10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2019

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.

3001 NW 25th Avenue, Suite 1
Pompano Beach, Florida	33069
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
n/a	n/a	n/a

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 [X] 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 [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 [X]	Smaller reporting company [X]
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 [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were 238,119,561 shares of common stock outstanding at July 1, 2019.

PART I

Item 1. Financial Statements

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current Assets
Cash	$	435,715		$	78,784
Accounts receivable – net		33,965			27,204
Accounts receivable - related parties		60,333			78,423
Inventory, net		798,493			723,170
Prepaid expenses and other current assets		108,212			58,520
Total current assets		1,436,718			966,101
Property, equipment and leasehold improvements, net		155			3,718
Right-to-use lease assets		612,447			-
Other assets		24,649			26,147
Total assets	$	2,073,969		$	995,966
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	309,868		$	325,309
Accounts payable - related parties		142,212			125,243
Customer deposits and unearned revenue		307,145			245,907
Other liabilities		223,382			142,142
Operating lease liabilities		91,273			-
Convertible debentures, net		110,000			110,000
Total current liabilities		1,183,880			948,601
Long-term operating lease liabilities		521,174			-
Total Liabilities		1,705,054			948,601
Commitments and contingent liabilities (see note 12)
Stockholders’ equity
Preferred stock; $0.001 par value: 10,000,000 shares authorized; 425,000 issued and outstanding		425			425
Common stock; $0.0001 par value; 1,000,000,000 shares authorized; 238,119,561 and 218,119,561 issued and outstanding at March 31, 2019 and 181,086,228 and 161,086,228 shares issued and outstanding at December 31, 2018, respectively		21,812			16,109
Common stock payable 138,941 shares and 138,941 shares, respectively as of March 31, 2019 and December 31, 2018		14			14
Additional paid-in capital		10,799,943			10,213,595
Accumulated other comprehensive loss		(6,456	)		-
Accumulated deficit		(10,446,823	)		(10,182,778	)
Total stockholders’ equity		368,915			47,365
Total liabilities and stockholders’ equity	$	2,073,969		$	995,966

See accompanying notes to unaudited condensed consolidated financial statements

2

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(UNAUDITED)

	Three Months Ended March 31
	2019			2018
Net revenues
Net revenues	$	382,789		$	356,783
Net revenues - related parties		138,664			157,832
Total net revenues		521,453			514,615
Cost of net revenues
Cost of net revenues		354,663			378,156
Cost of net revenues - related parties		68,797			66,563
Royalties expense - related parties		10,223			9,927
Total cost of revenues		433,683			454,646
Gross profit		87,770			59,969
Operating expenses
Selling, general and administrative		320,195			255,109
Research and development costs		29,568			6,432
Total operating expenses		349,763			261,541
Loss from operations		(261,993	)		(201,572	)
Other expense, net
Interest expense		2,052			16,368
Total other expense		2,052			16,368
Loss before provision for income taxes		(264,045	)		(217,940	)
Provision for income taxes		—			—
Net loss	$	(264,045	)	$	(217,940	)
Loss on foreign current translation		(6,456	)		-
Comprehensive loss	$	(270,501	)	$	(271,940	)
Basic loss per common share	$	(0.00)		$	(0.00)
Diluted loss per common share	$	(0.00)		$	(0.00)
Basic weighted average common shares outstanding		179,640,302			102,134,746
Diluted weighted average common shares outstanding		179,640,302			102,134,746

See accompanying notes to unaudited condensed consolidated financial statements

3

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(UNAUDITED)

	Preferred Stock				Common Stock				Common Stock Payable				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Equity
Balance, December 31, 2017		425,000	$	425		98,192,717	$	9,819		138,941	$	14	$	9,170,198	$	-		$	(8,879,793	)	$	300,663
Shares issued for services		-		-		2,000,000		200		-		-		24,800		-			-			25,000
Unit offering		-		-		2,608,695		261		-		-		29,739		-			-			30,000
Net loss		-		-		-		-		-		-		-		-			(217,940	)		(217,940	)
Balance, March 31, 2018		425,000	$	425		102,801,412	$	10,280		138,941	$	14	$	9,224,737	$	-		$	(9,097,733	)	$	137,723
Balance, December 31, 2018		425,000	$	425		161,086,228	$	16,109		138,941	$	14	$	10,213,595		-		$	(10,182,778	)	$	47,365
Shares issued for services		-		-		7,033,333		703		-		-		91,348		-			-			92,051
Unit offering		-		-		50,000,000		5,000		-		-		495,000		-			-			500,000
Foreign currency translation		-		-		-		-		-		-		-		(6,456	)		-			(6,456	)
Net loss		-		-		-		-		-		-		-		-			(264,045	)		(264,045	)
Balance, March 31, 2019		425,000	$	425		218,119,561	$	21,812		138,941	$	14	$	10,799,943	$	(6,456	)	$	(10,446,823	)	$	368,915

See accompanying notes to unaudited condensed consolidated financial statements

4

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(UNAUDITED)

	Three Months Ended March 31,
	2019			2018
Cash flows provided by operating activities:
Net loss	$	(264,045	)	$	(217,940	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		3,563			4,553
Shares issued for services		92,051			25,000
Amortization of Operating right of use asset		23,166			0
Amortization of debt discount		-			6,250
Changes in operating assets and liabilities
Change in accounts receivable, net		(6,761	)		(29,032	)
Change in accounts receivable - related parties		18,090			(1,392	)
Change in inventory		(75,323	)		(258,901	)
Change in prepaid expenses and other current assets		(48,192	)		167,949
Change in accounts payable and accrued liabilities		(21,899	)		210,993
Change in customer deposits and unearned revenue		16,969			(42,868	)
Change in other liabilities		61,238			(1,514	)
Change in accounts payable - related parties		81,240			9,927
Change in operating lease liabilities		(23,166	)		-
Net cash used in operating activities		(143,069	)		(126,975	)
Cash flows from investing activities:		-			-
Cash flows from financing activities:
Proceeds from unit offering		500,000			30,000
Net cash provided by financing activities		500,000			30,000
Net change in cash		356,931			(96,975	)
Cash, beginning of period		78,784			150,898
Cash, end of period	$	435,715		$	53,923
Supplemental disclosures of cash flow information:
Cash paid for interest	$	427		$	-
Cash paid for income taxes	$	-		$	-
Supplemental disclosure of non-cash financing activities:
Operating lease Assets and Liabilities	$	635,613		$	-

See accompanying notes to unaudited condensed consolidated financial statements

5

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business –Brownie’s Marine Group, Inc., (hereinafter referred to as the “Company,” or “BWMG”) designs, tests, manufactures and distributes recreational hookah diving, yacht based scuba air compressor and nitrox generation systems, scuba and water safety products through its wholly owned subsidiary Trebor Industries, Inc. and manufactures and sells high pressure air and industrial gas compressor packages through its wholly owned subsidiary Brownie’s High Pressure Compressor Services, Inc. The Company sells its products both on a wholesale and retail basis, and does so from its headquarters and manufacturing facility in Pompano Beach, Florida. The Company does business as (dba) Brownie’s Third Lung, the dba name of Trebor Industries, Inc. and Brownie’s High Pressure Compressor Services, Inc. The Company’s common stock is quoted on the OTC Markets (Pink) under the symbol “BWMG”.

On August 7, 2017, Brownie’s Marine Group, Inc. entered into an Exclusive Distribution Agreement with Lenhardt & Wagner GmbH (“L&W”), a German-based company engaged in the development, manufacturing and sales of high pressure air and industrial gas compressor packages. Under the terms of the Exclusive Distribution Agreement, we were appointed the exclusive distributor of L&W’s complete product line in North America and South America, including the Caribbean (the “Territory”). Pursuant to an intercompany assignment, Brownie’s High Pressure Compressor Services, Inc., our newly-formed wholly-owned subsidiary (“BHP”), is party to the agreement. Through BHP we expect to conduct business and build the brand name “L&W Americas/LWA”, establishing sales, distribution and service centers for high pressure air and industrial gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries. Our goal will be to build a network of jobbers, dealers, installers and high-pressure compressor distributors throughout the Territory by leveraging our know-how, brand awareness, complimentary products and creating sustainable distribution and core product OEM integration relationships.

In December 2017, the Company formed a new wholly-owned subsidiary BLU3, Inc. The Company was formed to develop and market an innovation electric shallow dive system that is completely portable to the user. As of March 31, 2019 and December 31, 2018 the company has had limited operations.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2019 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2019.

For further information, refer to the Company’s consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2018.

Definition of fiscal year – The Company’s fiscal year end is December 31.

Principles of Consolidation -The consolidated financial statements include the accounts of BWMG and its wholly owned subsidiaries, Trebor Industries, Inc., Brownie’s High Pressure Compressor Services, Inc. and BLU3, Inc. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

6

Cash and 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.

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. We incurred net losses for the three months ended years ended March 31, 2019 and 2018 of $246,045 and $217,940, respectively. The Company had an accumulated deficit as of March 31, 2019 of $10,446,823.

Because the Company believes that existing operational cash flow may not be sufficient to fund presently anticipated operations, this raises substantial doubt about our ability to continue as a going concern. Therefore, the Company will continue to raise additional funds as needed and is currently exploring alternative sources of financing. The Company has issued a number of common shares and convertible debentures as an interim measure to finance working capital needs and may continue to raise additional capital through sale of restricted common stock or other securities or obtaining short term loans.

If BWMG fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back or cease operations, liquidate assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Accounts receivable – Accounts receivable consist of amounts due from the sale of all of our products to wholesale and retail customers. The allowance for doubtful accounts are estimated based on historical customer experience and industry knowledge. The allowances for doubtful accounts totaled $9,200 and $9,200 at March 31, 2019 and December 31, 2018, respectively.

Inventory – Inventory is stated at the lower of cost or net realizable value. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company’s management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when indicated.

Property and equipment and leasehold improvements – Property and equipment and leasehold improvement is stated at cost less accumulated depreciation or amortization. Depreciation and amortization is provided principally on the straight-line method over the estimated useful lives of the assets or term of the lease, which are primarily 3 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Revenue Recognition

On January 1, 2018, we adopted the new accounting standard ASC 606, “Revenue from Contracts with Customers” and all the related amendments. This standards core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to receive. The new revenue standard was applied using the modified retrospective method. As a result of the adoption of this standard, there was no impact on the prior year financial statements.

We recognize the sale of products under single performance obligations upon shipment of the units as that is when ownership is transferred and our performance is completed. Revenues from repair and maintenance activities is recognized when the repairs are completed and the units have been shipped.

Advertising and marketing costs – The Company expenses the costs of producing advertisements and marketing material at the time production occurs, and expenses the costs of communicating advertisements and participating in trade shows in the period in which they occur. Advertising and trade show expense incurred for the three months ended March 31, 2019 and March 31, 2018, totaled $1,046 and $ 16,249, respectively.

7

Research and development costs – The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. During the three months ended March 31, 2019 and March 31, 2018 the Company incurred research and development costs of $29,568 and $6,432, respectively.

Customer deposits and unearned revenue and returns policy – The Company typically takes a minimum 50% deposit against custom and large tankfill systems prior to ordering and/or building the systems. The remaining balance due is payable upon delivery, shipment, or installation of the system. There is no provision for cancellation of custom orders once the deposit is accepted, nor return of the custom ordered product. Additionally, returns of all other merchandise are subject to a 15% restocking fee as stated on each sales invoice. Customer deposits and unearned revenue totaled $307,145 and $245,907 at March 31, 2019 and December 31, 2018, respectively.

Warranty policy – Under the provisions of FASB ASC 460, Guarantor’s Guarantees, the Company accrues a liability for estimated warranty policy costs based on historical information and experience. The Company provides our customers with an industry standard one year warranty on systems sold and recognizes a warranty reserve based on gross sales multiplied by the historical warranty expense return rate The warranty reserve at March 31, 2019 and December 31, 2018 was charged to cost of net revenues and is included in accrued expenses and is deemed sufficient to absorb any material or labor costs that might be incurred on sales recorded during the period. The Company recognized a reserve for warranty work in 2018 of $8,834. During the three months ended March 31, 2019 the Company increased the reserve by $1,709 to a total of $10,543.

Income taxes – On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Jobs Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a United States corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017.

The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Stock-based compensation – The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is 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.

8

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.

During the three months ended March 31, 2019 and 2018, the Company recognized share based compensation with a fair value of $92,051 and $25,000, respectively.

Beneficial conversion features on convertible debentures – A beneficial conversion feature arises when the conversion price of a convertible instrument is below the per share value of the underlying stock into which it is convertible. The fair value of the stock upon which to base the beneficial conversion feature (BCF) computation has been determined through use of the quoted stock price.

Fair value of financial instruments – Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. Management considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the Company’s perceived risk of that investment.

At March 31, 2019 and December 31, 2018,, the carrying amount of cash, accounts receivable, accounts receivable – related parties, accounts payable and accrued liabilities, customer deposits and unearned revenue, other liabilities, and convertible debentures, approximate fair value because of the short maturity of these instruments.

Earnings per common share – Basic earnings 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 earnings per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. At March 31 2019 and March 31, 2018, 68,386,823 and 62,164,296, respectively, potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible note agreements, outstanding warrants, outstanding stock options and the conversion of preferred stock.

New accounting pronouncements

In June 2018, the Financial Accounting Standards Board issued ASU 2018-7, “Compensation – Stock Compensation” (Topic 718) amending the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments specify that nonemployee share-based payments are measured at grant-date fair value with the grant date being defined when the parties reach a mutual understanding of the key terms and conditions of the share-based award. ASU 2018-07 is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The adoption of ASU 2018—07 did not have an impact on our operations, cash flows or financial condition.

9

In March 2018, the FASB issued ASU 2018-05, “Income Taxes” (Topic 740) amending previous guidance on accounting and disclosures for income taxes addressing changes under the Tax Cuts and Jobs Act (the “Act”). This standard addresses the recognition of taxes payable or refundable in the current year and the recognition of deferred tax liabilities and deferred tax assets following passage of the Act. ASU 2018-5 had an enactment date of December 22, 2017. We do not believe this ASU had a material impact on our results of operation, cash flows or financial condition.

