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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

(Mark One)

 

  ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the quarterly period ended March 31, 2024

 

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
None   Not applicable   Not applicable

 

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

 

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

  

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

 

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

 

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

 

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

 

As of July 17, 2024, there were 439,805,747 shares of common stock outstanding.

 

 

 

 
 

 

  TABLE OF CONTENTS  
     
    Page No.
  PART I – FINANCIAL INFORMATION  
     
ITEM 1. FINANCIAL STATEMENTS. 4
     
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 21
     
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 27
     
ITEM 4. CONTROLS AND PROCEDURES. 27
     
  PART II – OTHER INFORMATION  
     
ITEM 1. LEGAL PROCEEDINGS. 29
     
ITEM 1A. RISK FACTORS. 29
     
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. 29
     
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 29
     
ITEM 4. MINE SAFETY DISCLOSURES. 29
     
ITEM 5. OTHER INFORMATION. 29
     
ITEM 6. EXHIBITS. 30

 

2

 

 

NOTE REGARDING FORWARD-LOOKING INFORMATION

 

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

 

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

 

3

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   March 31, 2024   December 31, 2023 
    (Unaudited)      
ASSETS          
Current Assets          
Cash  $238,754   $431,112 
Accounts receivable – net of allowances of $52,660 in 2024 and $54,427 in 2023   162,054    84,140 
Accounts receivable - related parties   23,105    32,130 
Inventory, net   1,967,272    1,998,807 
Prepaid expenses and other current assets   267,204    190,412 
Total current assets   2,658,389    2,736,601 
           
Property, equipment and leasehold improvements, net   327,590    342,681 
Operating lease assets   777,478    844,083 
Intangible assets, net   555,839    573,955 
Goodwill   249,986    249,986 
Other assets   30,724    30,724 
           
Total assets  $4,600,006   $4,778,030 
           
Liabilities and stockholders’ equity          
Current liabilities          
Accounts payable and accrued liabilities  $711,616   $789,702 
Accounts payable - related parties   52,173    46,578 
Customer deposits and unearned revenue   204,905    255,740 
Other liabilities   472,300    451,954 
Operating lease liabilities   227,008    259,154 
Related party convertible demand note, net   54,088    52,484 
Convertible notes   347,793    346,871 
Current maturities long term debt   82,478    75,304 
Related party notes payable   505,000    225,000 
Total current liabilities   2,657,361    2,502,787 
           
Loans payable, net of current portion   78,273    64,656 
Operating lease liabilities   581,986    615,915 
Total liabilities   3,317,620    3,183,358 
           
Commitments and contingent liabilities (see note 8)   -    - 
           
Stockholders’ equity          
Preferred stock; $0.001 par value: 10,000,000 shares authorized; 425,000 issued and outstanding as of March 31, 2024 and December 31, 2023.   425    425 
Common stock; $0.0001 par value; 1,000,000,000 shares authorized; 437,940,254 shares issued and outstanding at March 31, 2024 and 437,742,050 shares issued and outstanding at December 31, 2023, respectively.   43,795    43,775 
Common stock payable 138,941 shares and 138,941 shares, respectively as of March 31, 2024 and December 31, 2023.   

14

    14 
Additional paid-in capital   19,259,478    19,236,068 
Accumulated deficit   (18,021,326)   (17,685,610)
Total stockholders’ equity  $1,282,386   $1,594,672 
           
Total liabilities and stockholders’ equity  $4,600,006   $4,778,030 

 

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

 

4

 

 

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31,

(unaudited)

 

   2024   2023 
Net revenues          
Net revenues  $1,492,299   $1,427,963 
Net revenues - related parties   115,223    211,090 
Total net revenues   1,607,522    1,639,053 
           
Cost of net revenues          
Cost of net revenues   889,918    1,071,068 
Cost of net revenues - related parties   53,124    108,925 
Royalties expense - related parties   9,061    10,212 
Royalties expense   67,984    34,823 
Total cost of revenues   1,020,087    1,225,028 
           
Gross profit   587,435    414,025 
           
Operating expenses          
Selling, general and administrative   899,821    726,220 
Research and development costs   3,378    529 
Total operating expenses   903,199    726,749 
           
Loss from operations   (315,764)   (312,724)
           
Other (income) expense, net          
Interest expense   (19,952)   (15,198)
Total other (income) expense - net   (19,952)   (15,198)
           
Loss income before provision for income taxes   (335,716)   (327,922)
           
Provision for income taxes   -    - 
           
Net loss  $(335,716)  $(327,922)
           
Basic loss per common share  $(0.00)  $(0.00)
Diluted loss per common share  $(0.00)  $(0.00)
           
Basic weighted average common shares outstanding   437,864,048    427,289,742 
           
Diluted weighted average common shares outstanding   437,864,048    427,289,742 

 

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

 

5

 

 

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(unaudited)

 

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

1,282,386

 

 

   Preferred Stock   Common Stock    Common Stock Payable   Additional         Total 
   Shares        Shares                  Paid-in   Accumulated   Stockholders 
   Outstanding   Par   Outstanding    Par   Shares    Amount   Capital    Deficit   Equity  
Balance, December 31, 2022   425,000    425    425,520,662   $42,553    138,941   $14   $18,916,876   $(16,437,495)  $2,522,373 
Shares issued for the purchase of units   -    -    11,428,570    1,143    -    -    198,857    -    200,000 
Shares issued for accrued interest in convertible notes   -    -    198,204    20    -    -    8,316    -    8,336 
Stock Option Expense   -    -    -    -    -    -    11,034    -    11,034 
Net Loss   -    -    -    -    -    -    -    (327,922)   (327,922)
Balance, March 31, 2023 (unaudited)   425,000    425    437,147,436   $43,716    138,941   $14   $19,135,083   $(16,765,417)  $2,413,821 

 

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

 

6

 

 

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31,

(unaudited)

 

   2024   2023 
Cash flows provided by operating activities:          
Net loss  $(335,716)  $(327,922)
Adjustments to reconcile net loss to cash used in operating activities:          
Depreciation and amortization   40,768    36,966 
Amortization of debt discount   3,763    2,764 
Amortization of right-of-use asset   66,605    75,765 
Reserve for Nomad recall   -    (74,200)
Stock Based Compensation - Options   12,423    11,034 
Stock based compensation - stock grant   -    8,336 
Changes in operating assets and liabilities          
Change in accounts receivable, net   (76,147)   (53,898)
Change in accounts receivable - related parties   9,025    (44,405)
Change in inventory   31,176    206,024 
Change in prepaid expenses and other current assets   (76,792)   (6,419)
Recovery of bad debt   

(1,767

)   - 
Change in reserve of slow moving inventory   359    - 
Change in other assets   -    - 
Change in accounts payable and accrued liabilities   (67,079)   (132,934)
Change in customer deposits and unearned revenue   (50,835)   62,412 
Change in long term lease liability   (66,075)   (72,399)
Change in other liabilities   20,346   8,756 
Change in accounts payable - related parties   5,595    (13,761)
Net cash used in operating activities   (484,351)   (313,881)
           
Cash flows used in investing activities:          
Purchase of fixed assets   (7,561)   (5,069)
Net cash used in investing activities   (7,561)   (5,069)
Cash flows from financing activities:          
Proceeds from issuance of units   -    200,000 
Proceeds of related party demand note   280,000    

-

 
Proceeds from long term debt   32,274    - 
Repayment of debt   (12,720)   (17,842)
Net cash provided from in financing activities   299,554    182,158 
           
Net decrease in cash   (192,358)   (136,792)
           
Cash, beginning balance   431,112    484,427 
Cash, end of period  $238,754    347,635 
           
Supplemental disclosures of cash flow information:          
Cash Paid for Interest  $8,944    6,860 
Cash Paid for Income Taxes  $-    - 
           
Supplemental disclosure of non-cash financing activities:          

Common Stock issued for payment of convertible note interest

   

11,007

    

8,336

 
Equipment obtained through financing  $-   $63,689 

 

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

 

7

 

 

BROWNIE’S MARINE GROUP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024

(UNAUDITED)

 

Note 1. Company Overview

 

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

 

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

 

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

 

Basis of Presentation

 

The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The balance sheet as of December 31, 2023 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a broader discussion of the Company’s business and the risks inherent in such business. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending December 31, 2024.

 

8

 

 

Principles of Consolidation

 

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

 

Use of estimates

 

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

 

Cash and cash equivalents

 

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

 

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per EIN. At March 31, 2024 and December 31, 2023, the Company had approximately $0 and $25,000 in excess of the FDIC insured limit.

 

Accounts receivable

 

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

 

In accordance with ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2024, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its lending practices have not changed significantly over time). As a result, management applied the applicable credit loss rates to determine the expected credit loss estimate for each aging category. Accordingly, the allowance for expected credit losses at March 31, 2024 and December 31, 2023 totaled $52,660 and $54,427, respectively.

 

Inventory

 

Inventory consists of the following:

   March 31, 2024 (unaudited)   December 31, 2023 
         
Raw materials  $1,116,667   $1,063,888 
Work in process   57,460    63,258 
Finished goods   926,003    1,004,160 
Rental Equipment   55,893    55,893 
Allowance reserve   (188,751)   (188,392)
Inventory, net  $1,967,272   $1,998,807 

 

9

 

 

Revenue Recognition

 

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

 

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

 

   2024   2023 
   Three months ended March 31 
   2024   2023 
   (unaudited)   (unaudited) 
Revenues  $1,492,299   $1,427,963 
Revenues - related parties   115,223    211,090 
Total Revenues  $1,607,522   $1,639,053 

 

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:

   2024   2023 
   Three months ended March 31 
   2024   2023 
   (unaudited)   (unaudited) 
Cost of revenues  $889,918   $1,071,068 
Cost of revenues - related parties   53,124    108,925 
Royalties expense - related parties   9,061    10,212 
Royalties expense   67,984    34,823 
Total cost of revenues  $1,020,087   $1,225,028 

 

10

 

 

Lease Accounting

 

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

 

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

 

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

 

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

 

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

 

For the three months ended March 31, 2024, and March 31,2023, cash paid for operating lease liabilities was $66,075 and $72,399, respectively.

 

Supplemental balance sheet information related to leases was as follows:

Operating Leases  March 31, 2024 
    (unaudited) 
Right-of-use assets  $777,478 
Current lease liabilities  $227,008 
Non-current lease liabilities   581,986 
Total lease liabilities  $808,994 

 

Stock-Based Compensation

 

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

 

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

 

11

 

 

Derivatives

 

The accounting treatment of derivative financial instruments requires that the Company record certain warrants and embedded conversion options at their fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into certain note agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy, by earliest issuance date, in accordance with ASC 815-40-35-12 whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors, as long as the certain variable issuance terms in certain convertible instruments exist. As of March 31, 2024 and December 31, 2023, the Company did not have any derivative liabilities.

 

Loss per share of common stock

 

Basic loss per share excludes any dilutive effects of options, warrants and convertible securities. Basic earnings per share is computed using the weighted- average number of outstanding common shares during the applicable period. Diluted loss per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive. At March 31, 2024, and March 31, 2023, 107,761,177 and 274,150,814 shares, respectively, of potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible notes, outstanding warrants, outstanding stock options and the conversion of preferred stock.

 

Recent accounting pronouncements

 

ASU 2016-13 Current Expected Credit Loss (ASC326)

 

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

 

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

 

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

 

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

 

12

 

 

Note 3. Going Concern

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. For the three months ended March 31, 2024, the Company incurred a net loss of $335,716. At March 31, 2024, the Company had an accumulated deficit of $18,021,326. Despite a working capital surplus of approximately $1,028 at March 31, 2024, the continued losses and cash used in operations raise substantial doubt as to the Company’s ability to continue as a going concern for the twelve months after the date the financial statements were issued. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to increase revenues, control expenses, raise capital and sustain adequate working capital to finance its operations. The failure to achieve the necessary levels of profitability and cash flows would be detrimental to the Company. The consolidated financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

 

Note 4. Related Party Transactions

 

The Company sells products to Brownie’s Southport Divers, Brownie’s Yacht Toys and Brownie’s Palm Beach Divers, companies owned by the brother of Robert Carmichael, the Company’s Chief Executive Officer and Chief Financial Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers with similar sales volumes. These entities accounted for 7.2% and 12.9% of the net revenues for the three months ended March 31, 2024 and March 31, 2023, respectively. Accounts receivable from these entities totaled $12,839 and $17,828, at March 31, 2024 and December 31, 2023, respectively.

 

The Company sells products to BGL and 940 A, entities wholly-owned by Robert Carmichael. Terms of sale are more favorable than those extended to the Company’s regular customers, but no more favorable than those extended to the Company’s strategic partners. Accounts receivable from these entities totaled $10,266 and $14,302 at March 31, 2024 and December 31, 2023, respectively.

 

The Company had accounts payable to related parties of $52,173 and $46,578 at March 31, 2024 and December 31, 2023, respectively. The balance payable at March 31, 2024 was comprised of $23,713 due to 940 A, $18,460 due to Robert Carmichael and $10,000 due to Blake Carmichael. At December 31, 2023, the balance payable was comprised of $29,559 due to 940 A, $12,019 due to Robert Carmichael and $5,000 due to Blake Carmichael.

 

The Company has exclusive license agreements with 940 A to license the trademark “Brownie’s Third Lung”, “Tankfill”, “Brownie’s Public Safety” and various other related trademarks as listed in the agreements. The agreements provide that the Company pay 2.5% of gross revenues per quarter as a royalty to 940A. Total royalty fees paid to 940A for the three months ended March 31, 2024 and March 31, 2023 was $9,061 and $10,212, respectively. The accrued royalty for March 31, 2024 and December 31, 20223 was $7,385 and $2,238 which is included in other liabilities.

 

On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day value weighted average price (“VWAP”) of the Company’s stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.021 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Company’s stock as of the date of the note. The Company recorded $19,250 for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. There were payments totaling $3,047 made with products in kind during the three months ended March 31, 2024. The outstanding balance on this note was $63,746 as of March 31, 2024.

 

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

 

On September 14, 2023, the Company issued a convertible demand 8% promissory note in the principal amount of $50,000 to Robert Carmichael for funds to meet the working capital needs of BLU3. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day VWAP of the Company’s stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.01351 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Company’s stock as of the date of the note. The Company recorded $-0- for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. The outstanding balance on this note was $50,000 as of March 31, 2024.

