Brownie's Marine Group, Inc 10-K

Item 1. Business. Unless specifically set forth to the contrary, when used in this report references to the “Company,” “we,” “our,” “us,” and similar terms refers to Brownie’s Marine Group, Inc., a Florida corporation, and its wholly owned subsidiaries, Trebor Industries, Inc., a Florida corporation (“Trebor”) doing business as Brownie’s Third Lung, Brownie’s High Pressure Compressor Services, Inc. a Florida corporation (“BHP”) doing business as LW Americas (“LWA”), BLU3, Inc., a Florida corporation (“BLU3”), Submersible Systems, Inc., a Florida corporation (“SSI”), doing business as Spare Air and Live Blue, Inc. (“LBI”), a Florida corporation. Overview The Company a marine technology company that wholly owns and operates five subsidiaries focused on portable air, underwater breathing, safety, and marine technologies. The Company’s businesses collectively serve recreational, professional, safety, industrial, and government-adjacent markets. The Company’s operations span surface-supplied air systems, battery-powered diving systems, miniature and emergency breathing devices, high-pressure compressor distribution and service, and consumer-facing training and experiential programs. The Company is executing a strategic transition away from legacy gasoline-powered systems toward battery-powered, software-enabled, and electrically driven technologies. The Company also operates a continental distribution and service platform supporting multiple industries beyond recreational diving. The Company seeks to leverage shared engineering, intellectual property, manufacturing, distribution, and training infrastructure across its subsidiaries to drive operational efficiencies and long-term growth. Products BWMG’s product offerings are organized across its five wholly owned operating subsidiaries, each with distinct technologies, markets, and strategic roles. Surface Supplied Air Products Brownies Third Lung designs and manufactures surface-supplied air (SSA) systems for shallow-water recreational and light professional use. Its flagship product, the patented Sea Lion®, is a floating air delivery platform capable of supporting multiple divers simultaneously for extended durations in shallow water. Historically powered by gasoline engines, Brownies Third Lung is transitioning its product line to battery-powered configurations utilizing instant-change battery systems. The Company’s patented Sea Lion architecture is also available for OEM boat builder integration across a range of boat sizes. 3 ● BIAS (Boat Integrated Air Systems): The Company developed several tankless products and complimentary accessories that it believes makes boat diving easier. The BIAS battery powered tankless kit allows boat builders, dealers and end users to seamlessly install a pre-packaged kit directly into the boat and our E-Reel, a level-winding battery powered hose reel system, provides compact storage of up to 150 feet of hose. Boaters can perform their own in-water maintenance and inspections or just dive for enjoyment. In addition to supplying air to divers, BIAS may be used for supporting air horns, inflating boat fenders/water toys and activating pneumatically operated doors. Ultra-Portable Tankless Dive Systems BLU3 develops a backpack-portable, battery-powered underwater breathing system designed exclusively for single-diver use. BLU3’s system utilizes patented, software-driven breathing control technology that dynamically regulates air delivery based on diver demand. This software-defined architecture enables reduced size, weight, and mechanical complexity compared to traditional diving systems and all competitors in this space. In the third quarter of 2025, BLU3 launched the Nomad 3X Battery which is a new battery design that has triple the capacity for three times the run time of the standard battery. The Nomad 3X Battery fits all existing Nomad units but is larger and heavier than the standard battery. As of January 2024, BLU3 is the exclusive distributor for the USA of the SeaNXT Elite sea scooter, made in France. High Pressure Gas Systems LW Americas serves as the exclusive distributor and authorized service provider for L&W Compressors across North America, Central America, and South America. LWA distributes portable, mobile, and stationary high-pressure compressor systems used in diving, fire and emergency services, industrial manufacturing, oil and gas, defense and government, aviation support, and specialized air applications. LWA is building a multi-tier distribution network including