In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

This standard will not have a material impact on our consolidated statement of operations however, the recognition of right of use assets and real estate operating lease liabilities will have a material impact on our consolidated balance sheet presentation. Adoption of this standard resulted in additional right of use assets and additional liabilities of approximately $635,613 based on the present fair value of the remaining minimum rental payments under our current real property lease obligations. See Note 12

The Company believes there was no other new accounting guidance adopted, but not yet effective that either has not already been disclosed in prior reporting periods or is relevant to the readers of our consolidated financial statements.

2. INVENTORY

	March 31, 2019			December 31, 2018
Raw materials	$	542,706		$	353,619
Finished goods		399,744			513,148
Allowance for obsolete inventory		(143,597	)		(143,597	)
	$	798,493		$	723,170

For the year ended December 31, 2018, the Company recognized an additional reserve for obsolete or slow moving inventory of approximately $100,000.

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

	March 31, 2019		December 31, 2018
Prepaid inventory	$	91,074	$	39,260
Prepaid insurance		11,138		4,615
Prepaid other current assets		6,000		14,645
	$	108,212	$	58,520

10

4. PROPERTY AND EQUIPMENT, NET

Property, equipment and leasehold improvements consists of the following as of:

	March 31, 2019			December 31, 2018
Tooling and equipment	$	138,632		$	138,632
Computer equipment and software		27,469			27,469
Vehicles		44,160			44,160
Leasehold improvements		43,779			43,779
		254,040			254,040
Less: accumulated depreciation and amortization		(253,885	)		(250,322	)
	$	155		$	3,718

Depreciation and amortization expense totaled $3,563 and $4,553 for the three months ended March 31, 2019 and 2018, respectively.

5. OTHER ASSETS

Other assets at March 31, 2019 of $24,649 consisted of refundable deposits $6,649 and an unamortized license fee of $18,000. Other assets at December 31, 2018 of $26,147 consisted of refundable deposits $6,649 and an unamortized license fee of $19,498.

6. CUSTOMER CREDIT CONCENTRATIONS

The Company sells to three (3) entities owned by the brother of Robert Carmichael, the Company’s Chief Executive Officer, and three (3) companies owned by the Chief Executive Officer as further discussed in Note 7 - RELATED PARTIES TRANSACTIONS. Combined sales to these six (6) entities for the three month periods ended March 31, 2019 and 2018, represented 26.59% and 30.67% respectively, of total net revenues.

In excess of 90% of our total net revenues are made up of product sales to customers within the state of Florida.

7. RELATED PARTIES TRANSACTIONS

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 volumes. Combined net revenues from these entities for the three months ended March 31, 2019 and 2018, totaled $138,664 and $157,832, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers and Brownie’s Yacht Toys, l at March 31, 2019, was $24,403, $4,611and $16,553, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at December 31, 2018, was $49,443, $7,731, and $8,646, respectively.

The Company sells products to Brownie’s Global Logistics, LLC. (“BGL”) and 940 Associates, Inc. fully owned by the Company’s Chief Executive Officer directly. 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 products 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 world-wide through its operations. Combined net revenues from these three entities for three months ended March 31, 2019 and 2018, were $810 and $0, respectively. Accounts receivable from BGL, 940 Associates, Inc. and the Chief Executive Officer totaled $14,766 and $12,603 at March 31, 2019 and December 31, 2018, respectively.

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Accounts payable – related parties – The Company had accounts payable to related parties of $142,212 and $125,243 at March 31, 2019 and December 31, 2018, respectively. The balance payable at March 31, 2019 and December 31, 2018 was due to Brownie’s Global Logistics, LLC, and 940 associates two companies affiliated with the Company’s Chief Executive Officer and directly to the CEO.

Royalties expense – related parties – The Company has Exclusive License Agreements 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 requires 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, 2019 and 2018 as disclosed on the face of the Company’s Consolidated Statements of Operations totaled $10,223 and $9,927, respectively.

On August 1, 2017, Mr. Mikkel Pitzner was appointed by the Company’s board of directors to serve on the Company’s board of directors, filling a vacancy on the board. Mr. Pitzner shall serve on the board of directors and shall hold office until the next election of directors by stockholders and until his successor is elected and qualified or until his earlier resignation or removal. The Company has agreed to pay Mr. Pitzner an annual fee of $6,000 and has issued Mr. Pitzner 2,000,000 shares of restricted common stock valued at $25,000 and an additional 1,666,667 with a fair value of $20,883 under a two month consulting agreement expiring in January 2019. In December 2018, Mr. Pitzner was issued 708,287 common shares in payment of accrued director fees through December 31, 2018. The shares were valued at $0.0195 per share, totaling $13,812, the fair value on the date of grant. During the three months ended March 31, 2019 the Company recorded $31,250 of stock compensation pursuant to this agreement.

In January 2018, the Company issued 2,000,000 shares of common stock to Mr. Dana Allan for his services for serving on our board of directors. The grant date fair value of the shares issued was $50,200 and were expensed during the year ended December 31, 2018. Mr. Allan also received 552,742 shares for his services on our board of directors with a grant date fair value of $10,778 and were expensed during the year ended December 31, 2018. Mr. Allen resigned as a director effective March 31, 2019.

In December 2018, the Company issued 20,000,000 shares of common stock to our CEO as an incentive bonus. As the shares are subject to continued employment by the CEO through January 2, 2020, the Company has treated the shares as issued but not as yet outstanding. Expense for the issuance is being recognized over the full vesting period, and accordingly, the Company recognized stock compensation expense of $10,576 as of December 31, 2018. During the three months ended March 31, 2019 the Company recognized additional stock compensation expense of $45,876. The Total amount of expense recorded as of March 31, 2019 is $56,452.

Stock options outstanding from patent purchase – Effective March 3, 2009, the Company entered into a Patent Purchase Agreement with Robert M. Carmichael, the Chief Executive Officer of the Company. The Company purchased several patents it had previously been paying royalties on and several related unissued patents. In exchange for the Intellectual Property, the Company issued Mr. Carmichael 234 stock options at a $1,350 exercise price expiring ten years from the effective date of grant. The options expired on March 2, 2019 without being exercised.

Commencing in February, 2019, the Company began paying Mr. Pitzner $9,300 per month, inclusive of a $1,300 auto allowance, for consulting services. These payments are not covered by a written agreement.

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consists of the following as of:

	March 31, 2019		December 31, 2018
Accounts payable trade and other	$	240,084	$	249,833
Accrued payroll & fringe benefits		43,709		48,065
Accrued Warranty Expense		10,543		8,834
Accrued payroll taxes & withholding		3,745		8,415
Accrued interest		11,787		10,162
	$	309,868	$	325,309

Balances due certain vendors are in arrears to varying degrees. The Company is handling all delinquent accounts on a case-by-case basis.

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9. OTHER LIABILITIES

Other liabilities consist of the following as of:

	March 31, 2019			December 31, 2018
Short-term loans	$	126,572	(*)	$	126,572	(*)
Asset purchase agreement payable		12,857			12,857
Other accrued liabilities		15,108
Accrued royalties expense		2,027			2,027
Accrued vendor settlement		66,500
On-line training liability		318			686
	$	223,382		$	142,142

(*) Initial balance of $200,000 non-convertible note dated July 7, 2013. The note carries a 0% interest rate and is due on demand.

10. CONVERTIBLE DEBENTURES

Convertible debentures consist of the following at December 31, 2018:

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.
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		—		10,000		3,694		(1	)
12/01/17	12/01/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,250		(42	)
12/05/17	12/04/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,218		(53	)
										$	110,000	$	—	$	110,000	$	10,162

Convertible debentures consist of the following at March 31, 2019:

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.
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		—		10,000		3,820		(1	)
12/01/17	12/01/19		6	%		50,000		(12,500	)		50,000		—		50,000		4,000		(2	)
12/05/17	12/04/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,967		(3	)
										$	110,000	$	—	$	110,000	$	11,787

(1) The Company borrowed $10,000 in exchange for a convertible debenture. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days. The Company valued the beneficial conversion feature of the convertible debenture at $4,286, which was accreted to interest expense over the period of the note. The discount has been fully amortized as of December 31, 2018.

(2) The Company entered into a 6% Secured Convertible Promissory Note, due December 1, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressor Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

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(3) The Company entered into a 6% Secured Convertible Promissory Note, due December 4, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressure Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

12. COMMITMENTS AND CONTINGENCIES

From time to time the Company is subject to legal proceedings, claims and litigation arising in the ordinary course of business, including matters relating to product liability claims. Such product liability claims sometimes involving wrongful death or injury have historically been covered by product liability insurance, which provided coverage for each claim up to $1,000,000. During the third quarter of 2014, the Company did not renew its product liability insurance since the renewal policy amount was cost prohibitive. As of August 15, 2017, the Company has obtained Product Liability Insurance, although prior claims are not covered under the new policy. The initial term of the policy was through August 14, 2018 and was renewed through August 14, 2019.

In addition, as previously disclosed, the Company, Trebor and other third parties, are each named as a co-defendants under actions initially filed in March 2015 in the Circuit Court of Broward County under Case No. CACE-15-03238 and CACE -16-0000242 by the Estate of Ernesto Rodriguez, claiming wrongful death and products liability resulting in the decedent’s drowning death while using a Brownie’s Third Lung product. This claim falls outside the Company’s period of insurance coverage. Plaintiff has claims damages exceeding $1,000,000. A default judgment was entered against Trebor in 2015 due to its failure to timely respond to the complaint. On November 2, 2016, the court granted plaintiff’s motion for sanctions against our company for frivolous litigation relating to our attempt to have the matter dismissed and granted the plaintiff’s motion to strike our motion for summary judgment due to our initial default. The Company believes the claim to be a Workers Compensation claim relating exclusively against other non-affiliated defendants and without merit, and will aggressively defend this action and to appeal the default judgment. In the event Trebor is unable to overturn the default judgment and the defendants are determined to be at fault, we would seek to allocate damages among all of the other parties, including the plaintiff. At this time, the amount of any loss, or range of loss, cannot be reasonably estimated due to the undetermined validity of any claim or claims made by plaintiff and the mitigating factors among the parties. Therefore, the Company has not recorded reserves and contingent liabilities related to this matter. However, in the future, as the case progresses, the Company may be required to record a contingent liability or reserve for these matters.

On August 14, 2014, the Company entered into a new lease commitment. Terms of the new lease include thirty-seven-month term commencing on September 1, 2014; payment of $5,367 security deposit; base rent of approximately $4,000 per month over the term of the lease plus sales tax; and payment of 10.76% of annual operating expenses (i.e. common areas maintenance), which is approximately $2,000 per month subject to periodic adjustment. On December 1, 2016, we entered into an amendment to the initial lease agreement, commencing on October 1, 2017, extending the term for an additional eighty-four months, expiring September 30, 2024. The base rent was increased to $4,626 per month with a 3% annual escalation throughout the amended term.

On November 11, 2018, the Company entered a new lease agreement for approximately 8,025 square feet adjoining its existing facility in Pompano Beach, Florida. Terms of the new lease include a sixty-nine month term commencing on January 1, 2019, or the date the Company takes possession of the premises, if earlier; a $6,527 security deposit; initial base rent of approximately $4,848 per month escalating at 3% per year during the term of the lease plus Florida state sales tax and payment of 10.11% of the buildings annual operating expenses (i.e. common area maintenance) which is approximately $1,679 per month subject to adjustment as provided in the lease.

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We believe that the facilities are suitable for their intended purpose, are being efficiently utilized and provide adequate capacity to meet demand for the foreseeable future.

Base rent expense, attributable to the Company’s headquarters facility totaled approximately $30,938 and $19,878 for the three months ended March 31, 2019 and 2018, respectively.

Supplemental balance sheet information related to leases was as follows:

Operating Leases	Classification	March 31, 2019
Right-of-use assets	Operating right of use assets	$	612,447
Current lease liabilities	Current operating lease liabilities		91,273
Non-current lease liabilities	Long-term operating lease liabilities		521,174
Total lease liabilities		$	612,447

Lease term and discount rate were as follows:

	March 31, 2019
Weighted average remaining lease term (years)		5.47
Weighted average discount rate		5.91	%

The component of lease costs were as follows:

	Three months ended March 31, 2019
Operating lease cost	$	30,938
Variable lease cost		-
Total lease costs	$	30,398

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

	March 31, 2019
Cash paid for operating lease liabilities	$	30,938
Operating right of use assets obtained in exchange for operating lease liabilities	$	635,613

Maturities of lease liabilities were as follows as of March 31, 2019:

	Trebor Industries Office Lease			LWA Office Lease			Copier			Total lease payments
Remainder of 2019	$	43,316		$	43,635		$	6,291		$	93,242
2020		59,339			59,927			8,388			127,654
2021		61,119			61,725			8,388			131,232
2022		62,953			63,576			8,388			134,917
2023 and thereafter		114,559			116,070			2,796			233,424
Total		341,286			344,933			34,251			720,470
Less: Imputed interest		(51,785	)		(52,352	)		(3,886	)		(108,023	)
Present value of lease liabilities	$	289,501		$	292,581		$	30,365		$	612,447

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On August 7, 2017 the Company entered into an Exclusive Distribution Agreement with Lenhardt & Wagner GmbH (“L&W”), a German-based company engaged in the development, manufacturing and sales of high pressure air and industrial gas compressor packages. Under the terms of the Exclusive Distribution Agreement, we were appointed the exclusive distributor of L&W’s complete product line in North America and South America, including the Caribbean (the “Territory”). Pursuant to an intercompany assignment, Brownie’s High Pressure Compressor Services, Inc., our newly-formed wholly-owned subsidiary (“BHP”), is party to the agreement. Through BHP we expect to conduct business and build the brand name “L&W Americas/LWA”, establishing sales, distribution and service centers for high pressure air and industrial gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries. Under the terms of the agreement, we were granted a non-exclusive, non-transferrable and irrevocable right to use certain of L&W’s trademarks in connection with the marketing, use, sale and service of the products in the Territory. The agreement is for an initial term of five years, and will automatically renew for one additional five year term unless terminated by either party upon one year written notice prior to the expiration of the then current term. Either party may terminate the agreement without cause upon one year prior written notice to the other party. In addition, L&W may terminate the agreement for cause upon 120 days prior notice to us, subject to certain cure periods.

