an additional term

Once a portion of the Constable Option vests, it is exercisable by Mr.

Constable for 4 years.

fair value of the Bonus Options on the date of the grant was $ 578,082 using the Black-Scholes option pricing model with the following

i) risk free interest rate of .14 %, ii) expected life of 2.0 years, iii) dividend yield of 0 %, iv) expected volatility of

The Company analyzed the likelihood that the vesting qualifications would be met, and as of December 31, 2021 deemed that there

was a 14% chance that the options would vest, as the measurement period does not begin until January 1, 2021.

Therefore, stock option

expense recognized during the years ended December 31, 2021 and December 31, 2020 was $ 82,734 and $ 0 , respectively.

June 14, 2021 the Company issued options to purchase up to an aggregate of 1,125,000

shares of common stock to various employees under

The options were issued pursuant to a stock option grant agreements and are exercisable at $ 0.036

per share for a period of four years from the

date of issuance, with 12.5% of the options vesting each fiscal quarter over a period of two

The fair value of the options totaled

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .21 %,

ii) expected life of 2

years, iii) dividend yield of 0 %,

iv) expected volatility of 304.77%.

The stock options expense recognized for the Year ended December 31, 2021 was $ 13,843 .

August 1, 2021 as part of the Blake Carmichael Employment Agreement (as defined below), the Company entered into a Non-Qualified

Stock Option agreement with Blake Carmichael.

Under the terms of the Blake Carmichael Employment agreement, the Company will enter into

an option contract that will grant Blake Carmichael a 5 year option to purchase 3,759,400

shares of the Company’s common stock at

an exercise price of $ .0399 ,

(the “BC Compensation Options”).

The BC Compensation Options vest 33.3% upon the execution of the agreement, 33% at the first

anniversary date and 33% upon the second anniversary date.

The fair value of the options on the date of the grant was $ 149,076

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .25 %,

ii) expected life of 2.5 years, iii) dividend yield of 0 %,

iv) expected volatility of 346.36 %.

The Company expensed $ 49,692

as of December 31, 2021.

part of the Blake Carmichael Agreement the company entered into a Non-Qualified Stock option agreement (the “BC Bonus Options”)

that will grant Blake Carmichael a 5-year option to purchase up to 18,000,000

shares to be vested annually on a contract year

basis, based upon the achievement of certain financial metrics tied to Revenue and EBITA.

The fair value of the BC Bonus Options was

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .25 %,

ii) expected life of 2.5

years, iii) dividend yield of 0 %,

iv) expected volatility of 346.36 %,

v) exercise price of .0399 per share.

The measurement period for these options began in August, 2021.

As of December 31, 2021 the Company

deemed that there was an opportunity for 3% of the total option to vest and an option expense of $ 21,810

was expensed for the year ended

December 31, 2021.

the Third Quarter, 2021 the Company issued options to purchase up to an aggregate of 175,000

shares of common stock to two employees under

The options were issued pursuant to stock option grant agreements and are exercisable at a range of $ .044

per share for a periods ranging from three

years of from the date of issuance, with quarterly

vesting periods over one to two years.

The fair value of the options totaled $ 7,149

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate from .155 %

ii) expected life of 1.5

years, iii) dividend yield of 0 % ,

iv) expected volatility of 249.38 %

The stock options expense recognized for the year ended December 31, 2021 was $ 2,989 .

September 3, 2021 the Company issued options to purchase up to an aggregate of 300,000

shares of common stock to Christeen Buban, President

of SSI under the Plan.

The options were issued pursuant to the Buban Agreement and a stock option grant agreement and is exercisable

per share for a period of five

years from the date of issuance, with 12.5 %

of the options vesting each fiscal quarter over a period of two years.

The fair value of the options totaled $ 15,814

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .315 %,

ii) expected life of 2.5 years, iii) dividend yield of 0 %,

iv) expected volatility of 339.21 %.

The stock options expense recognized for the year ended December 31, 2021 was $ 3,953 .

part of the Buban Agreement the company is also obligated to enter into a Non-Qualified Stock option agreement (the “Buban Bonus

Options”) that will grant Mrs.

Buban a 5 -year

option to purchase up to 7,110,000

shares to be vested annually on a contract year

basis, based upon the achievement of certain financial metrics tied to Revenue and EBITA.

The fair value of the Buban Bonus Options was

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .3150 %,

ii) expected life of 2.5

years, iii) dividend yield of 0 %,

iv) expected volatility of 339.21 %,

v) exercise price of .0531 per share.

The measurement period for these options began on September 3, 2021.

The company deemed that there

was no option expense to be recognized for the year ended December 31, 2021.