 

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

 

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

 

13

 

 

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

 

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

 

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

 

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

 

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

 

Note 5. Convertible Promissory Notes and Loans Payable

 

Convertible Promissory Notes

 

Convertible promissory notes consisted of the following at March 31, 2024:

 

Origination Date  Maturity Date  Interest Rate   Origination Principal Balance   Original Discount Balance   Period End Principal
Balance		   Period End Discount
Balance		   Period End Balance,
Net		   Accrued Interest Balance   Reg. 
9/03/21  9/03/24   8%   346,500    (12,355)  $346,500   $(2,186)  $344,314           -    (1)
9/03/21  9/03/24   8%   3,500    (125)   3,500    (21)   3,479    -    (2)
9/30/22  Demand   8%   66,793    (19,245)   63,746    (9,658)   54,088    -    (3)
                     $413,746   $(11,865)  $401,881   $-      

 

A breakdown of current and long-term amounts due are as follows for the convertible promissory notes as of March 31, 2024:

 

   Summit
Holdings V,
LLC Note		   Tierra Vista
Partners,
LLC Note		   Robert
Carmichael
Note		    Total 
                  
2024   346,500    3,500    63,746     413,746 
Discount   (2,186)   (21)   (9,658)    (11,865)
Total Loan Payments  $344,314   $3,479   $54,088    $401,881 
Current Portion of Loan Payable  $(344,314)  $(3,479)  $(54,088)   $(401,881)
Non-Current Portion of Loan Payable  $-   $-   $-    $- 

 

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

 

   Payment Amortization 
      
2024   346,500 
Total Note Payments  $346,500 
Current portion of note payable   (346,500)
Non-Current Portion of Notes Payable  $- 

 

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

 

   Payment Amortization 
      
2024   3,500 
Total Note Payments  $3,500 
Current portion of note payable   (3,500)
Non-Current Portion of Notes Payable  $- 

 

(3) On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. There is no amortization schedule for the note and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day VWAP of the Company’s stock prior to the quarterly interest payment date. This note is classified as a current liability as the note holder may demand payment or convert the outstanding principal at a conversion price of $0.021 per share at any time. The Company recorded $19,250 for the beneficial conversion feature.

 

Loans Payable

   Mercedes BMG (1)   Navitas BLU3 (2)   NFS SSI (3)   Navitas 2022
BLU3 (4)		   Navitas 2024
BLU3 (5)		   Total 
2024 (9 months)  $11,168   $12,596   $27,412   $16,131   $

3,791

   $71,097 
2025   5,895    19,556    5,036    25,143    

5,604

    61,234 
2026   -    6,339    -    -    6,304    12,643 
2027   -        -    -    

7,092

    7,091 

Thereafter

   -    -    -    -    8,685    8,685 
Total Loan Payments  $17,063   $38,492   $32,448   $41,273   $31,476   $160,751 
Current Portion of Loan Payable  $(11,168)  $(16,967)  $(27,412)  $(21,801)  $(5,131)  $(82,478)
Non-Current Portion of Loan Payable  $5,895   $21,525   $5,036   $19,472   $

26,345

   $78,273 

 

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

 

14

 

 

Note 6. Goodwill and Intangible Assets, Net

 

The following table sets for the changes in the carrying amount of the Company’s Goodwill for the three months ended March 31, 2024.

 

   2024 
Balance, January 1  $249,986 
Addition:   - 
Balance, March 31  $249,986 

 

The Company performed an evaluation of the value of goodwill at December 31, 2023. Based upon this evaluation it was determined that there should be no adjustment to goodwill. There has been nothing noted during the three months ended March 31, 2024 that would indicate that the value of goodwill should change through that date.

 

The following table sets for the components of the Company’s intangible assets at March 31, 2024:

 

   Amortization
Period (Years)		   Cost   Accumulated Amortization   Net Book Value 
                 
Intangible Assets Subject to amortization                    
Trademarks   15   $121,000   $(20,794)  $100,206 
Customer Relationships   10    600,000    (155,000)   445,000 
Non-Compete Agreements   5    22,000    (11,367)   10,633 
Total       $743,000    $ (187,161)   $555,839 

 

The aggregate amortization remaining on the intangible assets as of March 31, 2024 is a follows:

   Intangible
Amortization		 
2024 (9 months remaining)   54,350 
2025   72,467 
2026   71,367 
2027   68,066 
2028   

68,066

 
Thereafter   

221,523

 
Total  $555,839 

 

Amortization expense for amortizable intangible assets for each of the three months ended March 31, 2024 and 2023 was 18,117.

 

Note 7. Stockholders’ Equity

 

Common Stock

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Preferred Stock

 

During the second quarter of 2010, the holders of the majority of the Company’s outstanding shares of common stock approved an amendment to the Company’s Articles of Incorporation authorizing the issuance of 10,000,000 shares of blank check preferred stock. The blank check preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by the Board of Directors of the Company from time to time in accordance with the provisions of the Florida Business Corporation Act. In April 2011, the Board of Directors designated 425,000 shares as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into a share of the Company’s common stock at any time at the option of the holder at a conversion price of $18.23 per share. Holders of shares of Series A Convertible Preferred Stock are entitled to 250 votes for each share held. The Company’s common stock and Series A Convertible Preferred Stock vote together on any matters submitted to our shareholders. As of March 31, 2024, and December 31, 2023, 425,000 shares of Series A Convertible Preferred Stock are issued and outstanding and are owned by Robert Carmichael.

 

15

 

 

Equity Incentive Plan

 

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

 

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

 

Equity Compensation Plan Information as of March 31, 2024:

 

   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   3,275,000   $0.0401    21,680,882 
Equity Compensation Plans Not Approved by Security Holders   64,164,637    0.0293    — 
Total   67,439,637   $0.0299    21,680,882 

 

Options

 

The Company has issued options to purchase approximately 67,439,637 shares of its common stock at an average exercise price of $0.0299 with a fair value of approximately $37,000. For the three months ended March 31, 2024, and the year ended December 31, 2023, the Company issued no options to purchase shares.

 

For the three months ended March 31, 2024 and 2023, the Company recognized an expense of approximately $12,400 and $11,000, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying Consolidated Statement of Operations) determined by application of a Black-Scholes option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility. As of March 31, 2024, the Company had approximately $1,066,753 of unrecognized pre-tax non-cash compensation expense related to performance based options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 1.5 years. The Company uses straight-line amortization of compensation expense over the requisite service period for time-based options. For performance-based options the Company evaluates the likelihood of a vesting qualification being met, and will establish the expense based on that evaluation. The maximum contractual term of the Company’s stock options is 5 years. The Company recognizes forfeitures and expirations as they occur. Options to purchase approximately 42,323,387 shares of common stock have vested as of March 31, 2024.

 

16

 

 

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

 

   Three Months ended March 31, 
   2024   2023 
Expected volatility   172.0% - 346.4%   172.0 – 346.4%
Expected term   1.5 – 5.0 Years    1.5 – 5.0 Years 
Risk-free interest rate   0.16% - 4.64%   0.16% - 4.64%
Forfeiture rate   0.17%   0.17%

 

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

 

A summary of the status of the Company’s outstanding stock options as of March 31, 2024 and December 31, 2023 and changes during the periods ending on such dates is as follows:

 

   Number of  

Weighted

Average

Exercise

  

Weighted

Average

Remaining

Contractual

  

Aggregate

Intrinsic

 
   Options   Price   Life in Years   Value 
Outstanding at December 31, 2022   238,439,167   $0.0362    1.43               
Granted   -    -           
Forfeited   (170,999,530)   0.0379           
Exercised   -    -           
Cancelled   -    -           
Outstanding – December 31, 2023   67,439,637   $0.0360    1.43      
Exercisable – December 31, 2023   41,057,753   $0.0211    0.81   $- 
                     
Granted   -    -           
Forfeited   -    -           
Exercised   -    -           
Cancelled   -    -           
Outstanding – March 31, 2024   67,439,637   $0.0298    1.26      
Exercisable – March 31, 2024   42,323,387   $0.0217    0.61   $- 

 

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

 

Range of Exercise Price  Number
outstanding
at March 31,
2024		   Weighted
average
remaining
Life		   Weighted
average
exercise
price		   Number
exercisable
at March 31,2024		   Weighted
average
exercise
price		   Weighted
average
remaining
life		 
$ 0.0180 - $0.0225   35,295,237    0.33   $0.0180    35,295,237   $0.0180    0.33 
$ 0.0229 - $0.0325   1,050,000    2.14   $0.0324    1,043,750   $0.0324    2.14 
$ 0.0360 - $0.0425   23,009,400    2.29   $0.0398    5,009,400   $0.0393    2.11 
$ 0.0440 - $0.0531   8,085,000    2.31   $0.0529    975,000   $0.0517    1.46 
Outstanding options   67,439,637    1.26    0.0298    42,323,387    0.0217    0.61 

 

At March 31, 2024, there was approximately $1,066,753 of unrecognized stock option expense which may be recognized only if the full vesting requirements for these options are met.

 

At March 31, 2024, there was approximately $69,001 of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of 0.45 years.

 

17

 

 

Warrants

 

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

 

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

 

   Number of  

Weighted

Average

Exercise

  

Weighted

Average

Remaining

Contractual

  

Aggregate

Intrinsic

 
   Warrants   Price   Life in Years   Value 
Outstanding – December 31, 2023   25,684,521   $0.0247    0.93   $24,000 
Granted   -                
Exercised   -                
Forfeited or Expired   -                
Outstanding – March 31, 2024   25,684,521   $0.0247    0.68      
Exercisable – March 31, 2024   25,684,521   $0.0247    0.68   $- 

 

Note 8. Commitments and contingencies

 

Royalty Agreement

 

On June 30, 2020, the Company entered into Amendment No. 2 to its Patent License Agreement with Setaysha Technical Solutions, LLC (“STS”). The Amendment, among other things, provides that STS provide 30 hours per week of commercialization support for its NextGen licensed products without charge. In consideration therefor, the Company agreed to an increased minimum yearly royalty payment of $60,000 for years 2022, 2023 and 2024, with a yearly fourth quarter reconciliation with earned royalties. In addition, if the Company terminates the Agreement with STS prior to December 31, 2023, the Company is obligated to pay STS $180,000, less cumulative royalties paid in excess of $334,961 for the years 2019 through 2024. Royalty recorded under the Amendment was $67,984 and $34,823 for the three months ended March 31, 2024 and 2023, respectively.

 

18

 

 

Consulting and Employment Agreements

 

On August 1, 2021, the Company and Blake Carmichael entered into a three-year employment agreement (the “Blake Carmichael Employment Agreement”) pursuant to which Mr. Carmichael served as Chief Executive Officer of BLU3. In consideration for his services, Blake Carmichael received (i) an annual base salary of $120,000, payable in accordance with the customary payroll practices of the Company, (ii) a cash bonus equal to 5% of the net income of BLU3, payable quarterly, beginning with the first full calendar quarter after the execution of the agreement, and (iii) upon execution of the Carmichael Employment Agreement, a non-qualified five-year stock option to purchase 3,759,400 shares at $0.0399, 33.3% of which shares vest immediately, 33.3% vest on the second anniversary, and 33.3% vest on the third anniversary of the agreement. In addition, Blake Carmichael is entitled to receive a five-year stock option to purchase up to 18,000,000 shares of common stock at an exercise price of $0.0399 per share that will vest upon annual financial metrics based upon a revenue measurement, expediency measurement and an EBITDA measurement. A measurement was made for the three months ended March 31, 2024 resulting in no additional expense since the vesting criteria were not met.

 

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

 

In addition, Mrs. Buban is entitled to receive a five-year stock option to purchase up to 7,110,000 shares of common stock of the Company at an exercise price of $0.0531 per share, which vests upon the attainment of certain defined annual financial metrics, as set forth in the Buban Employment Agreement. A measurement was made for the three months ended March 31, 2024 and no expense was recorded based upon the vesting criteria not being met.

 

19

 

 

On January 17, 2022, the Company entered into an agreement with The Crone Law Group, PC (“CLG”) for the provision of legal services. In consideration therefore, the Company will pay CLG a monthly flat fee of $3,000 for SEC reporting work and its normal hourly rate for other legal work and issued 1,000,000 shares of common stock with a fair market value of $27,500 to CLG.

 

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

 

On May 2, 2022, LBI, entered into a lease assignment agreement with Gold Coast Scuba, LLC and Vicnsons Realty Group, LLC whereby LBI is the assignee of a three year lease for the property located at 259 Commercial Blvd., Suites 2 and 3 in Lauderdale-By-The Sea, Florida for $2,816 per month base rent. The lease expired on March 31, 2023 and LBI is currently renting on a month to month basis. LBI has the option to renew the lease for a two year term with an increase of base rent of 3.5%.

 

On September 14, 2022, SSI entered into a sixty-month lease renewal for its facility in Huntington Beach, California commencing on February 1, 2022 with base rent of approximately $17,550 per month for the first 24 months with an annual escalation clause of 3.0% thereafter. Obligations under the lease are guaranteed by the Company. The Company paid an additional security deposit of $10,727 upon entering into the lease.

 

On September 30, 2022, SSI entered into a sublease of its facility in Huntington Beach, California with Camburg Engineering, Inc. (“Tenant”) commencing October 1, 2022, The term of the sublease is through December 31, 2023, with a base monthly rent of $2,247 for the first twelve months with a 3% annual escalation thereafter. The Tenant also pays a monthly common area maintenance of $112. The Tenant provided a security deposit of $2,426 upon entering into the sublease.

 

On December 22, 2022, the U.S. Consumer Products Safety Commission (the “CPSC”) issued a voluntary recall notice for the Nomad tankless dive system, which is distributed by BLU3, Inc. As part of the recall procedure, the CPSC has approved the Company’s proposed remedy for the recall and BLU3 received units back from consumers to repair affected Nomad units. The Company has evaluated the costs of this recall and has deemed it necessary to set an allowance of $160,500 for such costs. During the twelve months ended December 31, 2023 the Company repaired and returned 653 units to customers resulting in a reduction of the reserve of $93,161 for the twelve months ended December 31, 2023.

 

Note 9. Subsequent Events

 

Effective May 21, 2024, Christopher Constable resigned as a member of the Company’s board of directors. As described in the resignation letter submitted by Mr. Constable, his termination was, among other reasons, the result of the Company having filed its Annual Report on Form 10-K for the year ended December 31, 2023 with the Securities and Exchange Commission without obtaining authorization from Mr. Constable.

 

20

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Quarterly Report. Actual future results may be materially different from what we expect. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by applicable law.

 

The management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

 

Overview

 

The Company owns and operates a portfolio of companies with a concentration in the industrial and recreational diving industry. The Company, through its subsidiaries, designs, tests, manufactures, and distributes recreational hookah diving, yacht-based scuba air compressors and nitrox generation systems and scuba and water safety products in the United States and internationally.