regional distributors, dealers, and authorized service centers. Engineering resources within the Company have also developed a battery-powered high-pressure fill compressor utilizing 48-volt architecture, designed for vessels and platforms that operate without diesel generators. Redundant Air Tank Systems Submersible Systems, Inc. designs and manufactures miniature and emergency breathing devices used globally across recreational diving, aviation egress, confined-space safety, marine operations, and emergency preparedness markets. Its product portfolio includes the Spare Air® , HEED® (Helicopter Emergency Egress Device) , and SWBA® (Surface Water Breathing Apparatus) product families. These compact systems are intended for redundant air supply, emergency escape, and short duration breathing applications. 4 Live Blue is the Company’s consumer-facing training and experiential subsidiary. Live Blue supports end-user education, demonstrations, and “try-before-you-buy” programs across the Company’s product lines. The brand is intended to facilitate product adoption, training, and customer engagement while enabling vertical integration from product development through end-user experience. Diving and Snorkeling Industry According to Fortune Market Insight, the Diving and Snorkelling market will reach $2.2 billion, signalling readiness for broader adoption as more enthusiasts enter the market and established players expand product offerings. Between 2025 and 2035, the market moves through scaling (2025-2030) and consolidation (2030-2035). By 2030, according to Fortune Market Insight, the market is estimated to surpass $2.6 billion, driven by growing participation in recreational diving, training programs, and tourism linked equipment sales. The 4.0% compound annual growth rate (“CAGR”) underscores steady, consistent growth, reflecting a transition from early adoption to widespread use, with scuba diving equipment becoming a standard choice for the recreational and professional divers worldwide. The Company has entered the tourist market via a guided tour program within LBI that is currently intended to act as an incubator for a scalable franchise model. The Company believes that the guided tour model is an important building block in introducing its battery powered diving products to the consumer market. Additionally, this model will not only give consumers the opportunity to “try before you buy”, but also provide experiential training for the consumer to increase the enjoyment and safety of our diving products. Yachting Industry According to Fortune Business Insights, the global yacht market was valued at $311.32 billion in 2025 and is estimated to grow from $325.96 billion in 2026 to $470.69 billion by 2034, demonstrating and CAGR of $4.70% between 2026-2034. The Company’s BIAS systems have been designed with this industry in mind. The Company markets directly to the yachting industry by leveraging its relationships with large yacht servicing companies, yacht builders and yacht brokerages. High Pressure Compressor Line According to Fortune Business Insights, the North American high pressure compressor market was valued at $6.73 billion in 2025 and is projected to grow from $7.11 billion in 2026 to $11.0 billion by 2034, exhibiting a CAGR of 5.6% during the forecast period. The global high pressure equipment market is characterized by significant technological advancements and strategic expansion by key players. High pressure equipment is utilized across multiple industries to processes that involve handling, transporting, and controlling gases or liquids at pressures far exceeding atmospheric levels. 5 The Company expects to continue to distribute L&W compressors through its YachtPro, and BIAS systems, while continuing to focus on the expansion of its distribution into non-marine related distribution channels that the Company believes should positively impact its market reach. Intellectual Property Trade Names The Company either owns or has licensed from entities in which Robert Carmichael, our Chairman and Chief Executive Officer, has an ownership interest, the following registered and unregistered trade names, trademarks and service marks: Brownie’s Third Lung™, browniedive.com, Brownie’s, Brownie’s Third Lung oval symbol, browniedive, YachtPro, NitroxMaker™, BLU3, diveBLU3.com, BLU3 Nemo, BLU3-Vent, Submersible Systems, Spare Air, HEED 3, Snorkelator, easy dive, spareair.com, HELO, RES, Gold Coast Scuba, fast float rescue harness, tankfill.com, browniestankfill, browniestankfill.com, browniespublicsafety.com, browniespublicsafety, Peleton