Item 1A. Risk Factors. Investing in our common stock involves risks. In addition to the other information contained in this report, you should carefully consider the following risks before deciding to purchase our common stock. The occurrence of any of the following risks might cause you to lose all or a part of your investment. Some statements in this report, including statements in the following risk factors, constitute forward-looking statements. Please refer to Cautionary Statement Regarding Forward-Looking Statements for more information regarding forward-looking statements. FINANCIAL RISKS We have a history of losses. We incurred net losses loss of $254,066 $105,149 and $1,248,115, a $ 240,599, respectively, for the year ended December 31, 2024 2025 and 2023. 2024. On December 31, 2024, 2025, we had an accumulated deficit of $17,940,797. $18,031,358. Revenues increased decreased by 8.11% 7.99% for the year ended December 31, 2024, 2025, from 2023, 2024, and our gross profit margin increased decreased from 27.8% 40.4% in 2023 2024 to 41.6% 37.4% in 2024. 2025. Our gross profit is was not sufficient to cover our operating expenses of $3,573,279 and $3,277,319 $2,958,659 for the twelve months ending December 31, 2024 and 2023, respectively. 2025. Operating expenses include non-cash stock compensation expenses of $159,992 $198,478 and $81,424 $151,492 for the years ending December 31, 2024 2025 and 2023, 2024, respectively. In the year ended December 31, 2024, 2025, our selling, general and administrative expenses, increased 9.2% decreased 14.13% from 2023. There 2024. Although we continue to show improvements in our cost control, there are no assurances that we will be able to increase our revenues to a level which supports profitable operations and provide sufficient capital to pay our operating expenses and other obligations as they become due. 10 8 Our auditors have disclosed substantial doubt as to our ability to continue as a going concern . Our independent registered public accounting firm has included an explanatory paragraph expressing substantial doubt relating to our ability to continue as a going concern in its report on our audited consolidated financial statements for the year ended December 31, 2023. 2025. We have recurring losses loss from operations and had a net loss of approximately $254,066 $105,149 and have used approximately $299,000 $109,793 in net cash used in our operations in the year ended December 31, 2024 2025 as well as an accumulated deficit of approximately $17,941,000. These $18,031,358. Although these factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from concern, we have shown improvements in our cost control, we show a net loss for the outcome of this uncertainty. year ended December 31, 2025. Our principal sources of liquidity are sales of equity and debt securities. We do not have any firm commitments to raise additional working capital. As we are a small company who Because our companys common stock is quoted on the OTC Markets, OTCID Basic Market, and our stock is currently not eligible for proprietary broker-dealer quotations, we expect to encounter difficulty in raising working capital upon terms and conditions satisfactory to us, if at all. If we are unable to obtain sufficient funding or generate sufficient revenues, our business and results of operations will be adversely affected, and we may be unable to continue as a going concern. Our common stock is currently traded on the OTC Expert OTCID Market and is only eligible for unsolicited quotes. Our commons stock is not eligible for proprietary broker-dealer quotations. Unsolicited-only stocks have a higher risk of wider spreads, increased volatility, and price dislocations. Investors may have difficulty selling this stock. We rely on revenues from related parties. We generate revenues from sales to related parties, which accounted for 6.9% 8.5% of our net revenues in 2024 2025 and 11.2% 6.9% of our net revenues in 2023. 2024. The loss of revenues from these related parties would have a material adverse impact on our business, results of operations and financial condition in future periods. We depend on licenses with Robert Carmichael, our Chairman, Chairman and Chief Executive Officer, who owns much of our intellectual property. The Company has licensed from entities in which Robert Carmichael, our Chairman, Chairman and Chief Executive Officer, has an ownership interest, the following registered and unregistered trade names, trademarks and service marks: Brownies Third Lung, browniedive.com, Brownies, Brownies Third Lung oval symbol, browniedive, YachtPro. Failure to maintain such licenses with Mr. Carmichael would have a material adverse effect on the Companys financial condition. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock. Our management has previously determined that we did not maintain effective internal controls over financial reporting. If the result of our remediation of the identified material weaknesses is not successful, or if additional material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably favourably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation. The U.S. Consumer Products Safety Commission (CPSC) has issued a voluntary recall for one of our products. On December 22, 2022, 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 Companys proposed remedy for the recall and BLU3 will begin to receive 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 a reserve for those costs related to the recall of $160,500. In 2023 2023, the Company finalized the recall and adjusted the reserve down to approximately $86,300 to reflect the actual impact on the Companys financial condition. There have been no further recalls on our products products. The Company reversed the remaining allowance for recall in 2024. 