RELATED PARTIES TRANSACTIONS

Notes payable – related parties

Notes payable – related parties consists of the following at March 31, 2016 and December 31, 2015:

	March 31,		December 31,
	2016		2015
Promissory note payable to Chief Executive Officer, unsecured, payable in twelve monthly principal payments of $2,250 beginning June 15, 2015, with interest at 10% per annum with payments monthly in shares of stock based on the monthly weighted average price of the stock, maturing May 15, 2016.	$	8,848	$	11,098

Less amounts due within one year		(8,848)		(11,098)

Long-term portion of notes payable	$	—		—

	$	8,848	$	11,098

Effective April 22, 2015, the Company issued Mr. Carmichael, Chief Executive Officer of the Company, an unsecured promissory note presented in the table above in consideration for a $27,000 advance. For the three months ended March 31, 2016 the Company converted $73 of accrued interest on the note payable – related party into 16,052 shares of restricted stock.

Net revenues and accounts receivable – related parties – The Company sells products to Brownie’s Southport Divers, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys, owned by the brother of the Company’s Chief Executive Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers with similar sales volume. Combined net revenues from these entities for three months ended March 31, 2016 and 2015, was $109,423 and $156,637, respectively. Accounts receivable from Brownie’s Southport Divers, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at March 31, 2016, was $21,496, $8,083 and $14,035 respectively. Accounts receivable from Brownie’s Southport Divers, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at December 31, 2015, was $12,981, $4,678, and $15,221, respectively.

The Company sells products to Brownie’s Global Logistics, LLC. (“BGL”), 3D Buoy and 940 Associates, Inc., affiliated with the Company’s Chief Executive Officer. Terms of sale are more favorable than those extended to BWMG’s regular customers, but no more favorable than those extended to Brownie’s strategic partners. Terms of sale to BGL approximate cost or include a nominal margin. These terms are consistent with those extended to Brownie’s strategic partners. Strategic partner terms on a per order basis include promotion of BWMG’s technologies and “Brownie’s” brand, offered only on product or services not offered for resale, and must provide for reciprocal terms or arrangements to BWMG on strategic partners’ product or services. BGL is fulfilling the strategic partner terms by providing exposure for BWMG’s technologies and “Brownie’s” brand in the yachting and exploration community word-wide through its operations. Combined net revenues from these entities for three months ended March 31, 2016, and 2015, were $589 and $13,806, respectively. Accounts receivable from BGL, 3D Buoy and 940 Associates at March 31, 2016 was $180, $2,146, and $0, respectively. Accounts receivable from BGL, 3D Buoy and 940 Associates at December 31, 2015 was $6,443, $1,948 and $0, respectively.

Royalties expense – related parties – The Company has an Exclusive License Agreement with 940 Associates, Inc. (hereinafter referred to as “940A”), an entity owned by the Company’s Chief Executive Officer, to license the trademark “Brownies Third Lung”, “Tankfill”, “Brownies Public Safety” and various other related trademarks as listed in the agreement. This license agreement calls for the Company to pay 940A 2.5% of gross revenues per quarter. Total royalty expense for the above agreements for the three months ended March 31, 2016 and 2015, is disclosed on the face of the Company’s Consolidated Statements of Operations. As of March 31, 2016, the Company was approximately thirty months in arrears on royalty payments due. No default notice has been received and the Company plans to make payments as able.

Equity based compensation to employee –The Company previously paid the employment compensation of Alexander F. Purdon, a more than 10% shareholder of the Company, in restricted shares of stock in lieu of cash. This arrangement terminated December 31, 2015 and was being renegotiated as of March 31, 2016. The number of shares previously paid was based on the weighted average price per share during the months the services were rendered. For the three months ended March 31, 2016, $13,500 has been accrued in anticipation of a successful renegotiation of Mr. Purdon’s compensation agreement. For the three months ended March 31, 2015, stock based compensation to Mr. Purdon was $13,500. In addition, of the $129,500 employee bonuses declared payable for 2012 year end, which is payable in stock or cash to be determined by the Board of Directors, Mr. Purdon is due $17,500. Lastly, of 61,852 total shares of common stock attributable to incentive retention bonuses declared by the Board of Directors in 2012, which vested as of May 2013, Mr. Purdon is payable 1,852 shares of stock, which were valued at $2,250. These shares are included in shares payable on the statement of stockholders’ deficit. See Note 17. SUBSEQUENT EVENTS.

Other liabilities and accrued interest– related parties

Other liabilities and accrued interest– related parties consist of the following at:

	March 31,		December 31,
	2016		2015

Year-end 2012 bonus payable to Chief Executive Officer(1)	$	67,000	$	67,000

Year-end 2012 bonus payable to employee(1)		17,500		17,500
	$	84,500	$	84,500

(1)

See Note 17. SUBSEQUENT EVENTS