September 3, 2021 the Company issued options to purchase up to an aggregate of 500,000

shares of common stock to various employees of

SSI under the Plan.

The options were issued pursuant to a stock option grant agreement and is exercisable at $ 0.0531

per share for a period of four years from the

date of issuance, with 12.5 %

of the options vesting each fiscal quarter over a period of two

The fair value of the options totaled

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .21 %,

ii) expected life of 2

years, iii) dividend yield of 0 %,

iv) expected volatility of 276.1 %.

The stock options expense recognized for the year ended December 31, 2021 was $ 6,300 .

the Fourth Quarter, 2021 the Company issued options to purchase up to an aggregate of 100,000

shares of common stock to two employees under

The options were issued pursuant to stock option grant agreements and are exercisable at a range of $ .040

per share for a period of four

years of from the date of issuance, with quarterly

vesting periods over two years.

The fair value of the options totaled $ 3,863

using the Black-Scholes option pricing model

with the following assumptions:

i) risk free interest rate of .204 %

ii) expected life of 2

years, iii) dividend yield of 0 %,

iv) expected volatility of 249.38 %

The stock options expense recognized for the year ended December 30, 2021 was $ 482 .

November 5, 2021 the company entered into a Non-Qualified Stock Option agreement with Christopher Constable the “Constable Option

Agreement” as part of his employment agreement.

Under the terms of the option agreement, the Company granted Mr.

Constable a 5

year option to purchase 2,403,846 shares of the Company’s common stock at an exercise price of $ .041 , the “Compensation Options”.

The Compensation Options were immediately vested.

The fair value of the options on the date of the grant was $ 98,976 using the Black-Scholes

option pricing model with the following assumptions:

i) risk free interest rate of .53 %, ii) expected life of 2.5 years, iii) dividend

yield of 0 %, iv) expected volatility of 269.12 %.

Stock option expense recognized during the year ended December 31, 2021 for these options

were $ 98,976 .

summary of the Company’s stock option as of December 31, 2021 and 2020, and changes during the years ended December 31, 2021

and 2020 is presented below:

Schedule of Option Activity

Equity Incentive Options issued outside of the Equity Compensation Plan

Company has issued options to purchase approximately 238,439,167

shares at an average price of $ 0.036

with a fair value of approximately $ 99,000 .

For the years ended December 31, 2022 and 2021, the Company issued options to purchase 5,710,901

and 33,473,246

shares, respectively.

Upon exercise, shares of

new common stock are issued by the Company.

the years ended December 31, 2022 and 2021, the Company recognized an expense of approximately $ 951,400 and $ 1,154,800 , 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 December 31, 2022, the Company had approximately $ 3,774,300 of unrecognized pre-tax

non-cash compensation expense related to options to purchase shares, which the Company expects to recognize, based on a weighted-average

period of 1.5 years.

The Company uses straight-line amortization of compensation expense over the requisite service period for time-based

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 as they occur.

There are options to purchase approximately 11,558,800 shares that have vested as of December 31, 2022.

Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances.

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:

of Valuation Assumptions of Options

Year ended December 31,

Expected volatility

215.2 % - 266.8 %

249.4 – 346.4 %

Expected term

2.0 – 2.50 Years

2 - 2.50 Years

Risk-free interest rate

0.3 % - 1.4 %

Forfeiture Rate

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.

summary of the status of the Company’s outstanding stock options as of December 31, 2022 and 2021 and changes during the periods

ending on that date is as follows

of Outstanding Stock Option Activity

Life in Years

2 unchanged sentences

Exercisable – December 31, 2021

Life in Years

Outstanding at December 31, 2020

Outstanding – December

Exercisable – December

February 25, 2020, Mr.

Hyatt, a member of the Company’s Board of Directors, partially exercised a warrant for the acquisition of

12,500,000 shares at $ .01 per share for proceeds to the Company of $ 125,000 .

April 2, 2020 Mr.

Hyatt purchased 10,000,000 shares related to the exercise of an outstanding common stock purchase warrant at an exercise

price of $ .01 per share.

The Company received proceeds of $ 100,000 upon such exercise.

On September 7, 2020 the balance of 27,500,000

in common stock purchase warrant owned by Mr.

Hyatt, expired.

the first quarter of 2020 warrants to purchase 2,608,725 shares of common stock held by two investors expired.

September 1, 2021, the Company issued Mr.

Hyatt, a member of our Board of Directors, 10,000,000 units of the securities of

the Company, with the unit consisting of 1 share of common stock and 1 two year common stock purchase warrants exercisable at $ 0.025

per share in consideration of $ 250,000 .

The Company did not pay any fees or commissions in connection with the sale of the unit.

