Brownie’s Marine Group, Inc. (BWMG) 2024 10-K Review

Discover how this diversified underwater breathing and high-pressure gas systems group performed in 2024. From legacy tankless dive systems to military-grade redundant air tanks, we unpack the numbers, risks, and opportunities that defined BWMG’s year.

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Company Overview

Brownie’s Marine Group, Inc. (OTC: BWMG) designs, manufactures and distributes a broad lineup of breathing-air products through five wholly owned subsidiaries:

• Trebor Industries (Third Lung/BTL): Gas-powered and battery-driven tankless surface-supplied air (SSA) systems for recreational dive and light-duty industrial use.
• Brownie’s High Pressure Compressor Services (LW Americas/LWA): High-pressure compressors and nitrox generation fill systems for yachts, fire crews, CNG, and industrial gas.
• BLU3, Inc.: Portable, battery-powered tankless dive systems (Nomad, Nomad Mini) and luxury sea scooters (SeaNXT Elite).
• Submersible Systems, Inc. (SSI): Redundant air-tank systems for aviation, submersibles, rescue, military and recreational diving.
• Live Blue, Inc. (LBI): Retail, training and guided-tour dive and watersport experiences, including the Gold Coast Scuba acquisition.

Headquarters & Facilities:

• Florida HQ (19,065 sq ft in Davie, FL)
• Subsidiary manufacturing in Huntington Beach, CA (13,000 sq ft)
• Retail/training site originally acquired from Gold Coast Scuba, later IP sale in October 2024

2024 Financial Highlights

Key performance indicators (year-over-year comparison):

Metric	2024	2023	% Change
Net Revenues	$8.18 M	$7.58 M	+7.9 %
Gross Profit Margin	41.6 %	27.8 %	+13.8 pts
Net Loss	$(0.24 M)	$(1.25 M)	–80.8 %
Operating Cash Flow	$(0.30 M)	$(0.37 M)	+19.7 %
Working Capital (year-end)	$0.17 M	$0.23 M	–26.3 %
Inventory	$2.06 M	$1.99 M	+3.2 %
Debt (Notes & Leases)	$2.06 M (LT + current)
	$1.68 M	+22.6 %

Segment Summary

• Legacy SSA Products (Third Lung): $1.90 M in sales (–17.9 %), 15.6 % gross margin.
• High-Pressure Gas Systems (LWA): $0.72 M sales (–27.3 %), 36.7 % gross margin.
• Portable Tankless Dives (BLU3): $2.47 M sales (+29.5 %), 32.2 % gross margin.
• Redundant Air Tanks (SSI): $2.95 M sales (+42.8 %), 31.1 % gross margin.
• Retail/Guided Tours (LBI): $0.14 M (–53.1 %), 35.6 % gross margin.

Gross Margin Improvement

Margin expanded substantially to 41.6 % from 27.8 % as cost control measures and mix-shift toward higher margin segments (e.g., BLU3 and LWA) took effect.

Expense Trends

• SG&A: Increased 9.7 % to $3.57 M—driven by payroll inflation, higher trade show & advertising spend (+16.8 %) and stock-based comp (+86.1 %).
• R&D: Remained modest at $9.9 K (–28 %), reflecting a shift toward non-capitalized commercial updates.
• Interest: Stable at ~$79 K.

Balance Sheet & Liquidity

• Cash: $0.42 M at year-end, down slightly from $0.43 M.
• Working Capital: $0.17 M vs. $0.23 M (2023) after higher customer deposits (+$155 K) and related-party debt (+$280 K).
• Debt & Leases: Total liabilities $4.19 M (+31.5 %) including $1.67 M in operating leases, $0.46 M in convertible debt and $0.33 M in equipment financing.
• Inventory: $2.06 M (+3.2 %)—scrap/slow-moving reserves of $0.20 M.

Going Concern

Net losses, cash burn, and working capital pressures raise “substantial doubt” about BWMG’s ability to continue without successful capital infusions. Management is exploring equity/debt financings.

Risk Factors (Item 1A Highlights)

• Going Concern: Auditors flagged doubts on BWMG’s continuity.
• Profitability: Three years of net losses.
• Seasonality: U.S. dive market seasonal; high-pressure systems peak Q4/Q1.
• Single-vendor Components: Chinese-sourced parts face supply chain risk.
• Related-party Concentration: ~7 %–11 % of revenues from affiliates.
• Thin Trading: OTC Expert Market limited liquidity.
• Product Recall: BLU3 Nomad recall reserve of $86 K.
• Weak Controls: Identified material weaknesses in financial reporting processes.

Corporate Developments

• Acquired Gold Coast Scuba retail + training (May 2022), sold IP & trade name to a third party (Oct 2024) to focus on guided-tour franchise model.
• Exclusive Agreements: LWA secured 5-year distribution of L&W compressors in North/South America.
• New Products: BLU3 Nomad Mini shipping Q3 2023; exclusive SeaNXT Elite sea scooter distributor.
• Strategic Shift: Emphasis on OEM OEM boatbuilder kits (BIAS, Yacht-Pro Essential).

Governance & Insider Activity

• Management: CEO/Chair Robert Carmichael (owner of key patents/licensing entity), Exec team includes family members (Son as BLU3 CEO).
• Board: Two Directors; one independent (Charles Hyatt).
• Capital Infusions: Frequent stock issuances for services/interest, related-party loans and convertible notes.

Net Loss

2024 Net Loss: $(240,599) 2023 Net Loss: $(1,248,115)

Investment Score: 4.0/10

Rationale:

• Strengths: Diversified product lines, improving margins, global distribution agreements, proprietary IP.
• Concerns: Limited liquidity, repeated net losses, seasonality, supply chain reliance, governance weaknesses.
• Near-term upside if capitalizes on yacht market growth and scaling portable tankless dive technology; longer runway needed to reach sustainable profitability.

Score: 4.0/10

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