UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2025

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 333-99393

BROWNIE’S MARINE GROUP, INC.

(Exact name of registrant as specified in its charter)

Florida	90-0226181
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4061 SW, 47th Avenue, Davie, Florida	33314
(Address of principal executive offices)	(Zip code)

(954) 462-5570

Registrant’s telephone number, including area code

Not applicable

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	Not applicable	Not applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of June 27, 2025, there were 439,805,747 shares of common stock outstanding.

TABLE OF CONTENTS

		Page No.
	PART I – FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS.	4
	PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS.	24
ITEM 1A.	RISK FACTORS.	24
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	24
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	24
ITEM 4.	MINE SAFETY DISCLOSURES.	24
ITEM 5.	OTHER INFORMATION.	24
ITEM 6.	EXHIBITS.	25

2

NOTE REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward- looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs.

You should read thoroughly this Quarterly Report with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by risk factors included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 9, 2024, which risk factors could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by applicable law.

3

PART I

ITEM 1. FINANCIAL STATEMENTS

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31, 2025			December 31, 2024
	(Unaudited)
ASSETS
Current Assets
Cash	$	341,038		$	417,678
Accounts receivable – net of allowances of $17,933 in 2025 and $52,660 in 2024		250,896			180,496
Accounts receivable - related parties		19,853			41,686
Inventory, net		2,200,553			2,062,279
Prepaid expenses and other current assets		133,426			328,785
Total current assets		2,945,766			3,030,924
Property, equipment and leasehold improvements, net		302,082			303,498
Operating lease assets		1,538,491			1,629,192
Intangible assets, net		495,449			501,489
Goodwill		249,986			249,986
Other assets		51,826			51,826
Total assets	$	5,583,600		$	5,766,915
Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued liabilities	$	655,900		$	675,950
Accounts payable - related parties		18,889			18,448
Customer deposits and unearned revenue		317,046			410,636
Other liabilities		442,175			386,402
Operating lease liabilities		418,327			394,672
Related party convertible demand note, net		39,088			38,772
Convertible notes		360,868			360,561
Current maturities long term debt		1,241			70,308
Related party notes payable		544,088			505,000
Total current liabilities		2,797,622			2,860,749
Loans payable, net of current portion		91,398			46,763
Operating lease liabilities		1,163,249			1,279,444
Total liabilities		4,052,269			4,186,956
Commitments and contingent liabilities (see note 8)
Stockholders’ equity
Preferred stock; $0.001 par value: 10,000,000 shares authorized; 425,000 issued and outstanding as of March 31, 2024 and December 31, 2023.		425			425
Common stock; $0.0001 par value; 1,000,000,000 shares authorized; 449,567,462 shares issued and outstanding at March 31, 2025 and 449,430,935 shares issued and outstanding at December 31, 2024, respectively.		43,795			44,951
Common stock payable 138,941 shares and 138,941 shares, respectively as of March 31, 2025 and December 31, 2024.		14			14
Additional paid-in capital		19,467,774			19,461,898
Accumulated deficit		(17,980,677	)		(17,927,329	)
Total stockholders’ equity	$	1,531,331		$	1,579,960
Total liabilities and stockholders’ equity	$	5,583,600		$	5,766,915

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

4

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31,

(unaudited)

	2025			2024
Net revenues
Net revenues	$	1,320,004		$	1,492,299
Net revenues - related parties		209,198			115,223
Total net revenues		1,529,202			1,607,522
Cost of net revenues
Cost of net revenues		923,287			889,918
Cost of net revenues - related parties		72,264			53,124
Royalties expense - related parties		3,992			9,061
Royalties expense		25,629			67,984
Total cost of revenues		1,025,172			1,020,087
Gross profit		504,030			587,435
Operating expenses
Selling, general and administrative		548,126			899,821
Research and development costs		1,142			3,378
Total operating expenses		549,268			903,199
Loss from operations		(45,238	)		(315,764	)
Other (income) expense, net
Other Income		18,849
Interest expense		(28,080	)		(19,952	)
Total other (income) expense - net		(9,231	)		(19,952	)
Loss income before provision for income taxes		(54,468	)		(335,716	)
Provision for income taxes		-			-
Net loss	$	(54,468	)	$	(335,716	)
Basic loss per common share	$	(0.00	)	$	(0.00	)
Diluted loss per common share	$	(0.00	)	$	(0.00	)
Basic weighted average common shares outstanding		449,430,935			438,937,858
Diluted weighted average common shares outstanding		449,430,935			438,937,858

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

5

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(unaudited)

	Preferred Stock				Common Stock				Common Stock Payable				Additional					Total
	Shares				Shares								Paid-in		Accumulated			Stockholders
	Outstanding		Par		Outstanding		Par		Shares		Amount		Capital		Deficit			Equity
Balance, December 31, 2024		425,000	$	425		449,430,935	$	44,944		138,941	$	14	$	19,460,786	$	(17,926,209	)	$	1,579,960
Shares issued for accrued interest in convertible notes		-		-		136,527		14		-				6,988		-			7,002
Stock Option Expense		-		-		-		-		-		-				-			(1,163	)
Net Loss		-		-		-		-		-		-		-		(54,468	)		(54,468	)
Balance, March 31, 2025 (unaudited)		425,000		425		449,567,462	$	44,958		138,941	$	14	$	19,467,774	$	(17,980,677	)	$	1,531,331

	Preferred Stock				Common Stock				Common Stock Payable				Additional					Total
	Shares				Shares								Paid-in		Accumulated			Stockholders
	Outstanding		Par		Outstanding		Par		Shares		Amount		Capital		Deficit			Equity
Balance, December 31, 2023		425,000		425		437,742,050	$	43,775		138,941	$	14	$	19,236,068	$	(17,685,610	)	$	1,594,672
Shares issued for the purchase of units		-		-						-		-				-
Shares issued for accrued interest in convertible notes		-		-		198,204		20		-		-		10,987		-			11,007
Stock Option Expense		-		-		-		-		-		-		12,423		-			12,423
Net Loss		-		-		-		-		-		-		-		(335,716	)		(335,716	)
Balance, March 31, 2024 (unaudited)		425,000		425		437,940,254	$	43,795		138,941	$	14	$	19,259,478	$	(18,021,326	)	$	1,282,386