2025. BUSINESS AND OPERATIONAL RISKS We are dependent upon certain key members of management and qualified employees and consultants. Our success depends to a significant degree on the abilities and efforts of our senior management. and on our ability to attract, retain and motivate highly qualified marketing, technical, engineering and sales personnel and consultants. These people are in high demand and often have competing employment opportunities. The labor market for skilled employees is highly competitive and we may lose key employees or be forced to increase their compensation to retain these people. Employee turnover could significantly increase our recruitment, training and other related employee costs. The loss of key personnel, or the failure to attract qualified personnel, could result in delays in development or fulfillment fulfilment of any current strategic and operational plans and have a material adverse effect on our business, financial condition or results of operations. 11 9 Our failure to obtain and enforce intellectual property protection may have a material adverse effect on our business. Our success depends in part on our ability, and the ability of our patent and trademark licensors, and entities owned and controlled by Robert Carmichael to obtain and defend our intellectual property, including patent protection for our products and processes, preserve our trade secrets, defend and enforce our rights against infringement and operate without infringing the proprietary rights of third parties, both in the United States and in other countries. Despite our efforts to protect our intellectual proprietary rights, existing copyright, trademark and trade secret laws afford only limited protection. Our industry is characterized by frequent intellectual property litigation based on allegations of infringement of intellectual property rights. Although we are not aware of any intellectual property claims against us, we may be a party to litigation in the future. Our intellectual property rights are valuable, and any inability to adequately protect, or uncertainty regarding validity, enforceability or scope of them could undermine our competitive position and reduce the value of our products and brand, and litigation to protect our intellectual property rights may be costly. We attempt to strengthen and differentiate our product portfolio by developing new and innovative products and product improvements. As a result, our patents, trademarks, trade secrets, copyrights and other intellectual property rights are important assets to us. Various events outside of our control pose a threat to our intellectual property rights as well as to our products and services. For example, effective intellectual property protection may not be available in countries in which our products are sold. Also, although we have registered our trademark in various jurisdictions, our efforts to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. Litigation might be necessary to protect our intellectual property rights and any such litigation may be costly and may divert our managements attention from our core business. An adverse determination in any lawsuit involving our intellectual property is likely to jeopardize our business prospects and reputation. Although we are not aware of any of such litigation, we have no insurance coverage against litigation costs, and we would be forced to bear all litigation costs if we cannot recover them from other parties. All foregoing factors could harm our business, financial condition, and results of operations. Any unauthorized use of our intellectual property could harm our operating results. We may be exposed to infringement or misappropriation claims by third parties, which, if determined against us, could adversely affect our business and subject us to significant liability to third parties. Our success mainly depends on our ability to use and develop our technology and product designs without infringing upon the intellectual property rights of third parties. We may be subject to litigation involving claims of patent infringement or violations of other intellectual property rights of third parties. Holders of patents and other intellectual property rights potentially relevant to our product offerings may be unknown to us, which may make it difficult for us to acquire a license on commercially acceptable terms. There may also be technologies licensed to us and that we rely upon that are subject to infringement or other corresponding allegations or claims by third parties which may damage our ability to rely on such technologies. In addition, although we endeavor to ensure that companies that work with us possess appropriate intellectual property rights or licenses, we cannot fully avoid the risks of intellectual property rights infringement created by suppliers of components used in our products or by companies we work with in cooperative research and development activities. Our current or potential competitors may obtain patents that will prevent, limit or interfere with our ability to make, use or sell our products. The defense of intellectual property claims, including patent infringement suits, and related legal and administrative proceedings can be both costly and time consuming, and may significantly divert the efforts and resources of our technical personnel and management. These factors could effectively prevent us from pursuing some or all of our business operations and result in our customers or potential customers deferring, canceling or limiting their purchase or use of our products, which may have a material adverse effect on our business, financial condition and results of operations. 