September 1, 2021, the Company issued Ms.

Grace Hyatt, the adult child of a member of our Board of Directors, 600,000 units of the securities

of the Company, with the unit consisting of 1 share of common stock and 1 two year common stock purchase warrants exercisable at $ 0.025

following table summarizes information about employee stock options outstanding at December 31, 2022

of Exercise Price of Employee Stock Options Outstanding

Range of Exercise Price

Number outstanding at December 31, 2022

Weighted average remaining life

Weighted average exercise price

Number exercisable at December 31, 2022

Weighted average exercise price

Weighted average remaining life

0.018 - $ 0.0225

0.0229 - $ 0.0325

0.0360 - $ 0.0425

0.0440 - $ 0.0531

Outstanding options

of December 31, 2022, the Company had approximately $ 3,774,300 of unrecognized pre-tax non-cash compensation expense related to options

to purchase shares, which the Company expects to recognize, based on a weighted-average period of 1.5 years.

September 1, 2021, the Company issued Charles Hyatt 10,000,000 units, each unit consisted of one share of common stock and a two-year

warrant to purchase one share of common stock at an exercise price of $ 0.025 per share in consideration of $ 250,000 .

September 1, 2021, the Company issued Grace Hyatt, the adult child of Charles Hyatt, 600,000 units, each unit consisted of one share

of common stock and a two-year warrant to purchase one share of common stock at an exercise price of $ 0.025 per share in consideration

of $ 15,000 .

September, 2021, the Company issued 4,000,000 units to three accredited investors, each unit consisting of one share of common stock

and a two-year warrant to purchase one share of common stock at $ 0.025 per share in consideration of $ 100,000 .

February 2, 2022, the Company issued Charles Hyatt 10,000,000 shares of common stock upon the exercise of a warrant at $ 0.025 per share

in consideration of $ 250,000 .

February 2, 2022, the Company issued Grace Hyatt, the adult child of Charles Hyatt, 600,000 shares of common stock upon the exercise

of a warrant at $ 0.025 per share in consideration of $ 15,000 .

September 7, 2022, the Company issued an aggregate of 8,541,666 units to two accredited investors.

Each unit consisted 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 $ 0.024

per share in consideration of $ 205,000 .

The Company did not pay any fees or commissions in connection with the sale of the unit.

September, 2021, the Company issued 4,000,000 units of the securities of the Company to three accredited investors, with the unit consisting

of 1 share of common stock and 1 two year common stock purchase warrants exercisable at $ 0.025 per share in consideration of $ 100,000 .

The Company did not pay any fees or commissions in connection with the sale of the unit.

summary of the Company’s warrants as of December 31, 2021 and 2020, and changes during the years ended December 31, 2021

and 2020 is presented below:

of Warrants Activity

December 13, 2022, the Company issued to Charles Hyatt, 5,714,285 units.

Each unit consisted 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 $ 100,000 .

summary of the Company’s warrants as of December 31, 2022 and 2021, and changes during the years ended December 31, 2022 and 2021

is presented below:

Schedule of Warrants Activity

Number of Warrants

1 unchanged sentence

Contractual Life in Years

Aggregate Intrinsic Value

Outstanding at December 31, 2020

( 22,500,000 )

( 30,108,725 )

Outstanding – December 31, 2021

Exercisable – December 31, 2021

Number of Warrants

Exercise Price

Contractual Life in Years

Aggregate Intrinsic Value

Outstanding at December 31, 2020

( 10,600,000 )

Outstanding – December 31, 2022

19 unchanged sentences

Reserves for slow moving inventory

Reserve for recall

Net operating loss carryforward

Total deferred tax assets

Deferred tax liabilities

Reserve for recall

Total deferred tax liability

Total deferred tax

Valuation allowance

4 unchanged sentences

The Company has established a 100 %

valuation allowance against deferred tax assets of $ 1,504,200 ,

valuation allowance against deferred tax assets of approximately $ 2,184,400 ,

due to the uncertainty regarding realization reserve against the deferred tax assets.

The change in valuation allowance was an increase

of $ 40,100 .

The change in valuation allowance was an

increase of $ 680,108 .

The Company has approximately $ 3,346,650

loss carryforward that expire through 2037 and $ 2,125,933

carryforward indefinitely, but is limited to 80% of taxable income in any one year .

that carryforward indefinitely but is limited to 80% of taxable income in any one year.

effective tax rate used for calculation of the deferred taxes as of December 31, 2021 was 25.35 %.

The Company has established a 100 %

valuation allowance against deferred tax assets of $ 1,544,400

due to the uncertainty regarding realization

reserve against the deferred tax assets.

valuation allowance against deferred tax assets of $ 1,504,200 due to the uncertainty regarding realization reserve against the deferred

The change in valuation allowance was an increase of $ 40,100.