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

6

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31,

(unaudited)

	2025			2024
Cash flows provided by operating activities:
Net loss	$	(54,468	)	$	(335,716	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		7,456			39,202
Amortization of debt discount		623			2,526	)
Amortization of right-of-use asset		90,701			66,605
Common Stock Issued for services
Reserve for Nomad recall		(86,300	)
Stock Based Compensation - Options					12,423
Stock based compensation - stock grant		-
Shares issued for convertible notes		5,839			11,007
Changes in operating assets and liabilities
Change in accounts receivable, net		(70,400	)		(77,914	)
Change in accounts receivable - related parties		21,833			9,025
Change in inventory		(138,274	)		31,535
Change in prepaid expenses and other current assets		195,359	)		(76,792	)
Recovery of bad debt					-
Change in reserve of slow moving inventory					-
Change in other assets		-
Change in ROU assets
Change in accounts payable and accrued liabilities		(44,482	)		(57,296	)
Change in customer deposits and unearned revenue		(93,590	)		(50,835
Change in long term lease liability		(92,540	)		(66,075	)
Change in other liabilities		142,073			20,346
Change in accounts payable - related parties		441			5,595	)
Net cash used in operating activities		(115,729	)		(466,364	)
Cash flows used in investing activities:
Purchase of fixed assets					(5,995	)
Net cash used in investing activities					(5,995	)
Cash flows from financing activities:
Proceeds from issuance of units		-			280,000
Proceeds of related party demand note		39,088			-
Proceeds from long term debt					-
Repayment of debt
Net cash provided from in financing activities		39,088			280,000
Net decrease in cash		(76,641	)		(192,359	)
Cash, beginning balance		417,678			431,112
Cash, end of period	$	341,038			238,753
Supplemental disclosures of cash flow information:
Cash Paid for Interest	$	17,073			8,944
Cash Paid for Income Taxes	$	-			-
Supplemental disclosure of non-cash financing activities:
Common Stock issued for payment of convertible note interest		11,007			11,007
Equipment obtained through financing	$	-		$

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

7

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024

(UNAUDITED)

Note 1. Company Overview

Brownie’s Marine Group, Inc. (the “Company”) designs, tests, manufactures and distributes recreational hookah diving, scuba and water safety products through its wholly owned subsidiary, Trebor Industries, Inc., a Florida corporation, incorporated in 1981 (“Trebor” or “BTL”), manufactures and sells high pressure air and industrial compressor packages, yacht based scuba air compressor and nitrox generation systems through its wholly owned subsidiary, Brownie’s High Pressure Compressor Services, Inc., a Florida corporation incorporated in 2017 (“BHP”) and doing business as LW Americas (“LWA”) and develops and markets portable battery powered surface supplied air dive systems through its wholly owned subsidiary BLU3, Inc., a Florida corporation (“BLU3”). On September 3, 2021, the Company, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Submersible Acquisition, Inc., a Florida corporation and wholly owned subsidiary of the Company (“Acquisition Sub”), Submersible Systems, Inc., a Florida corporation (“Submersible” or “SSI”), and Summit Holdings V, LLC, a Florida limited liability company (“Summit”) and Tierra Vista Group, LLC, a Florida limited liability company (“Tierra Vista” and, together with Summit, the “Sellers”), the owners of all of the capital stock of Submersible, pursuant to which Acquisition Sub merged with and into Submersible (the “Merger”), and Submersible, the surviving corporation, became a wholly owned subsidiary of the Company.

Submersible is a manufacturer of high pressure tanks and redundant air systems for the military and recreational diving industries, based in Huntington Beach, California and sells its products to governments, militaries, private companies and the dive industry throughout the world.

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

Basis of Presentation

The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The balance sheet as of December 31, 2024 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for a broader discussion of the Company’s business and the risks inherent in such business. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending December 31, 2025.

8

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Trebor, BHP, BLU3, SSI and LBI. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

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

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per EIN. At March 31, 2025 and December 31, 2024, the Company had approximately $0 and $25,000 in excess of the FDIC insured limit.

Accounts receivable

The Company manufactures and sells its products to a broad range of customers, primarily retail stores. Few customers are provided with payment terms of 30 days. The Company has tracked historical loss information for its trade receivables and compiled historical credit loss percentages for different aging categories (current, 1–30 days past due, 31–60 days past due, 61–90 days past due, and more than 90 days past due).

In accordance with ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2025, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its lending practices have not changed significantly over time). As a result, management applied the applicable credit loss rates to determine the expected credit loss estimate for each aging category. Accordingly, the allowance for expected credit losses at March 31, 2025 and December 31, 2025 totaled $17,933 and $52,660, respectively.

Inventory

Inventory consists of the following:

	March 31, 2025 (unaudited)			December 31, 2024
Raw materials	$	1,440,541		$	1,397,819
Work in process		60,978			40,978
Finished goods		873,453			821,912
Rental Equipment
Allowance reserve		(174,419	)		(198,430	)
Inventory, net	$	2,200,553		$	2,062,279

9

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606 Revenue from Contracts with Customers. The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due upon receipt of the invoice and the contracts do not have significant financing components. Product sales occur once control or title is transferred based on the commercial terms. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Product sales are recorded net of variable consideration, such as provisions for returns, discounts and promotional allowances. Such provisions are calculated based on the actual allowances given. Management believes that adequate provision has been made for cash discounts, returns, spoilage and promotional allowances based on the Company’s historical experience.