In May 2018 the Company entered into an agreement with an employee to pay him $28 an hour in cash and $10 per hour in common stock not to exceed 40 hours a week. The stock price is determined at the end of each month using the 10-day weighted average of the stock price. As of March 31, 2019 the Company has not issued all of the common stock to the employee and has recorded a liability of $6,206.

13. EQUITY AND EQUITY INCENTIVE PLAN

Common Stock

The Company had 218,119,561 and 161,086,228 common shares outstanding at March 31, 2019 and December 31, 2018, respectively.

In December 2018, the Company issued 20,000,000 shares of common stock to our CEO as an incentive bonus. As the shares are subject to continued employment by the CEO through January 2, 2020, the Company has treated the shares as issued but not as yet outstanding. Expense for the issuance is being recognized over the full vesting period, and accordingly, the Company recognized stock compensation expense of $10,576 as of December 31, 2018. During the three months ended March 31, 2019 the Company recognized additional stock compensation expense of $45,876. The Total amount of expense recorded as of March 31, 2019 is $56,452.

On August 1, 2017, Mr. Mikkel Pitzner was appointed by the Company’s board of directors to serve on the Company’s board of directors, filling a vacancy on the board. Mr. Pitzner shall serve on the board of directors and shall hold office until the next election of directors by stockholders and until his successor is elected and qualified or until his earlier resignation or removal. The Company has agreed to pay Mr. Pitzner an annual fee of $6,000 and has issued Mr. Pitzner 3,333,333 shares of restricted common stock valued at $31,250 under a consulting agreement expiring in January 2019. In December 2018, Mr. Pitzner was issued 708,287 common shares in payment of accrued director fees through December 31, 2018. The shares were valued at $0.0195 per share, totaling $13,812, the fair value on the date of grant. During the three months ended March 31, 2019 the Company recorded $31,275 of stock compensation pursuant to this agreement.

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In January 2019, the Company entered into an investment banking and corporate advisory agreement. The term of the agreement is for one year and provided for compensation of 2,700,000 common shares with a fair value of $29,700 plus related expenses. The shares were issued in February and March 2019. For the three months ended March 31, 2019 the Company expenses $7,400 in stock compensation.

In January 2019, the Company issued 1,000,000 common shares with a fair value of $12,500 to a consultant for general administrative advisory services, of which $7,500 was expensed during the three months ended March 31, 2019.

In March, 2019 we issued an accredited investor, a unit of the securities of the Company, with the unit consisting of 50,000,000 shares of common stock, par value $0.0001 per share and 50,000,000 eighteen month common stock purchase warrants exercisable at $0.01 per share in consideration of $500,000. The Company intends to use the proceeds from the sale for product research and development and working capital purposes. The Company did not pay any fees or commissions in connection with the sale of the unit.

Preferred Stock

During the second quarter of 2010, the holder 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 preferred stock. The preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by our Board of Directors of the Company from time to time in accordance with the provisions of the Florida Business Corporation Act. Before modification, the existing Articles of Incorporation did not authorize the issuance of shares of preferred stock. The Company authorized the preferred stock for the purpose of added flexibility in seeking capital and potential acquisition targets. The amendment authorizing the issuance of shares of preferred stock grants the Board authority, without further action by our stockholders, to designate and issue preferred stock in one or more series and to designate certain rights, preferences and restrictions of each series, any or all of which may be greater than the rights of the common stock. As of March 31, 2019 and December 31, 2018, the 425,000 shares of preferred stock are owned by the Company’s Chief Executive Officer. The preferred shares have 250 to 1 voting rights over the common stock, and are convertible into 31,481 shares of common stock. The preferred stock votes with the Company’s common stock, except as otherwise required under Florida law.

Equity Incentive Plan

On August 22, 2007, the Company adopted an Equity Incentive Plan (the “Plan”). The Plan expired on August 22, 2017. All 297 options issued under the Plan had expired as of March 31, 2019.

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Equity Compensation Plan Information as of December 31, 2018.

	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		297	$	1,350		—
Equity Compensation Plans Not Approved by Security Holders		—		—		—
Total		297	$	1,350		—

Equity Compensation Plan Information as of March 31, 2019.

	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	—	$	—	—
Equity Compensation Plans Not Approved by Security Holders	—		—	—
Total	—	$	—	—

14. SUBSEQUENT EVENTS

In April, 2019, the Company reached a settlement agreement with a customer regarding returned merchandise agreeing to refund $65,000. The Company determined the returned merchandise had little or no value and the adjustment was charged to Cost of Revenues at December 31, 2018. In addition, the Company recognized $1,500 in related legal fees in this matter as of December 31, 2018.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introductory Statements

Information included or incorporated by reference in this filing may contain forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology.

Overview

Brownie’s Marine Group, Inc., a Florida corporation (referred to herein as “the Company”, “we”, or “BWMG”), designs, tests, manufactures and distributes recreational diving, yacht based scuba air compressor and nitrox generations systems, and water safety products through its wholly owned subsidiary, Trebor Industries, Inc., d/b/a Brownie’s Third Lung, a Florida corporation. The Company sells its products both on a wholesale and retail basis, and does so from its headquarters and manufacturing facility located in Pompano Beach, Florida. The Company does business as (dba) Brownie’s Third Lung, the dba name of Trebor Industries, Inc. In August 2017, the Company organized Brownie’s High Pressure Compressor Services, Inc., a wholly-owned subsidiary (“BHP”). Through BHP we are party to an Exclusive Distribution Agreement with Lenhardt & Wagner GmbH (“L&W”), a German-based company engaged in the development, manufacturing and sales of high pressure air and industrial gas compressor packages. Through this agreement we intend to establish sales, distribution and service centers for high pressure air and industrial gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries. The Company’s common stock is quoted on the OTC Markets (Pink) under the symbol “BWMG”. The Company’s website is www.Browniesmarinegroup.com. Information on the website is not a part of this report.

In December 2017, the Company formed a new wholly-owned subsidiary BLU3, Inc. The Company was formed to develop and market an innovation electric shallow dive system that is completely portable to the user. As of March 31, 2019 there were as yet no operations, other than research expenditures, in the new company.

Results of Operations for the Three Months Ended March 31, 2019 as Compared to the Three Months Ended March 31, 2018

Net revenues. For the three months ended March 31, 2019, we had net revenues of $521,453, a 1% increase over the three months ended March 31, 2018. The bulk of this increase was attributable to increase in sales of are Brownies Third Lung due to product modification and change in pricing. While there can be no assurance, the Company expects revenues to increase in the future due to increase in our customer base, product modifications which we anticipate will result in additional sales and under the Exclusive Distribution Agreement with L&W. The sales for our subsidiary, BHP declined by 16% compared to the three months ended March 31, 2018. We had an increase in the customer base for LWA but the increase was in one time buyers for their yachts. Last year we sold more to wholesalers than to one time buyers. Therefore, the price per item sold was lower this year resulting in decrease in sales revenue. Related party revenues declined by approximately 12% between periods as a result of a decrease in demand in recreational dive products primarily attributable to the unfavorable weather conditions for boating and diving.

As of March 31, 2019, there were no revenues recognized in BLU3, as we expect to deliver our first pre-orders of our NEMO product in the third quarter of 2019. Our BLU3 products are currently in the development stage. However, the Company has been incurring engineering and development costs. In connection with this project, in April 2018, the Company entered into a patent license agreement contracting for certain intellectual property rights which we believe will enhance the capabilities of our portable shallow dive system currently under development.

In November 2018, the Company announced its crowdfunding “Kick Starter” program for the NEMO system which was successfully concluded, preselling approximately 350 units, which has resulted in proceeds, net of related costs, of approximately $112,000. This amount, coupled with additional funds raised subsequent to December 31, 2018, is considered sufficient to commence commercial production of the NEMO product line in the second quarter 2019.

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Cost of net revenues. Cost of net revenues decreased during the three months ended March 31, 2019, a 5% decrease compared to the three months ended March 31, 2018. Due to the nature of a large portion of our business being dependent on recreational boating and diving, sales are seasonal and often dependent on weather conditions. However, while there can be no assurance, given the formation of BHP in the third quarter 2017, the Company believes that as our operations under the L&W agreement target industrial applications, we will be less susceptible to weather or other seasonal fluctuations.

Operating expenses. Operating expenses, consisting of selling, general and administrative expenses and research and development costs increased sharply between the periods. Selling, general and administrative expenses and research and development costs totaled $349,763 for the three months ended March 31, 2019, an increase of $88,222 or 34% over the prior year. The large bulk of this increase in general and administrative was due to an increase in the number of employees between the periods with an associated increase in salaries and benefits and an increase in consulting fees and employee benefits paid in stock totaling $92,051 compared to $25,000 in 2018. Employees were added in large part due to the formation of BHP and BLU3 including , two engineers, a director of marketing and public relations and an additional mechanic. This increase in operating expenses is expected to continue as the Company adds additional production personnel in support of our expanding product lines with LWA and BLU3 and associated administrative support.

While there can be no assurance, the Company believes that the near term costs of “ramping up” its high pressure business, through BHP, and continued development of its BLU3 portable shallow dive system product line will provide the Company with increased product diversity and increase revenues in the future.

Research and development costs were up sharply, increasing to $29,568 during the three months ended March 31, 2019, as compared to $6,432 in 2018. This increase of 360% is primarily attributable to our efforts to expand our product lines including our portable shallow dive system currently under development as described above. We expect research and development costs to continue to increase as we continue development of products aimed at increasing what we believe to be new innovative product offerings.

Under the patent license agreement, the Company paid an initial license fee in April 2018 through the issuance of 759,422 shares of common stock with a fair value of $30,000 which is being amortized on a straight line basis over its five year term which resulted in $4,500 in expense being recognized in 2018. During the three months ended March 31, 2019 the Company amortized an additional $1,500. The patent license agreement further provides for royalties to be paid based on annual net revenues achieved.

Other expense, net. Other expense consisting primarily of interest expense, decreased during the three months ended March 31, 2019, totaling $2,052, a decrease of $14,316 over 2018. In addition, interest expense for the three months ended March 31, 2018 includes amortization of beneficial conversion features on two notes issued in December 2017 and related interest recognized on these notes.

Net loss. For the three months ended March 31, 2019, we recognized a net loss of $264,045 as compared to a loss of $217,940 for comparable period in 2018. This increase in loss was primarily attributable to sharp increase in general and administrative expenses, including administrative salaries and benefits, research and development costs attributable to increased staffing and related costs associated with new product development efforts..

Liquidity and Capital Resources

The Company’s current ratio and working capital declined between March 31, 2019 and December 31, 2018. As of March had current assets of $1,436,718 and current liabilities of $1,183,880 or a current ratio of 1.2 to 1, representing a working capital balance of $252,838. At December 31, 2018, the Company had current assets of $966,101 and current liabilities of $948,601, or a current ratio also of 1.0 to 1.

The condensed consolidated financial statements included herein have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of issuance of these consolidated financial statements. We incurred losses for the three months ended March 31, 2019 and 2018 of $264,045 and $217,940, respectively. The Company had an accumulated deficit as of March 31, 2019 and December 31, 2018 of $10,446,823 and $10,182,778, respectively.

20

Because the Company believes that existing operational cash flow may not be sufficient to fund presently anticipated operations, this raises substantial doubt about our ability to continue as a going concern. Therefore, the Company will continue to raise additional funds as needed and is currently exploring alternative sources of financing. The Company has issued common shares and a number of convertible debentures as an interim measure to finance working capital needs and may continue to raise additional capital through sale of restricted common stock or other securities or obtaining short term loans.

If the Company fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back or cease operations, liquidate assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

On March 7, 2019 we issued an accredited investor, a unit of the securities of the Company, with the unit consisting of 50,000,000 shares of common stock, par value $0.0001 per share and 50,000,000 eighteen month common stock purchase warrants exercisable at $0.01 per share in consideration of $500,000. The Company intends to use the proceeds from the sale for BLU3 product research and development and working capital purposes. The Company did not pay any fees or commissions in connection with the sale of the unit.

Net cash used in operating activities totaled $143,069 for the three months ended March 31, 2019. The cash used in operations was primarily the result of a net loss from operations of $264,045, being offset by certain non-cash expenses including; shares issued for services with a fair value of $92,051, a decrease in inventory and prepaid expenses and other assets of $75,323 and $48,192, an increase in customer deposits and unearned revenue of $16,969 and an increase in accounts payable and accrued liabilities of $142,478. The increase in customer deposits and unearned revenue was due primarily to deposits related to our newly formed BHP and BLU3 subsidiaries and the introduction of these new product lines. As of March 31, 2019, no sales have yet been recorded by our BLU3.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. The Company’s management, under the supervision and with the participation of Robert Carmichael, the Company’s Chief Executive Officer who also serves as our principal financial and accounting officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of March 31, 2019. Based upon that evaluation and the continuing material weakness in the Company’s internal control over financial reporting as described in Item 9A. of our Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the SEC on June 7, 2019, the Chief Executive Officer who also serves as our principal financial and accounting officer concluded that the Company’s disclosure controls and procedures were ineffective as of the end of the period covered by this report. We have failed to timely file certain reports with the SEC, including this Quarterly Report on Form 10-Q for the period ended March 31, 2019. We do not expect that the weaknesses in our disclosure controls will be remediated until such time as we remediate the material weaknesses in our internal control over financial reporting.

21

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15 under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time the Company is subject to legal proceedings, claims and litigation arising in the ordinary course of business, including matters relating to product liability claims. Such product liability claims sometimes involving wrongful death or injury have historically been covered by product liability insurance, which provided coverage for each claim up to $1,000,000. During the third quarter of 2014, the Company did not renew its product liability insurance since the renewal policy amount was cost prohibitive. As of August 15, 2017, the Company has obtained Product Liability Insurance, although prior claims are not covered under the new policy. The policy was renewed and is prepaid through its term and will remain in effect until its renewal date of August 14, 2019.