4 unchanged sentences

Permanent differences

Temporary differences

Change in valuation allowance

Effective tax rate

The Company’s income

tax returns for 2017 through 2021 remain subject to examination by the Internal Revenue Services and state tax authorities.

Company’s income tax returns for 2019 through 2022 remain subject to examination by the Internal Revenue Services and state tax

Commitments and Contingencies

August 14, 2014, the Company entered into a thirty-seven-month term lease for its initial facilities in Pompano Beach, Florida, commencing

on September 1, 2014.

Terms included payment of $ 5,367 security deposit;

base rent of approximately $ 4,000 per month over the term of

the lease plus sales tax;

and payment of 10.76 % of annual operating expenses (i.e.

common areas maintenance), which was approximately

$ 2,000 per month subject to periodic adjustment.

On December 1, 2016, we entered into an amendment to the initial lease agreement, commencing

on October 1, 2017, extending the term for an additional eighty-four months, expiring September 30, 2024 .

The base rent was increased

to $ 4,626 per month with a 3 % annual escalation throughout the amended term.

On January 4, 2018, the Company entered

into a sixty-one month lease renewal for its facility in Huntington Beach, CA, commencing on February 1, 2018.

Terms included base rent

of approximately $ 9,300 Gross per month for the first 12 months and increasing 2.5 % annual escalation throughout the amended term.

Company paid a security deposit of $ 8,450 with the initial lease that ended with the renewal.

November 11, 2018, the Company entered a new lease agreement for approximately 8,025 square feet adjoining its existing facility in Pompano

Beach, Florida.

Terms of the new lease include a sixty-nine month term commencing on January 1, 2019, or the date the Company took possession

of the premises, if earlier;

a $ 6,527 security deposit;

initial base rent of approximately $ 4,848 per month escalating at 3 % per year

during the term of the lease plus Florida state sales tax and payment of 10.11 % of the buildings annual operating expenses (i.e.

area maintenance) which is approximately $ 1,679 per month subject to adjustment as provided in the lease.

Company, Trebor and other third parties, were each named as a co-defendants under actions initially filed in March 2015 in the Circuit

Court of Broward County under Case No.

CACE-15-03238 and CACE -16-0000242 by the Estate of Ernesto Rodriguez, claiming wrongful death

and products liability resulting in the decedent’s drowning death while using a Brownie’s Third Lung product.

was settled in June 2020 for $ 50,000 , and further modified into a lump sum payment of $ 44,200 ( 88.4 % of the original settlement amount)

which was paid in full on August 25, 2020.

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.

Effective December 31, 2019, the Company entered into

1 to the STS Agreement (“Addendum No.

1”) to amend the payment due upon the first commercial sale of NEMO.

accordance with Addendum No.

1, $ 8,250 was paid in cash and $ 8,250 was accrued as of December 31, 2019, and paid during the year ended

December 31, 2020.

The Company issued 828,221 shares of common stock in satisfaction of $ 13,500 for the first commercial sale of NEMO

with a fair value of $ 19,635 .

Effective June 30, 2020, the Company entered into Addendum No.2 to the Patent License Agreement (“Addendum

No.2”) This addendum is to set limits and expectations of the assistance from STS rated to designing and commercializing NextGen

diving products, and that STS receive deferred consideration for uncompensated services.

2 also states that if the Company

terminate the STS Agreement before December 31, 2024 , then the Company will pay STS $ 180,000 , less cumulative royalties paid in excess

of $ 334,961 for years 2020, 2021, 2022, 2023 and 2024.

August 14, 2014, the Company entered into a thirty-seven month lease for its facilities in Pompano Beach, Florida, commencing on September

Terms included payment of a $ 5,367 security deposit;

base rent of approximately $ 4,000 per month over the term of the lease

plus sales tax;

and payment of 10.76 % of annual operating expenses (common areas maintenance), which was approximately $ 2,000 per month

subject to periodic adjustment.

On December 1, 2016, the Company entered into an amendment to the initial lease agreement, commencing

on October 1, 2017, extending the term of the lease for an additional eighty-four months , expiring September 30, 2024 .

The base rent

was increased to $ 4,626 per month with a 3 % annual escalation throughout the amended term.

January 4, 2018, the Company entered into a sixty-one month lease renewal for its facility in Huntington Beach, California commencing

on February 1, 2018.

Terms included base rent of approximately $ 9,300 per month for the first 12 months with an annual escalation clause

of 2.5 % thereafter.

The Company paid a security deposit of $ 8,450 upon entering into the lease.