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

	Three months ended March 31
	2025		2024
	(unaudited)		(unaudited)
Revenues	$	1,320,005	$	1,492,299
Revenues - related parties		209,198		115,223
Total Revenues	$	1,529,203	$	1,607,522

Cost of Sales

Cost of sales consists of the cost of the components of finished goods, the costs of raw materials utilized in the manufacture of products, in-bound and out- bound freight charges, direct manufacturing labor as well as certain internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company’s finished products, inventory allowance for excess and obsolete products, and royalties paid on licensing agreements. Components account for the largest portion of the cost of sales. Components include plastic molded parts, gas powered engines, aluminum pressure bottles, electronic parts, batteries and packaging materials.

The breakdown of cost of sales to include cost of sales for related party and non-related party as well as the related party and non-related party royalty expense is as follows:

	Three months ended March 31
	2025		2024
	(unaudited)		(unaudited)
Cost of revenues	$	923,287	$	889,918
Cost of revenues - related parties		72,264		53,124
Royalties expense - related parties		3,992		9,061
Royalties expense		25,629		67,984
Total cost of revenues	$	1,025,172	$	1,020,087

10

Lease Accounting

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

The lease standard requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations. The Company elected the practical expedients permitted under the transition guidance of the new standard that retained the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. The Company did not reassess whether any contracts entered into prior to adoption are leases or contain leases.

The Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that would allow the Company to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. The Company did not have any finance leases as of March 31, 2024. The Company’s leases generally have terms that range from three years for equipment and five to twenty years for property. The Company elected the accounting policy to include both the lease and non-lease components of its agreements as a single component and account for them as a lease.

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

When the Company has the option to extend the lease term, terminate the lease for the contractual expiration date, or purchase the leased asset, and it is reasonably certain that the Company will exercise the option, it considers these options in determining the classification and measurement of the lease. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.

For the three months ended March 31, 2025, and March 31, 2024, cash paid for operating lease liabilities was $60,376 and $66,075, respectively.

Supplemental balance sheet information related to leases was as follows:

Operating Leases	March 31, 2025
	(unaudited)
Right-of-use assets	$	1,538,941
Current lease liabilities	$	418,327
Non-current lease liabilities		1,163,249
Total lease liabilities	$	1,518,576

Stock-Based Compensation

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

The Company uses the Black-Scholes valuation model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued on the effective date of the agreement in accordance with generally accepted accounting principles, which includes determination of the fair value of the share-based transaction. The fair value is determined through use of the quoted stock price.

11

Derivatives

The accounting treatment of derivative financial instruments requires that the Company record certain warrants and embedded conversion options at their fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into certain note agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy, by earliest issuance date, in accordance with ASC 815-40-35-12 whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors, as long as the certain variable issuance terms in certain convertible instruments exist. As of March 31, 2025 and December 31, 2024, the Company did not have any derivative liabilities.

Loss per share of common stock

Basic loss per share excludes any dilutive effects of options, warrants and convertible securities. Basic earnings per share is computed using the weighted- average number of outstanding common shares during the applicable period. Diluted loss per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive. At March 31, 2025, and March 31, 2024, 50,808,957 and 107,761,177 shares, respectively, of potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible notes, outstanding warrants, outstanding stock options and the conversion of preferred stock.

Recent accounting pronouncements

ASU 2016-13 Current Expected Credit Loss (ASC326)

In December 2021, the FASB issued an update to ASU No. 2016-13 the Current Expected Credit Losses (CECL) standard (ASC 326), which is designed to provide greater transparency and understanding of credit risk by incorporating estimated, forward-looking data when measuring lifetime Estimated Credit Losses (ECL) and requires enhanced financial statement disclosures. This guidance was adopted on January 1, 2023, with no effect to the financial statements.

ASU 2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption or are not applicable.

12

Note 3. Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. For the three months ended March 31, 2025, the Company incurred a net loss of $113,039. At March 31, 2025, the Company had an accumulated deficit of $17,980,677. Despite a small working capital deficit of approximately $6,428 at March 31, 2025, the continued losses and cash used in operations raise substantial doubt as to the Company’s ability to continue as a going concern for the twelve months after the date the financial statements were issued. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to increase revenues, control expenses, raise capital and sustain adequate working capital to finance its operations. The failure to achieve the necessary levels of profitability and cash flows would be detrimental to the Company. The consolidated financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

Note 4. Related Party Transactions

The Company sells products to Brownie’s Southport Divers, Brownie’s Yacht Toys and Brownie’s Palm Beach Divers, companies owned by the brother of Robert Carmichael, the Company’s Chief Executive Officer and Chief Financial Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers with similar sales volumes. These entities accounted for 15.8% and 7.2% of the net revenues for the three months ended March 31, 2025 and March 31, 2024, respectively. Accounts receivable from these entities totaled $19,853.38 and $12,839, at March 31, 2025 and December 31, 2024, respectively.

The Company sells products to BGL and 940 A, entities wholly-owned by Robert Carmichael. Terms of sale are more favorable than those extended to the Company’s regular customers, but no more favorable than those extended to the Company’s strategic partners. Accounts receivable from these entities totaled $2,389.22 and $10,266 at March 31, 2025 and December 31, 2024, respectively.

The Company had accounts payable to related parties of $29,365 and $52,173 at March 31, 20254 and December 31, 2024, respectively. The balance payable at March 31, 2025 was comprised of $18,889due to Robert Carmichael and $10,476 due to Blake Carmichael. At December 31, 2024, the balance payable was comprised of $23,713 due to 940 A, $460 due to Robert Carmichael and $10,000 due to Blake Carmichael.

The Company has exclusive license agreements with 940 A to license the trademark “Brownie’s Third Lung”, “Tankfill”, “Brownie’s Public Safety” and various other related trademarks as listed in the agreements. The agreements provide that the Company pay 2.5% of gross revenues per quarter as a royalty to 940A. Total royalty fees paid to 940A for the three months ended March 31, 2025 and March 31, 2024 was $3,992 and $9,061, respectively. The accrued royalty for March 31, 2025 and December 31, 2024 was $4,290 and $7,385 which is included in other liabilities.

On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day value weighted average price (“VWAP”) of the Company’s stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.021 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Company’s stock as of the date of the note. The Company recorded $19,250 for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. . The outstanding balance on this note was $39,088 as of March 31, 2025.

