Schedule of Supplemental Balance Sheet Information

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


	2022		2021
Revenues	$	7,595,581	$	5,111,049
Revenues - related parties		981,791		1,116,330
Total Revenues	$	8,577,372	$	6,227,379

See further disaggregate revenue disclosures by segment and product type in Note 16.

Cost of Sales

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

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


	2022		2021
Cost of revenues	$	5,055,947	$	3,569,894
Cost of revenues - related parties		462,297		534,910
Royalty expense - related parties		61,308		75,161
Royalty expense		203,620		157,855
Total cost of revenues	$	5,783,173	$	4,337,820

Operating Expenses

Operating expenses include selling expenses such as warehousing expenses after manufacture, as well as expenses for advertising, and other marketing expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees (including legal fees), depreciation and other general and administrative costs.

Lease Accounting

We account for leases in accordance with ASC 842.

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

We categorize leases with contractual terms longer than twelve months as either operating or finance leases. Finance leases are generally those leases that would allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. We did not have any finance leases as of December 31, 2022 and 2021. Our leases generally have terms that range from three years for equipment and three to six years for property. We elected the accounting policy to include both the lease and non-lease components of our agreements as a single component and account for them as a lease.

Lease liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the leases. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the lease term.

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

Supplemental balance sheet information related to leases was as follows:

Operating Leases	Classification	December 31, 2022		December 31, 2021
Right-of-use assets	Operating lease assets	$	1,133,092	$	454,475

Current lease liabilities	Current operating lease liabilities	$	269,046	$	232,283
Non-current lease liabilities	Long-term operating lease liabilities		864,057		222,899
Total lease liabilities		$	1,133,103	$	455,182

Schedule of Supplemental Balance Sheet Information

Supplemental balance sheet information related to leases was as follows:

Operating Leases	Classification	December 31, 2022		December 31, 2021
Right-of-use assets	Operating lease assets	$	1,133,092	$	454,475

Current lease liabilities	Current operating lease liabilities	$	269,046	$	232,283
Non-current lease liabilities	Long-term operating lease liabilities		864,057		222,899
Total lease liabilities		$	1,133,103	$	455,182

Schedule of Lease Cost

The components of lease costs were as follows:

Schedule of Lease Cost

	December 31, 2022		December 31, 2021
Operating lease cost	$	246,571	$	171,292
Variable lease cost		-		2,125
Total lease costs	$	246,571	$	173,417

Schedule of Maturities of Operating Lease Liabilities

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

	Trebor Industries Office Lease			BMG Office Lease		Submersible Systems Lease			Live Blue, Inc.		Total lease payments
2023		64,842			65,484		203,315			8,447		342,088
2024		49,716			50,586		210,600			-		310,902
2025		-			-		216,397			-		216,397
2026		-			-		222,886			-		222,886
Thereafter		-			-		258,342					258,342
Total		114,558			116,070		1,111,540			8,447		1,350,615
Less: Imputed interest		(6,019	)		(6,098)		(204,842	)		(553)		(217,512	)
Present value of lease liabilities	$	108,539		$	109,972		906,698		$	7,894	$	1,133,103