Hose System, Twin-Trim, and Kayak Diving Hose Kit. The Company owns the following patents: Patent number Description Issued Date Expiration Date Owned by 10,758,246 Abdominal Aortic Tourniquet 9/1/2020 3/17/2034 Trebor Industries, Inc. 9,782,182 Abdominal Aortic Tourniquet 10/10/2021 10/26/2033 Trebor Industries, Inc. 9,351,737 Abdominal Aortic Tourniquet 5/31/2016 3/2/2034 Trebor Industries, Inc. 11,265,625 Automated Self-Contained Hooka system with unobtrusive aquatic data recording 3/1/2022 10/30/2039 BLU3, Inc. 11,077,924 System for adjusting pressure limits based on depth of diver(s) 8/3/2021 3/20/2039 Brownie’s Marine Group, Inc. 11,767,089 System for adjusting pressure limits based on depth of diver(s) 9/26/2023 4/10/2041 Brownie’s Marine Group, Inc. Application number Description Filed Date Owned by 17/683,502 Automated Self-Contained Hooka system with unobtrusive aquatic data recording 3/1/2022 BLU3, Inc. License Agreements On April 6, 2018, the Company entered into a patent license agreement (the “STS Agreement”) with Setaysha Technical Solutions, LLC (“STS”) pursuant to which the Company licensed certain intellectual property, including patent rights, non-patent rights and know-how from STS for use in our ultra-portable tankless dive system products. Under the STS Agreement, the Company paid an initial license fee in April 2018 through the issuance of 759,422 shares of common stock with a fair value of $30,000. The STS Agreement further provides for royalties based on annual net revenues. On December 31, 2019, the Company entered into Addendum No. 1 to the STS Agreement (“Addendum No. 1”) which amended the payments due upon the first commercial sale of Nemo. Upon entering into Addendum No. 1, $8,250 was paid to STS in cash and $8,250 was paid on January 10, 2020. On February 6, 2020, the Company issued 828,221 shares of common stock with a fair value of $18,635 in satisfaction of $13,500 for the first commercial sale of the Nemo dive system. On June 30, 2020, the Company entered into Addendum No. 2 to the STS Agreement concerning STS’s assistance related to designing and commercializing certain diving products. Addendum No. 2 provides for a minimum yearly royalty of $60,000, or $15,000 per fiscal quarter, beginning in December 2019 and increasing by 2.15% per year. With the introduction of NOMAD in the last quarter of 2021, the Company is obligated to pay an additional annual minimum royalty of $60,000 per year for the years 2022, 2023 and 2024, which increased the quarterly minimum royalty by $15,000 per quarter. On January 24, 2024, the Company entered into Addendum No. 3 to the STS Agreement. Addendum No. 3 delays the additional minimum yearly royalty of $60,000, or $15,000 per fiscal quarter from 2024 to 2025. Therefore, no additional minimum royalty was required during 2024, but was required beginning in the first quarter of 2025, which was the final year of the additional minimum royalty under the STS agreement. Royalty payments under the amended STS Agreement were $91,907 and $125,159 for the years ended December 31, 2025 and 2024, respectively. 6 Marketing Print Literature, Public Relations, and Advertising We have in-house graphic design capability to create and maintain product support literature, catalogs, mailings, web-based advertising, newsletters, editorials, advertorials, and press releases. We also, from time-to-time, target specific markets by selectively advertising in journals and magazines that we believe reach our potential customers. In addition, we strive to issue press releases, newsletters, and social media postings periodically to keep the public informed of our latest products and related endeavors. Tradeshows In 2025, the Company was represented at The Palm Beach Boat Show, The Annapolis Motor and Sailing Shows, The Fort Lauderdale Boat show, Diving Equipment, Manufacturing show, The Seattle Boat Show, The Miamaii Boat Show, Boot Dusseldorf and the HAI Heli-Expo, along with various other trade and industry shows. Websites We sell our products online through our and our subsidiaries websites and many of our products are marketed on some of our customers’ websites. In addition to these websites, numerous other websites have quick links to the Company’s website. Our products are available both domestically and internationally. Internet sales and inquiries are also supported by the Company. Product Research and Development Research and development costs for the year ended December 31, 2025 and December 31, 2024 and