As previously disclosed, the Company, Trebor and other third parties, are each named as co-defendants under actions initially filed in March 2015 in the Circuit Court of Broward County under Case No. CACE15-03238 and CACE-16-0000242 by the Estate of Ernesto Rodriguez, claiming wrongful death and products liability resulting in the decedent’s drowning death while using a Brownie’s Third Lung product. This claim falls outside the Company’s period of insurance coverage. Plaintiff has claimed damages exceeding $1,000,000. A default judgment was entered against Trebor in 2015 due to its failure to timely respond to the complaint. On November 2, 2016, the court granted plaintiff’s motion for sanctions against our company for frivolous litigation relating to our attempt to have the matter dismissed and granted the plaintiff’s motion to strike our motion for summary judgment due to our initial default. The Company believes the claim to be a Workers Compensation claim relating exclusively against other non-affiliated defendants and without merit, and will aggressively defend this action and to appeal the default judgment. In the event Trebor is unable to overturn the default judgment and the defendants are determined to be at fault, we would seek to allocate damages among all of the other parties, including the plaintiff. At this time, the amount of any loss, or range of loss, cannot be reasonably estimated due to the undetermined validity of any claim or claims made by plaintiff and the mitigating factors among the parties. Therefore, the Company has not recorded reserves and contingent liabilities related to this matter. However, in the future, as the case progresses, the Company may be required to record a contingent liability or reserve for these matters.

Item 1a. Risk Factors

We incorporate by reference the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2. Unregistered sales of equity securities and use of proceeds

Except as previously disclosed, during the period covered by this report, no other equity securities were sold by the company without registration under the Securities Act of 1933, as amended, during the period covered by this report

Item 3. Defaults Upon Senior Securities

None.

Item 4. MINE SAFETY DISCLOSURE

None.

Item 5. Other Information

None.

22

Item 6. Exhibits

			Incorporated by Reference		Filed Or
No.	Exhibit Description	Form	Date Filed	Exhibit Number	Furnished Herewith
2.2	Merger Agreement, dated June 18, 2002 by and among United Companies Corporation, Merger Co., Inc. and Avid Sportswear & Golf Corp.	S-4	6/24/02	2.02
2.3	Articles of Merger of Avid Sportswear & Golf Corp. with and into Merger Co., Inc.	S-4	6/24/02	2.03
2.4	Plan of Conversion	8-K	10/28/15	2.1
3.1	Articles of Conversion (Nevada)	8-K	10/28/15	3.1
3.2	Certificate of Conversion (Florida)	8-K	10/28/15	3.2
3.3	Articles of Incorporation (Florida)	8-K	10/28/15	3.3
3.5	Articles of Amendment	8-K	12/16/15	3.5
3.6	Bylaws	8-K	10/28/15	3.4
31.1	Certification Pursuant to Rule 13a-14(a)/15d-14(a)				Filed
31.2	Certification Pursuant to Rule 13a-14(a)/15d-14(a)				Filed
32.1	Certification Pursuant to Section 1350				Filed
101	XBRL Interactive Data File				Filed

23

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 5, 2019	Brownie’s Marine Group, Inc.
	By:	/s/ Robert M. Carmichael
		Robert M. Carmichael
		President, Chief Executive Officer,
		Principal financial and accounting officer

24

EX-31.1

EXHIBIT 31.1

OFFICER’S CERTIFICATE
PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Robert M. Carmichael, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2019 of Brownie’s Marine Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 5, 2019	By:	/s/ Robert M. Carmichael
	Name:	Robert M. Carmichael
	Title:	Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

OFFICER’S CERTIFICATE
PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Robert M. Carmichael, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2019 of Brownie’s Marine Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 5, 2019	By:	/s/ Robert M. Carmichael
	Name:	Robert M. Carmichael
	Title:	Chief Executive Officer, principal financial and accounting officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Brownie’s Marine Group, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2019 as filed with the United States Securities and Exchange Commission (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: July 5, 2019	By:	/s/ Robert M. Carmichael
	Name:	Robert M. Carmichael
	Title:	Chief Executive Officer, principal executive officer, principal financial and accounting officer

A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Brownie’s Marine Group, Inc. and will be retained by Brownie’s Marine Group, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Jul. 01, 2019
Document And Entity Information
Entity Registrant Name	Brownie's Marine Group, Inc
Entity Central Index Key	0001166708
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Reporting Status Current	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		238,119,561
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

XML

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current Assets
Cash	$ 435,715	$ 78,784
Accounts receivable - net	33,965	27,204
Accounts receivable - related parties	60,333	78,423
Inventory, net	798,493	723,170
Prepaid expenses and other current assets	108,212	58,520
Total current assets	1,436,718	966,101
Property, equipment and leasehold improvements, net	155	3,718
Right-to-use lease assets	612,447
Other assets	24,649	26,147
Total assets	2,073,969	995,966
Current liabilities
Accounts payable and accrued liabilities	309,868	325,309
Accounts payable - related parties	142,212	125,243
Customer deposits and unearned revenue	307,145	245,907
Other liabilities	223,382	142,142
Operating lease liabilities	91,273
Convertible debentures, net	110,000	110,000
Total current liabilities	1,183,880	948,601
Long-term operating lease liabilities	521,174
Total Liabilities	1,705,054	948,601
Commitments and contingent liabilities (see note 12)
Stockholders' equity
Preferred stock; $0.001 par value: 10,000,000 shares authorized; 425,000 issued and outstanding	425	425
Common stock; $0.0001 par value; 1,000,000,000 shares authorized; 238,119,561 and 218,119,561 issued and outstanding at March 31, 2019 and 181,086,228 and 161,086,228 shares issued and outstanding at December 31, 2018, respectively	21,812	16,109
Common stock payable 138,941 shares and 138,941 shares, respectively as of March 31, 2019 and December 31, 2018	14	14
Additional paid-in capital	10,799,943	10,213,595
Accumulated other comprehensive loss	(6,456)
Accumulated deficit	(10,446,823)	(10,182,778)
Total stockholders' equity	368,915	47,365
Total liabilities and stockholders' equity	$ 2,073,969	$ 995,966

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, share issued	425,000	425,000
Preferred stock, share outstanding	425,000	425,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	238,119,561	181,086,228
Common stock, share outstanding	218,119,561	161,086,228
Common stock payable, shares outstanding	138,941	138,941

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net revenues
Net revenues	$ 382,789	$ 356,783
Net revenues - related parties	138,664	157,832
Total net revenues	521,453	514,615
Cost of net revenues
Cost of net revenues	354,663	378,156
Cost of net revenues - related parties	68,797	66,563
Royalties expense - related parties	10,223	9,927
Total cost of revenues	433,683	454,646
Gross profit	87,770	59,969
Operating expenses
Selling, general and administrative	320,195	255,109
Research and development costs	29,568	6,432
Total operating expenses	349,763	261,541
Loss from operations	(261,993)	(201,572)
Other expense, net
Interest expense	2,052	16,368
Total other expense	2,052	16,368
Loss before provision for income taxes	(264,045)	(217,940)
Provision for income taxes
Net loss	(264,045)	(217,940)
Loss on foreign current translation	(6,456)
Comprehensive loss	$ (270,501)	$ (271,940)
Basic loss per common share	$ (0.00)	$ (0.00)
Diluted loss per common share	$ (0.00)	$ (0.00)
Basic weighted average common shares outstanding	179,640,302	102,134,746
Diluted weighted average common shares outstanding	179,640,302	102,134,746

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Common Stock Payable [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2017	$ 425	$ 9,819	$ 14	$ 9,170,198		$ (8,879,793)	$ 300,663
Balance, shares at Dec. 31, 2017	425,000	98,192,717	138,941
Shares issued for services		$ 200		24,800			25,000
Shares issued for services, shares		2,000,000
Unit offering		$ 261		29,739			30,000
Unit offering, shares		2,608,695
Net loss						(217,940)	(217,940)
Balance at Mar. 31, 2018	$ 425	$ 10,280	$ 14	9,224,737		(9,097,733)	137,723
Balance, shares at Mar. 31, 2018	425,000	102,801,412	138,941
Balance at Dec. 31, 2017	$ 425	$ 9,819	$ 14	9,170,198		(8,879,793)	300,663
Balance, shares at Dec. 31, 2017	425,000	98,192,717	138,941
Balance at Dec. 31, 2018	$ 425	$ 16,109	$ 14	10,213,595		(10,182,778)	47,365
Balance, shares at Dec. 31, 2018	425,000	161,086,228	138,941
Shares issued for services		$ 703		91,348			92,051
Shares issued for services, shares		7,033,333
Unit offering		$ 5,000		495,000			500,000
Unit offering, shares		50,000,000
Foreign currency translation					(6,456)		(6,456)
Net loss						(264,045)	(264,045)
Balance at Mar. 31, 2019	$ 425	$ 21,812	$ 14	$ 10,799,943	$ (6,456)	$ (10,446,823)	$ 368,915
Balance, shares at Mar. 31, 2019	425,000	218,119,561	138,941

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows provided by operating activities:
Net loss	$ (264,045)	$ (217,940)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	3,563	4,553
Shares issued for services	92,051	25,000
Amortization of Operating right of use asset	23,166	0
Amortization of debt discount		6,250
Changes in operating assets and liabilities
Change in accounts receivable, net	(6,761)	(29,032)
Change in accounts receivable - related parties	18,090	(1,392)
Change in inventory	(75,323)	(258,901)
Change in prepaid expenses and other current assets	(48,192)	167,949
Change in accounts payable and accrued liabilities	(21,899)	210,993
Change in customer deposits and unearned revenue	16,969	(42,868)
Change in other liabilities	61,238	(1,514)
Change in accounts payable - related parties	81,240	9,927
Change in operating lease liabilities	(23,166)
Net cash used in operating activities	(143,069)	(126,975)
Cash flows from investing activities:
Cash flows from financing activities:
Proceeds from unit offering	500,000	30,000
Net cash provided by financing activities	500,000	30,000
Net change in cash	356,931	(96,975)
Cash, beginning of period	78,784	150,898
Cash, end of period	435,715	53,923
Supplemental disclosures of cash flow information:
Cash paid for interest	427
Cash paid for income taxes
Supplemental disclosure of non-cash financing activities:
Operating lease Assets and Liabilities	$ 635,613

XML

Description of Business and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Description of Business and Summary of Significant Accounting Policies

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business –Brownie’s Marine Group, Inc., (hereinafter referred to as the “Company,” or “BWMG”) designs, tests, manufactures and distributes recreational hookah diving, yacht based scuba air compressor and nitrox generation systems, scuba and water safety products through its wholly owned subsidiary Trebor Industries, Inc. and manufactures and sells high pressure air and industrial gas compressor packages through its wholly owned subsidiary Brownie’s High Pressure Compressor Services, Inc. The Company sells its products both on a wholesale and retail basis, and does so from its headquarters and manufacturing facility in Pompano Beach, Florida. The Company does business as (dba) Brownie’s Third Lung, the dba name of Trebor Industries, Inc. and Brownie’s High Pressure Compressor Services, Inc. The Company’s common stock is quoted on the OTC Markets (Pink) under the symbol “BWMG”.

On August 7, 2017, Brownie’s Marine Group, Inc. entered into an Exclusive Distribution Agreement with Lenhardt & Wagner GmbH (“L&W”), a German-based company engaged in the development, manufacturing and sales of high pressure air and industrial gas compressor packages. Under the terms of the Exclusive Distribution Agreement, we were appointed the exclusive distributor of L&W’s complete product line in North America and South America, including the Caribbean (the “Territory”). Pursuant to an intercompany assignment, Brownie’s High Pressure Compressor Services, Inc., our newly-formed wholly-owned subsidiary (“BHP”), is party to the agreement. Through BHP we expect to conduct business and build the brand name “L&W Americas/LWA”, establishing sales, distribution and service centers for high pressure air and industrial gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries. Our goal will be to build a network of jobbers, dealers, installers and high-pressure compressor distributors throughout the Territory by leveraging our know-how, brand awareness, complimentary products and creating sustainable distribution and core product OEM integration relationships.

In December 2017, the Company formed a new wholly-owned subsidiary BLU3, Inc. The Company was formed to develop and market an innovation electric shallow dive system that is completely portable to the user. As of March 31, 2019 and December 31, 2018 the company has had limited operations.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2019 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2019.

For further information, refer to the Company’s consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2018.

Definition of fiscal year – The Company’s fiscal year end is December 31.

Principles of Consolidation -The consolidated financial statements include the accounts of BWMG and its wholly owned subsidiaries, Trebor Industries, Inc., Brownie’s High Pressure Compressor Services, Inc. and BLU3, Inc. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 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.

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. We incurred net losses for the three months ended years ended March 31, 2019 and 2018 of $246,045 and $217,940, respectively. The Company had an accumulated deficit as of March 31, 2019 of $10,446,823.

Because the Company believes that existing operational cash flow may not be sufficient to fund presently anticipated operations, this raises substantial doubt about our ability to continue as a going concern. Therefore, the Company will continue to raise additional funds as needed and is currently exploring alternative sources of financing. The Company has issued a number of common shares and convertible debentures as an interim measure to finance working capital needs and may continue to raise additional capital through sale of restricted common stock or other securities or obtaining short term loans.

If BWMG fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back or cease operations, liquidate assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Accounts receivable – Accounts receivable consist of amounts due from the sale of all of our products to wholesale and retail customers. The allowance for doubtful accounts are estimated based on historical customer experience and industry knowledge. The allowances for doubtful accounts totaled $9,200 and $9,200 at March 31, 2019 and December 31, 2018, respectively.

Inventory – Inventory is stated at the lower of cost or net realizable value. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company’s management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when indicated.

Property and equipment and leasehold improvements – Property and equipment and leasehold improvement is stated at cost less accumulated depreciation or amortization. Depreciation and amortization is provided principally on the straight-line method over the estimated useful lives of the assets or term of the lease, which are primarily 3 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Revenue Recognition

On January 1, 2018, we adopted the new accounting standard ASC 606, “Revenue from Contracts with Customers” and all the related amendments. This standards core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to receive. The new revenue standard was applied using the modified retrospective method. As a result of the adoption of this standard, there was no impact on the prior year financial statements.