November 11, 2018, the Company entered a sixty-nine month lease commencing on January 1, 2019 for approximately 8,025 square feet adjoining

its existing facility in Pompano Beach, Florida.

Terms of the new lease include a $ 6,527 security deposit;

initial base rent of approximately

$ 4,848 per month escalating at 3 % per year during the term of the lease plus Florida state sales tax and 10.11 % of the buildings annual

operating expenses (common area maintenance) which is approximately $ 1,679 per month, subject to adjustment as provided in the lease.

On May 2, 2022, LBI entered into a lease assignment

agreement with Gold Coast Scuba, LLC and Vicnsons Realty Group, LLC whereby LBI is the assignee to the remainder of the lease for the

property located at 259 Commercial Blvd., Suites 2 and 3 in Lauderdale-By-The Sea, Florida.

The lease is in its third year of a three-year term and has a $ 2,816 per month base rent.

The lease provides an option to renew for an additional term of two years with an increase

of base rent by 3.5 %.

On September 14, 2022, SSI entered into a sixty-month

lease renewal for its facility in Huntington Beach, California effective February 1, 2022.

Terms included base rent of approximately

$ 17,550 per month for the first 24 months with an annual escalation clause of 3.0 % thereafter.

Obligations under the lease are guaranteed

by the Company.

The Company paid an additional security deposit of $ 10,727 upon entering into the lease.

On September 30, 2022, SSI entered into a sublease

of its facility in Huntington Beach, California with Camburg Engineering, Inc.(“Tenant”) commencing October 1, 2022, The term

of the sublease is through December 31, 2023 with a base monthly rent of $ 2,247 for the first twelve months with an 3 % annual escalation

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.

June 30, 2020, the Company entered into Amendment No.

2 to the STS Agreement.

The amendment set certain limits and expectations of the

assistance from STS related to designing and commercializing certain diving products, and revised the royalty payments due to STS as

consideration for uncompensated services.

The Company is obligated to pay STS a minimum yearly royalty of $ 60,000 ,

2 to its Patent License Agreement with Setaysha Technical Solutions, LLC (“STS”).

The amendment set certain limits and expectations of the assistance from STS related to designing and commercializing certain diving

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

The Company is obligated to pay STS

a minimum yearly royalty of $ 60,000 ,

per fiscal quarter, beginning in December 2019

3 unchanged sentences

fourth quarter true up against earned royalties.

In addition, if the Company should terminate the agreements with STS prior to December

31, 2023, then the Company is obligated to pay STS $ 180,000 ,

In addition, if the Company terminates the Agreement with STS prior to December 31,

2023, the Company is obligated to pay STS $ 180,000 ,

less cumulative royalties paid in excess of $ 200,174

for the years 2019 through 2024.

recorded in relation to this agreement totaled $ 157,855

for the years ended December 31, 2021 and

2020, respectively.

In accordance with the amendment the Company will pay additional minimum royalties of $ 60,000 per year or $ 15,000

In accordance

with the amendment, the Company will pay additional minimum royalties of $ 60,000

per year or $ 15,000

per quarter for the years 2022 through 2024.

April 9, 2020 the Company entered into an Investor Relations Consulting Agreement with HIR Holdings, LLC pursuant to which the Company

engaged the firm to provide investor relations services.

The term of the agreement is for a minimum guaranteed period of six months,

and thereafter is cancellable by either party upon 30 days’ notice to the other party.

As compensation the Company issued the consultant

3,000,000 shares of its common stock, valued at $ 133,500 , and is responsible for reimbursement of certain pre-approved expenses.

April 9, 2020 the Company also entered into a Corporate Communications Consulting Agreement with Impact IR Inc.

pursuant to which the

Company also engaged this firm to provide investor relations services.

The term of the agreement is six months.

As compensation the Company

issued the consultant 2,000,000 shares of its common stock valued at $ 89,000 .

June 9, 2020 the Company entered into an advertising and marketing agreement with Figment Design.

The term of the agreement is for one

year, and thereafter renew or cancel the agreement in writing 60 days before the final date.

The Company will be billed $ 5,275 for June

and July 2020 and $ 8,840 from August 2020 to July 2021.

This contract was not renewed at the expiration date.

August 1, 2020, BLU3 entered into an advertising and marketing agreement with Figment Design.

The term of the agreement is for one year

beginning August 1, 2020, and thereafter renew or cancel the agreement in writing 60 days before the final date.

Figment Design will

bill BLU3 $ 3,500 per month as retainer and $ 1,500 to $ 2,000 for monthly ad spend.

This agreement was terminated with 30 day notice prior

to its expiration.