On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, a Company director, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise price of $0.0175 per share in consideration of $200,000.

On September 14, 2023, the Company issued a convertible demand promissory note in the principal amount of $50,000 to Robert Carmichael for funds to meet the working capital needs of BLU3. There is no amortization schedule for the note as the note is interest free.. The Company recorded $-0- for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. The outstanding balance on this note was $50,000 as of March 31, 2025.

On November 14, 2023, the Company borrowed funds through the issuance of a promissory note (the Note) in the principal amount of $150,000 to Charles Hyatt, a Company director, for working capital requirements and payment of certain expenses in connection with the Company’s business combinations. The maturity date of the Note is May 7, 2024 (the “Maturity Date”). The Note bears interest at a rate of 9.9% per annum, and a default interest of 18% per annum. Interest payments shall be due and payable on a monthly basis. The Company may prepay the Note in whole or in part, at any time without premium or penalty.

On February 5, 2024, the Company borrowed funds through the issuance of a promissory note (the Note) in the principal amount of $280,000 to Charles Hyatt, a Company director, for working capital requirements and payment of certain expenses in connection with the Company’s business combinations. The maturity date of the Note is August 6, 2024 (the “Maturity Date”). The Note bears interest at a rate of 9.9% per annum, and a default interest of 18% per annum. Interest payments shall be due and payable on a monthly basis. The Company may prepay the Note in whole or in part, at any time without premium or penalty.

13

On March 31, 2023, the Company issued 61,204 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending March 31, 2023. The fair value of these shares was $1,336.

On June 30, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending June 30, 2023. The fair value of these shares was $1,287.

On September 30, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending September 30, 2023. The fair value of these shares was $1,287.

On December 31, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending December 31, 2023. The fair value of these shares was $1,287.

On March 31, 2024, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending March 31, 2024. The fair value of these shares was $1,287.

On July 16, 2024, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending June 30, 2024. The fair value of these shares was $1,287.

On August 15, 2024, the Company issued 850,000 shares to Davis Natan per a consulting agreement. The fair value of these shares was $8,500.

On December 9, 2024, the Company issued 8,241,759 shares of common stock to Blake Carmichael as compensation for a reduction in salary. The fair value of these shares was $60,000..

Note 5. Convertible Promissory Notes and Loans Payable

Convertible Promissory Notes

Convertible promissory notes consisted of the following at March 31, 2025:

Origination Date	Maturity Date	Interest Rate			Origination Principal Balance		Original Discount Balance			Period End Principal Balance		Period End Discount Balance			Period End Balance, Net		Accrued Interest Balance		Reg.
9/03/21	9/03/24		8	%		346,500		(12,355	)	$	346,500	$	854	)	$	347,354		-		(1	)
9/03/21	9/03/24		8	%		3,500		(125	)		3,500		14	)		3,514		-		(2	)
9/30/22	Demand		8	%		66,793		(19,250	)		58,338		(19,250	)		39,088		-		(3	)
09/14/23	Demand		8	%							50,000					50,000				(4	)
										$	458,338	$	(18,382	)	$	439,956	$	-

A breakdown of current and long-term amounts due are as follows for the convertible promissory notes as of March 31, 2025:

	Summit Holdings V,			Tierra Vista Partners,			Robert Carmichael			Robert Carmichael
	LLC Note			LLC Note			LBI Note			BLU3 Note			Total
2025	$	346,500		$	3,500		$	58,338		$	50,000		$	458,338
Discount		854	)		14	)		(19,250	)		( -	)		(18,382	)
Total Loan Payments	$	347,354		$	3,514		$	39,088		$	50,000		$	439,956
Current Portion of Loan Payable	$	(347,354	)	$	(3,514	)	$	(39,088	)	$	(50,000	)	$	(439,956	)
Non-Current Portion of Loan Payable	$	-		$	-		$	-		$	-		$	-

(1) On September 3, 2021, the Company issued a three-year 8% convertible promissory note in the principal amount of $346,500 to Summit Holding V, LLC as part of the acquisition of SSI. The Company is required to make quarterly payments under the note in an amount equal to 50% of the adjusted net profit of SSI. Interest is payable quarterly in shares of common stock of the Company at a conversion price of $0.051272 per share. The note holder may convert outstanding principal and interest into shares of common stock at a conversion price of $0.051272 per share at any time during the term of the note. The Company recorded $12,355 for the beneficial conversion feature. This note is classified as a current liability for the quarter ended March 31, 2025. The maturity due date of the note has been extended by the lender from September 3, 2024 to ______________ while the Company works through a determines a restructure of the note.

	Payment Amortization
2025		346,500
Total Note Payments	$
Current portion of note payable		(346,500	)
Non-Current Portion of Notes Payable	$	-

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(2) On September 3, 2021, the Company issued a three-year 8% promissory note in the principal amount of $3,500 to Tierra Vista Partners, LLC as part of the acquisition of SSI. The Company is required to make quarterly payments under the note in an amount equal to 50% of the adjusted net profit of SSI. Interest is payable quarterly in common stock of the Company at a conversion price of $0.051272 per share. The note holder may convert outstanding principal and interest into shares of common stock at a conversion price of $0.051272 at any time during the term of the note. The Company recorded $125 for the beneficial conversion feature. This note is classified as a current liability for the quarter ended March 31, 2024.