We recognize the sale of products under single performance obligations upon shipment of the units as that is when ownership is transferred and our performance is completed. Revenues from repair and maintenance activities is recognized when the repairs are completed and the units have been shipped.

Advertising and marketing costs – The Company expenses the costs of producing advertisements and marketing material at the time production occurs, and expenses the costs of communicating advertisements and participating in trade shows in the period in which they occur. Advertising and trade show expense incurred for the three months ended March 31, 2019 and March 31, 2018, totaled $1,046 and $ 16,249, respectively.

Research and development costs – The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. During the three months ended March 31, 2019 and March 31, 2018 the Company incurred research and development costs of $29,568 and $6,432, respectively.

Customer deposits and unearned revenue and returns policy – The Company typically takes a minimum 50% deposit against custom and large tankfill systems prior to ordering and/or building the systems. The remaining balance due is payable upon delivery, shipment, or installation of the system. There is no provision for cancellation of custom orders once the deposit is accepted, nor return of the custom ordered product. Additionally, returns of all other merchandise are subject to a 15% restocking fee as stated on each sales invoice. Customer deposits and unearned revenue totaled $307,145 and $245,907 at March 31, 2019 and December 31, 2018, respectively.

Warranty policy – Under the provisions of FASB ASC 460, Guarantor’s Guarantees, the Company accrues a liability for estimated warranty policy costs based on historical information and experience. The Company provides our customers with an industry standard one year warranty on systems sold and recognizes a warranty reserve based on gross sales multiplied by the historical warranty expense return rate The warranty reserve at March 31, 2019 and December 31, 2018 was charged to cost of net revenues and is included in accrued expenses and is deemed sufficient to absorb any material or labor costs that might be incurred on sales recorded during the period. The Company recognized a reserve for warranty work in 2018 of $8,834. During the three months ended March 31, 2019 the Company increased the reserve by $1,709 to a total of $10,543.

Income taxes – On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Jobs Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a United States corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017.

The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Stock-based compensation – The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is 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.

During the three months ended March 31, 2019 and 2018, the Company recognized share based compensation with a fair value of $92,051 and $25,000, respectively.

Beneficial conversion features on convertible debentures – A beneficial conversion feature arises when the conversion price of a convertible instrument is below the per share value of the underlying stock into which it is convertible. The fair value of the stock upon which to base the beneficial conversion feature (BCF) computation has been determined through use of the quoted stock price.

Fair value of financial instruments – Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. Management considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the Company’s perceived risk of that investment.

At March 31, 2019 and December 31, 2018,, the carrying amount of cash, accounts receivable, accounts receivable – related parties, accounts payable and accrued liabilities, customer deposits and unearned revenue, other liabilities, and convertible debentures, approximate fair value because of the short maturity of these instruments.

Earnings per common share – Basic earnings 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 earnings per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. At March 31 2019 and March 31, 2018, 68,386,823 and 62,164,296, respectively, potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible note agreements, outstanding warrants, outstanding stock options and the conversion of preferred stock.

New accounting pronouncements

In June 2018, the Financial Accounting Standards Board issued ASU 2018-7, “Compensation – Stock Compensation” (Topic 718) amending the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments specify that nonemployee share-based payments are measured at grant-date fair value with the grant date being defined when the parties reach a mutual understanding of the key terms and conditions of the share-based award. ASU 2018-07 is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The adoption of ASU 2018—07 did not have an impact on our operations, cash flows or financial condition.

In March 2018, the FASB issued ASU 2018-05, “Income Taxes” (Topic 740) amending previous guidance on accounting and disclosures for income taxes addressing changes under the Tax Cuts and Jobs Act (the “Act”). This standard addresses the recognition of taxes payable or refundable in the current year and the recognition of deferred tax liabilities and deferred tax assets following passage of the Act. ASU 2018-5 had an enactment date of December 22, 2017. We do not believe this ASU had a material impact on our results of operation, cash flows or financial condition.

In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

This standard will not have a material impact on our consolidated statement of operations however, the recognition of right of use assets and real estate operating lease liabilities will have a material impact on our consolidated balance sheet presentation. Adoption of this standard resulted in additional right of use assets and additional liabilities of approximately $635,613 based on the present fair value of the remaining minimum rental payments under our current real property lease obligations. See Note 12

The Company believes there was no other new accounting guidance adopted, but not yet effective that either has not already been disclosed in prior reporting periods or is relevant to the readers of our consolidated financial statements.

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Inventory

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Inventory

2. INVENTORY

	March 31, 2019			December 31, 2018
Raw materials	$	542,706		$	353,619
Finished goods		399,744			513,148
Allowance for obsolete inventory		(143,597	)		(143,597	)
	$	798,493		$	723,170

For the year ended December 31, 2018, the Company recognized an additional reserve for obsolete or slow moving inventory of approximately $100,000.

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Prepaid Expenses and Other Current Assets

3 Months Ended

Mar. 31, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

	March 31, 2019		December 31, 2018
Prepaid inventory	$	91,074	$	39,260
Prepaid insurance		11,138		4,615
Prepaid other current assets		6,000		14,645
	$	108,212	$	58,520

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Property and Equipment, Net

3 Months Ended

Mar. 31, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

4. PROPERTY AND EQUIPMENT, NET

Property, equipment and leasehold improvements consists of the following as of:

	March 31, 2019			December 31, 2018
Tooling and equipment	$	138,632		$	138,632
Computer equipment and software		27,469			27,469
Vehicles		44,160			44,160
Leasehold improvements		43,779			43,779
		254,040			254,040
Less: accumulated depreciation and amortization		(253,885	)		(250,322	)
	$	155		$	3,718

Depreciation and amortization expense totaled $3,563 and $4,553 for the three months ended March 31, 2019 and 2018, respectively.

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Other Assets

3 Months Ended

Mar. 31, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

5. OTHER ASSETS

Other assets at March 31, 2019 of $24,649 consisted of refundable deposits $6,649 and an unamortized license fee of $18,000. Other assets at December 31, 2018 of $26,147 consisted of refundable deposits $6,649 and an unamortized license fee of $19,498.

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Customer Credit Concentrations

3 Months Ended

Mar. 31, 2019

Risks and Uncertainties [Abstract]

Customer Credit Concentrations

6. CUSTOMER CREDIT CONCENTRATIONS

The Company sells to three (3) entities owned by the brother of Robert Carmichael, the Company’s Chief Executive Officer, and three (3) companies owned by the Chief Executive Officer as further discussed in Note 7 - RELATED PARTIES TRANSACTIONS. Combined sales to these six (6) entities for the three month periods ended March 31, 2019 and 2018, represented 26.59% and 30.67% respectively, of total net revenues.

In excess of 90% of our total net revenues are made up of product sales to customers within the state of Florida.

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Related Parties Transactions

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Parties Transactions

7. RELATED PARTIES TRANSACTIONS

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 volumes. Combined net revenues from these entities for the three months ended March 31, 2019 and 2018, totaled $138,664 and $157,832, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers and Brownie’s Yacht Toys, l at March 31, 2019, was $24,403, $4,611and $16,553, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at December 31, 2018, was $49,443, $7,731, and $8,646, respectively.

The Company sells products to Brownie’s Global Logistics, LLC. (“BGL”) and 940 Associates, Inc. fully owned by the Company’s Chief Executive Officer directly. 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 products 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 world-wide through its operations. Combined net revenues from these three entities for three months ended March 31, 2019 and 2018, were $810 and $0, respectively. Accounts receivable from BGL, 940 Associates, Inc. and the Chief Executive Officer totaled $14,766 and $12,603 at March 31, 2019 and December 31, 2018, respectively.

Accounts payable – related parties – The Company had accounts payable to related parties of $142,212 and $125,243 at March 31, 2019 and December 31, 2018, respectively. The balance payable at March 31, 2019 and December 31, 2018 was due to Brownie’s Global Logistics, LLC, and 940 associates two companies affiliated with the Company’s Chief Executive Officer and directly to the CEO.

Royalties expense – related parties – The Company has Exclusive License Agreements 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 requires 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, 2019 and 2018 as disclosed on the face of the Company’s Consolidated Statements of Operations totaled $10,223 and $9,927, respectively.

On August 1, 2017, Mr. Mikkel Pitzner was appointed by the Company’s board of directors to serve on the Company’s board of directors, filling a vacancy on the board. Mr. Pitzner shall serve on the board of directors and shall hold office until the next election of directors by stockholders and until his successor is elected and qualified or until his earlier resignation or removal. The Company has agreed to pay Mr. Pitzner an annual fee of $6,000 and has issued Mr. Pitzner 2,000,000 shares of restricted common stock valued at $25,000 and an additional 1,666,667 with a fair value of $20,883 under a two month consulting agreement expiring in January 2019. In December 2018, Mr. Pitzner was issued 708,287 common shares in payment of accrued director fees through December 31, 2018. The shares were valued at $0.0195 per share, totaling $13,812, the fair value on the date of grant. During the three months ended March 31, 2019 the Company recorded $31,250 of stock compensation pursuant to this agreement.

In January 2018, the Company issued 2,000,000 shares of common stock to Mr. Dana Allan for his services for serving on our board of directors. The grant date fair value of the shares issued was $50,200 and were expensed during the year ended December 31, 2018. Mr. Allan also received 552,742 shares for his services on our board of directors with a grant date fair value of $10,778 and were expensed during the year ended December 31, 2018. Mr. Allen resigned as a director effective March 31, 2019.

In December 2018, the Company issued 20,000,000 shares of common stock to our CEO as an incentive bonus. As the shares are subject to continued employment by the CEO through January 2, 2020, the Company has treated the shares as issued but not as yet outstanding. Expense for the issuance is being recognized over the full vesting period, and accordingly, the Company recognized stock compensation expense of $10,576 as of December 31, 2018. During the three months ended March 31, 2019 the Company recognized additional stock compensation expense of $45,876. The Total amount of expense recorded as of March 31, 2019 is $56,452.

Stock options outstanding from patent purchase – Effective March 3, 2009, the Company entered into a Patent Purchase Agreement with Robert M. Carmichael, the Chief Executive Officer of the Company. The Company purchased several patents it had previously been paying royalties on and several related unissued patents. In exchange for the Intellectual Property, the Company issued Mr. Carmichael 234 stock options at a $1,350 exercise price expiring ten years from the effective date of grant. The options expired on March 2, 2019 without being exercised.

Commencing in February, 2019, the Company began paying Mr. Pitzner $9,300 per month, inclusive of a $1,300 auto allowance, for consulting services. These payments are not covered by a written agreement.

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Accounts Payable and Accrued Liabilities

3 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consists of the following as of:

	March 31, 2019		December 31, 2018
Accounts payable trade and other	$	240,084	$	249,833
Accrued payroll & fringe benefits		43,709		48,065
Accrued Warranty Expense		10,543		8,834
Accrued payroll taxes & withholding		3,745		8,415
Accrued interest		11,787		10,162
	$	309,868	$	325,309

Balances due certain vendors are in arrears to varying degrees. The Company is handling all delinquent accounts on a case-by-case basis.

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Other Liabilities

3 Months Ended

Mar. 31, 2019

Other Liabilities Disclosure [Abstract]

Other Liabilities

9. OTHER LIABILITIES

Other liabilities consist of the following as of:

	March 31, 2019			December 31, 2018
Short-term loans	$	126,572	(*)	$	126,572	(*)
Asset purchase agreement payable		12,857			12,857
Other accrued liabilities		15,108
Accrued royalties expense		2,027			2,027
Accrued vendor settlement		66,500
On-line training liability		318			686
	$	223,382		$	142,142

(*) Initial balance of $200,000 non-convertible note dated July 7, 2013. The note carries a 0% interest rate and is due on demand.

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Convertible Debentures

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Convertible Debentures

10. CONVERTIBLE DEBENTURES

Convertible debentures consist of the following at December 31, 2018:

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.
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		—		10,000		3,694		(1	)
12/01/17	12/01/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,250		(42	)
12/05/17	12/04/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,218		(53	)
										$	110,000	$	—	$	110,000	$	10,162

Convertible debentures consist of the following at March 31, 2019:

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.
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		—		10,000		3,820		(1	)
12/01/17	12/01/19		6	%		50,000		(12,500	)		50,000		—		50,000		4,000		(2	)
12/05/17	12/04/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,967		(3	)
										$	110,000	$	—	$	110,000	$	11,787

(1) The Company borrowed $10,000 in exchange for a convertible debenture. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days. The Company valued the beneficial conversion feature of the convertible debenture at $4,286, which was accreted to interest expense over the period of the note. The discount has been fully amortized as of December 31, 2018.

(2) The Company entered into a 6% Secured Convertible Promissory Note, due December 1, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressor Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

(3) The Company entered into a 6% Secured Convertible Promissory Note, due December 4, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressure Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. COMMITMENTS AND CONTINGENCIES

From time to time the Company is subject to legal proceedings, claims and litigation arising in the ordinary course of business, including matters relating to product liability claims. Such product liability claims sometimes involving wrongful death or injury have historically been covered by product liability insurance, which provided coverage for each claim up to $1,000,000. During the third quarter of 2014, the Company did not renew its product liability insurance since the renewal policy amount was cost prohibitive. As of August 15, 2017, the Company has obtained Product Liability Insurance, although prior claims are not covered under the new policy. The initial term of the policy was through August 14, 2018 and was renewed through August 14, 2019.