 

The Company has five subsidiaries focused on various sub-sectors:

 

●Brownie’s Third Lung - Surface Supplied Air (“SSA”)
●BLU3, Inc. - Ultra-Portable Tankless Dive Systems
●LW Americas - High Pressure Gas Systems
●Submersible Systems, Inc. - Redundant Air Tank Systems
●Live Blue, Inc. – Guided Tours and Retail

 

Our wholly owned subsidiaries do business under their respective trade names on both a wholesale and retail basis from our headquarters and manufacturing facility in Pompano Beach, Florida, a manufacturing facility in Huntington Beach, California, and a retail facility in Lauderdale-By-The-Sea, Florida.

 

The Company, through its wholly owned subsidiaries, designs, tests, and manufactures tankless dive systems, rescue air systems and yacht-based self- contained underwater breathing apparatus (“SCUBA”) air compressor and nitrox generation fill systems. In addition, the Company is the exclusive distributor for North and South America for Lenhardt & Wagner GmbH (“L&W”) compressors in the high-pressure breathing air and industrial gas markets. The Company is also building a guided tour operation that includes dive retail. Lastly, The Company is the exclusive United States and Caribbean distributor for Chrysalis Trading CC, a South African manufacturer of fitness and dive equipment, doing business as Bright Weights (“Bright Weights”), of a dive ballast system produced in South Africa.

 

Recent Development

 

Effective May 21, 2024, Christopher Constable resigned as a member of the Company’s board of directors. As described in the resignation letter submitted by Mr. Constable, his termination was, among other reasons, the result of the Company having filed its Annual Report on Form 10-K for the year ended December 31, 2023 with the Securities and Exchange Commission without first obtaining authorization from Mr. Constable.

 

21

 

 

Results of Operations

 

Net Revenues, Costs of Net Revenues and Gross Profit

 

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

 

Net revenues decreased 1.9% for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 as a result of a decrease in revenues in BTL and LWA. Net revenue for BTL and LWA decreased 39.0% and 48.0%, respectively, as a result of a loss of sales momentum as well as a soft demand in many areas of BTL’s and LWA’s market. The decrease in BTL and LWA’s revenues was mostly offset by increased revenues in BLU3 and SSI. The increase in BLU3’s revenue is due to the recovery from the recall that directly affected the previous period’s revenues. SSI’s increase can be attributed to the continued momentum of the Company’s newest product, HEED3 as well as increased demand from international users of SSI’s Spare Air product line.

 

For the three months ended March 31, 2024, cost of net revenues was 74.7% as compared with the cost of net revenues of 63.5% for the three months ended March 31, 2023. The cost increase as a percentage of revenue, can be directly attributed to the cost of direct labor, which accounted for a larger portion of costs and significantly impacted the profit margin. Included in cost of net revenues are royalty expenses paid to Robert Carmichael which decreased 11.3% for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

 

Gross profit margin was 36.5% for the three months ended March 31, 2024 as compared to gross profit margin of 25.3% for the three months ended March 31, 2023. The increase in gross margin, is directly attributable to an increase in SSI’s margin to 66.7%, offset by a decrease in BTL’s margin to (9.7)%.

 

22

 

 

The following tables provides net revenues, total costs of net revenues and gross profit margins for our segments for the periods presented.

 

Revenues

 

   Three Months Ended
March 31,		   % of 
   2024   2023   Change 
   (unaudited)     
Legacy SSA Products  $277,954   $455,380    (39.0)%
High Pressure Gas Systems   122,082    234,880    (48.0)%
Ultra-Portable Tankless Dive Systems   657,169    476,915    37.8%
Redundant Air Tank Systems   502,301    392,976    27.8%
Guided Tour Retail   48,016    78,902    (39.1)%
Total net revenues  $1,607,522   $1,639,053    (1.9)%

 

Cost of revenues as a percentage of net revenues

 

   Three Months Ended
March 31		 
   2024   2023 
   (unaudited) 
Legacy SSA Products   109.7%   91.8%
High Pressure Gas Systems   66.4%   52.9%
Ultra-Portable Tankless Dive Systems   66.1%   72.2%
Redundant Air Tank Systems   33.3%   73.2%
Guided Tour Rental   53.8%   64.3%

 

Gross profit (loss) margins

 

   Three Months Ended
March 31,		 
   2024   2023 
   (unaudited) 
Legacy SSA Products   (9.7)%   8.2%
High Pressure Gas Systems   33.6%   47.1%
Ultra-Portable Tankless Dive Systems   33.9%   27.8%
Redundant Air Tank Systems   66.7%   26.8%
Guided Tour Rental   46.2%   35.7%

 

23

 

 

Operating Expenses

 

Operating expenses consist of selling, general and administrative (“SG&A”) expenses and research and development costs and are reported on a consolidated basis for our operating segments. Operating expenses increased 24.3%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

 

Selling, General & Administrative Expenses (SG&A Expenses)

 

SG&A increased by 23.9% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. SG&A expenses were comprised of the following:

 

   Three Months Ended    Three Months Ended      
Expense Item  March 31,2024   March 31,2023   % Change 
Payroll, Selling & Administrative  $473,453   $450,806    5.0%
Stock Compensation Expense   12,423    11,034    12.6%
Professional Fees   51,490    66,302    (22.3)%
Advertising   107,969    104,005    3.8%
All Other   254,486    94,073    170.5%
Total SG&A  $899,821   $726,220    23.9%

 

24

 

 

Payroll for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, increased 5.0%, respectively. The increase reflects an increase in personnel in BLU3, as well as a reallocation of SSI direct labor from payroll expense to cost of sales for the three months ended March 31, 2024.

 

Non-Cash Stock Compensation expenses increased by 12.6%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, as a result of vesting milestones not being met due to the reduction in revenue for the three months ended March 31, 2024.

 

Professional fees, including legal, accounting and other professional fees decreased 22.3%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The decrease for the three months ended March 31, 2024 can be attributed to a decrease in other professional fees of 53.6% and a decrease in accounting fees of 42.7%. The decrease in the Company’s acquisition activities in 2024 resulted in a decrease in legal fees. Additionally, the decrease in professional fees is attributable to the conversion of consultants to employees early in 2023 and the decrease in accounting fees can be attributed to new auditors who offer fixed priced services.

 

Advertising expenses increased by 3.8% for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, respectively. This increase is attributable to BLU3’s increase in advertising of 26.8% during the three months ended March, 31 2024. BLU3’s increase in advertising expense was offset slightly by a decrease in advertising expense for SSI of 17.2%.

 

Other expenses increased by 170.5% for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, due primarily to a reversal of the reserve for recall expenses which decreased other expenses recorded in 2023.

 

Research & Development Expenses (R&D Expenses)

 

R&D expenses for the three months ended March 31, 2024, increased 538.6% as compared to the three months ended March 31, 2023. The increase was attributable to an increase in new product development activity.

 

Other Income/Expense

 

For the three months ended March 31, 2024 and March 31, 2023, other income/expense consisted solely of interest expense. For the three months ended March 31, 2024, interest expense increased 31.3% from the three months ended March 31, 2023 to $19,952 as compared to $15,198 in the three months ended March 31, 2023. The increase in interest expense can be attributed to the related party demand notes from Charles Hyatt that were funded in the fourth quarter 2023 and first quarter of 2024.

 

Liquidity and Capital Resources

 

We had cash of $238,754 as of March 31, 2024. The following table summarizes total current assets, total current liabilities, and working capital at March 31, 2024, as compared to December 31, 2023.

 

   March 31,   December 31,     
   2024   2023   % change 
   (unaudited)         
Total current assets  $2,658,389   $2,736,601    (2.9)%
Total current liabilities  $2,657,361   $2,502,787    6.2%
Working capital  $1,028   $233,814    (99.26)%

 

The decrease in our current assets at March 31, 2024 from December 31, 2023 primarily reflected by a decrease in inventory as the Company decreased its inventory purchases to match the reduction in current demand. The increase in current liabilities reflects an increase in related party notes payable.

 

25

 

 

Summary Cash Flows

 

   Three Months Ended March 31, 
   2024   2023 
   (unaudited) 
Net cash used in operating activities  $(484,351)  $(313,881)
Net cash used in investing activities  $(7,561)  $(5,069)
Net cash provided by financing activities  $299,554   $182,158 

 

Net cash used in operating activities for the three months ended March 31, 2024 was due to the net loss of approximately $336,000. Net cash used in operating activities is also the result of a decrease in current assets, offset by an increase in accounts receivable and prepaid expenses which generated approximately $155,000. A net increase in liabilities which generated approximately $94,000 primarily from an increase in related party notes payable partially offset by a decrease in accounts payable and customer deposits.

 

Net cash used in investing activities for the three months ended March 31, 2024, of $7,561 consists of fixed asset purchases.

 

Net cash provided by financing activities for the three months ended March 31, 2024, of $299,554 reflects the issuance of debt to a related party and proceeds from long term debt partially offset by the repayment of debt.

 

Going Concern

 

Our unaudited consolidated financial statements included in this Quarterly Report were prepared assuming we 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. The report of our independent registered public accounting firm on our audited consolidated financial statements for the year ended December 31, 2023 includes an explanatory paragraph stating the Company has net losses and an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. If the Company is unable to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back, delay or cease operations, liquidate assets and possibly seek bankruptcy protection.

 

We have a history of losses, and an accumulated deficit of $18,021,326 as of March 31, 2024. Despite a working capital surplus of $1,028 at March 31, 2024, the continued losses and cash used in operations raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to continue to increase revenues, control expenses, raise capital, and continue to sustain adequate working capital to finance its operations. The failure to achieve the necessary levels of profitability and cash flows would be detrimental to the Company. We are continuing to engage in discussions with potential sources for additional capital, however, our ability to raise capital is somewhat limited based upon our revenue levels, net losses and limited market for our common stock. If we fail to raise additional funds when needed, or if we do not have sufficient cash flows from operations, we may be required to scale back or cease certain of our operations.

 

Critical Accounting Policies

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition, valuation of inventory, allowance for doubtful accounts, and equity-based transactions. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our unaudited consolidated financial statements contained in this Quarterly Report.

 

26

 

 

Recent Accounting Pronouncements

 

There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company’s operations, financial position or cash flows.

 

These recent accounting pronouncements are described in Note 2 to our unaudited consolidated financial statements contained in this Quarterly Report.

 

Off Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under Exchange Act. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluations as of March 31, 2024, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses in our internal control over financial reporting described below. A material weakness is a deficiency, or combination of deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.

 

27

 

 

Our management, including our Principal Executive Officer and Principal Financial Officer, have evaluated the effectiveness of the design and operations of our disclosure controls and procedures (defined in Exchange Act Rules 13a-15(c) and 15d-15(e)) as of March 31, 2024 and based upon the such evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to the material weaknesses set forth below.

 

  ● Insufficient number and lack of qualified accounting department and administrative personnel and support;
     
  ● Insufficient written policies and procedures to ensure the correct application of accounting and financial reporting with respect to GAAP and SEC disclosure requirements;
     
  ● Insufficient segregation of duties, oversight of work performed and lack of controls in our finance and accounting functions due to limited personnel;
     
  ● Company’s systems that impact financial information and disclosures have ineffective information technology controls;
     
  ● Inadequate controls surrounding revenue recognition, to ensure that all material transactions and developments impacting the financial statements are reflected and properly recorded; and
     
  ● Evaluation of disclosure controls and procedures was not sufficiently comprehensive due to limited personnel.

 

Subject to sufficient resources, management expects to remediate the material weaknesses identified above as follows:

 

  ● Management has leveraged and will continue to leverage experienced consultants to assist with ongoing GAAP and SEC compliance requirements. We intend to expand our finance department through the hiring of a certified public accountant to strengthen the segregation of duties, internal controls and enhance our current staff.
     
  ● Segregation of duties is being analyzed and adjusted Company-wide, where possible. The Company intends to hire additional personnel in the accounting department, as well as the documentation of controls and procedures.
     
  ● The Company plans on evaluating various accounting systems to enhance its system controls.

 

We will continue to monitor and evaluate the effectiveness of our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. We do not, however, expect that the material weaknesses in our disclosure controls will be remediated until such time as we have added to our accounting and administrative staff allowing improved internal control over financial reporting.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

 

28

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEEDINGS

 

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

 

ITEM 1A. RISK FACTORS

 

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

 

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

 

None.

 

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

 

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

 

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

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURE

 

None.

 

ITEM 5. OTHER INFORMATION

 

During the quarter ended March 31, 2024, no director, officer or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.

 

29

 

 

ITEM 6. EXHIBITS

 

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

 

30

 

 

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 17, 2024 BROWNIE’S MARINE GROUP, INC.
     