August 1, 2020, BLU3 entered into a marketing agreement with This Way Media PTY, Ltd.

term of this agreement is for 11 months and can be cancelled with 30 days notice during the first 90 days of the agreement.

the first 90 days, the agreement can be cancelled with 60 days’ notice after the completion of the term of the agreement.

will pay This Way Media PTY, LTD $500 per month, and 5% of each affiliate sale .

This agreement expired on July 1, 2021.

is currently in negotiation to renew this agreement, but continues to pay the originally agreed upon amount and receive content

from the vendor

August 10, 2020, the Company engaged Brandywine, LLC to provide certain accounting advisory and consulting services to it under the terms

of a letter agreement.

As compensation for the services, we agreed to pay Brandywine, LLC an hourly rate of $ 125.00 and issue it 10,000

shares of our common stock for each hour billed, which such shares are issuable to a designee of Brandywine, LLC in its discretion, and

reimburse it for pre-approved expenses.

The agreement may be terminated by either party upon 15 days’ notice, and contains customary

indemnification provisions.

This agreement was terminated on November 5, 2020 upon entering into an employment agreement as detailed

below, a total number of 2,795,000 shares were issued under this agreement as of December 31, 2020 This agreement was terminate upon

the execution of the Constable Employment Agreement.

November 5, 2020 the Company and Christopher Constable entered into a three year employment agreement (the “Constable Employment

Agreement”) pursuant to which the Mr.

Constable shall serve as Chief Executive Officer of the Company.

On November 1, 2022 the Company issued to the designees of STS 1,155,881 shares of common stock with a fair value of $30,000 in accordance

with the Patent License Agreement.

Royalty recorded under this Agreement was $ 203,621

and $ 157,855

for twelve months ended December 31, 2022 and

December 31, 2021, respectively.

As included in other liabilities, accrued royalties under this agreement were $ 18,870 and 59,493 at

December 31, 2022 and 2021, respectively.

and Employment Agreements

June 9, 2020, the Company entered into a one-year advertising and marketing agreement with Figment Design for $ 8,840 per month which

agreement terminated on July 31, 2021.

November 5, 2020, the Company entered into a three-year employment agreement with Christopher Constable (the “Constable Employment

Agreement”) pursuant to which Mr.

Constable serves as Chief Executive Officer of the Company.

Previously, Mr.

had provided advisory services to the Company through the agreement with Brandywine LLC.

Constable had provided

advisory services to the Company through an agreement with Brandywine LLC.

In consideration for his services, Mr.

shall receive (i) an annual base salary of $ 200,000 , payable in accordance with the customary payroll practices of the Company, and (ii)

issuable upon execution of the Employment Agreement and on each anniversary of the date of the agreement during the term, a non-qualified

immediately exercisable five-year stock 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 Common Stock on the date of issuance.

Therefore, the Executive shall

receive an initial stock option grant to purchase 5,434,783 shares of the Corporation’s common stock at an exercise price of $ 0.0184

per share pursuant to an option award agreement (the “Option Award Agreement”).

Constable shall receive

(i) an annual base salary of $ 200,000 , payable in accordance with the customary payroll practices of the Company, and (ii) upon execution

of the Employment Agreement and on each anniversary of the date of the Agreement during the term, a non-qualified immediately exercisable

five-year option to purchase that number of shares equal to $ 100,000 of the value of the 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.

was issued an option to purchase 5,434,783 shares of the common stock at an exercise price of $ 0.0184 per share and on November 5, 2021,

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

addition, Mr.

Constable shall be entitled to receive four-year stock options to purchase shares of common stock at an exercise price

equal to $ 0.0184 per share in the amounts listed below based upon the following performance milestones during the term of the Constable

equal to $ 0.0184 per share in the following amounts based upon the following performance milestones during the term of the Constable

Employment Agreement:

(i) 2,000,000 shares - if the 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

(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;

20,000,000 shares - if the Company’s common stock is listed on the on NASDAQ or New York Stock Exchange.

Constable is also entitled to participate in all benefit programs the Company offers to its executives, reimbursement for business expenses

and three weeks of annual paid vacation.

agreement may be terminated for cause, upon his death or disability, or by the Company without cause.

Furthermore, Mr.

Constable may

terminate the agreement for “good reason” as defined in the agreement.

If the Company terminates the Constable Employment

Agreement for cause, or if it terminates upon Mr.

Constable’s death or disability, or if he voluntarily terminates the agreement,

Constable nor his estate (as the case may be) is entitled to any severance or other benefits following the date of termination.

If the Company should terminate the Constable Employment Agreement without cause or if Mr.

Constable terminates for good reason, the

Company is obligated to continue to pay him his base salary for a period of six months.