In addition, as previously disclosed, the Company, Trebor and other third parties, are each named as a co-defendants under actions initially filed in March 2015 in the Circuit Court of Broward County under Case No. CACE-15-03238 and CACE -16-0000242 by the Estate of Ernesto Rodriguez, claiming wrongful death and products liability resulting in the decedent’s drowning death while using a Brownie’s Third Lung product. This claim falls outside the Company’s period of insurance coverage. Plaintiff has claims damages exceeding $1,000,000. A default judgment was entered against Trebor in 2015 due to its failure to timely respond to the complaint. On November 2, 2016, the court granted plaintiff’s motion for sanctions against our company for frivolous litigation relating to our attempt to have the matter dismissed and granted the plaintiff’s motion to strike our motion for summary judgment due to our initial default. The Company believes the claim to be a Workers Compensation claim relating exclusively against other non-affiliated defendants and without merit, and will aggressively defend this action and to appeal the default judgment. In the event Trebor is unable to overturn the default judgment and the defendants are determined to be at fault, we would seek to allocate damages among all of the other parties, including the plaintiff. At this time, the amount of any loss, or range of loss, cannot be reasonably estimated due to the undetermined validity of any claim or claims made by plaintiff and the mitigating factors among the parties. Therefore, the Company has not recorded reserves and contingent liabilities related to this matter. However, in the future, as the case progresses, the Company may be required to record a contingent liability or reserve for these matters.

On August 14, 2014, the Company entered into a new lease commitment. Terms of the new lease include thirty-seven-month term commencing on September 1, 2014; payment of $5,367 security deposit; base rent of approximately $4,000 per month over the term of the lease plus sales tax; and payment of 10.76% of annual operating expenses (i.e. common areas maintenance), which is approximately $2,000 per month subject to periodic adjustment. On December 1, 2016, we entered into an amendment to the initial lease agreement, commencing on October 1, 2017, extending the term for an additional eighty-four months, expiring September 30, 2024. The base rent was increased to $4,626 per month with a 3% annual escalation throughout the amended term.

On November 11, 2018, the Company entered a new lease agreement for approximately 8,025 square feet adjoining its existing facility in Pompano Beach, Florida. Terms of the new lease include a sixty-nine month term commencing on January 1, 2019, or the date the Company takes possession of the premises, if earlier; a $6,527 security deposit; initial base rent of approximately $4,848 per month escalating at 3% per year during the term of the lease plus Florida state sales tax and payment of 10.11% of the buildings annual operating expenses (i.e. common area maintenance) which is approximately $1,679 per month subject to adjustment as provided in the lease.

We believe that the facilities are suitable for their intended purpose, are being efficiently utilized and provide adequate capacity to meet demand for the foreseeable future.

Base rent expense, attributable to the Company’s headquarters facility totaled approximately $30,938 and $19,878 for the three months ended March 31, 2019 and 2018, respectively.

Supplemental balance sheet information related to leases was as follows:

Operating Leases	Classification	March 31, 2019
Right-of-use assets	Operating right of use assets	$	612,447
Current lease liabilities	Current operating lease liabilities		91,273
Non-current lease liabilities	Long-term operating lease liabilities		521,174
Total lease liabilities		$	612,447

Lease term and discount rate were as follows:

	March 31, 2019
Weighted average remaining lease term (years)		5.47
Weighted average discount rate		5.91	%

The component of lease costs were as follows:

	Three months ended March 31, 2019
Operating lease cost	$	30,938
Variable lease cost		-
Total lease costs	$	30,398

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

	March 31, 2019
Cash paid for operating lease liabilities	$	30,938
Operating right of use assets obtained in exchange for operating lease liabilities	$	635,613

Maturities of lease liabilities were as follows as of March 31, 2019:

	Trebor Industries  Office Lease			LWA Office  Lease			Copier			Total lease  payments
Remainder of 2019	$	43,316		$	43,635		$	6,291		$	93,242
2020		59,339			59,927			8,388			127,654
2021		61,119			61,725			8,388			131,232
2022		62,953			63,576			8,388			134,917
2023 and thereafter		114,559			116,070			2,796			233,424
Total		341,286			344,933			34,251			720,470
Less: Imputed interest		(51,785	)		(52,352	)		(3,886	)		(108,023	)
Present value of lease liabilities	$	289,501		$	292,581		$	30,365		$	612,447

On August 7, 2017 the Company entered into an Exclusive Distribution Agreement with Lenhardt & Wagner GmbH (“L&W”), a German-based company engaged in the development, manufacturing and sales of high pressure air and industrial gas compressor packages. Under the terms of the Exclusive Distribution Agreement, we were appointed the exclusive distributor of L&W’s complete product line in North America and South America, including the Caribbean (the “Territory”). Pursuant to an intercompany assignment, Brownie’s High Pressure Compressor Services, Inc., our newly-formed wholly-owned subsidiary (“BHP”), is party to the agreement. Through BHP we expect to conduct business and build the brand name “L&W Americas/LWA”, establishing sales, distribution and service centers for high pressure air and industrial gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries. Under the terms of the agreement, we were granted a non-exclusive, non-transferrable and irrevocable right to use certain of L&W’s trademarks in connection with the marketing, use, sale and service of the products in the Territory. The agreement is for an initial term of five years, and will automatically renew for one additional five year term unless terminated by either party upon one year written notice prior to the expiration of the then current term. Either party may terminate the agreement without cause upon one year prior written notice to the other party. In addition, L&W may terminate the agreement for cause upon 120 days prior notice to us, subject to certain cure periods.

In May 2018 the Company entered into an agreement with an employee to pay him $28 an hour in cash and $10 per hour in common stock not to exceed 40 hours a week. The stock price is determined at the end of each month using the 10-day weighted average of the stock price. As of March 31, 2019 the Company has not issued all of the common stock to the employee and has recorded a liability of $6,206.

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Equity and Equity Incentive Plan

3 Months Ended

Mar. 31, 2019

Share-based Payment Arrangement [Abstract]

Equity and Equity Incentive Plan

13. EQUITY AND EQUITY INCENTIVE PLAN

Common Stock

The Company had 218,119,561 and 161,086,228 common shares outstanding at March 31, 2019 and December 31, 2018, respectively.

In December 2018, the Company issued 20,000,000 shares of common stock to our CEO as an incentive bonus. As the shares are subject to continued employment by the CEO through January 2, 2020, the Company has treated the shares as issued but not as yet outstanding. Expense for the issuance is being recognized over the full vesting period, and accordingly, the Company recognized stock compensation expense of $10,576 as of December 31, 2018. During the three months ended March 31, 2019 the Company recognized additional stock compensation expense of $45,876. The Total amount of expense recorded as of March 31, 2019 is $56,452.

On August 1, 2017, Mr. Mikkel Pitzner was appointed by the Company’s board of directors to serve on the Company’s board of directors, filling a vacancy on the board. Mr. Pitzner shall serve on the board of directors and shall hold office until the next election of directors by stockholders and until his successor is elected and qualified or until his earlier resignation or removal. The Company has agreed to pay Mr. Pitzner an annual fee of $6,000 and has issued Mr. Pitzner 3,333,333 shares of restricted common stock valued at $31,250 under a consulting agreement expiring in January 2019. In December 2018, Mr. Pitzner was issued 708,287 common shares in payment of accrued director fees through December 31, 2018. The shares were valued at $0.0195 per share, totaling $13,812, the fair value on the date of grant. During the three months ended March 31, 2019 the Company recorded $31,275 of stock compensation pursuant to this agreement.

In January 2019, the Company entered into an investment banking and corporate advisory agreement. The term of the agreement is for one year and provided for compensation of 2,700,000 common shares with a fair value of $29,700 plus related expenses. The shares were issued in February and March 2019. For the three months ended March 31, 2019 the Company expenses $7,400 in stock compensation.

In January 2019, the Company issued 1,000,000 common shares with a fair value of $12,500 to a consultant for general administrative advisory services, of which $7,500 was expensed during the three months ended March 31, 2019.

In March, 2019 we issued an accredited investor, a unit of the securities of the Company, with the unit consisting of 50,000,000 shares of common stock, par value $0.0001 per share and 50,000,000 eighteen month common stock purchase warrants exercisable at $0.01 per share in consideration of $500,000. The Company intends to use the proceeds from the sale for product research and development and working capital purposes. The Company did not pay any fees or commissions in connection with the sale of the unit.

Preferred Stock

During the second quarter of 2010, the holder 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 preferred stock. The preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by our Board of Directors of the Company from time to time in accordance with the provisions of the Florida Business Corporation Act. Before modification, the existing Articles of Incorporation did not authorize the issuance of shares of preferred stock. The Company authorized the preferred stock for the purpose of added flexibility in seeking capital and potential acquisition targets. The amendment authorizing the issuance of shares of preferred stock grants the Board authority, without further action by our stockholders, to designate and issue preferred stock in one or more series and to designate certain rights, preferences and restrictions of each series, any or all of which may be greater than the rights of the common stock. As of March 31, 2019 and December 31, 2018, the 425,000 shares of preferred stock are owned by the Company’s Chief Executive Officer. The preferred shares have 250 to 1 voting rights over the common stock, and are convertible into 31,481 shares of common stock. The preferred stock votes with the Company’s common stock, except as otherwise required under Florida law.

Equity Incentive Plan

On August 22, 2007, the Company adopted an Equity Incentive Plan (the “Plan”). The Plan expired on August 22, 2017. All 297 options issued under the Plan had expired as of March 31, 2019.

Equity Compensation Plan Information as of December 31, 2018.

	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		297	$	1,350		—
Equity Compensation Plans Not Approved by Security Holders		—		—		—
Total		297	$	1,350		—

Equity Compensation Plan Information as of March 31, 2019.

	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	—	$	—	—
Equity Compensation Plans Not Approved by Security Holders	—		—	—
Total	—	$	—	—

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

14. SUBSEQUENT EVENTS

In April, 2019, the Company reached a settlement agreement with a customer regarding returned merchandise agreeing to refund $65,000. The Company determined the returned merchandise had little or no value and the adjustment was charged to Cost of Revenues at December 31, 2018. In addition, the Company recognized $1,500 in related legal fees in this matter as of December 31, 2018.

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Description of Business and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Description of Business

Description of business –Brownie’s Marine Group, Inc., (hereinafter referred to as the “Company,” or “BWMG”) designs, tests, manufactures and distributes recreational hookah diving, yacht based scuba air compressor and nitrox generation systems, scuba and water safety products through its wholly owned subsidiary Trebor Industries, Inc. and manufactures and sells high pressure air and industrial gas compressor packages through its wholly owned subsidiary Brownie’s High Pressure Compressor Services, Inc. The Company sells its products both on a wholesale and retail basis, and does so from its headquarters and manufacturing facility in Pompano Beach, Florida. The Company does business as (dba) Brownie’s Third Lung, the dba name of Trebor Industries, Inc. and Brownie’s High Pressure Compressor Services, Inc. The Company’s common stock is quoted on the OTC Markets (Pink) under the symbol “BWMG”.

On August 7, 2017, Brownie’s Marine Group, Inc. entered into an Exclusive Distribution Agreement with Lenhardt & Wagner GmbH (“L&W”), a German-based company engaged in the development, manufacturing and sales of high pressure air and industrial gas compressor packages. Under the terms of the Exclusive Distribution Agreement, we were appointed the exclusive distributor of L&W’s complete product line in North America and South America, including the Caribbean (the “Territory”). Pursuant to an intercompany assignment, Brownie’s High Pressure Compressor Services, Inc., our newly-formed wholly-owned subsidiary (“BHP”), is party to the agreement. Through BHP we expect to conduct business and build the brand name “L&W Americas/LWA”, establishing sales, distribution and service centers for high pressure air and industrial gas systems in the dive, fire, CNG, military, scientific, recreational and aerospace industries. Our goal will be to build a network of jobbers, dealers, installers and high-pressure compressor distributors throughout the Territory by leveraging our know-how, brand awareness, complimentary products and creating sustainable distribution and core product OEM integration relationships.

In December 2017, the Company formed a new wholly-owned subsidiary BLU3, Inc. The Company was formed to develop and market an innovation electric shallow dive system that is completely portable to the user. As of March 31, 2019 and December 31, 2018 the company has had limited operations.

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2019 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2019.

For further information, refer to the Company’s consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2018.

Definition of Fiscal Year

Definition of fiscal year – The Company’s fiscal year end is December 31.

Principles of Consolidation

Principles of Consolidation -The consolidated financial statements include the accounts of BWMG and its wholly owned subsidiaries, Trebor Industries, Inc., Brownie’s High Pressure Compressor Services, Inc. and BLU3, Inc. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 Equivalents

Cash and 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.

Going Concern

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. We incurred net losses for the three months ended years ended March 31, 2019 and 2018 of $246,045 and $217,940, respectively. The Company had an accumulated deficit as of March 31, 2019 of $10,446,823.

Because the Company believes that existing operational cash flow may not be sufficient to fund presently anticipated operations, this raises substantial doubt about our ability to continue as a going concern. Therefore, the Company will continue to raise additional funds as needed and is currently exploring alternative sources of financing. The Company has issued a number of common shares and convertible debentures as an interim measure to finance working capital needs and may continue to raise additional capital through sale of restricted common stock or other securities or obtaining short term loans.

If BWMG fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back or cease operations, liquidate assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Accounts Receivable

Accounts receivable – Accounts receivable consist of amounts due from the sale of all of our products to wholesale and retail customers. The allowance for doubtful accounts are estimated based on historical customer experience and industry knowledge. The allowances for doubtful accounts totaled $9,200 and $9,200 at March 31, 2019 and December 31, 2018, respectively.

Inventory

Inventory – Inventory is stated at the lower of cost or net realizable value. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company’s management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when indicated.

Property and Equipment and Leasehold Improvements

Property and equipment and leasehold improvements – Property and equipment and leasehold improvement is stated at cost less accumulated depreciation or amortization. Depreciation and amortization is provided principally on the straight-line method over the estimated useful lives of the assets or term of the lease, which are primarily 3 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Revenue Recognition

Revenue Recognition

On January 1, 2018, we adopted the new accounting standard ASC 606, “Revenue from Contracts with Customers” and all the related amendments. This standards core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to receive. The new revenue standard was applied using the modified retrospective method. As a result of the adoption of this standard, there was no impact on the prior year financial statements.

We recognize the sale of products under single performance obligations upon shipment of the units as that is when ownership is transferred and our performance is completed. Revenues from repair and maintenance activities is recognized when the repairs are completed and the units have been shipped.

Advertising and Marketing Costs

Advertising and marketing costs – The Company expenses the costs of producing advertisements and marketing material at the time production occurs, and expenses the costs of communicating advertisements and participating in trade shows in the period in which they occur. Advertising and trade show expense incurred for the three months ended March 31, 2019 and March 31, 2018, totaled $1,046 and $ 16,249, respectively.