  By: /s/ Robert M. Carmichael
    Robert M. Carmichael
    Chief Executive Officer
    (Principal Executive Officer)
     
  By: /s/ Robert M. Carmichael
    Robert M. Carmichael
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

31

 

EXHIBIT 31.1

 

CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER 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 quarter ended March 31, 2024, 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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal controls over financial reporting (as defined in Exchange Act Rules 3a-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. I have disclosed, based on my 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 17, 2024 /s/ Robert M. Carmichael
  Name: Robert M. Carmichael
  Title: Chief Executive Officer (Principal Executive Officer)

 

 

 

 

 

EXHIBIT 31.2

 

CERTIFICATE OF PRINCIPAL FINANCIAL OFFICER 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 quarter ended March 31, 2024, 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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal controls over financial reporting (as defined in Exchange Act Rules 3a-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. I have disclosed, based on my 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 17, 2024 /s/ Robert M. Carmichael
  Name: Robert M. Carmichael
  Title: Chairman of the Board, President and Chief Financial Officer (Principal Financial and Accounting Officer)

 

 

 

 

 

EXHIBIT 32

 

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 on Form 10-Q of Brownie’s Marine Group, Inc. (the “Company”) for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (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 17, 2024 /s/ Robert M. Carmichael
  Name: Robert M. Carmichael
  Title: Chief Executive Officer (Principal Executive Officer)
     
  /s/ Robert M. Carmichael
  Name: Robert M. Carmichael
  Title: Chief Financial Officer (Principal Financial and Accounting Officer)

 

 

 

 

v3.24.2
Cover - shares
 3 Months Ended
Mar. 31, 2024
Jul. 17, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Mar. 31, 2024  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 333-99393  
Entity Registrant Name BROWNIE’S MARINE GROUP, INC.  
Entity Central Index Key 0001166708  
Entity Tax Identification Number 90-0226181  
Entity Incorporation, State or Country Code FL  
Entity Address, Address Line One 3001 NW 25th Avenue  
Entity Address, Address Line Two Suite 1  
Entity Address, City or Town Pompano Beach  
Entity Address, State or Province FL  
Entity Address, Postal Zip Code 33069  
City Area Code 954  
Local Phone Number 462-5570  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   439,805,747
v3.24.2
Consolidated Balance Sheets - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Current Assets    
Cash $ 238,754 $ 431,112
Inventory, net 1,967,272 1,998,807
Prepaid expenses and other current assets 267,204 190,412
Total current assets 2,658,389 2,736,601
Property, equipment and leasehold improvements, net 327,590 342,681
Operating lease assets 777,478 844,083
Intangible assets, net 555,839 573,955
Goodwill 249,986 249,986
Other assets 30,724 30,724
Total assets 4,600,006 4,778,030
Current liabilities    
Accounts payable and accrued liabilities 711,616 789,702
Customer deposits and unearned revenue 204,905 255,740
Other liabilities 472,300 451,954
Operating lease liabilities 227,008 259,154
Current maturities long term debt 82,478 75,304
Total current liabilities 2,657,361 2,502,787
Loans payable, net of current portion 78,273 64,656
Operating lease liabilities 581,986 615,915
Total liabilities 3,317,620 3,183,358
Commitments and contingent liabilities (see note 8)
Stockholders’ equity    
Preferred stock; $0.001 par value: 10,000,000 shares authorized; 425,000 issued and outstanding as of March 31, 2024 and December 31, 2023. 425 425
Common stock; $0.0001 par value; 1,000,000,000 shares authorized; 437,940,254 shares issued and outstanding at March 31, 2024 and 437,742,050 shares issued and outstanding at December 31, 2023, respectively. 43,795 43,775
Common stock payable 138,941 shares and 138,941 shares, respectively as of March 31, 2024 and December 31, 2023. 14 14
Additional paid-in capital 19,259,478 19,236,068
Accumulated deficit (18,021,326) (17,685,610)
Total stockholders’ equity 1,282,386 1,594,672
Total liabilities and stockholders’ equity 4,600,006 4,778,030
Nonrelated Party [Member]    
Current Assets    
Accounts receivable 162,054 84,140
Current liabilities    
Convertible notes 347,793 346,871
Related Party [Member]    
Current Assets    
Accounts receivable 23,105 32,130
Current liabilities    
Accounts payable - related parties 52,173 46,578
Convertible notes 54,088 52,484
Related party notes payable $ 505,000 $ 225,000
v3.24.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 52,660 $ 54,427
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 425,000 425,000
Preferred stock, shares 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 437,940,254 437,742,050
Common stock, share outstanding 437,940,254 437,742,050
Common Stock, Capital Shares Reserved for Future Issuance 138,941 138,941
v3.24.2
Consolidated Statement of Operations (Unaudited) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Net revenues    
Total net revenues $ 1,607,522 $ 1,639,053
Cost of net revenues    
Total cost of revenues 1,020,087 1,225,028
Gross profit 587,435 414,025
Operating expenses    
Selling, general and administrative 899,821 726,220
Research and development costs 3,378 529
Total operating expenses 903,199 726,749
Loss from operations (315,764) (312,724)
Other (income) expense, net    
Interest expense (19,952) (15,198)
Total other (income) expense - net (19,952) (15,198)
Loss income before provision for income taxes (335,716) (327,922)
Provision for income taxes
Net loss $ (335,716) $ (327,922)
Basic loss per common share $ (0.00) $ (0.00)
Diluted loss per common share $ (0.00) $ (0.00)
Basic weighted average common shares outstanding 437,864,048 427,289,742
Diluted weighted average common shares outstanding 437,864,048 427,289,742
Nonrelated Party [Member]    
Net revenues    
Total net revenues $ 1,492,299 $ 1,427,963
Cost of net revenues    
Cost of net revenues 889,918 1,071,068
Royalties expense 67,984 34,823
Related Party [Member]    
Net revenues    
Total net revenues 115,223 211,090
Cost of net revenues    
Cost of net revenues 53,124 108,925
Royalties expense $ 9,061 $ 10,212
v3.24.2
Consolidated Statements of Changes in Shareholders Equity (Unaudited) - USD ($)
Preferred Stock [Member]
Common Stock [Member]
Common Stock Payable [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance at Dec. 31, 2022 $ 425 $ 42,553 $ 14 $ 18,916,876 $ (16,437,495) $ 2,522,373
Balance, shares at Dec. 31, 2022 425,000 425,520,662 138,941      
Shares issued for accrued interest in convertible notes $ 20 8,316 8,336
Shares issued for accrued interest in convertible notes, shares   198,204        
Stock Option Expense 11,034 11,034
Net Loss (327,922) (327,922)
Shares issued for the purchase of units $ 1,143 198,857 200,000
Shares issued for the purchase of units, shares   11,428,570        
Balance at Mar. 31, 2023 $ 425 $ 43,716 $ 14 19,135,083 (16,765,417) 2,413,821
Balance, shares at Mar. 31, 2023 425,000 437,147,436 138,941      
Balance at Dec. 31, 2023 $ 425 $ 43,775 $ 14 19,236,068 (17,685,610) 1,594,672
Balance, shares at Dec. 31, 2023 425,000 437,742,050 138,941      
Shares issued for accrued interest in convertible notes $ 20   10,987 11,007
Shares issued for accrued interest in convertible notes, shares   198,204      
Stock Option Expense 12,423 12,423
Net Loss (335,716) (335,716)
Balance at Mar. 31, 2024 $ 425 $ 43,795 $ 14 $ 19,259,478 $ (18,021,326) $ 1,282,386
Balance, shares at Mar. 31, 2024 425,000 437,940,254 138,941      
v3.24.2
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash flows provided by operating activities:    
Net loss $ (335,716) $ (327,922)
Adjustments to reconcile net loss to cash used in operating activities:    
Depreciation and amortization 40,768 36,966
Amortization of debt discount 3,763 2,764
Amortization of right-of-use asset 66,605 75,765
Reserve for Nomad recall (74,200)
Stock Based Compensation - Options 12,423 11,034
Stock based compensation - stock grant 8,336
Changes in operating assets and liabilities    
Change in accounts receivable, net (76,147) (53,898)
Change in accounts receivable - related parties 9,025 (44,405)
Change in inventory 31,176 206,024
Change in prepaid expenses and other current assets (76,792) (6,419)
Recovery of bad debt (1,767)
Change in reserve of slow moving inventory 359
Change in other assets
Change in accounts payable and accrued liabilities (67,079) (132,934)
Change in customer deposits and unearned revenue (50,835) 62,412
Change in long term lease liability (66,075) (72,399)
Change in other liabilities 20,346 8,756
Change in accounts payable - related parties 5,595 (13,761)
Net cash used in operating activities (484,351) (313,881)
Cash flows used in investing activities:    
Purchase of fixed assets (7,561) (5,069)
Net cash used in investing activities (7,561) (5,069)
Cash flows from financing activities:    
Proceeds from issuance of units 200,000
Proceeds of related party demand note 280,000
Proceeds from long term debt 32,274
Repayment of debt (12,720) (17,842)
Net cash provided from in financing activities 299,554 182,158
Net decrease in cash (192,358) (136,792)
Cash, beginning balance 431,112 484,427
Cash, end of period 238,754 347,635
Supplemental disclosures of cash flow information:    
Cash Paid for Interest 8,944 6,860
Cash Paid for Income Taxes
Supplemental disclosure of non-cash financing activities:    
Common Stock issued for payment of convertible note interest 11,007 8,336
Equipment obtained through financing $ 63,689
v3.24.2
Pay vs Performance Disclosure - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Pay vs Performance Disclosure [Table]    
Net Income (Loss) $ (335,716) $ (327,922)
v3.24.2
Insider Trading Arrangements
 3 Months Ended
Mar. 31, 2024
Trading Arrangements, by Individual [Table]  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.2
Company Overview
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Company Overview

Note 1. Company Overview

 

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

 

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

 
v3.24.2
Basis of Presentation and Summary of Significant Accounting Policies
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies

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

 

Basis of Presentation

 

The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The balance sheet as of December 31, 2023 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a broader discussion of the Company’s business and the risks inherent in such business. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending December 31, 2024.

 

 

Principles of Consolidation

 

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

 

Use of estimates

 

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

 

Cash and cash equivalents

 

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

 

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per EIN. At March 31, 2024 and December 31, 2023, the Company had approximately $0 and $25,000 in excess of the FDIC insured limit.

 

Accounts receivable

 

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

 

In accordance with ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2024, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its lending practices have not changed significantly over time). As a result, management applied the applicable credit loss rates to determine the expected credit loss estimate for each aging category. Accordingly, the allowance for expected credit losses at March 31, 2024 and December 31, 2023 totaled $52,660 and $54,427, respectively.

 

Inventory

 

Inventory consists of the following:

   March 31, 2024 (unaudited)   December 31, 2023 
         
Raw materials  $1,116,667   $1,063,888 
Work in process   57,460    63,258 
Finished goods   926,003    1,004,160 
Rental Equipment   55,893    55,893 
Allowance reserve   (188,751)   (188,392)
Inventory, net  $1,967,272   $1,998,807 

 

 

Revenue Recognition

 

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

 

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

 

   2024   2023 
   Three months ended March 31 
   2024   2023 
   (unaudited)   (unaudited) 
Revenues  $1,492,299   $1,427,963 
Revenues - related parties   115,223    211,090 
Total Revenues  $1,607,522   $1,639,053 

 

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:

   2024   2023 
   Three months ended March 31 
   2024   2023 
   (unaudited)   (unaudited) 
Cost of revenues  $889,918   $1,071,068 
Cost of revenues - related parties   53,124    108,925 
Royalties expense - related parties   9,061    10,212 
Royalties expense   67,984    34,823 
Total cost of revenues  $1,020,087   $1,225,028 

 

 

Lease Accounting

 

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

 

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

 

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

 

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

 

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

 

For the three months ended March 31, 2024, and March 31,2023, cash paid for operating lease liabilities was $66,075 and $72,399, respectively.

 

Supplemental balance sheet information related to leases was as follows:

Operating Leases  March 31, 2024 
    (unaudited) 
Right-of-use assets  $777,478 
Current lease liabilities  $227,008 
Non-current lease liabilities   581,986 
Total lease liabilities  $808,994 

 

Stock-Based Compensation

 

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

 

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

 

 

Derivatives

 

The accounting treatment of derivative financial instruments requires that the Company record certain warrants and embedded conversion options at their fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into certain note agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy, by earliest issuance date, in accordance with ASC 815-40-35-12 whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors, as long as the certain variable issuance terms in certain convertible instruments exist. As of March 31, 2024 and December 31, 2023, the Company did not have any derivative liabilities.

 

Loss per share of common stock

 

Basic loss per share excludes any dilutive effects of options, warrants and convertible securities. Basic earnings per share is computed using the weighted- average number of outstanding common shares during the applicable period. Diluted loss per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive. At March 31, 2024, and March 31, 2023, 107,761,177 and 274,150,814 shares, respectively, of potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible notes, outstanding warrants, outstanding stock options and the conversion of preferred stock.

 

Recent accounting pronouncements

 

ASU 2016-13 Current Expected Credit Loss (ASC326)

 

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

 

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

 

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

 

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

 

 
v3.24.2
Going Concern
 3 Months Ended
Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

Note 3. Going Concern

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. For the three months ended March 31, 2024, the Company incurred a net loss of $335,716. At March 31, 2024, the Company had an accumulated deficit of $18,021,326. Despite a working capital surplus of approximately $1,028 at March 31, 2024, the continued losses and cash used in operations raise substantial doubt as to the Company’s ability to continue as a going concern for the twelve months after the date the financial statements were issued. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to increase revenues, control expenses, raise capital and sustain adequate working capital to finance its operations. The failure to achieve the necessary levels of profitability and cash flows would be detrimental to the Company. The consolidated financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

 
v3.24.2
Related Party Transactions
 3 Months Ended
Mar. 31, 2024
Related Party Transactions [Abstract]  
Related Party Transactions

Note 4. Related Party Transactions

 

The Company sells products to Brownie’s Southport Divers, Brownie’s Yacht Toys and Brownie’s Palm Beach Divers, companies owned by the brother of Robert Carmichael, the Company’s Chief Executive Officer and Chief Financial Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers with similar sales volumes. These entities accounted for 7.2% and 12.9% of the net revenues for the three months ended March 31, 2024 and March 31, 2023, respectively. Accounts receivable from these entities totaled $12,839 and $17,828, at March 31, 2024 and December 31, 2023, respectively.

 

The Company sells products to BGL and 940 A, entities wholly-owned by Robert Carmichael. Terms of sale are more favorable than those extended to the Company’s regular customers, but no more favorable than those extended to the Company’s strategic partners. Accounts receivable from these entities totaled $10,266 and $14,302 at March 31, 2024 and December 31, 2023, respectively.

 

The Company had accounts payable to related parties of $52,173 and $46,578 at March 31, 2024 and December 31, 2023, respectively. The balance payable at March 31, 2024 was comprised of $23,713 due to 940 A, $18,460 due to Robert Carmichael and $10,000 due to Blake Carmichael. At December 31, 2023, the balance payable was comprised of $29,559 due to 940 A, $12,019 due to Robert Carmichael and $5,000 due to Blake Carmichael.

 

The Company has exclusive license agreements with 940 A to license the trademark “Brownie’s Third Lung”, “Tankfill”, “Brownie’s Public Safety” and various other related trademarks as listed in the agreements. The agreements provide that the Company pay 2.5% of gross revenues per quarter as a royalty to 940A. Total royalty fees paid to 940A for the three months ended March 31, 2024 and March 31, 2023 was $9,061 and $10,212, respectively. The accrued royalty for March 31, 2024 and December 31, 20223 was $7,385 and $2,238 which is included in other liabilities.

 

On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day value weighted average price (“VWAP”) of the Company’s stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.021 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Company’s stock as of the date of the note. The Company recorded $19,250 for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. There were payments totaling $3,047 made with products in kind during the three months ended March 31, 2024. The outstanding balance on this note was $63,746 as of March 31, 2024.