		Payment Amortization
2025		3,500
Total Note Payments	$
Current portion of note payable		(3,500	)
Non-Current Portion of Notes Payable	$	-

(3)	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 date. This note is classified as a current liability as the note holder may demand payment or convert the outstanding principal at a conversion price of $0.021 per share at any time. The Company recorded $19,250 for the beneficial conversion feature.
(4)	On September 14, 2023, the Company issued a convertible demand 8% promissory note in the principal amount of $50,000 to Robert Carmichael for working capital needs of BLU3. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day (“VWAP”) of the Company’s common stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.01351 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Company’s stock as of the date of the note. The Company recorded $-0- for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. The outstanding balance on this note was $50,000 as of December 31, 2024 and December 31, 2023. Mr. Carmichael has waived interest payments on this note effective September 14, 2023.
	Demand Notes
	On November 14, 2023, the Company issued a promissory note in the principal amount of $150,000 to Charles Hyatt, a director, for working capital requirements and payment of certain expenses in connection with the Company’s business combinations. The maturity date of the Note is May 7, 2024 (the “Maturity Date”). The Note bears interest at a rate of 9.9% per annum, and a default interest of 18% per annum. Interest payments shall be due and payable on a monthly basis. The Company may prepay the Note in whole or in part, at any time without premium or penalty. The balance of $280,000 was outstanding as of December 31, 2024, and the due date was extended to a due date of May 5, 2025, pursuant to an amendment dated November 13, 2024.
	On February 5, 2024, the Company borrowed funds through the issuance of a promissory note in the principal amount of $280,000 to Charles Hyatt, a Company director, for working capital requirements and payment of certain expenses in connection with the Company’s business combinations. The maturity date of the note was August 6, 2024. The note bears interest at a rate of 9.9% per annum, and has a default interest rate of 18% per annum. Interest payments are and payable on a monthly basis. The Company may prepay the note in whole or in part, at any time without premium or penalty. The balance of $280,000 was outstanding as of December, and the due date was extended to a due date of May 5, 2025, pursuant to an amendment dated November 13, 2024

Loans Payable

	Mercedes BTL (1)			Navitas 2021 BLU3 (2)			NFS SSI (3)			Navitas 2022 BLU3  (4)			Navitas 2024 BLU3 (5)			Navitas 2024 BTL (6)			Total
					-			-			-									-
2025		5,584			21,432			4,555			17,941			4,223			2,963			56,697
2026		-			6,338			-			-			6,243			4,411			16,691
2027		-			-			-			-			7,022			5,002			12,024
2028		-			-			-			-			7,899			5,672			13,571
Thereafter		-			-			-			-			1,409			4,747			6,157
Total Loan Payments		5,584			27,770			4,555			17,941			26,796			22,794			105,440
Current Portion of Loan Payable		(5,584	)		(21,432	)		(4,555	)		(17,941	)		(5,771	)		(4,014	)		(59,298	)
Non-Current Portion of Loan Payable		-			6,338			-			-			21,025			18,780			46,143

(1)	On August 21, 2020, the Company executed an installment sales contract with Mercedes Benz Coconut Creek for the purchase of a 2019 Mercedes Benz Sprinter delivery van. The installment agreement is for $55,841 with a zero interest rate payable over 60 months with a monthly payment of $931 and is personally guaranteed by Mr. Carmichael. The loan balance as of March 31, 2024 was $17,063 and $19,855 as of December 31, 2023.
(2)	On May 19, 2021, BLU3 executed an equipment finance agreement with Navitas Credit Corp. (“Navitas”) to finance the purchase of certain plastic molding equipment. The amount financed is $75,764 payable over 60 equal monthly installments of $1,611. The equipment finance agreement contains customary events of default. The loan balance as of March 31, 2024 was $38,492 and $42,525 as of December 31, 2023.
(3)	On June 29, 2022, SSI executed an equipment financing agreement with NFS Leasing (“NFS Leasing”) to secure replacement production molds. The total purchase price of the molds was $84,500 of which $63,375 was financed by NFS Leasing on August 15, 2022. The financing agreement has a 33 month term beginning in August 2022 with a monthly payment of $2,571. The financing agreement contains customary events of default, is guaranteed by the Company and NFS Leasing has a lien on all of the assets of SSI. The loan balance as of March 31, 2024 and December 31, 2023 was $32,448 and $38,607, respectively.
(4)	On December 12, 2022, BLU3 executed an equipment finance agreement to finance the purchase of certain plastic molding equipment through Navitas. The amount financed is $63,689 payable over 36 equal monthly installments of $2,083. The equipment finance agreement contains customary events of default. The loan balance as of March 31, 2024 was $41,273 and $44,839 as of December 31, 2023.
(5)	On February 12, 2024, BLU3 executed an inventory finance agreement to finance the purchase of certain equipment stock through Navitas. The amount financed is $32,274 payable over 60 equal monthly installments of $715. The inventory finance agreement contains customary events of default. The loan balance as of March 31, 2024 was $31,476.

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(6) On September 4, 2024, BLU3 executed an inventory finance agreement to finance the purchase of certain equipment stock through Navitas. The amount financed is $24,620 payable over 60 equal monthly installments of $602. The inventory finance agreement contains customary events of default. The loan balance as of September 30, 2024 was $23,722.

Note 6. Goodwill and Intangible Assets, Net

The following table sets for the changes in the carrying amount of the Company’s Goodwill for the three months ended March 31, 2025.

	2025
Balance, January 1	$	249,986
Addition:		-
Balance, March 31	$	249,986

The Company performed an evaluation of the value of goodwill at December 31, 2023. Based upon this evaluation it was determined that there should be no adjustment to goodwill. There has been nothing noted during the three months ended March 31, 2025 that would indicate that the value of goodwill should change through that date.

The following table sets for the components of the Company’s intangible assets at March 31, 2025:

	Amortization Period (Years)		Cost		Accumulated Amortization			Net Book Value
Intangible Assets Subject to amortization
Trademarks		15	$	121,000	$	(26,785	)	$	94,215
Customer Relationships		10		600,000		(205,000	)		395,000
Non-Compete Agreements		5		22,000		(15,766	)		6,234
Total			$	743,000	$	(247,551	)	$	495,449

The aggregate amortization remaining on the intangible assets as of March 31, 2025 is a follows:

	Intangible Amortization
2025 (9 months remaining)		66,426
2025		71,367
2026		71,367
2027		68,067
2028		68,067
Thereafter		221,523
Total	$	495,449

Amortization expense for amortizable intangible assets for each of the three months ended March 31, 2025 and 2024 was 18,117.

Note 7. Stockholders’ Equity

Common Stock

On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise price of $0.0175 per share in consideration of $200,000.