Research and Development Costs

Research and development costs – The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. During the three months ended March 31, 2019 and March 31, 2018 the Company incurred research and development costs of $29,568 and $6,432, respectively.

Customer Deposits and Unearned Revenue and Returns Policy

Customer deposits and unearned revenue and returns policy – The Company typically takes a minimum 50% deposit against custom and large tankfill systems prior to ordering and/or building the systems. The remaining balance due is payable upon delivery, shipment, or installation of the system. There is no provision for cancellation of custom orders once the deposit is accepted, nor return of the custom ordered product. Additionally, returns of all other merchandise are subject to a 15% restocking fee as stated on each sales invoice. Customer deposits and unearned revenue totaled $307,145 and $245,907 at March 31, 2019 and December 31, 2018, respectively.

Warranty Policy

Warranty policy – Under the provisions of FASB ASC 460, Guarantor’s Guarantees, the Company accrues a liability for estimated warranty policy costs based on historical information and experience. The Company provides our customers with an industry standard one year warranty on systems sold and recognizes a warranty reserve based on gross sales multiplied by the historical warranty expense return rate The warranty reserve at March 31, 2019 and December 31, 2018 was charged to cost of net revenues and is included in accrued expenses and is deemed sufficient to absorb any material or labor costs that might be incurred on sales recorded during the period. The Company recognized a reserve for warranty work in 2018 of $8,834. During the three months ended March 31, 2019 the Company increased the reserve by $1,709 to a total of $10,543.

Income Taxes

Income taxes – On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Jobs Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a United States corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017.

The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Stock-based Compensation

Stock-based compensation – The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is 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.

During the three months ended March 31, 2019 and 2018, the Company recognized share based compensation with a fair value of $92,051 and $25,000, respectively.

Beneficial Conversion Features On Convertible Debentures

Beneficial conversion features on convertible debentures – A beneficial conversion feature arises when the conversion price of a convertible instrument is below the per share value of the underlying stock into which it is convertible. The fair value of the stock upon which to base the beneficial conversion feature (BCF) computation has been determined through use of the quoted stock price.

Fair Value of Financial Instruments

Fair value of financial instruments – Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. Management considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the Company’s perceived risk of that investment.

At March 31, 2019 and December 31, 2018,, the carrying amount of cash, accounts receivable, accounts receivable – related parties, accounts payable and accrued liabilities, customer deposits and unearned revenue, other liabilities, and convertible debentures, approximate fair value because of the short maturity of these instruments.

Earnings Per Common Share

Earnings per common share – Basic earnings 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 earnings per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. At March 31 2019 and March 31, 2018, 68,386,823 and 62,164,296, respectively, potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible note agreements, outstanding warrants, outstanding stock options and the conversion of preferred stock.

New Accounting Pronouncements

New accounting pronouncements

In June 2018, the Financial Accounting Standards Board issued ASU 2018-7, “Compensation – Stock Compensation” (Topic 718) amending the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments specify that nonemployee share-based payments are measured at grant-date fair value with the grant date being defined when the parties reach a mutual understanding of the key terms and conditions of the share-based award. ASU 2018-07 is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The adoption of ASU 2018—07 did not have an impact on our operations, cash flows or financial condition.

In March 2018, the FASB issued ASU 2018-05, “Income Taxes” (Topic 740) amending previous guidance on accounting and disclosures for income taxes addressing changes under the Tax Cuts and Jobs Act (the “Act”). This standard addresses the recognition of taxes payable or refundable in the current year and the recognition of deferred tax liabilities and deferred tax assets following passage of the Act. ASU 2018-5 had an enactment date of December 22, 2017. We do not believe this ASU had a material impact on our results of operation, cash flows or financial condition.

In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

This standard will not have a material impact on our consolidated statement of operations however, the recognition of right of use assets and real estate operating lease liabilities will have a material impact on our consolidated balance sheet presentation. Adoption of this standard resulted in additional right of use assets and additional liabilities of approximately $635,613 based on the present fair value of the remaining minimum rental payments under our current real property lease obligations. See Note 12

The Company believes there was no other new accounting guidance adopted, but not yet effective that either has not already been disclosed in prior reporting periods or is relevant to the readers of our consolidated financial statements.

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Inventory (Tables)

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory

	March 31, 2019			December 31, 2018
Raw materials	$	542,706		$	353,619
Finished goods		399,744			513,148
Allowance for obsolete inventory		(143,597	)		(143,597	)
	$	798,493		$	723,170

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Prepaid Expenses and Other Current Assets (Tables)

3 Months Ended

Mar. 31, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	March 31, 2019		December 31, 2018
Prepaid inventory	$	91,074	$	39,260
Prepaid insurance		11,138		4,615
Prepaid other current assets		6,000		14,645
	$	108,212	$	58,520

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Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2019

Property, Plant and Equipment [Abstract]

Schedule of Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements consists of the following as of:

	March 31, 2019			December 31, 2018
Tooling and equipment	$	138,632		$	138,632
Computer equipment and software		27,469			27,469
Vehicles		44,160			44,160
Leasehold improvements		43,779			43,779
		254,040			254,040
Less: accumulated depreciation and amortization		(253,885	)		(250,322	)
	$	155		$	3,718

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Accounts Payable and Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consists of the following as of:

	March 31, 2019		December 31, 2018
Accounts payable trade and other	$	240,084	$	249,833
Accrued payroll & fringe benefits		43,709		48,065
Accrued Warranty Expense		10,543		8,834
Accrued payroll taxes & withholding		3,745		8,415
Accrued interest		11,787		10,162
	$	309,868	$	325,309

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Other Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

Other Liabilities Disclosure [Abstract]

Schedule of Other Liabilities

Other liabilities consist of the following as of:

	March 31, 2019			December 31, 2018
Short-term loans	$	126,572	(*)	$	126,572	(*)
Asset purchase agreement payable		12,857			12,857
Other accrued liabilities		15,108
Accrued royalties expense		2,027			2,027
Accrued vendor settlement		66,500
On-line training liability		318			686
	$	223,382		$	142,142

(*) Initial balance of $200,000 non-convertible note dated July 7, 2013. The note carries a 0% interest rate and is due on demand.

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Convertible Debentures (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Convertible Debentures

Convertible debentures consist of the following at December 31, 2018:

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.
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		—		10,000		3,694		(1	)
12/01/17	12/01/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,250		(42	)
12/05/17	12/04/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,218		(53	)
										$	110,000	$	—	$	110,000	$	10,162

Convertible debentures consist of the following at March 31, 2019:

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.
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		—		10,000		3,820		(1	)
12/01/17	12/01/19		6	%		50,000		(12,500	)		50,000		—		50,000		4,000		(2	)
12/05/17	12/04/19		6	%		50,000		(12,500	)		50,000		—		50,000		3,967		(3	)
										$	110,000	$	—	$	110,000	$	11,787

(1) The Company borrowed $10,000 in exchange for a convertible debenture. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days. The Company valued the beneficial conversion feature of the convertible debenture at $4,286, which was accreted to interest expense over the period of the note. The discount has been fully amortized as of December 31, 2018.

(2) The Company entered into a 6% Secured Convertible Promissory Note, due December 1, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressor Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

(3) The Company entered into a 6% Secured Convertible Promissory Note, due December 4, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressure Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Operating Leases

Supplemental balance sheet information related to leases was as follows:

Operating Leases	Classification	March 31, 2019
Right-of-use assets	Operating right of use assets	$	612,447
Current lease liabilities	Current operating lease liabilities		91,273
Non-current lease liabilities	Long-term operating lease liabilities		521,174
Total lease liabilities		$	612,447

Summary of Operating Lease Liabilities

Lease term and discount rate were as follows:

	March 31, 2019
Weighted average remaining lease term (years)		5.47
Weighted average discount rate		5.91	%

Schedule of Lease Cost

The component of lease costs were as follows:

	Three months ended March 31, 2019
Operating lease cost	$	30,938
Variable lease cost		-
Total lease costs	$	30,398

Schedule of Cash Flow Information Related to Leases

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

	March 31, 2019
Cash paid for operating lease liabilities	$	30,938
Operating right of use assets obtained in exchange for operating lease liabilities	$	635,613

Schedule of Maturities of Operating Lease Liabilities

Maturities of lease liabilities were as follows as of March 31, 2019:

	Trebor Industries  Office Lease			LWA Office  Lease			Copier			Total lease  payments
Remainder of 2019	$	43,316		$	43,635		$	6,291		$	93,242
2020		59,339			59,927			8,388			127,654
2021		61,119			61,725			8,388			131,232
2022		62,953			63,576			8,388			134,917
2023 and thereafter		114,559			116,070			2,796			233,424
Total		341,286			344,933			34,251			720,470
Less: Imputed interest		(51,785	)		(52,352	)		(3,886	)		(108,023	)
Present value of lease liabilities	$	289,501		$	292,581		$	30,365		$	612,447

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Equity and Equity Incentive Plan (Tables)

3 Months Ended

Mar. 31, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Equity Compensation Plan Information

Equity Compensation Plan Information as of December 31, 2018.

	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		297	$	1,350		—
Equity Compensation Plans Not Approved by Security Holders		—		—		—
Total		297	$	1,350		—

Equity Compensation Plan Information as of March 31, 2019.

	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	—	$	—	—
Equity Compensation Plans Not Approved by Security Holders	—		—	—
Total	—	$	—	—

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Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Net (loss) income	$ (264,045)	$ (217,940)
Accumulated deficit	10,446,823		$ 10,182,778
Allowance for doubtful accounts	9,200		9,200
Advertising and trade show expense	1,046	16,249
Research and development costs	$ 29,568	6,432
Percentage of minimum deposit for custom and large tank fill systems	50.00%
Percentage of restocking fees	15.00%
Customer deposits and unearned revenue	$ 307,145		245,907
Reserve for warranty work	10,543		8,834
Incerased amount of reserve for warranty work	$ 1,709
Income tax rate, description	On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Jobs Act") was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a United States corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017.
Effective tax rates	21.00%
Stock issued for employee compensation	$ 92,051	$ 25,000
Potentially dilutive shares included from dilutive earnings per share	68,386,823	62,164,296
Right of use assets	$ 612,447
Accounting Standards Update 2016-02 [Member]
Right of use assets	635,613
Additional liabilities	$ 635,613
Property, Equipment and Leasehold Improvements [Member] | Minimum [Member]
Property, plant and equipment, useful life	3 years
Property, Equipment and Leasehold Improvements [Member] | Maximum [Member]
Property, plant and equipment, useful life	5 years

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Inventory (Details Narrative)	Dec. 31, 2018 USD ($)
Inventory Disclosure [Abstract]
Reserve for obsolete inventory	$ 100,000

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Inventory - Schedule of Inventory (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 542,706	$ 353,619
Finished goods	399,744	513,148
Allowance for obsolete inventory	(143,597)	(143,597)
Inventory	$ 798,493	$ 723,170

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Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid inventory	$ 91,074	$ 39,260
Prepaid insurance	11,138	4,615
Prepaid other current assets	6,000	14,645
Prepaid expense and other assets, current	$ 108,212	$ 58,520

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Property and Equipment, Net (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 3,563	$ 4,553

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Property and Equipment, Net - Schedule of Property, Equipment and Leasehold Improvements (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment, Gross	$ 254,040	$ 254,040
Less: accumulated depreciation and amortization	(253,885)	(250,322)
Property Plant and Equipment, Net	155	3,718
Tooling and Equipment [Member]
Property, Plant and Equipment, Gross	138,632	138,632
Computer Equipment and Software [Member]
Property, Plant and Equipment, Gross	27,469	27,469
Vehicles [Member]
Property, Plant and Equipment, Gross	44,160	44,160
Leasehold Improvements [Member]
Property, Plant and Equipment, Gross	$ 43,779	$ 43,779

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Other Assets (Details Narrative) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other assets	$ 24,649	$ 26,147
Refundable deposits	6,649	6,649
Unamortized license fee	$ 18,000	$ 19,498

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Customer Credit Concentrations (Details Narrative) - Sales Revenue [Member]	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Concentration credits risk	90.00%
Related Party [Member]
Concentration credits risk	26.59%	30.67%

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Related Parties Transactions (Details Narrative) - USD ($)			1 Months Ended			3 Months Ended		12 Months Ended
	Aug. 02, 2017	Mar. 03, 2009	Feb. 28, 2019	Dec. 31, 2018	Jan. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Net revenues from related parties						$ 138,664	$ 157,832
Accounts payable - related parties				$ 125,243		$ 142,212		$ 125,243
Percentage of gross revenues per quarter required to pay						2.50%
Total royalty expense						$ 10,223	9,927
Annual fee						6,206
Number of shares issued for services, value						92,051	25,000
Total compensation expense						45,876
Chief Executive Officer [Member]
Number of shares issued, shares				20,000,000
Number of shares issued for share based compensation				20,000,000
Total compensation expense				$ 10,576
Brownie's Southport Divers, Inc., Brownie's Palm Beach Divers, and Brownie's Yacht Toys [Member] | Chief Executive Officer [Member]
Net revenues from related parties						138,664	157,832
Brownies Southport Divers Inc [Member]
Accounts receivable from related parties				49,443		24,403		49,443
Brownies Palm Beach Divers [Member]
Accounts receivable from related parties				7,731		4,611		7,731
Brownie's Yacht Toys [Member]
Accounts receivable from related parties				8,646		16,553		8,646
Three Entities [Member]
Net revenues from related parties						810	$ 0
Accounts receivable from related parties				$ 12,603		14,766		$ 12,603
Mr. Mikkel Pitzner [Member]
Annual fee	$ 6,000
Issuance of restricted shares, share	2,000,000
Issuance of restricted shares	$ 25,000
Number of shares issued for services, shares	1,666,667
Number of shares issued for services, value	$ 20,883
Consulting agreement expiring date	Jan. 31, 2019
Number of shares issued, shares				708,287
Shares issued price per share				$ 0.0195				$ 0.0195
Number of shares issued, value				$ 13,812
Stock compensation expense						$ 31,250
Monthly salary			$ 9,300
Allowance for consulting services			$ 1,300
Mr. Dana Allan [Member]
Number of shares issued for services, shares					2,000,000			552,742
Number of shares issued for services, value					$ 50,200			$ 10,778
Mr. Robert M. Carmichael [Member] | Patent Purchase Agreement [Member]
Share-based compensation arrangement by share-based payment award, options, outstanding, number, beginning balance		234
Share-based compensation arrangement by share-based payment award, options, outstanding, weighted average exercise price, beginning balance		$ 1,350
Share-based compensation arrangement, expiring period		10 years

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Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accounts payable trade and other	$ 240,084	$ 249,833
Accrued payroll & fringe benefits	43,709	48,065
Accrued Warranty Expense	10,543	8,834
Accrued payroll taxes & withholding	3,745	8,415
Accrued interest	11,787	10,162
Total	$ 309,868	$ 325,309

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Other Liabilities - Schedule of Other Liabilities (Details) - USD ($)		Mar. 31, 2019	Dec. 31, 2018
Other Liabilities Disclosure [Abstract]
Short-term loans	[1]	$ 126,572	$ 126,572
Asset purchase agreement payable		12,857	12,857
Other accrued liabilities		15,108
Accrued royalties expense		2,027	2,027
Accrued vendor settlement		66,500
On-line training liability		318	686
Total		$ 223,382	$ 142,142

[1] Initial balance of $200,000 non-convertible note dated July 7, 2013. The note carries a 0% interest rate and is due on demand.