 

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

 

On September 14, 2023, the Company issued a convertible demand 8% promissory note in the principal amount of $50,000 to Robert Carmichael for funds to meet the working capital needs of BLU3. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day VWAP of the Company’s stock prior to the quarterly interest payment date. The note holder may demand payment or convert the outstanding principal at a conversion rate of $0.01351 per share at any time. The conversion rate was calculated at a 35% discount to the 90 day VWAP of the Company’s stock as of the date of the note. The Company recorded $-0- for the beneficial conversion feature. As this conversion rate is a fixed rate, the embedded conversion feature is not a derivative liability. The outstanding balance on this note was $50,000 as of March 31, 2024.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 
v3.24.2
Convertible Promissory Notes and Loans Payable
 3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Convertible Promissory Notes and Loans Payable

Note 5. Convertible Promissory Notes and Loans Payable

 

Convertible Promissory Notes

 

Convertible promissory notes consisted of the following at March 31, 2024:

 

Origination Date  Maturity Date  Interest Rate   Origination Principal Balance   Original Discount Balance   Period End Principal
Balance		   Period End Discount
Balance		   Period End Balance,
Net		   Accrued Interest Balance   Reg. 
9/03/21  9/03/24   8%   346,500    (12,355)  $346,500   $(2,186)  $344,314           -    (1)
9/03/21  9/03/24   8%   3,500    (125)   3,500    (21)   3,479    -    (2)
9/30/22  Demand   8%   66,793    (19,245)   63,746    (9,658)   54,088    -    (3)
                     $413,746   $(11,865)  $401,881   $-      

 

A breakdown of current and long-term amounts due are as follows for the convertible promissory notes as of March 31, 2024:

 

   Summit
Holdings V,
LLC Note		   Tierra Vista
Partners,
LLC Note		   Robert
Carmichael
Note		    Total 
                  
2024   346,500    3,500    63,746     413,746 
Discount   (2,186)   (21)   (9,658)    (11,865)
Total Loan Payments  $344,314   $3,479   $54,088    $401,881 
Current Portion of Loan Payable  $(344,314)  $(3,479)  $(54,088)   $(401,881)
Non-Current Portion of Loan Payable  $-   $-   $-    $- 

 

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

 

   Payment Amortization 
      
2024   346,500 
Total Note Payments  $346,500 
Current portion of note payable   (346,500)
Non-Current Portion of Notes Payable  $- 

 

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

 

   Payment Amortization 
      
2024   3,500 
Total Note Payments  $3,500 
Current portion of note payable   (3,500)
Non-Current Portion of Notes Payable  $- 

 

(3) On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. There is no amortization schedule for the note and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day VWAP of the Company’s stock prior to the quarterly interest payment date. This note is classified as a current liability as the note holder may demand payment or convert the outstanding principal at a conversion price of $0.021 per share at any time. The Company recorded $19,250 for the beneficial conversion feature.

 

Loans Payable

   Mercedes BMG (1)   Navitas BLU3 (2)   NFS SSI (3)   Navitas 2022
BLU3 (4)		   Navitas 2024
BLU3 (5)		   Total 
2024 (9 months)  $11,168   $12,596   $27,412   $16,131   $

3,791

   $71,097 
2025   5,895    19,556    5,036    25,143    

5,604

    61,234 
2026   -    6,339    -    -    6,304    12,643 
2027   -        -    -    

7,092

    7,091 

Thereafter

   -    -    -    -    8,685    8,685 
Total Loan Payments  $17,063   $38,492   $32,448   $41,273   $31,476   $160,751 
Current Portion of Loan Payable  $(11,168)  $(16,967)  $(27,412)  $(21,801)  $(5,131)  $(82,478)
Non-Current Portion of Loan Payable  $5,895   $21,525   $5,036   $19,472   $

26,345

   $78,273 

 

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

 

 
v3.24.2
Goodwill and Intangible Assets, Net
 3 Months Ended
Mar. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets, Net

Note 6. Goodwill and Intangible Assets, Net

 

The following table sets for the changes in the carrying amount of the Company’s Goodwill for the three months ended March 31, 2024.

 

   2024 
Balance, January 1  $249,986 
Addition:   - 
Balance, March 31  $249,986 

 

The Company performed an evaluation of the value of goodwill at December 31, 2023. Based upon this evaluation it was determined that there should be no adjustment to goodwill. There has been nothing noted during the three months ended March 31, 2024 that would indicate that the value of goodwill should change through that date.

 

The following table sets for the components of the Company’s intangible assets at March 31, 2024:

 

   Amortization
Period (Years)		   Cost   Accumulated Amortization   Net Book Value 
                 
Intangible Assets Subject to amortization                    
Trademarks   15   $121,000   $(20,794)  $100,206 
Customer Relationships   10    600,000    (155,000)   445,000 
Non-Compete Agreements   5    22,000    (11,367)   10,633 
Total       $743,000    $ (187,161)   $555,839 

 

The aggregate amortization remaining on the intangible assets as of March 31, 2024 is a follows:

   Intangible
Amortization		 
2024 (9 months remaining)   54,350 
2025   72,467 
2026   71,367 
2027   68,066 
2028   

68,066

 
Thereafter   

221,523

 
Total  $555,839 

 

Amortization expense for amortizable intangible assets for each of the three months ended March 31, 2024 and 2023 was 18,117.

 
v3.24.2
Stockholders’ Equity
 3 Months Ended
Mar. 31, 2024
Equity [Abstract]  
Stockholders’ Equity

Note 7. Stockholders’ Equity

 

Common Stock

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Preferred Stock

 

During the second quarter of 2010, the holders of the majority of the Company’s outstanding shares of common stock approved an amendment to the Company’s Articles of Incorporation authorizing the issuance of 10,000,000 shares of blank check preferred stock. The blank check preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by the Board of Directors of the Company from time to time in accordance with the provisions of the Florida Business Corporation Act. In April 2011, the Board of Directors designated 425,000 shares as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into a share of the Company’s common stock at any time at the option of the holder at a conversion price of $18.23 per share. Holders of shares of Series A Convertible Preferred Stock are entitled to 250 votes for each share held. The Company’s common stock and Series A Convertible Preferred Stock vote together on any matters submitted to our shareholders. As of March 31, 2024, and December 31, 2023, 425,000 shares of Series A Convertible Preferred Stock are issued and outstanding and are owned by Robert Carmichael.

 

 

Equity Incentive Plan

 

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

 

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

 

Equity Compensation Plan Information as of March 31, 2024:

 

   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   3,275,000   $0.0401    21,680,882 
Equity Compensation Plans Not Approved by Security Holders   64,164,637    0.0293    — 
Total   67,439,637   $0.0299    21,680,882 

 

Options

 

The Company has issued options to purchase approximately 67,439,637 shares of its common stock at an average exercise price of $0.0299 with a fair value of approximately $37,000. For the three months ended March 31, 2024, and the year ended December 31, 2023, the Company issued no options to purchase shares.

 

For the three months ended March 31, 2024 and 2023, the Company recognized an expense of approximately $12,400 and $11,000, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying Consolidated Statement of Operations) determined by application of a Black-Scholes option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility. As of March 31, 2024, the Company had approximately $1,066,753 of unrecognized pre-tax non-cash compensation expense related to performance based options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 1.5 years. The Company uses straight-line amortization of compensation expense over the requisite service period for time-based options. For performance-based options the Company evaluates the likelihood of a vesting qualification being met, and will establish the expense based on that evaluation. The maximum contractual term of the Company’s stock options is 5 years. The Company recognizes forfeitures and expirations as they occur. Options to purchase approximately 42,323,387 shares of common stock have vested as of March 31, 2024.

 

 

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

 

   Three Months ended March 31, 
   2024   2023 
Expected volatility   172.0% - 346.4%   172.0 – 346.4%
Expected term   1.5 – 5.0 Years    1.5 – 5.0 Years 
Risk-free interest rate   0.16% - 4.64%   0.16% - 4.64%
Forfeiture rate   0.17%   0.17%

 

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

 

A summary of the status of the Company’s outstanding stock options as of March 31, 2024 and December 31, 2023 and changes during the periods ending on such dates is as follows:

 

   Number of  

Weighted

Average

Exercise

  

Weighted

Average

Remaining

Contractual

  

Aggregate

Intrinsic

 
   Options   Price   Life in Years   Value 
Outstanding at December 31, 2022   238,439,167   $0.0362    1.43               
Granted   -    -           
Forfeited   (170,999,530)   0.0379           
Exercised   -    -           
Cancelled   -    -           
Outstanding – December 31, 2023   67,439,637   $0.0360    1.43      
Exercisable – December 31, 2023   41,057,753   $0.0211    0.81   $- 
                     
Granted   -    -           
Forfeited   -    -           
Exercised   -    -           
Cancelled   -    -           
Outstanding – March 31, 2024   67,439,637   $0.0298    1.26      
Exercisable – March 31, 2024   42,323,387   $0.0217    0.61   $- 

 

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

 

Range of Exercise Price  Number
outstanding
at March 31,
2024		   Weighted
average
remaining
Life		   Weighted
average
exercise
price		   Number
exercisable
at March 31,2024		   Weighted
average
exercise
price		   Weighted
average
remaining
life		 
$ 0.0180 - $0.0225   35,295,237    0.33   $0.0180    35,295,237   $0.0180    0.33 
$ 0.0229 - $0.0325   1,050,000    2.14   $0.0324    1,043,750   $0.0324    2.14 
$ 0.0360 - $0.0425   23,009,400    2.29   $0.0398    5,009,400   $0.0393    2.11 
$ 0.0440 - $0.0531   8,085,000    2.31   $0.0529    975,000   $0.0517    1.46 
Outstanding options   67,439,637    1.26    0.0298    42,323,387    0.0217    0.61 

 

At March 31, 2024, there was approximately $1,066,753 of unrecognized stock option expense which may be recognized only if the full vesting requirements for these options are met.

 

At March 31, 2024, there was approximately $69,001 of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of 0.45 years.

 

 

Warrants

 

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

 

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

 

   Number of  

Weighted

Average

Exercise

  

Weighted

Average

Remaining

Contractual

  

Aggregate

Intrinsic

 
   Warrants   Price   Life in Years   Value 
Outstanding – December 31, 2023   25,684,521   $0.0247    0.93   $24,000 
Granted   -                
Exercised   -                
Forfeited or Expired   -                
Outstanding – March 31, 2024   25,684,521   $0.0247    0.68      
Exercisable – March 31, 2024   25,684,521   $0.0247    0.68   $- 

 
v3.24.2
Commitments and contingencies
 3 Months Ended
Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and contingencies

Note 8. Commitments and contingencies

 

Royalty Agreement

 

On June 30, 2020, the Company entered into Amendment No. 2 to its Patent License Agreement with Setaysha Technical Solutions, LLC (“STS”). The Amendment, among other things, provides that STS provide 30 hours per week of commercialization support for its NextGen licensed products without charge. In consideration therefor, the Company agreed to an increased minimum yearly royalty payment of $60,000 for years 2022, 2023 and 2024, with a yearly fourth quarter reconciliation with earned royalties. In addition, if the Company terminates the Agreement with STS prior to December 31, 2023, the Company is obligated to pay STS $180,000, less cumulative royalties paid in excess of $334,961 for the years 2019 through 2024. Royalty recorded under the Amendment was $67,984 and $34,823 for the three months ended March 31, 2024 and 2023, respectively.

 

 

Consulting and Employment Agreements

 

On August 1, 2021, the Company and Blake Carmichael entered into a three-year employment agreement (the “Blake Carmichael Employment Agreement”) pursuant to which Mr. Carmichael served as Chief Executive Officer of BLU3. In consideration for his services, Blake Carmichael received (i) an annual base salary of $120,000, payable in accordance with the customary payroll practices of the Company, (ii) a cash bonus equal to 5% of the net income of BLU3, payable quarterly, beginning with the first full calendar quarter after the execution of the agreement, and (iii) upon execution of the Carmichael Employment Agreement, a non-qualified five-year stock option to purchase 3,759,400 shares at $0.0399, 33.3% of which shares vest immediately, 33.3% vest on the second anniversary, and 33.3% vest on the third anniversary of the agreement. In addition, Blake Carmichael is entitled to receive a five-year stock option to purchase up to 18,000,000 shares of common stock at an exercise price of $0.0399 per share that will vest upon annual financial metrics based upon a revenue measurement, expediency measurement and an EBITDA measurement. A measurement was made for the three months ended March 31, 2024 resulting in no additional expense since the vesting criteria were not met.

 

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

 

In addition, Mrs. Buban is entitled to receive a five-year stock option to purchase up to 7,110,000 shares of common stock of the Company at an exercise price of $0.0531 per share, which vests upon the attainment of certain defined annual financial metrics, as set forth in the Buban Employment Agreement. A measurement was made for the three months ended March 31, 2024 and no expense was recorded based upon the vesting criteria not being met.

 

 

On January 17, 2022, the Company entered into an agreement with The Crone Law Group, PC (“CLG”) for the provision of legal services. In consideration therefore, the Company will pay CLG a monthly flat fee of $3,000 for SEC reporting work and its normal hourly rate for other legal work and issued 1,000,000 shares of common stock with a fair market value of $27,500 to CLG.

 

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

 

On May 2, 2022, LBI, entered into a lease assignment agreement with Gold Coast Scuba, LLC and Vicnsons Realty Group, LLC whereby LBI is the assignee of a three year lease for the property located at 259 Commercial Blvd., Suites 2 and 3 in Lauderdale-By-The Sea, Florida for $2,816 per month base rent. The lease expired on March 31, 2023 and LBI is currently renting on a month to month basis. LBI has the option to renew the lease for a two year term with an increase of base rent of 3.5%.

 

On September 14, 2022, SSI entered into a sixty-month lease renewal for its facility in Huntington Beach, California commencing on February 1, 2022 with base rent of approximately $17,550 per month for the first 24 months with an annual escalation clause of 3.0% thereafter. Obligations under the lease are guaranteed by the Company. The Company paid an additional security deposit of $10,727 upon entering into the lease.

 

On September 30, 2022, SSI entered into a sublease of its facility in Huntington Beach, California with Camburg Engineering, Inc. (“Tenant”) commencing October 1, 2022, The term of the sublease is through December 31, 2023, with a base monthly rent of $2,247 for the first twelve months with a 3% annual escalation thereafter. The Tenant also pays a monthly common area maintenance of $112. The Tenant provided a security deposit of $2,426 upon entering into the sublease.

 

On December 22, 2022, the U.S. Consumer Products Safety Commission (the “CPSC”) issued a voluntary recall notice for the Nomad tankless dive system, which is distributed by BLU3, Inc. As part of the recall procedure, the CPSC has approved the Company’s proposed remedy for the recall and BLU3 received units back from consumers to repair affected Nomad units. The Company has evaluated the costs of this recall and has deemed it necessary to set an allowance of $160,500 for such costs. During the twelve months ended December 31, 2023 the Company repaired and returned 653 units to customers resulting in a reduction of the reserve of $93,161 for the twelve months ended December 31, 2023.

 
v3.24.2
Subsequent Events
 3 Months Ended
Mar. 31, 2024
Subsequent Events [Abstract]  
Subsequent Events

Note 9. Subsequent Events

 

Effective May 21, 2024, Christopher Constable resigned as a member of the Company’s board of directors. As described in the resignation letter submitted by Mr. Constable, his termination was, among other reasons, the result of the Company having filed its Annual Report on Form 10-K for the year ended December 31, 2023 with the Securities and Exchange Commission without obtaining authorization from Mr. Constable.
v3.24.2
Basis of Presentation and Summary of Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The balance sheet as of December 31, 2023 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a broader discussion of the Company’s business and the risks inherent in such business. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending December 31, 2024.