On March 31, 2023, the Company issued 61,204 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending March 31, 2023. The fair value of these shares was $1,336.

On March 31, 2023, the Company issued an aggregate of 137,000 shares of common stock to the holders of convertible notes for payment of interest for the three months ending December 31, 2022. The fair value of these shares was $7,000.

16

On June 30, 2023, the Company issued 61,205 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending June 30, 2023. The fair value of these shares was $1,326.

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

On September 30, 2023, the Company issued 61,205 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending September 30, 2023. The fair value of these shares was $1,326.

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

On December 31, 2023, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending December 31, 2023. The fair value of these shares was $1,287.

On December 31, 2023, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending December 31, 2023. The fair value of these shares was $7,000.

On March 31, 2024, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending December 31, 2023. The fair value of these shares was $1,287.

On March 31, 2024, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending December 31, 2023. The fair value of these shares was $7,000.

On June 30, 2024, the Company issued 123,354 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending June 30, 2024. The fair value of these shares was $2,672.

On June 30, 2024, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending June 30, 2024. The fair value of these shares was $4,328.

On August 15, 2024 the Company issued 850,000 shares of common stock to the holders of convertible notes for payment of professional services. The fair market value of these shares was $8,500.

On September 30, 2024, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending September 30, 2024. The fair value of these shares was $7,000.

On December 9, 2024, the Company issued 8,241,759 shares to Blake Carmichael as compensation related to a salary reduction. The fair market value of these shares was $60,000.

On December 31, 2024, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending December 31, 2024. The fair value of these

shares was $7,000.

On March 31,2025, the Company issued an aggregate of 136,527 shares of common stock to the holders of convertible notes for payment of interest for the three months ending March 31 2025,. The fair value of these shares was $7,000.

Preferred Stock

During the second quarter of 2010, the holders of the majority of the Company’s outstanding shares of common stock approved an amendment to the Company’s Articles of Incorporation authorizing the issuance of 10,000,000 shares of blank check preferred stock. The blank check preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by the Board of Directors of the Company from time to time in accordance with the provisions of the Florida Business Corporation Act. In April 2011, the Board of Directors designated 425,000 shares as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into a share of the Company’s common stock at any time at the option of the holder at a conversion price of $18.23 per share. Holders of shares of Series A Convertible Preferred Stock are entitled to 250 votes for each share held. The Company’s common stock and Series A Convertible Preferred Stock vote together on any matters submitted to our shareholders. As of March 31, 2025, and December 31, 2024, 425,000 shares of Series A Convertible Preferred Stock are issued and outstanding and are owned by Robert Carmichael.

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Equity Incentive Plan

On May 26, 2021 the Company adopted an Equity Incentive Plan (the “Plan”). Under the Plan, stock options may be granted to employees, directors, and consultants in the form of incentive stock options or non-qualified stock options, stock purchase rights, time vested and/performance invested restricted stock, and stock appreciation rights and unrestricted shares may also be granted under the Plan. 25,000,000 shares are reserved for issuance under the Plan. The term of the Plan is ten years.

The Company also issued options outside of the Plan that were not approved by the security holders. These options may be granted to employees, directors, and consultants in the form of incentive stock options or non-qualified stock options.

Equity Compensation Plan Information as of March 31, 2025:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted – average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a) (c)
Equity Compensation Plans Approved by Security Holders		1,800,000	$	0.04474		23,200,000
Equity Compensation Plans Not Approved by Security Holders		28,869,400		0.0432		—
Total		30,669,400	$	0.0432		23,200,000

Options

For the years ended December 31, 2024 and 2023, the Company has issued no options. Upon exercise, shares of new common stock are issued by the Company.

For the years ended December 31, 2024 and 2023, the Company recognized an expense of approximately $91,492 and $81,424, 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. The Company uses straight-line amortization of compensation expense over the requisite service period for time-based options. For performance-based options the Company evaluates the likelihood of a vesting qualification being met, and will establish the expense based on that evaluation. The maximum contractual term of the Company’s stock options is 5 years. The Company recognizes forfeitures as they occur. There are options to purchase approximately 5,806,266 shares that have vested as of December 31, 2024.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances. The calculation of the fair value of the awards using the Black-Scholes option-pricing model is affected by the Company’s stock price on the date of grant as well as assumptions regarding the following:

	Year ended December 31,
	2025			2024
Expected volatility		266.0% - 346.4 %			172.0% – 346.4 %
Expected term		1.5 – 5.0 Years			1.5- 5.0 Years
Risk-free interest rate		0.21% - 3.18 %			0.16% - 4.64 %
Forfeiture Rate		2.2	%		0.17	%

The expected volatility was determined with reference to the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant.

18

A summary of the status of the Company’s outstanding stock options as of December 31, 2025 and 2024 and changes during the periods ending on that date is as follows

The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances. The calculation of the fair value of the awards using the Black-Scholes option-pricing model is affected by the Company’s stock price on the date of grant as well as assumptions regarding the following:

	Year ended December 31,
	2025			2024
Expected volatility		266.0% - 346.4 %			172.0% – 346.4 %
Expected term		1.5 – 5.0 Years			1.5- 5.0 Years
Risk-free interest rate		0.21% - 3.18 %			0.16% - 4.64 %
Forfeiture Rate		2.2	%		0.17	%

The expected volatility was determined with reference to the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant.