12 10 We may not be able to enforce our intellectual property rights throughout the world. The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This could make it difficult for us to stop the infringement or the misappropriation of our intellectual property rights. Many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property. We rely on third party vendors and manufacturers. We deal with suppliers on an order-by- order basis and have no long-term purchase contracts or other contractual assurances of continued supply or pricing. In addition, we have no long-term contracts with our manufacturing sources and compete with other companies for production facility capacity. Historically, we have purchased enough inventories of products or their substitutes to satisfy demand. However, unanticipated failure of any manufacturer or supplier to meet our requirements or our inability to build or obtain substitutes could force us to curtail or cease operations. Certain of our product components are manufactured in China. Due to Covid, and the logistics challenges existing currently, we have experienced delays and may experience continued delays in our supply chain, including component products, which are manufactured in China. Our senior management will continue to monitor our situation on a daily basis; however, we expect that these factors and others we have yet to experience may materially adversely impact our company, its business and operations for the foreseeable future. We are dependent on consumer discretionary spending. The success of our business depends largely upon a number of factors related to consumer spending, including current and future economic conditions affecting disposable consumer income such as employment, business conditions, tax rates, and interest rates. In times of economic uncertainty, consumers tend to defer expenditures for discretionary items, which effects demand for our products. Any significant deterioration in overall economic conditions that diminishes consumer confidence or discretionary income can reduce our sales and adversely affect our financial results. The impact of weakening consumer credit markets; layoffs; corporate restructurings; higher fuel prices; declines in the value of investments and residential real estate; and increases in federal and state taxation can all negatively affect our results. There can be no assurance that in this type of environment consumer spending will not decline, thereby adversely affecting our growth, net sales and profitability or that our business will not be adversely affected by continuing or future downturns in the economy, boating industry, or dive industry. If declines in consumer spending on recreational marine accessories and dive gear are other than temporary, we could be forced to curtail or cease operations. Government regulations may impact us. The SCUBA industry is self-regulating, therefore, from an industry perspective the Company is not subject to government industry specific regulation. However, our tank manufacturing operation is required to comply with DOT, as well as being approved to sell in various countries outside of the United States. The Company strives to be a leader in promoting safe diving practices within the industry and is at the forefront of self-regulation through responsible diving practices. The Company is subject to all regulations applicable to for profit companies as well as all trade and general commerce governmental regulation. All required federal and state permits, licenses, and bonds to operate its facility have been obtained. There can be no assurance that our operations will not be subject to more restrictive regulations in the future, which could force us to curtail or cease operations. 13 11 Our failure to adequately protect personal information that is collected on our website and our third-party payment platforms could have a material adverse effect on our business. A wide variety of local, state, national, and international laws, directives and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data (including with respect to the European Unions General Data Protection Regulation and U.S. state laws such as the California Consumer Privacy Act). These data protection and privacy-related laws and regulations continue to evolve and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions and increased costs of compliance. Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement actions against us, including fines, imprisonment of company officials and public censure, claims for damages by end-customers and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing end-customers and prospective end-customers), any of which could have a material adverse effect on our operations, financial performance, and business. Changing definitions of personal data and personal information, within the European Union, the United States, and elsewhere may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. The evolving data protection regulatory environment may require significant management attention and financial resources to analyze and modify our information technology infrastructure to meet these changing requirements all of which could reduce our operating margins and impact our operating results and financial condition. Bad weather could have an adverse effect on operating results. Our business is significantly impacted by weather patterns. Unseasonably cool weather, extraordinary amounts of rainfall, or unseasonably rough surf, may decrease boat use and diving, thereby decreasing sales. Accordingly, our results of operations for any prior period may not be indicative of results of any future period. The manufacture and distribution of recreational diving equipment could result in product liability claims. We, like any other retailer, distributor and manufacturer of products that are designed for recreational sporting purposes, face an inherent risk of exposure to product liability claims in the event that the use of our products results in injury. Such claims may include, among other things, that our products are designed and/or manufactured improperly or fail to include adequate instructions as to proper use and/or side effects, if any. We do not obtain indemnification from parties supplying raw materials , manufacturing our products or marketing our products. In the event that we do not have adequate insurance or contractual indemnification, product liabilities relating to defective products could have a material adverse effect on our operations and financial conditions, which could force us to curtail or cease our business operations. 