 

 
Principles of Consolidation

Principles of Consolidation

 

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

 
Use of estimates

Use of estimates

 

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

 
Cash and cash equivalents

Cash and cash equivalents

 

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

 

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per EIN. At March 31, 2024 and December 31, 2023, the Company had approximately $0 and $25,000 in excess of the FDIC insured limit.

 
Accounts receivable

Accounts receivable

 

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

 

In accordance with ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2024, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its lending practices have not changed significantly over time). As a result, management applied the applicable credit loss rates to determine the expected credit loss estimate for each aging category. Accordingly, the allowance for expected credit losses at March 31, 2024 and December 31, 2023 totaled $52,660 and $54,427, respectively.

 
Inventory

Inventory

 

Inventory consists of the following:

   March 31, 2024 (unaudited)   December 31, 2023 
         
Raw materials  $1,116,667   $1,063,888 
Work in process   57,460    63,258 
Finished goods   926,003    1,004,160 
Rental Equipment   55,893    55,893 
Allowance reserve   (188,751)   (188,392)
Inventory, net  $1,967,272   $1,998,807 

 

 
Revenue Recognition

Revenue Recognition

 

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

 

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

 

   2024   2023 
   Three months ended March 31 
   2024   2023 
   (unaudited)   (unaudited) 
Revenues  $1,492,299   $1,427,963 
Revenues - related parties   115,223    211,090 
Total Revenues  $1,607,522   $1,639,053 

 

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:

   2024   2023 
   Three months ended March 31 
   2024   2023 
   (unaudited)   (unaudited) 
Cost of revenues  $889,918   $1,071,068 
Cost of revenues - related parties   53,124    108,925 
Royalties expense - related parties   9,061    10,212 
Royalties expense   67,984    34,823 
Total cost of revenues  $1,020,087   $1,225,028 

 

 
Lease Accounting

Lease Accounting

 

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

 

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

 

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

 

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

 

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

 

For the three months ended March 31, 2024, and March 31,2023, cash paid for operating lease liabilities was $66,075 and $72,399, respectively.

 

Supplemental balance sheet information related to leases was as follows:

Operating Leases  March 31, 2024 
    (unaudited) 
Right-of-use assets  $777,478 
Current lease liabilities  $227,008 
Non-current lease liabilities   581,986 
Total lease liabilities  $808,994 

 
Stock-Based Compensation

Stock-Based Compensation

 

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

 

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

 

 
Derivatives

Derivatives

 

The accounting treatment of derivative financial instruments requires that the Company record certain warrants and embedded conversion options at their fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into certain note agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy, by earliest issuance date, in accordance with ASC 815-40-35-12 whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors, as long as the certain variable issuance terms in certain convertible instruments exist. As of March 31, 2024 and December 31, 2023, the Company did not have any derivative liabilities.

 
Loss per share of common stock

Loss per share of common stock

 

Basic loss per share excludes any dilutive effects of options, warrants and convertible securities. Basic earnings per share is computed using the weighted- average number of outstanding common shares during the applicable period. Diluted loss per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive. At March 31, 2024, and March 31, 2023, 107,761,177 and 274,150,814 shares, respectively, of potentially dilutive shares were not recognized as their inclusion would be anti-dilutive. These shares reflect shares potentially issuable under convertible notes, outstanding warrants, outstanding stock options and the conversion of preferred stock.

 
Recent accounting pronouncements

Recent accounting pronouncements

 

ASU 2016-13 Current Expected Credit Loss (ASC326)

 

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

 

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

 

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

 

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption or are not applicable.
v3.24.2
Basis of Presentation and Summary of Significant Accounting Policies (Tables)
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Schedule of Inventory

Inventory consists of the following:

   March 31, 2024 (unaudited)   December 31, 2023 
         
Raw materials  $1,116,667   $1,063,888 
Work in process   57,460    63,258 
Finished goods   926,003    1,004,160 
Rental Equipment   55,893    55,893 
Allowance reserve   (188,751)   (188,392)
Inventory, net  $1,967,272   $1,998,807 
Schedule of Related Party and Non-Related Party Revenue

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

 

   2024   2023 
   Three months ended March 31 
   2024   2023 
   (unaudited)   (unaudited) 
Revenues  $1,492,299   $1,427,963 
Revenues - related parties   115,223    211,090 
Total Revenues  $1,607,522   $1,639,053 
Schedule of Related Party and Non-Related Party Cost of Revenue

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:

   2024   2023 
   Three months ended March 31 
   2024   2023 
   (unaudited)   (unaudited) 
Cost of revenues  $889,918   $1,071,068 
Cost of revenues - related parties   53,124    108,925 
Royalties expense - related parties   9,061    10,212 
Royalties expense   67,984    34,823 
Total cost of revenues  $1,020,087   $1,225,028 
Schedule of Supplemental Balance Sheet Information

Supplemental balance sheet information related to leases was as follows:

Operating Leases  March 31, 2024 
    (unaudited) 
Right-of-use assets  $777,478 
Current lease liabilities  $227,008 
Non-current lease liabilities   581,986 
Total lease liabilities  $808,994 
v3.24.2
Convertible Promissory Notes and Loans Payable (Tables)
 3 Months Ended
Mar. 31, 2024
Debt Instrument [Line Items]  
Schedule of Convertible Debentures

Convertible promissory notes consisted of the following at March 31, 2024:

 

Origination Date  Maturity Date  Interest Rate   Origination Principal Balance   Original Discount Balance   Period End Principal
Balance		   Period End Discount
Balance		   Period End Balance,
Net		   Accrued Interest Balance   Reg. 
9/03/21  9/03/24   8%   346,500    (12,355)  $346,500   $(2,186)  $344,314           -    (1)
9/03/21  9/03/24   8%   3,500    (125)   3,500    (21)   3,479    -    (2)
9/30/22  Demand   8%   66,793    (19,245)   63,746    (9,658)   54,088    -    (3)
                     $413,746   $(11,865)  $401,881   $-      
Schedule Convertible Promissory Notes

A breakdown of current and long-term amounts due are as follows for the convertible promissory notes as of March 31, 2024:

 

   Summit
Holdings V,
LLC Note		   Tierra Vista
Partners,
LLC Note		   Robert
Carmichael
Note		    Total 
                  
2024   346,500    3,500    63,746     413,746 
Discount   (2,186)   (21)   (9,658)    (11,865)
Total Loan Payments  $344,314   $3,479   $54,088    $401,881 
Current Portion of Loan Payable  $(344,314)  $(3,479)  $(54,088)   $(401,881)
Non-Current Portion of Loan Payable  $-   $-   $-    $- 

 

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

   Mercedes BMG (1)   Navitas BLU3 (2)   NFS SSI (3)   Navitas 2022
BLU3 (4)		   Navitas 2024
BLU3 (5)		   Total 
2024 (9 months)  $11,168   $12,596   $27,412   $16,131   $

3,791

   $71,097 
2025   5,895    19,556    5,036    25,143    

5,604

    61,234 
2026   -    6,339    -    -    6,304    12,643 
2027   -        -    -    

7,092

    7,091 

Thereafter

   -    -    -    -    8,685    8,685 
Total Loan Payments  $17,063   $38,492   $32,448   $41,273   $31,476   $160,751 
Current Portion of Loan Payable  $(11,168)  $(16,967)  $(27,412)  $(21,801)  $(5,131)  $(82,478)
Non-Current Portion of Loan Payable  $5,895   $21,525   $5,036   $19,472   $

26,345

   $78,273 

 

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

   Payment Amortization 
      
2024   346,500 
Total Note Payments  $346,500 
Current portion of note payable   (346,500)
Non-Current Portion of Notes Payable  $- 
Convertible Debenture [Member] | Tierra Vista Partners, LLC [Member]  
Debt Instrument [Line Items]  
Schedule of Future Amortization of Loans Payable

   Payment Amortization 
      
2024   3,500 
Total Note Payments  $3,500 
Current portion of note payable   (3,500)
Non-Current Portion of Notes Payable  $- 
v3.24.2
Goodwill and Intangible Assets, Net (Tables)
 3 Months Ended
Mar. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Changes in Goodwill

The following table sets for the changes in the carrying amount of the Company’s Goodwill for the three months ended March 31, 2024.

 

   2024 
Balance, January 1  $249,986 
Addition:   - 
Balance, March 31  $249,986 
Summary of Intangible Assets

The following table sets for the components of the Company’s intangible assets at March 31, 2024:

 

   Amortization
Period (Years)		   Cost   Accumulated Amortization   Net Book Value 
                 
Intangible Assets Subject to amortization                    
Trademarks   15   $121,000   $(20,794)  $100,206 
Customer Relationships   10    600,000    (155,000)   445,000 
Non-Compete Agreements   5    22,000    (11,367)   10,633 
Total       $743,000    $ (187,161)   $555,839 
Schedule of Estimated Intangible Assets Amortization Expense

The aggregate amortization remaining on the intangible assets as of March 31, 2024 is a follows:

   Intangible
Amortization		 
2024 (9 months remaining)   54,350 
2025   72,467 
2026   71,367 
2027   68,066 
2028   

68,066

 
Thereafter   

221,523

 
Total  $555,839 
v3.24.2
Stockholders’ Equity (Tables)
 3 Months Ended
Mar. 31, 2024
Equity [Abstract]  
Schedule of Equity Compensation Plan Information

Equity Compensation Plan Information as of March 31, 2024:

 

   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   3,275,000   $0.0401    21,680,882 
Equity Compensation Plans Not Approved by Security Holders   64,164,637    0.0293    — 
Total   67,439,637   $0.0299    21,680,882 
Schedule of Valuation Assumptions of Options

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

 

   Three Months ended March 31, 
   2024   2023 
Expected volatility   172.0% - 346.4%   172.0 – 346.4%
Expected term   1.5 – 5.0 Years    1.5 – 5.0 Years 
Risk-free interest rate   0.16% - 4.64%   0.16% - 4.64%
Forfeiture rate   0.17%   0.17%
Schedule of Outstanding Stock Option Activity

A summary of the status of the Company’s outstanding stock options as of March 31, 2024 and December 31, 2023 and changes during the periods ending on such dates is as follows:

 

   Number of  

Weighted

Average

Exercise

  

Weighted

Average

Remaining

Contractual

  

Aggregate

Intrinsic

 
   Options   Price   Life in Years   Value 
Outstanding at December 31, 2022   238,439,167   $0.0362    1.43               
Granted   -    -           
Forfeited   (170,999,530)   0.0379           
Exercised   -    -           
Cancelled   -    -           
Outstanding – December 31, 2023   67,439,637   $0.0360    1.43      
Exercisable – December 31, 2023   41,057,753   $0.0211    0.81   $- 
                     
Granted   -    -           
Forfeited   -    -           
Exercised   -    -           
Cancelled   -    -           
Outstanding – March 31, 2024   67,439,637   $0.0298    1.26      
Exercisable – March 31, 2024   42,323,387   $0.0217    0.61   $- 
Summary of Exercise Price of Employee Stock Options Outstanding

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

 

Range of Exercise Price  Number
outstanding
at March 31,
2024		   Weighted
average
remaining
Life		   Weighted
average
exercise
price		   Number
exercisable
at March 31,2024		   Weighted
average
exercise
price		   Weighted
average
remaining
life		 
$ 0.0180 - $0.0225   35,295,237    0.33   $0.0180    35,295,237   $0.0180    0.33 
$ 0.0229 - $0.0325   1,050,000    2.14   $0.0324    1,043,750   $0.0324    2.14 
$ 0.0360 - $0.0425   23,009,400    2.29   $0.0398    5,009,400   $0.0393    2.11 
$ 0.0440 - $0.0531   8,085,000    2.31   $0.0529    975,000   $0.0517    1.46 
Outstanding options   67,439,637    1.26    0.0298    42,323,387    0.0217    0.61 
Schedule of Warrants Activity

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

 

   Number of  

Weighted

Average

Exercise

  

Weighted

Average

Remaining

Contractual

  