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Other Liabilities - Schedule of Other Liabilities (Details) (Parenthetical)	Jul. 07, 2013 USD ($)
Other Liabilities Disclosure [Abstract]
Non-convertible note	$ 200,000
Debt instrument interest percentage	0.00%

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Convertible Debentures (Details Narrative) - USD ($)		3 Months Ended	12 Months Ended
		Mar. 31, 2019	Dec. 31, 2018	Jul. 07, 2013
Debt instrument interest percentage				0.00%
Convertible Debenture One [Member]
Borrowing convertible debenture		$ 10,000
Percentage of discount on conversion price		30.00%
Trading days description		The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days.
Beneficial conversion feature of convertible debenture		$ 4,286
Debt instrument interest percentage	[1]	5.00%	5.00%
Debt maturity date	[1]	Aug. 31, 2013	Aug. 31, 2013
Convertible Debenture Two [Member]
Debt instrument interest percentage	[2]	6.00%	6.00%
Debt maturity date	[2]	Dec. 01, 2019	Dec. 01, 2019
Convertible Debenture Two [Member] | 6% Secured Convertible Promissory Note [Member]
Debt instrument interest percentage		6.00%
Maximum conversion of common stock, percentage		9.99%
Reduction in conversion price per share		$ 0.01
Debt discount		$ 12,500
Debt maturity date		Dec. 01, 2018
Convertible Debenture Two [Member] | 6% Secured Convertible Promissory Note [Member] | First Year [Member]
Debt conversion price per share		$ 0.02
Convertible Debenture Two [Member] | 6% Secured Convertible Promissory Note [Member] | Fifth Year [Member]
Debt conversion price per share		$ 0.125
Convertible Debenture Three [Member]
Debt instrument interest percentage	[3]	6.00%	6.00%
Debt maturity date	[3]	Dec. 04, 2019	Dec. 04, 2019
Convertible Debenture Three [Member] | 6% Secured Convertible Promissory Note [Member]
Debt instrument interest percentage		6.00%
Maximum conversion of common stock, percentage		9.99%
Reduction in conversion price per share		$ 0.01
Debt discount		$ 12,500
Debt maturity date		Dec. 04, 2018
Convertible Debenture Three [Member] | 6% Secured Convertible Promissory Note [Member] | First Year [Member]
Debt conversion price per share		$ 0.02
Convertible Debenture Three [Member] | 6% Secured Convertible Promissory Note [Member] | Fifth Year [Member]
Debt conversion price per share		$ 0.125

[1] The Company borrowed $10,000 in exchange for a convertible debenture. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days. The Company valued the beneficial conversion feature of the convertible debenture at $4,286, which was accreted to interest expense over the period of the note. The discount has been fully amortized as of December 31, 2018.

[2] The Company entered into a 6% Secured Convertible Promissory Note, due December 1, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressor Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

[3] The Company entered into a 6% Secured Convertible Promissory Note, due December 4, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressure Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

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Convertible Debentures - Schedule of Convertible Debentures (Details) - USD ($)		3 Months Ended	12 Months Ended
		Mar. 31, 2019	Dec. 31, 2018	Jul. 07, 2013
Interest Rate				0.00%
Period End Principal Balance		$ 110,000	$ 110,000
Period End Discount Balance
Period End Debenture, Net Balance		110,000	110,000
Accrued Interest Balance		$ 11,787	$ 10,162
Convertible Debenture One [Member]
Origination Date	[1]	Aug. 31, 2011	Aug. 31, 2011
Maturity Date	[1]	Aug. 31, 2013	Aug. 31, 2013
Interest Rate	[1]	5.00%	5.00%
Origination Principal Balance	[1]	$ 10,000	$ 10,000
Origination Discount Balance	[1]	(4,286)	(4,286)
Period End Principal Balance	[1]	10,000	10,000
Period End Discount Balance	[1]
Period End Debenture, Net Balance	[1]	10,000	10,000
Accrued Interest Balance	[1]	$ 3,820	$ 3,694
Convertible Debenture Two [Member]
Origination Date	[2]	Dec. 01, 2017	Dec. 01, 2017
Maturity Date	[2]	Dec. 01, 2019	Dec. 01, 2019
Interest Rate	[2]	6.00%	6.00%
Origination Principal Balance	[2]	$ 50,000	$ 50,000
Origination Discount Balance	[2]	(12,500)	(12,500)
Period End Principal Balance	[2]	50,000	50,000
Period End Discount Balance	[2]
Period End Debenture, Net Balance	[2]	50,000	50,000
Accrued Interest Balance	[2]	$ 4,000	$ 3,250
Convertible Debenture Three [Member]
Origination Date	[3]	Dec. 05, 2017	Dec. 05, 2017
Maturity Date	[3]	Dec. 04, 2019	Dec. 04, 2019
Interest Rate	[3]	6.00%	6.00%
Origination Principal Balance	[3]	$ 50,000	$ 50,000
Origination Discount Balance	[3]	(12,500)	(12,500)
Period End Principal Balance	[3]	50,000	50,000
Period End Discount Balance	[3]
Period End Debenture, Net Balance	[3]	50,000	50,000
Accrued Interest Balance	[3]	$ 3,967	$ 3,218

[1] The Company borrowed $10,000 in exchange for a convertible debenture. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days. The Company valued the beneficial conversion feature of the convertible debenture at $4,286, which was accreted to interest expense over the period of the note. The discount has been fully amortized as of December 31, 2018.

[2] The Company entered into a 6% Secured Convertible Promissory Note, due December 1, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressor Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

[3] The Company entered into a 6% Secured Convertible Promissory Note, due December 4, 2018, subject to extension. The Note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor Industries, Inc. and Brownie’s High Pressure Compressor Services, Inc. and the personal guarantee of Robert M. Carmichael, the Company’s Chief Executive Officer. The conversion price under the Note range from $0.02 per share if converted in the first year to $0.125 if converted in year five. The lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding Common Stock of the Company at any one time. The Note was extended subsequent to year end for one additional year with a reduction in the conversion price to $0.01 per share. The Company recorded a debt discount initially of $12,500 which was fully amortized as of December 31, 2018.

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Commitments and Contingencies (Details Narrative)				3 Months Ended
	Nov. 11, 2018 USD ($) ft²	Dec. 01, 2016 USD ($)	Aug. 14, 2014 USD ($)	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)
Lease term	69 months	84 months	37 months
Payment of security deposit			$ 5,367
Operating leases, rent expense, minimum rentals	$ 4,848		$ 4,000
Percentage of annual operating expenses	10.11%		10.76%
Operating leases, rent expense	$ 1,679		$ 2,000	$ 30,938	$ 19,878
Lease expiration date		Sep. 30, 2024
Annual escalation percentage	3.00%	3.00%
Area of land | ft²	8,025
Security deposit	$ 6,527
Employee agreement description				In May 2018 the Company entered into an agreement with an employee to pay him $28 an hour in cash and $10 per hour in common stock not to exceed 40 hours a week. The stock price is determined at the end of each month using the 10-day weighted average of the stock price.
Employee related liabilities				$ 6,206
Plaintiff [Member]
Loss contingency, damages paid, value				1,000,000
Maximum [Member]
Loss contingency, damages paid, value				$ 1,000,000
Operating leases, rent expense, minimum rentals		$ 4,626

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Commitments and Contingencies - Schedule of Operating Leases (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Right-of-use assets	$ 612,447
Current lease liabilities	91,273
Non-current lease liabilities	521,174
Total lease liabilities	612,447
Operating Right of Use Assets [Member]
Right-of-use assets	612,447
Current Operating Lease Liabilities [Member]
Current lease liabilities	91,273
Long-term Operating Lease Liabilities [Member]
Non-current lease liabilities	$ 521,174

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Commitments and Contingencies - Summary of Operating Lease Liabilities (Details)	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Weighted average remaining lease term (years)	5 years 5 months 20 days
Weighted-average discount rate	5.91%

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Commitments and Contingencies - Schedule of Lease Cost (Details)	3 Months Ended
	Mar. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 30,938
Variable lease cost
Total lease costs	$ 30,398

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Commitments and Contingencies - Schedule of Cash Flow Information Related to Leases (Details)	3 Months Ended
	Mar. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Cash paid for operating lease liabilities	$ 30,938
Operating right of use assets obtained in exchange for operating lease liabilities	$ 635,613

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Commitments and Contingencies - Schedule of Maturities of Operating Lease Liabilities (Details)	Mar. 31, 2019 USD ($)
Commitments and Contingencies [Line Items]
Remainder of 2019	$ 93,242
2020	127,654
2021	131,232
2022	134,917
2023 and thereafter	233,424
Total	720,470
Less: Imputed interest	(108,023)
Present value of lease liabilities	612,447
Trebor Industries Office Lease [Member]
Commitments and Contingencies [Line Items]
Remainder of 2019	43,316
2020	59,339
2021	61,119
2022	62,953
2023 and thereafter	114,559
Total	341,286
Less: Imputed interest	(51,785)
Present value of lease liabilities	289,501
LWA Office Lease [Member]
Commitments and Contingencies [Line Items]
Remainder of 2019	43,635
2020	59,927
2021	61,725
2022	63,576
2023 and thereafter	116,070
Total	344,933
Less: Imputed interest	(52,352)
Present value of lease liabilities	292,581
Copier [Member]
Commitments and Contingencies [Line Items]
Remainder of 2019	6,291
2020	8,388
2021	8,388
2022	8,388
2023 and thereafter	2,796
Total	34,251
Less: Imputed interest	(3,886)
Present value of lease liabilities	$ 30,365

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Equity and Equity Incentive Plan (Details Narrative) - USD ($)			1 Months Ended		3 Months Ended
	Aug. 02, 2017	Aug. 22, 2007	Jan. 31, 2019	Dec. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Equity Incentive Plan [Line Items]
Common stock, share outstanding				161,086,228	218,119,561
Total compensation expense					$ 45,876
Annual fee					6,206
Value of common stock issued for services performed					$ 92,051	$ 25,000
Common stock, par value				$ 0.0001	$ 0.0001
Preferred stock, shares authorized				10,000,000	10,000,000
Preferred stock, share outstanding				425,000	425,000
Preferred stock, voting rights					The preferred shares have 250 to 1 voting rights over the common stock
Convertible preferred stock, shares issued upon conversion					31,481
Equity Incentive Plan [Member]
Equity Incentive Plan [Line Items]
Share-based compensation arrangement by share-based payment award, options, outstanding, number		297
Share-based compensation arrangement by share-based payment award, expiration date		Mar. 31, 2019
Investment Banking and Corporate Advisory Agreement [Member]
Equity Incentive Plan [Line Items]
Number of shares issued, shares			2,700,000
Total compensation expense					$ 7,400
Number of shares issued, value			$ 29,700
Chief Executive Officer [Member]
Equity Incentive Plan [Line Items]
Number of shares issued, shares				20,000,000
Total compensation expense				$ 10,576
Mikkel Pitzner [Member]
Equity Incentive Plan [Line Items]
Number of shares issued, shares				708,287
Total compensation expense					31,275
Annual fee	$ 6,000
Issuance of restricted shares, share	3,333,333
Issuance of restricted shares, value	$ 31,250
Agreement expiration	Jan. 31, 2019
Shares issued price per share				$ 0.0195
Number of shares issued, value				$ 13,812
Consultant [Member]
Equity Incentive Plan [Line Items]
Total compensation expense					$ 7,500
Number of common stock issued for services performed			1,000,000
Value of common stock issued for services performed			$ 12,500
Accredited Investor [Member]
Equity Incentive Plan [Line Items]
Number of unit consist of common stock					50,000,000
Common stock, par value					$ 0.0001
Common stock purchase of warrant					50,000,000
Warrants exercise price per share					$ 0.01
Common stock purchase of warrant consideration					$ 500,000

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Equity and Equity Incentive Plan - Schedule of Equity Compensation Plan Information (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Equity Compensation Plans Approved by Security Holders [Member]
Number of securities to be issued upon exercise of outstanding options, warrants and rights		297
Weighted - average exercise price of outstanding options, warrants and rights		$ 1,350
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column)
Equity Compensation Plans Not Approved by Security Holders [Member]
Number of securities to be issued upon exercise of outstanding options, warrants and rights
Weighted - average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column)
Equity Compensation Plan [Member]
Number of securities to be issued upon exercise of outstanding options, warrants and rights		297
Weighted - average exercise price of outstanding options, warrants and rights		$ 1,350
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column)

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Subsequent Events (Details Narrative) - Settlement Agreement [Member] - USD ($)	12 Months Ended
	Dec. 31, 2018	Apr. 30, 2019
Legal fees	$ 1,500
Subsequent Event [Member]
Customer refund		$ 65,000