were $3,638 and $9,992, respectively, none of which cost is borne directly by customers. Government Regulation The SCUBA industry is self-regulating; therefore, the Company is not subject to government industry specific regulation. However, SSI, our tank manufacturing company is subject to Department of Transportation (“DOT”) regulation and testing of each of their tanks. The Company strives to promote safe diving practices within the industry and believes it is at the forefront of self-regulation through responsible diving practices. The Company is subject to all regulations applicable to “for profit” companies as well as all trade and general commerce governmental regulation. All required federal and state permits, licenses, and bonds to operate its facility have been obtained. Distribution/Customers The Company has historically been predominantly a wholesale distributor to retail dive stores, marine stores, boat dealers, builders, and the US and international militaries. Currently, the Company generates a significant amount of direct-to-consumer sales via its websites and its relationship with Amazon via BLU3, BTL and SSI. Retail sales customers include boat owners, recreational divers, commercial divers and pilots. The Company sells products to three entities owned by the brother of Robert Carmichael, the Company’s Chairman, and Chief Executive Officer and two companies owned by Mr. Carmichael. Combined sales to these five entities for 2025 and 2024, represented 8.7% and 6.9%, respectively, of the Company’s total net revenues. The majority of L&W high pressure compressors and NitroxMaker™ systems have been sold to commercial dive stores, dive operators (resorts and liveaboard dive boats), yacht builders, yacht owners, and high-pressure compressor distributors. Sales of YachtPro™ compressor systems have been split between retail sales directly to consumers and wholesale sales to OEM boat builders/resellers/brokers. 7 Suppliers/Raw Materials Principal raw materials for our business include machined parts such as rods, pistons, bearings, hoses, regulators, compressors, engines, high-pressure valves and fittings, sewn goods, and various plastic parts including pans, covers, intake staffs, and quick release connections which are typically purchased on a per order basis. Most materials are readily available from multiple vendors. Some materials require greater lead times than other materials. Accordingly, we strive to avoid out of stock situations through careful monitoring of these inventory lead times, and through avoiding single source vendors whenever possible. Principle suppliers include Lenhardt & Wagner GmbH, Xometry, Inc., Burgess Manufacturing Corp, Bix International, Inc., Carrol Stream Motor Company, Zhejiang Xiangyang Gear Electormechan, Co, Tian Li He Technology Co, Ltd, Xiamen Feipeng Insdustry Co. Ltd. and Catalina Cylinders, Inc. Competition We consider the most significant competitive factors in our business to be innovation, lifestyle, fair prices, shopping convenience, variety of available products, knowledgeable and prompt customer service and rapid and accurate order fulfillment. We currently have one significant competitor within the BTL business model, Airline by JSink, Inc. There are a variety of competitors, including Aqua Lung America, Coltri America and Bauer Compressors, Inc. in our redundant air tank systems and high-pressure compressor systems sales. In 2025 and 2024 competition has surfaced in the BLU3 business segment from companies such as AirBuddy, and a few other very low-cost Chinese manufactured competitors. Overall, we are operating in a moderately competitive environment. The price structure for all the products we distribute compares favorably with the majority of our competitors based on quality and available features. We believe that our key competitive advantage is our ability to create better quality, new products and, in some cases, new markets. Employees As of March 31, 2026, we have thirty six full-time employees, and two part-time employees. Seasonality Our product lines have historically been seasonal in nature in the United States. The peak season for the diving related products, BTL, BLU3, SSI and LBI is the second and third quarters of the year. The peak season for LWA high pressure products is typically the fourth and first quarters of the year. The Company continues to address the seasonality of the business by expanding its reach beyond the traditional markets in the U.S. to other areas of the world that may somewhat offset the seasonality.