14 12 SHAREHOLDER RISKS The issuance of shares of our common stock upon exercise of our outstanding options, warrants, convertible debt and Series A Convertible Preferred Stock may cause immediate and substantial dilution to our existing shareholders. We presently have vested and unvested options, warrants, convertible debt and Series A Convertible Preferred Stock that if exercised would result in the issuance of an additional 50,824,019 shares of our common stock. The issuance of shares upon exercise of options will result in dilution to the interests of other shareholders. Our common stock may be affected by limited trading volume and may fluctuate significantly. The Companys common stock was is quoted on the OTCPink OTCID Basic Market tier of the OTC Markets under the symbol BWMG until April 15, 2025. As of April 15, 2025, the BWMG. Securities quoted on OTC Markets tiers generally have lower trading volumes and less liquidity than securities listed on national securities exchanges. The Companys common stock has traded on the Expert Market of the OTC. Our commons stock is currently not eligible for proprietary broker-dealer quotations on the Expert Market. Unsolicited-only stocks and therefore have a higher risk of wider spreads, increased volatility, and price dislocations. As a result, Investors may have difficulty selling our the Companys common stock. There can be no assurance that we can regain quotation Limited trading activity may contribute to price volatility and wider bid-ask spreads than securities traded on a higher tier of national exchanges. Accordingly, the OTC Markets or that an active trading market for price of our common stock will develop. As a result, this could adversely affect our shareholders ability to sell our common stock in may fluctuate over short time periods, and shareholders may experience difficulty buying or possibly at all. Thinly traded common stock can be more volatile than common stock traded selling shares in an active desired quantities or at desired prices. The Company is focused on strengthening its public market. Our common stock has experienced, company profile through continued operational growth, transparent financial reporting, and is likely enhanced corporate governance and investor communications. While there can be no assurance regarding future market tier status, management intends to experience pursue initiatives designed to improve the Companys visibility in the future, significant price public markets and volume fluctuations, which could adversely affect support potential qualification for higher tiers of the OTC Markets as the Companys financial condition, reporting status, and market conditions permit. The market price of our common stock without regard may also be influenced by factors unrelated to our operating performance. In addition, we believe that factors such as quarterly fluctuations performance, including changes in investor perception, developments in our industry, variations in financial results results, and changes in the overall economy broader economic or the condition of the financial markets market conditions. These and other factors could cause the trading price of our common stock to fluctuate substantially fluctuate. Our company is a voluntary filer with the SEC and in the event that we cease reporting under the Exchange Act, investors would have limited information available to them about the company. While we voluntarily file reports with the SEC under Section 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), we do not have a class of securities registered under Section 12(g) of the Exchange Act. To the extent that our duty to file Exchange Act reports has automatically suspended under Section 15(d) of the Exchange Act, as a voluntary filer, we may elect to cease reporting under the Exchange Act at such time which would limit the information available to investors and shareholders about the company. Our common stock is deemed to be penny stock, which may make it more difficult for investors to sell their shares due to suitability requirements. Our common stock is deemed to be penny stock as that term is defined under the Exchange Act. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges. Our common stock is covered by an SEC rule that imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors, which are generally institutions with assets in excess of $5,000,000, or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline. Our officers and directors are able to control the Company. Our officers and directors and their affiliates own or have the right to vote a majority of the common stock of our company. As a result, they have significant influence over the management and affairs of the Company and control over matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets. Their interests may differ from the interests of other shareholders and thus result in corporate decisions that are disadvantageous to other shareholders. This concentration of ownership and influence in management and board decision-making could also harm the price of our capital stock by, among other things, discouraging a potential acquirer from seeking to acquire shares of our capital stock (whether by making a tender offer or otherwise) or otherwise attempting to obtain control of our company. 15 13