Aggregate

Intrinsic

 
   Warrants   Price   Life in Years   Value 
Outstanding – December 31, 2023   25,684,521   $0.0247    0.93   $24,000 
Granted   -                
Exercised   -                
Forfeited or Expired   -                
Outstanding – March 31, 2024   25,684,521   $0.0247    0.68      
Exercisable – March 31, 2024   25,684,521   $0.0247    0.68   $- 
v3.24.2
Schedule of Inventory (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Accounting Policies [Abstract]    
Raw materials $ 1,116,667 $ 1,063,888
Work in process 57,460 63,258
Finished goods 926,003 1,004,160
Rental Equipment 55,893 55,893
Allowance reserve (188,751) (188,392)
Inventory, net $ 1,967,272 $ 1,998,807
v3.24.2
Schedule of Related Party and Non-Related Party Revenue (Details) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Total Revenues $ 1,607,522 $ 1,639,053
Nonrelated Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Total Revenues 1,492,299 1,427,963
Related Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Total Revenues $ 115,223 $ 211,090
v3.24.2
Schedule of Related Party and Non-Related Party Cost of Revenue (Details) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Total cost of revenues $ 1,020,087 $ 1,225,028
Nonrelated Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Cost of revenues 889,918 1,071,068
Royalties expense 67,984 34,823
Related Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Cost of revenues 53,124 108,925
Royalties expense $ 9,061 $ 10,212
v3.24.2
Schedule of Supplemental Balance Sheet Information (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Accounting Policies [Abstract]    
Right-of-use assets $ 777,478 $ 844,083
Current lease liabilities 227,008 259,154
Non-current lease liabilities 581,986 $ 615,915
Total lease liabilities $ 808,994  
v3.24.2
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Property, Plant and Equipment [Line Items]      
Cash FDIC insured amount $ 0   $ 25,000
Allowance for expected credit losses $ 52,660   $ 54,427
Lease description The Company’s leases generally have terms that range from three years for equipment and five to twenty years for property    
Cash paid for operating lease liabilities $ 66,075 $ 72,399  
Antidilutive earnings per share, amount 107,761,177 274,150,814  
Maximum [Member]      
Property, Plant and Equipment [Line Items]      
Cash FDIC insured amount $ 250,000    
v3.24.2
Going Concern (Details Narrative) - USD ($)
 3 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Net loss $ 335,716  
Accumulated deficit 18,021,326 $ 17,685,610
Working capital surplus $ 1,028  
v3.24.2
Related Party Transactions (Details Narrative) - USD ($)
 3 Months Ended
Mar. 31, 2024
Feb. 05, 2024
Dec. 31, 2023
Nov. 14, 2023
Sep. 30, 2023
Sep. 14, 2023
Jun. 30, 2023
Mar. 31, 2023
Feb. 18, 2023
Sep. 30, 2022
Mar. 31, 2024
Mar. 31, 2023
Royalties percentage                     2.50%  
Outstsanding principal balance $ 401,881                   $ 401,881  
Debt instrument, convertible, conversion price                   $ 0.021    
Discount rate value of weighted average price                   35.00%    
Debt instrument beneficial conversion feature                   $ 19,250    
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.0299                   $ 0.0299  
License Agreement [Member]                        
Royalty Expense                     $ 9,061 $ 10,212
Accrued Royalties $ 7,385   $ 2,238               7,385  
Robert Carmichael [Member]                        
Stock issued during period, shares 61,677   61,677   61,677   61,677 61,204        
Stock issued during period, shares $ 1,287   $ 1,287   $ 1,287   $ 1,287 $ 1,336        
Robert Carmichael [Member] | Live Blue, Inc. [Member]                        
Outstsanding principal balance [1] 63,746                   63,746  
Payments productive assets                     3,047  
Robert Carmichael [Member] | BLU3, Inc. [Member]                        
Interest rate           8.00%            
Outstsanding principal balance [1] 50,000                   50,000  
Debt instrument, convertible, conversion price           $ 0.01351            
Discount rate value of weighted average price           35.00%            
Debt instrument beneficial conversion feature           $ 0            
Principal amount           $ 50,000            
Charles Hyatt [Member] | BLU3, Inc. [Member]                        
Interest rate   9.90%   9.90%                
Principal amount   $ 280,000   $ 150,000                
Debt instrument maturity date   Aug. 06, 2024   May 07, 2024                
Default interest   18.00%   18.00%                
Related Party [Member]                        
Accounts receivable 23,105   32,130               23,105  
Accounts payable 52,173   46,578               52,173  
Related Party [Member] | Robert Carmichael [Member]                        
Accounts payable     12,019                  
Related Party [Member] | LLC 940 [Member]                        
Accounts payable 23,713   29,559               23,713  
Related Party [Member] | Robert Carmichael [Member]                        
Accounts payable 18,460                   18,460  
Related Party [Member] | Blake Carmichael [Member]                        
Accounts payable 10,000   5,000               10,000  
Robert Carmichael [Member] | Board of Directors Chairman [Member]                        
Interest rate                   8.00%    
Outstsanding principal balance                   $ 66,793    
Charles Hyatt [Member] | Warrant [Member]                        
Stock issued during period, shares                 11,428,570      
Class of Warrant or Right, Exercise Price of Warrants or Rights                 $ 0.0175      
Proceeds from Warrant Exercises                 $ 200,000      
Robert Carmichael [Member] | Related Party [Member]                        
Accounts receivable 12,839   17,828               12,839  
Accounts receivable $ 10,266   $ 14,302               $ 10,266  
Robert Carmichael [Member] | Revenue Benchmark [Member] | Product Concentration Risk [Member]                        
Concentration risk percentage                     7.20% 12.90%
[1] On June 29, 2022, SSI executed an equipment financing agreement with NFS Leasing (“NFS Leasing”) to secure replacement production molds. The total purchase price of the molds was $84,500 of which $63,375 was financed by NFS Leasing on August 15, 2022. The financing agreement has a 33 month term beginning in August 2022 with a monthly payment of $2,571. The financing agreement contains customary events of default, is guaranteed by the Company and NFS Leasing has a lien on all of the assets of SSI. The loan balance as of March 31, 2024 and December 31, 2023 was $32,448 and $38,607, respectively.
v3.24.2
Schedule of Convertible Debentures (Details)
 3 Months Ended
Mar. 31, 2024
USD ($)
Debt Instrument [Line Items]  
Period End Principal Balance $ 413,746
Period End Discount Balance (11,865)
Period End Balance Net 401,881
Accrued Interest Balance
Convertible Debenture One [Member]  
Debt Instrument [Line Items]  
Origination Date Sep. 03, 2021 [1]
Maturity Date Sep. 03, 2024 [1]
Interest Rate 8.00% [1]
Origination Principal Balance $ 346,500 [1]
Original Discount Balance (12,355) [1]
Period End Principal Balance 346,500 [1]
Period End Discount Balance (2,186) [1]
Period End Balance Net 344,314 [1]
Accrued Interest Balance [1]
Convertible Debenture Two [Member]  
Debt Instrument [Line Items]  
Origination Date Sep. 03, 2021 [2]
Maturity Date Sep. 03, 2024 [2]
Interest Rate 8.00% [2]
Origination Principal Balance $ 3,500 [2]
Original Discount Balance (125) [2]
Period End Principal Balance 3,500 [2]
Period End Discount Balance (21) [2]
Period End Balance Net 3,479 [2]
Accrued Interest Balance [2]
Convertible Debenture Three [Member]  
Debt Instrument [Line Items]  
Origination Date Sep. 30, 2022 [3]
Interest Rate 8.00% [3]
Origination Principal Balance $ 66,793 [3]
Original Discount Balance (19,245) [3]
Period End Principal Balance 63,746 [3]
Period End Discount Balance (9,658) [3]
Period End Balance Net 54,088 [3]
Accrued Interest Balance [3]
Debt maturity date, description Demand [3]
[1] On August 21, 2020, the Company executed an installment sales contract with Mercedes Benz Coconut Creek for the purchase of a 2019 Mercedes Benz Sprinter delivery van. The installment agreement is for $55,841 with a zero interest rate payable over 60 months with a monthly payment of $931 and is personally guaranteed by Mr. Carmichael. The loan balance as of March 31, 2024 was $17,063 and $19,855 as of December 31, 2023.
[2] On May 19, 2021, BLU3 executed an equipment finance agreement with Navitas Credit Corp. (“Navitas”) to finance the purchase of certain plastic molding equipment. The amount financed is $75,764 payable over 60 equal monthly installments of $1,611. The equipment finance agreement contains customary events of default. The loan balance as of March 31, 2024 was $38,492 and $42,525 as of December 31, 2023.
[3] On June 29, 2022, SSI executed an equipment financing agreement with NFS Leasing (“NFS Leasing”) to secure replacement production molds. The total purchase price of the molds was $84,500 of which $63,375 was financed by NFS Leasing on August 15, 2022. The financing agreement has a 33 month term beginning in August 2022 with a monthly payment of $2,571. The financing agreement contains customary events of default, is guaranteed by the Company and NFS Leasing has a lien on all of the assets of SSI. The loan balance as of March 31, 2024 and December 31, 2023 was $32,448 and $38,607, respectively.
v3.24.2
Schedule Convertible Promissory Notes (Details)
Mar. 31, 2024
USD ($)
2024 $ 71,097
Discount (11,865)
Total Loan Payments 160,751
Current Portion of Loan Payable (82,478)
Non-Current Portion of Loan Payable 78,273
Convertible Debt Securities [Member]  
2024 413,746
Discount (11,865)
Total Loan Payments 401,881
Current Portion of Loan Payable (401,881)
Non-Current Portion of Loan Payable
Summit Holdings VLLC Note [Member] | Convertible Debt Securities [Member]  
2024 346,500
Discount (2,186)
Total Loan Payments 344,314
Current Portion of Loan Payable (344,314)
Non-Current Portion of Loan Payable
TierraVista Partners LLC Note [Member] | Convertible Debt Securities [Member]  
2024 3,500
Discount (21)
Total Loan Payments 3,479
Current Portion of Loan Payable (3,479)
Non-Current Portion of Loan Payable
Robert Carmichael Note [Member] | Convertible Debt Securities [Member]  
2024 63,746
Discount (9,658)
Total Loan Payments 54,088
Current Portion of Loan Payable (54,088)
Non-Current Portion of Loan Payable
v3.24.2
Schedule of Convertible Debentures (Details) (Parenthetical) - USD ($)
Sep. 30, 2022
Sep. 03, 2021
Mar. 31, 2024
Debt Instrument [Line Items]      
Convertible debt     $ 401,881
Debt conversion price per share $ 0.021    
Debt beneficial conversion feature $ 19,250    
Convertible Notes Payable [Member] | Robert Carmichael [Member]      
Debt Instrument [Line Items]      
Convertible debt $ 66,793    
Debt conversion price per share $ 0.021    
Debt beneficial conversion feature $ 19,250    
Interest rate 8.00%    
Convertible Notes Payable [Member] | Summit Holding V, LLC [Member]      
Debt Instrument [Line Items]      
Interest rate   8.00%  
Convertible debt   $ 346,500  
Debt instrument payment rate percentage   50.00%  
Debt conversion price per share   $ 0.051272  
Debt beneficial conversion feature   $ 12,355  
Convertible Notes Payable [Member] | Tierra Vista Partners, LLC [Member]      
Debt Instrument [Line Items]      
Interest rate   8.00%  
Convertible debt   $ 3,500  
Debt instrument payment rate percentage   50.00%  
Debt conversion price per share   $ 0.051272  
Debt beneficial conversion feature   $ 125  
v3.24.2
Schedule of Future Amortization of Notes Payable (Details) - USD ($)
Mar. 31, 2024
Sep. 03, 2021
Debt Instrument [Line Items]    
2024 $ 61,234  
Total Note Payments 160,751  
2024 71,097  
Current portion of note payable (82,478)  
Non-Current Portion of Notes Payable $ 78,273  
Convertible Notes Payable [Member] | Summit Holding V, LLC [Member]    
Debt Instrument [Line Items]    
2024   $ 346,500
Total Note Payments   346,500
Current portion of note payable   (346,500)
Non-Current Portion of Notes Payable  
Convertible Notes Payable [Member] | Tierra Vista Partners, LLC [Member]    
Debt Instrument [Line Items]    
Total Note Payments   3,500
2024   3,500
Current portion of note payable   (3,500)
Non-Current Portion of Notes Payable  
v3.24.2
Schedule of Future Amortization of Loans Payable (Details)
Mar. 31, 2024
USD ($)
2024 (9 months) $ 71,097
2025 61,234
2026 12,643
2027 7,091
Thereafter 8,685
Total Note Payments 160,751
Current Portion of Loan Payable (82,478)
Non-Current Portion of Loan Payable 78,273
Mercedes Benz [Member]  
2024 (9 months) 11,168 [1]
2025 5,895 [1]
2026 [1]
2027 [1]
Thereafter [1]
Total Note Payments 17,063 [1]
Current Portion of Loan Payable (11,168) [1]
Non-Current Portion of Loan Payable 5,895 [1]
Navitas BLU 3 [Member]  
2024 (9 months) 12,596 [2]
2025 19,556 [2]
2026 6,339 [2]
Thereafter [2]
Total Note Payments 38,492 [2]
Current Portion of Loan Payable (16,967) [2]
Non-Current Portion of Loan Payable 21,525 [2]
NFS SSI [Member]  
2024 (9 months) 27,412 [3]
2025 5,036 [3]
2026 [3]
2027 [3]
Thereafter [3]
Total Note Payments 32,448 [3]
Current Portion of Loan Payable (27,412) [3]
Non-Current Portion of Loan Payable 5,036 [3]
Navitas 2022 BLU3 [Member]  
2024 (9 months) 16,131 [4]
2025 25,143 [4]
2026 [4]
2027 [4]
Thereafter [4]
Total Note Payments 41,273 [4]
Current Portion of Loan Payable (21,801) [4]
Non-Current Portion of Loan Payable 19,472 [4]
Navitas B L U 3 Two [Member]  
2024 (9 months) 3,791 [5]
2025 5,604 [5]
2026 6,304 [5]
2027 7,092 [5]
Thereafter 8,685 [5]
Total Note Payments 31,476 [5]
Current Portion of Loan Payable (5,131) [5]
Non-Current Portion of Loan Payable $ 26,345 [5]
[1] On August 21, 2020, the Company executed an installment sales contract with Mercedes Benz Coconut Creek for the purchase of a 2019 Mercedes Benz Sprinter delivery van. The installment agreement is for $55,841 with a zero interest rate payable over 60 months with a monthly payment of $931 and is personally guaranteed by Mr. Carmichael. The loan balance as of March 31, 2024 was $17,063 and $19,855 as of December 31, 2023.
[2] On May 19, 2021, BLU3 executed an equipment finance agreement with Navitas Credit Corp. (“Navitas”) to finance the purchase of certain plastic molding equipment. The amount financed is $75,764 payable over 60 equal monthly installments of $1,611. The equipment finance agreement contains customary events of default. The loan balance as of March 31, 2024 was $38,492 and $42,525 as of December 31, 2023.
[3] On June 29, 2022, SSI executed an equipment financing agreement with NFS Leasing (“NFS Leasing”) to secure replacement production molds. The total purchase price of the molds was $84,500 of which $63,375 was financed by NFS Leasing on August 15, 2022. The financing agreement has a 33 month term beginning in August 2022 with a monthly payment of $2,571. The financing agreement contains customary events of default, is guaranteed by the Company and NFS Leasing has a lien on all of the assets of SSI. The loan balance as of March 31, 2024 and December 31, 2023 was $32,448 and $38,607, respectively.
[4] On December 12, 2022, BLU3 executed an equipment finance agreement to finance the purchase of certain plastic molding equipment through Navitas. The amount financed is $63,689 payable over 36 equal monthly installments of $2,083. The equipment finance agreement contains customary events of default. The loan balance as of March 31, 2024 was $41,273 and $44,839 as of December 31, 2023.
[5] On February 12, 2024, BLU3 executed an inventory finance agreement to finance the purchase of certain equipment stock through Navitas. The amount financed is $32,274 payable over 60 equal monthly installments of $715. The inventory finance agreement contains customary events of default. The loan balance as of March 31, 2024 was $31,476.
v3.24.2
Schedule of Future Amortization of Loans Payable (Details) (Parenthetical) - USD ($)
 3 Months Ended
Feb. 12, 2024
Dec. 12, 2022
Jun. 29, 2022
May 19, 2021
Aug. 21, 2020
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Proceeds from related party           $ 280,000  
Operating lease, description           The Company’s leases generally have terms that range from three years for equipment and five to twenty years for property    
Mercedes Benz [Member] | Installment Agreement [Member]                
Debt instrument face amount         $ 55,841      
Debt instrument term         60 months      
Debt instrument monthly installment         $ 931      
Loans payable           $ 17,063   $ 19,855
Navitas Credit Corp [Member] | Installment Agreement [Member]                
Debt instrument face amount       $ 75,764        
Debt instrument term       60 months        
Debt instrument monthly installment       $ 1,611        
Loans payable           38,492   42,525