The Constable Employment Agreement also contains

customary confidentiality, non-disclosure and indemnification provisions.

to the Constable Employment Agreement, Mr.

Constable also agreed to serve on the Company’s Board of Directors and the Company agreed

to nominate him to serve on the Board during the term of the Constable Employment Agreement.

December 15, 2020 the Company engaged Newbridge Securities Corporation to provide Investment Banking and Corporate Advisory services.

The term of this agreement is for twelve months and can be terminated by either party with 14 day written notice.

As compensation for

this agreement the Company issued 2,100,000 shares of common stock with a fair market value of $ 40,320 .

(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.

March 1, 2021, the Company entered into an investor relations consulting agreement with BGM Equity Partners, LLC.

2 unchanged sentences

As compensation, the Company issued 3,000,000 shares of its common stock valued at $ 120,000 to BGM Equity Partners.

May 20, 2021, the Company entered into an exclusive distribution agreement with Chrysalis Trading CC doing business as Bright Weights

for exclusive distribution of the Bright Weights diving products in the United States and Caribbean.

The term of the agreement is 2 years

and will renew at the two-year anniversary date for an additional two-year term.

There are no minimum purchase commitments in this agreement.

The company paid to the sole shareholder of Chrysalis Trading CC 500,000 shares of its common stock at a fair market value of $ 36,690

for this exclusivity.

The agreement expired on March 1, 2022.

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 shall continue to serve as Chief Executive Officer of BLU3.

In consideration for his

services, Blake Carmichael shall receive (i) an annual base salary of $ 120,000 , payable in accordance with the customary payroll practices

of the Company, and (ii) a cash bonus equal to 5% of the net income of BLU3 payable quarterly, beginning with the first full calendar

quarter after the execution of the agreement.

(iii) Issuable upon execution of the Employment Agreement, a non-qualified five -year stock

option to purchase 3,759,400 shares at $ .0399 .

33.3% of the stock option vests immediately, 33.3% vests on the second anniversary of

the contract and 33.3% on the third anniversary of the agreement .

addition, Blake Carmichael shall be entitled to receive a five -year stock options to purchase up to 18,000,000 shares of common stock

at an exercise price equal to $ 0.0399 per share that will vest upon defined financial metrics that are measured on a contract year basis.

The metrics defined in the agreement escalate the shares available to vest based upon a revenue measurement, expediency measurement and

an EBITDA measurement.

Carmichael shall serve as Chief Executive Officer of BLU3.

In consideration for his services,

Blake Carmichael shall receive (i) an annual base salary of $ 120,000 , payable in accordance with the customary payroll practices of the

Company, and (ii) a cash bonus equal to 5% of the net income of BLU3 payable quarterly, beginning with the first full calendar quarter

after the execution of the agreement.

(iii) upon execution of the Employment Agreement, a non-qualified five-year stock option to purchase

3,759,400 shares at $ 0.0399 , 33.3% of which shares vest immediately, 33.3% vest on the second anniversary, and 33.3% vest on the third

anniversary of the agreement .

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.

August 6, 2021, the Company entered into a six-month, non-exclusive mergers and acquisitions services agreement with Newbridge Securities

merger agreement shall pay seven percent commission for the first two million dollars paid in aggregate consideration and six percent

on the aggregate consideration above two million dollars .

The fee shall be paid in the common stock of the Company.

The equity received is subject to a holding period of six months from the closing

date of the transaction.

No payment has been issued in relation to this agreement.

Corporation which provides for a 7 % commission for the first $ 2,000,000 paid in aggregate purchase price consideration and 6 % on an aggregate

purchase price in excess of $ 2,000,000 for any merger or acquisition target sourced by Newbridge, to be paid in common stock of the Company.

Such agreement expired by its terms.

September 3, 2021, SSI and Christeen Buban entered into a three-year employment agreement (the “Buban Employment Agreement”)

pursuant to which Mrs.

pursuant to which Ms.

Buban shall serve as the President of SSI.

In consideration for his 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 totaling $ 10,800 per year, (iii) a five -year stock option issued under the Plan to purchase 300,000 shares at $ .0531 .

The options vest quarterly over the next eight calendar quarters.

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.

addition, Mrs.

Buban shall be entitled to receive a five -year stock options to purchase up to 7,110,000 shares of common stock at an

exercise price equal to $ 0.0531 that will vest upon defined financial metrics that are measured on a contract year basis.

defined in the agreement escalate the shares available to vest based upon a revenue measurement, expediency measurement and an EBITDA

Company was a defendant in that certain lawsuit styled Basil Vann, as Personal Representative of the Estate of Jeffrey William

Brownie’s Marine Group, Inc., filed on May 6, 2019 in the Circuit Court of the 17 th Judicial Circuit in

and for Broward County, Florida.