A summary of the status of the Company’s outstanding stock options as of December 31, 2025 and 2024 and changes during the periods ending on that date is as follows

						Weighted
	Weighted					Average
	Average					Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Options			Price		Life in Years		Value
Outstanding at December 31, 2022		238,439,167		$	0.0362		1.43
Granted		-			-
Forfeited		(170,999,530	)		0.0379
Exercised		-			-
Cancelled		-			-
Outstanding – December 31, 2023		67,439,637		$	0.0362		1.43
Exercisable – December 31, 2023		41,057,753		$	0.0321		1.33	$	68,994
Granted		-			-
Forfeited		(1,475,000	)		0.0379
Exercised		-			-
Expired		(35,295,237	)		0.0180
Cancelled		-			-
Outstanding – December 31, 2024		30,669,400		$	0.0432		1.68
Exercisable – December 31, 2024		5,806,266		$	0.0448		2.01	$	-
Exercisable – March 31, 2025		0			0		0		0

The following table summarizes information about employee stock options outstanding at December 31, 2024

Range of Exercise Price	Number outstanding at December 31, 2024		Weighted average remaining life		Weighted average exercise price		Number exercisable at December 31, 2024		Weighted average exercise price		Weighted average remaining life
$ 0.0229 - $0.0325		50,000		1.62	$	0.0302		50,000	$	0.0302		1.62
$ 0.0360 - $0.0425		22,659,400		1.55	$	0.0398		4,659,400	$	0.0395		1.42
$ 0.0440 - $0.0531		7,960,000		1.60	$	0.0530		2,350,000	$	0.0530		1.44
Outstanding options		30,669,400		1.68	$	0.0360		5,806,266	$	0.0448		2.01

As of December 31, 2024, the Company had approximately $987,800 of unrecognized pre-tax non-cash compensation expense related to options to performance based options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 2.1 years. The Company uses straight-line amortization of compensation expense over the requisite service period for time-based options. For performance-based options the Company evaluates the likelihood of a vesting qualification being met, and will establish the expense based on that evaluation. Stock option expense recognized during the year ended March 31, 2025 and December 31, 2024 was $0.00 and $91,492, respectively.

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Warrants

On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year warrant to purchase one share of common stock at an exercise price of $0.0175 per share in consideration of $200,000.

A summary of the Company’s warrants as of December 31, 2024 and 2023, and changes during the years ended December 31, 2024 and 2023 is presented below:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Warrants			Price		Life in Years		Value
Outstanding at December 31, 2023		18,255,951		$	.0245		1.55
Granted		11,428,570			0.0175
Forfeited		(4,000,000	)		-
Exercised		-			-
Cancelled		-			-
Outstanding – December 31, 2024		25,684,521		$	0.0247		1.55
Exercisable – December 31, 2024		25,684,521		$	0.0247		1.55	$	12,000
Granted		-			-
Forfeited		(14,255,952	)		-
Exercised		-			-
Cancelled		-			-
Outstanding – December 31, 2024		11,428,570		$	0.0175		0.09
Exercisable – December 31, 2024		11,428,570		$	0.0175		0.09	$	-

These warrants expired as of February 2025.

Note 14. Income Taxes

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made. Likewise, should the Company determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made.

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The components of the provision for income tax expense are as follows for the years ended:

	December 31,
	2024			2023
Current taxes
Federal	$	—		$	—
State		—			—
Current taxes		—			—
Change in deferred taxes		62,146			347,400
Change in valuation allowance		(62,146	)		(347,400	)
Provision for income tax expense	$	—		$	—

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at December 31, 2024 and 2023:

	December 31,
	2024			2023
Deferred tax assets:
Equity based compensation	$	416,237		$	416,237
Allowance for doubtful accounts		5,954			13,800
Deferred Rent		(1,796	)		-
Reserves for slow moving inventory		50,292			47,800
Depreciation		52,867			23,800
Reserve for recall		0			3,200
Net operating loss carry forward		2,027,000			2,027,000
Total deferred tax assets		2,550,554			2,531,837
Deferred tax liabilities
Reserve for recall		-			-
Total deferred tax asset (liability)		-			-
Total deferred tax		2,550,554			2,531,837
Valuation allowance		(2,550,554	)		(2,531,837	)
Deferred tax assets, net of valuation allowance	$	-		$	-

The effective tax rate used for calculation of the deferred taxes as of December 31, 2024 was 26.35. The Company has established a 100% valuation allowance against deferred tax assets of approximately $2,550,500, due to the uncertainty regarding realization reserve against the deferred tax assets. The change in valuation allowance was an increase of $18,717. The Company has approximately $3,346,650 of net loss carryforward that expire through 2037 and $4,497,364 that carryforward indefinitely but is limited to 80% of taxable income in any one year.

The effective tax rate used for calculation of the deferred taxes as of December 31, 2023 was 21.39%. The Company has established a 100% valuation allowance against deferred tax assets of $2,531,800 due to the uncertainty regarding realization reserve against the deferred tax assets. The change in valuation allowance was an increase of $347,400.

The significant differences between the statutory tax rate and the effective tax rates for the Company for the years ended are as follows:

	December 31,
	2024			2023
Statutory tax rate		(21.00	)%		(21.00	)%
State tax, net of Federal benefits		(4.28	)%		(4.28	)%
Permanent differences		0.11	%		0.21	%
Temporary differences		(1.18	)%		3.68	%
Change in valuation allowance		26.35	%		21.39	%
Effective tax rate		—	%		—	%

The Company’s income tax returns for 2020 through 2024 remain subject to examination by the Internal Revenue Services and state tax authorities.

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Note 15. Commitments and Contingencies

Leases

On August 14, 2014, the Company entered into a thirty-seven month lease for its facilities in Pompano Beach, Florida, commencing on September 1, 2014. 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.

On 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. The Company did not renew this lease at expiration.

On 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. The Company did not renew this lease at expiration.

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 thereafter. The Tenant also pays a monthly common area maintenance of $112. The Tenant provided a security deposit of $2,426 upon entering into the sublease. This lease has expired but the tenant remains on a month to month basis.

On November 1, 2024, the Brownies Marine Group entered a 45 month sublease agreement with Inovar Packaging , LLC for approximately 19,065 square feet in the building located at 4061 SW , 47^th Ave, Davie, Florida, 33314. The monthly base rent staring the first of November, 2024 will be $26,000 ( twenty six thousand dollars ). The rent will increase to $31,000 ( thirty one thousand dollars ) on October 2025 through the rest of the term of tem of the lease. The sublease will terminate on July 31, 2028.