SSI [Member]                
Loans payable           32,448   38,607
Purchase price     $ 84,500          
Proceeds from related party     $ 63,375          
Operating lease, description     The financing agreement has a 33 month term beginning in August 2022 with a monthly payment of $2,571.          
Lessee, finance lease, term of contract     33 months          
Short-term lease payments     $ 2,571          
Navitas 2022 BLU3 [Member]                
Debt instrument face amount   $ 63,689            
Debt instrument term   36 months            
Debt instrument monthly installment   $ 2,083            
Loans payable           41,273   $ 44,839
Navitas B L U 3 Two [Member]                
Debt instrument face amount $ 32,274              
Debt instrument term 60 months              
Debt instrument monthly installment $ 715              
Loans payable           $ 31,476    
v3.24.2
Summary of Changes in Goodwill (Details)
 3 Months Ended
Mar. 31, 2024
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
Balance, January 1 $ 249,986
Addition:
Balance, March 31 $ 249,986
v3.24.2
Summary of Intangible Assets (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]    
Intangible assets, cost $ 743,000  
Accumulated amortization (187,161)  
Intangible assets net book value $ 555,839 $ 573,955
Trademarks [Member]    
Finite-Lived Intangible Assets [Line Items]    
Amortization period (years) 15 years  
Intangible assets, cost $ 121,000  
Accumulated amortization (20,794)  
Intangible assets net book value $ 100,206  
Customer Relationships [Member]    
Finite-Lived Intangible Assets [Line Items]    
Amortization period (years) 10 years  
Intangible assets, cost $ 600,000  
Accumulated amortization (155,000)  
Intangible assets net book value $ 445,000  
Noncompete Agreements [Member]    
Finite-Lived Intangible Assets [Line Items]    
Amortization period (years) 5 years  
Intangible assets, cost $ 22,000  
Accumulated amortization (11,367)  
Intangible assets net book value $ 10,633  
v3.24.2
Schedule of Estimated Intangible Assets Amortization Expense (Details)
Mar. 31, 2024
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2024 (9 months remaining) $ 54,350
2025 72,467
2026 71,367
2027 68,066
2028 68,066
Thereafter 221,523
Total $ 555,839
v3.24.2
Goodwill and Intangible Assets, Net (Details Narrative) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]    
Amortization of intangible assets $ 18,117 $ 18,117
v3.24.2
Schedule of Equity Compensation Plan Information (Details)
Mar. 31, 2024
$ / shares
shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Number of securities to be issued upon exercise of outstanding options, warrants and rights 67,439,637
Weighted average exercise price of outstanding options, warrants and rights | $ / shares $ 0.0299
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column 21,680,882
Equity Compensation Approved Plan [Member] | Security Holders [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Number of securities to be issued upon exercise of outstanding options, warrants and rights 3,275,000
Weighted average exercise price of outstanding options, warrants and rights | $ / shares $ 0.0401
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column 21,680,882
Equity Compensation Not Approved Plan [Member] | Security Holders [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Number of securities to be issued upon exercise of outstanding options, warrants and rights 64,164,637
Weighted average exercise price of outstanding options, warrants and rights | $ / shares $ 0.0293
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column
v3.24.2
Schedule of Valuation Assumptions of Options (Details)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Expected volatility, minimum 172.00% 172.00%
Expected volatility, maximum 346.40% 346.40%
Risk-free interest rate, minimum 0.16% 0.16%
Risk-free interest rate, maximum 4.64% 4.64%
Forfeiture rate 0.17% 0.17%
Minimum [Member]    
Expected term 1 year 6 months 1 year 6 months
Maximum [Member]    
Expected term 5 years 5 years
v3.24.2
Schedule of Outstanding Stock Option Activity (Details) - USD ($)
 3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Dec. 31, 2022
Equity [Abstract]      
Number of options, outstanding, beginning balance 67,439,637 238,439,167  
Weighted average exercise price, outstanding, beginning balance $ 0.0360 $ 0.0362  
Weighted average remaining contractual life in years 1 year 3 months 3 days 1 year 5 months 4 days 1 year 5 months 4 days
Number of options, granted  
Weighted average exercise price, granted  
Number of options, forfeited (170,999,530)  
Weighted average exercise price, granted $ 0.0379  
Number of optionss, exercised  
Weighted average exercise price, exercised  
Number of optionss, cancelled  
Weighted average exercise price, cancelled  
Number of options, exercisable, beginning balance 41,057,753    
Weighted average exercise price, exercisable, beginning balance $ 0.0211    
Weighted average remaining contractual life in years, exercisable 7 months 9 days 9 months 21 days  
Aggregate intrinsic value, exercisable, beginning balance    
Number of options, outstanding, ending balance 67,439,637 67,439,637 238,439,167
Weighted average exercise price, outstanding, ending balance $ 0.0298 $ 0.0360 $ 0.0362
Number of options, exercisable, ending balance 42,323,387 41,057,753  
Weighted average exercise price, exercisable, ending balance $ 0.0217 $ 0.0211  
Aggregate intrinsic value, exercisable, ending balance  
v3.24.2
Summary of Exercise Price of Employee Stock Options Outstanding (Details)
 3 Months Ended
Mar. 31, 2024
$ / shares
shares
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Stock options, outstanding | shares 67,439,637
Stock options, weighted average remaining life 1 year 3 months 3 days
Stock options, weighted average exercise price $ 0.0298
Stock options, excercisable | shares 42,323,387
Stock options, weighted average exercise price, exercisable $ 0.0217
Stock options, weighted average remaining life, exercisable 7 months 9 days
Exercise Price Range One [Member]  
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price, lower range limit $ 0.0180
Exercise price, upper range limit $ 0.0225
Stock options, outstanding | shares 35,295,237
Stock options, weighted average remaining life 3 months 29 days
Stock options, weighted average exercise price $ 0.0180
Stock options, excercisable | shares 35,295,237
Stock options, weighted average exercise price, exercisable $ 0.0180
Stock options, weighted average remaining life, exercisable 3 months 29 days
Exercise Price Range Two [Member]  
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price, lower range limit $ 0.0229
Exercise price, upper range limit $ 0.0325
Stock options, outstanding | shares 1,050,000
Stock options, weighted average remaining life 2 years 1 month 20 days
Stock options, weighted average exercise price $ 0.0324
Stock options, excercisable | shares 1,043,750
Stock options, weighted average exercise price, exercisable $ 0.0324
Stock options, weighted average remaining life, exercisable 2 years 1 month 20 days
Exercise Price Range Three [Member]  
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price, lower range limit $ 0.0360
Exercise price, upper range limit $ 0.0425
Stock options, outstanding | shares 23,009,400
Stock options, weighted average remaining life 2 years 3 months 14 days
Stock options, weighted average exercise price $ 0.0398
Stock options, excercisable | shares 5,009,400
Stock options, weighted average exercise price, exercisable $ 0.0393
Stock options, weighted average remaining life, exercisable 2 years 1 month 9 days
Exercise Price Range Four [Member]  
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price, lower range limit $ 0.0440
Exercise price, upper range limit $ 0.0531
Stock options, outstanding | shares 8,085,000
Stock options, weighted average remaining life 2 years 3 months 21 days
Stock options, weighted average exercise price $ 0.0529
Stock options, excercisable | shares 975,000
Stock options, weighted average exercise price, exercisable $ 0.0517
Stock options, weighted average remaining life, exercisable 1 year 5 months 15 days
v3.24.2
Schedule of Warrants Activity (Details) - Warrant [Member] - USD ($)
 3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]    
Number of warrants, outstanding, beginning balance 25,684,521  
Weighted average exercise price, outstanding, beginning balance $ 0.0247  
Weighted average remaining contractual life in years 8 months 4 days 11 months 4 days
Aggregate intrinsic value, beginning balance $ 24,000  
Number of warrants, granted  
Number of warrants, exercised  
Number of warrants, forfeited or expired  
Number of warrants, outstanding, ending balance 25,684,521 (25,684,521)
Weighted average exercise price, outstanding, ending balance $ 0.0247 $ 0.0247
Number of warrants, exercisable 25,684,521  
Weighted average exercise price, exercisable, ending balance $ 0.0247  
Weighted average remaining contractual life in years, exercisable 8 months 4 days  
Aggregate intrinsic value, ending balance $ 24,000
v3.24.2
Stockholders’ Equity (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Feb. 18, 2023
Jan. 18, 2023
Apr. 30, 2011
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Dec. 31, 2022
May 26, 2021
Jun. 30, 2010
Class of Stock [Line Items]                            
Class of warrant or right, exercise price of warrants or rights $ 0.0299               $ 0.0299          
Preferred stock, shares authorized 10,000,000 10,000,000             10,000,000   10,000,000     10,000,000
Preferred stock, shares outstanding 425,000 425,000             425,000   425,000      
Shares reserved for issuance under the plan 138,941 138,941             138,941   138,941      
Common stock shares purchase 67,439,637 67,439,637             67,439,637   67,439,637 238,439,167    
Average exercise price $ 0.0298 $ 0.0360             $ 0.0298   $ 0.0360 $ 0.0362    
Common stock shares purchase                        
Options Held [Member]                            
Class of Stock [Line Items]                            
Unrecognized stock option expense $ 69,001               $ 69,001          
Weighted-average period for recognition                 5 months 12 days          
Unrecognized stock option expense $ 1,066,753               $ 1,066,753          
General and Administrative Expense [Member]                            
Class of Stock [Line Items]                            
Non-cash compensation expense                 $ 12,400 $ 11,000        
Equity Incentive Plan [Member]                            
Class of Stock [Line Items]                            
Shares reserved for issuance under the plan                         25,000,000  
Share-Based Payment Arrangement, Option [Member]                            
Class of Stock [Line Items]                            
Common stock shares purchase 67,439,637               67,439,637          
Average exercise price $ 0.0299               $ 0.0299          
Fair value granted                 $ 37,000          
Common stock shares purchase                        
Unrecognized stock option expense $ 1,066,753               $ 1,066,753          
Weighted-average period for recognition                 1 year 6 months          
Maximum contractual term                 5 years          
Number of shares vested                 42,323,387          
Series A Convertible Preferred Stock [Member]                            
Class of Stock [Line Items]                            
Preferred stock, shares authorized               425,000            
Preferred stock conversion price               $ 18.23            
Preferred stock, voting rights               Series A Convertible Preferred Stock are entitled to 250 votes for each share held            
Mr. Charles F. Hyatt [Member]                            
Class of Stock [Line Items]                            
Stock issued during period, shares, new issues           11,428,570 11,428,570              
Class of warrant or right, exercise price of warrants or rights           $ 0.0175 $ 0.0175              
Proceeds from warrant exercises           $ 200,000 $ 200,000              
Robert Carmichael [Member]                            
Class of Stock [Line Items]                            
Stock issued during period, shares, new issues 61,677 61,677 61,677 61,677 61,204                  
Convertible shares issued 61,677 61,677 61,205 61,205 61,204                  
Convertible shares issued, value   $ 1,287 $ 1,326 $ 1,326 $ 1,336                  
Robert Carmichael [Member] | Series A Convertible Preferred Stock [Member]                            
Class of Stock [Line Items]                            
Preferred stock, shares outstanding 425,000 425,000             425,000   425,000      
Convertible Notes Holder [Member]                            
Class of Stock [Line Items]                            
Convertible shares issued 136,527 136,527 137,000 137,000 137,000                  
Convertible shares issued, value   $ 7,000 $ 7,000 $ 7,000 $ 7,000                  
v3.24.2
Commitments and contingencies (Details Narrative) - USD ($)
 3 Months Ended 12 Months Ended
Dec. 22, 2022
Sep. 30, 2022
Sep. 14, 2022
May 02, 2022
Jan. 17, 2022
Sep. 03, 2021
Aug. 01, 2021
Jun. 30, 2020
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Dec. 31, 2022
Loss Contingencies [Line Items]                        
Weighted average remaining contractual term                 1 year 3 months 3 days   1 year 5 months 4 days 1 year 5 months 4 days
Common stock shares purchase                 67,439,637   67,439,637 238,439,167
Exercise price                 $ 0.0298   $ 0.0360 $ 0.0362
Monthly rent   $ 2,247 $ 17,550 $ 2,816                
Rent increased percentage     3.00% 3.50%                
Security deposit   2,426 $ 10,727                  
Monthly common area maintenance   $ 112                    
Reserve cost $ 160,500                      
Repaired and returned units                     653  
Customers resulting in reduction and reserve amount                     $ 93,161  
Crone Law Group [Member]                        
Loss Contingencies [Line Items]                        
Monthly rent         $ 3,000              
Shares issued         1,000,000              
Common stock with a fair market value         $ 27,500              
Patent License Agreement [Member] | Setaysha Technical Solutions, LLC [Member]                        
Loss Contingencies [Line Items]                        
Minimum royalty               $ 60,000        
Payments for Royalties                 $ 67,984 $ 34,823    
Patent License Agreement [Member] | Setaysha Technical Solutions, LLC [Member] | December 31, 2023 [Member]                        
Loss Contingencies [Line Items]                        
Obligation to pay royalty               180,000        
Patent License Agreement [Member] | Setaysha Technical Solutions, LLC [Member] | Years 2019 Through 2024 [Member]                        
Loss Contingencies [Line Items]                        
Obligation to pay royalty               $ 334,961        
Blake Carmichael Agreement [Member]                        
Loss Contingencies [Line Items]                        
Annual base salary             $ 120,000          
Weighted average remaining contractual term             5 years          
Common stock shares purchase             3,759,400          
Exercise price             $ 0.0399          
Vesting description             33.3% of which shares vest immediately, 33.3% vest on the second anniversary, and 33.3% vest on the third anniversary of the agreement          
Blake Carmichael Agreement One [Member]                        
Loss Contingencies [Line Items]                        
Exercise price             $ 0.0399          
Blake Carmichael Agreement One [Member] | Maximum [Member]                        
Loss Contingencies [Line Items]                        
Common stock shares purchase             18,000,000          
Buban Agreement [Member]                        
Loss Contingencies [Line Items]                        
Annual base salary           $ 110,000            
Weighted average remaining contractual term           5 years            
Common stock shares purchase           300,000            
Exercise price           $ 0.0531            
Share based payment arrangement, expense           $ 10,800            
Buban Agreement [Member] | Five Year Stock Option [Member]                        
Loss Contingencies [Line Items]                        
Exercise price           $ 0.0531            
Buban Agreement [Member] | Maximum [Member]                        
Loss Contingencies [Line Items]                        
Common stock shares purchase           7,110,000            
Gagas Employment Agreement [Member]                        
Loss Contingencies [Line Items]                        
Annual base salary       $ 50,000                
Brownies Marine (PK) (USOTC:BWMG)
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