The complaint, which relates to consulting services provided to the Company by the deceased between

2005 and 2017, alleges breach of contract and quantum meruit and is seeking $ 15,870.97

in unpaid consulting fees together with interest.

In April 2020, the Company filed a Motion to Dismiss, and at a hearing held in May

2021, the Court struck certain allegations contained in the complaint, the parties agreed that the quantum meruit allegation is

deemed to be an alternative to the breach of contract allegation, but permitted certain other allegations to stand.

entered mediation pursuant to the Court’s order.

This action was settled for $ 10,000

on July 12, 2021.

The company has a balance of $ 5,000 remaining on this obligation as of December 31, 2021.

Company has four operating segments as described below:

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

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

Ultra Portable Tankless Dive Systems, which sells next generation electric surface supply air diving systems and electric shallow dive

system that are battery operated and completely portable to the user.

Redundant Air Tank Systems, which manufactures and distributes a line of high pressure tanks, redundant and rescue air systems for the

military and recreational diving industries

Schedule of Segment Reporting Information

SSA Products High

Pressure Gas Systems

Portable Tankless Dive Systems

Air Tank Systems

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.

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

January 17, 2022, the Company entered into an agreement with The Crone Law Group, PC (“CLG”) for the provision of legal services.

In consideration therefor, the Company will pay CLG a monthly flat fee of $ 3,000 for the SEC reporting work, and its normal

hourly rate for any other legal work and issued 1,000,000 shares of common stock with a fair market value of $ 27,500 to CLG.

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.

Company was a defendant in an action, Basil Vann, as Personal Representative of the Estate of Jeffrey William Morris v.

Marine Group, Inc., filed on May 6, 2019 in the Circuit Court of the 17th Judicial Circuit, Broward County, Florida.

The complaint, related to consulting services provided to the Company by the deceased between 2005 and 2017, alleged breach of contract and quantum

meruit and sought $ 15,870.97 in unpaid consulting fees together with interest.

In April 2020, the Company filed a Motion to Dismiss,

and at a hearing held in May 2021, the Court struck certain allegations contained in the complaint, the parties agreed that the quantum

meruit allegation is deemed to be an alternative to the breach of contract allegation but permitted certain other allegations to stand.

The parties entered mediation pursuant to the Court’s order.

This action was settled for $ 10,000 on July 12, 2021.

paid monthly installments of $ 1,000 .

The settlement was fully paid during the second quarter of 2022.

Company has five operating segments as described below:

SSA Products, which sells

recreational multi-diver surface supplied air diving systems.

High Pressure Gas Systems,

which sells high pressure air and industrial gas compressor packages.

Ultra- Portable Tankless

Dive Systems, which sells next generation electric surface supply air diving systems and electric shallow dive system that are battery

operated and completely portable to the user.

Redundant Air Tank Systems,

which manufactures and distributes a line of high-pressure tanks and redundant air systems for the military and recreational diving

Guided Tour and Retail,

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

of Segment Reporting Information

Year ended December 31

Legacy SSA Products

High Pressure Gas Systems

Ultra-Portable Tankless Dive Systems

Redundant Air Tank Systems

Guided Tour Retail

Total Company

Cost of Revenue

4 unchanged sentences

( 1,109,340 )

(Loss) from operations

( 5,783,173 )

( 4,337,820 )

Depreciation/Amortization

Income (loss) from operations

$ ( 1,161,446 )

2 unchanged sentences

$ ( 340,435 )

$ ( 125,215 )

( 1,850,397 )

$ ( 1,852,703 )

Subsequent Events

February 2022 the Company issued 10,000,000

shares of common stock to Charles Hyatt, a

director, upon the exercise of a common stock purchase warrant at an exercise price of $ 0.025

for $ 250,000 .

February, 2022 the Company issued 600,000

shares of common stock related to Grace Hyatt,

the adult daughter of a director upon the exercise of a common stock purchase warrant at an exercise price of $ 0.025

for $ 15,000 .

January 31, 2022 and February 28, 2022 the Company issued an aggregate of 206,318 shares of its common stock with a fair value of $ 21,000

to a consultant for services related to the dive retail industry.

On January 19, 2022, SSI entered into a capital

lease with Alliance Funding Group to secure a new piece of essential equipment for its operation.

The lease has a 36 month term with

a monthly payment of $ 3,522 .

At the end of the lease SSI has the option to purchase the equipment for $3,522 plus applicable taxes.

total purchase price of machine was $108,675.

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.

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 .

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 9A. Controls and Procedures