Royalty Agreement

On June 30, 2020, the Company entered into Amendment No. 2 to its Patent License Agreement with Setaysha Technical Solutions, LLC (“STS”). The amendment set certain limits and expectations of the assistance from STS related to designing and commercializing certain diving products and revised the royalty payments due to STS as consideration for uncompensated services. The Company is obligated to pay STS a minimum yearly royalty of $60,000, or $15,000 per fiscal quarter, beginning in December 2019 and increasing by 2.15% per year. The minimum royalty was temporarily increased to $60,000 for fiscal years 2022, 2023 and 2024, with a fourth quarter true up against earned royalties. In addition, if the Company terminates the Agreement with STS prior to December 31, 2023, the Company is obligated to pay STS $180,000, less cumulative royalties paid in excess of $200,174 for the years 2019 through 2024. 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. 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 will be required beginning the fiscal first quarter of 2025. 2025 will be the final year of the additional minimum royalty under the STS agreement. 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 the Amended agreement was $25,504 and $125,159 for the three months ended March 31, 2025 and year ended December 31, 2024

Consulting and Employment Agreements

On November 5, 2020, the Company entered into a three-year employment agreement with Christopher Constable (the “Constable Employment Agreement”) pursuant to which Mr. Constable serves as Chief Executive Officer of the Company. Previously, Mr. Constable had provided advisory services to the Company through an agreement with Brandywine LLC. In consideration for his services, Mr. Constable 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. Constable 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, Mr. Constable was issued an option to purchase 2,403,846 shares of the Company’s common stock at an exercise price of $0.0401 per share.

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In 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 following amounts based upon the following performance milestones during the term of the Constable Employment Agreement: (i) 2,000,000 shares – if the Company’s total net revenues, as reported in its statement of operations in its financial statements in its filings with the SEC, including as a result of a stock or asset acquisition of a third party (“Net Revenues”) are in excess of $5,000,000, in the aggregate, for four consecutive fiscal quarters; (ii) 3,000,000 shares – if the Company’s Net Revenues are in excess of $7,500,000, in the aggregate, for four consecutive fiscal quarters; (iii) 5,000,000 shares – if the Company’s Net Revenues are in excess of $10,000,000, in the aggregate, for four consecutive fiscal quarters; and (iv) 20,000,000 shares – if the Company’s common stock is listed on the NASDAQ or New York Stock Exchange.

On June 24, 2023, Mr. Constable resigned as Chief Executive Officer of the Company effective July 7, 2023 .

On August 1, 2021, the Company and Blake Carmichael entered into a three-year employment agreement (the “Blake Carmichael Employment Agreement”) pursuant to which Mr. Blake 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. This agreement automatically renews for one year term unless either party give a 30 day notice.

In addition, Blake Carmichael shall be entitled to receive a five-year stock option to purchase up to 18,000,000 shares of common stock at an exercise price of $0.0399 per share that will vest upon annual financial metrics based upon a revenue measurement, expediency measurement and an EBITDA measurement.

On September 3, 2021, SSI and Christeen Buban entered into a three-year employment agreement (the “Buban Employment Agreement”) pursuant to which Ms. Buban shall serve as the President of SSI. In consideration for her services, Mrs. Buban shall receive (i) an annual base salary of $110,000, payable in accordance with the customary payroll practices of the Company, (ii) a car allowance and cell phone allowance of $10,800 per year, (iii) a five-year option issued under the Plan to purchase 300,000 shares of common stock of the Company at $0.0531 per share, which option vests quarterly over the eight calendar quarters for one year term unless either party give a 30 day notice.

In addition, Mrs. Buban shall be entitled to receive a five-year stock option to purchase up to 7,110,000 shares of common stock of the Company at an exercise price of $0.0531 per share, which vests upon the attainment of certain defined annual financial metrics, as set forth in the Buban Employment Agreement.

On May 2, 2022, the Company entered into a two-year employment agreement with Steven Gagas (the “Gagas Employment Agreement”) pursuant to which Mr. Gagas shall serve as the General Manager of the dive shop currently operating within LBI. In consideration for his services Mr. Gagas shall receive an annual salary of $50,000. The agreement terminated upon Mr. Gagas’ retirement in January 2024.

On January 17, 2022, the Company entered into an agreement with The Crone Law Group, PC (“CLG”) for the provision of legal services. In consideration 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. Mr. Gagas retired in January, 2024

On December 22, 2022, the U.S. Consumer Products Safety Commission (the “CPSC”) issued a voluntary recall notice for the Nomad tankless dive system, which is distributed by BLU3, Inc. As part of the recall procedure, the CPSC approved the Company’s proposed remedy for the recall and BLU3 began to receive units back from consumers for repair in [provide month and year].. The Company has evaluated the costs of this recall and has deemed it necessary to set an allowance of $160,500 for such costs. In 2024, the Company finalized the recall and adjusted the reserve down to zero reflecting that all expenses related to the recall had been realized..

Legal

There are no outstanding legal issues as of June 27, 2025

Note 16. Subsequent Events

The maturity due date of the convertible notes has been verbally extended by the lender while the Company works through to determines a restructure of the notes.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEEDINGS

There are no pending legal proceedings to which we are a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us.

ITEM 1A. RISK FACTORS

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

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

None.

Except as set forth below, there were no sales of equity securities sold during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.

On March 31, 2024, the Company issued 61,677 shares of common stock to Robert Carmichael for payment of interest on a convertible demand note.

The above issuance did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe isare exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

None.

ITEM 5. OTHER INFORMATION

During the quarter ended March 31, 2025, no director, officer or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.

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ITEM 6. EXHIBITS

Exhibit
Number	Exhibit
31.1	Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
101.INS	Inline XBRL INSTANCE DOCUMENT
101.SCH	Inline XBRL TAXONOMY EXTENSION SCHEMA
101.CAL	Inline XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF	Inline XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB	Inline XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE	Inline XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

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

Date: July 2, 2025	BROWNIE’S MARINE GROUP, INC.
	By:	/s/ Robert M. Carmichael
		Robert M. Carmichael
		Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Robert M. Carmichael
		Robert M. Carmichael
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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