Nevada
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90-0226181
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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940 N.W. 1st Street, Fort Lauderdale, Florida
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33311
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(Address of Principal Executive Offices)
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(Zip Code)
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(954) 462-5570
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(Issuer’s Telephone Number, Including Area Code)
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Title of each class
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Name of each exchange on which registered
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None
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None
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Common Stock
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(Title of class)
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Large accelerated filer
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¨
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Accelerated file
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¨
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Non-accelerated filer
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¨ (Do not check if a smaller reporting company)
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Smaller reporting company
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x
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Item 1. | Business. |
1 | ||
2 | ||
3 | ||
· | According to the 2012 Annual Report of Dive Equipment Manufacturers Association (DEMA), there are between 2.7 and 3.5 million active divers in the United States and approximately 6 million active divers worldwide. Further, there are approximately 11 million snorkelers in the United States and approximately 20 snorkelers worldwide. (source: DEMA) |
· | According to Global Certification and Membership Statistics as updated February 2013 on the Professional Association of Diver Instructors (PADI) website, www.padi.com, worldwide PADI certifications of divers has grown annually from over 500,000 certifications in1992, to consistently over 900,000 annual certifications annually from 2003 to 945,107 certifications in 2012. There are other scuba training organizations also issuing scuba dive training certifications, but PADI is the training organization issuing the largest number of certifications annually. (source: PADI) |
· | There were approximately 16.7 million boats in use in 2012, up slightly from approximately 16.2 million in use in 2011. Use decreased in outboard, inboard and stern drive boats approximately 1% from 2010 to 2012. (source: United States Coast Guard (USCG) / National Marine Manufacturers Association (NMMA) |
· | Approximately 88 million people went boating in the US in 2012; this represents approximately 38% of the adult population in the United States. (source: NMMA) |
4 | ||
· | Water safety and survival |
· | Garment integrated flotation devices or life jacket |
· | Collar for improved life jacket performance |
· | Combined signaling and ballast for personal flotation device |
· | Inflatable dive marker and collection bag. |
· | Three dimensional dive flag |
· | Novel dive raft and float system for divers |
· | Drop weight Cummerbelt |
· | Buoyancy compensator |
· | Utility backpack |
· | Transport harness or like garment with adjustable one size component for use by a wide range of individuals |
· | Active control releasable ballast |
5 | ||
6 | ||
Item 1A. | Risk Factors. |
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties. |
Item 3. | Legal Proceedings. |
Item 4. | Mine Safety Disclosure |
7 | ||
Item 5. | Purchases of Equity Securities. |
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Calendar Year 2013
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||||
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High Bid
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Low Bid
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First Quarter
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$
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1.215
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$
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..270
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Second Quarter
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$
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..675
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$
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..135
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Third Quarter
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$
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..129
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$
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..020
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Fourth Quarter
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$
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..100
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$
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..007
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Calendar Year 2012
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||||
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High Bid
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Low Bid
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First Quarter
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$
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94.50
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$
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2.70
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Second Quarter
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$
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121.50
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$
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12.15
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Third Quarter
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$
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14.85
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$
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1.08
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Fourth Quarter
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$
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3.78
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$
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..54
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8 | ||
Item 6. | Selected Financial Data. |
Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations. |
9 | ||
10 | ||
11 | ||
12 | ||
13 | ||
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Less than
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More than 5
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Contractual Obligations
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Total
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1 year
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1-3 years
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3-5 years
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years
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Long-Term Debt Obligations
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$
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142,924
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$
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140,159
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$
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2,765
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$
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--
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$
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--
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Operating Lease Obligations
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24,959
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24,959
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--
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--
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--
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Convertible Debentures (1)
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526,910
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526,910
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--
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--
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--
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Purchase Obligations
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--
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--
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--
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--
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--
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Other Long-Term Liabilities Reflected on the Company’s Balance Sheet under GAAP
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--
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--
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--
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--
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--
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Total
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$
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694,793
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$
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692,028
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$
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2,765
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$
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--
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$
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--
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(1)
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Convertible Debentures are presented “Gross” in the above Schedule. On the Company’s Financial Statements for the year ended December 31, 2013, Convertible Debentures are presented “Net” of Discount. |
14 | ||
15 | ||
16 | ||
17 | ||
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk. |
Item 8. | Financial Statements. |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
18 | ||
Item 10. | Directors, Executive Officers, and Corporate Governance |
Name:
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Age:
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Position:
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Robert M. Carmichael
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51
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President, Chief Executive Officer, Principal Financial Officer and Director
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Mikkel Pitzner
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46
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Director
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19 | ||
20 | ||
21 | ||
Item 11. | Executive Compensation |
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Non-Equity
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All Other
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Name and Principal
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Stock
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Option
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Incentive Plan
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Compen-
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Position(s)
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Year
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Salary
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Bonus
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Awards
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Awards
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Compensation
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sation
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Total
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Robert M. Carmichael, President, Principal Executive
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2013
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$
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35,894
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$
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--
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$
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291,904
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(1)
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$
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--
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$
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--
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$
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--
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$
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332,058
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(1)(2)
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Officer, and Principal Financial Officer
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2012
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$
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35,894
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$
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67,000
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$
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264,999
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$
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--
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$
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--
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$
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--
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$
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367,893
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(2)
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(1)
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Stock awards of $291,904 consist of $30,000 incentive retention bonus, and $261,904 incremental equity based compensation. On December 23, 2013, the Chief Executive officer forgave the $261,904 payable to him by the Company whereby it was recorded as contributed capital.
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(2)
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Executive compensation excludes certain transactions which are disclosed under “Item 13. Certain Relationships and Related Transactions, and Director Independence.”
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Option Awards
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Stock Awards
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Incentive
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Equity
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plan
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Incentive
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awards:
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Equity
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plan
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Market or
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Incentive
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awards:
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payout
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plan
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Number of
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value of
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Number of
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awards:
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Number of
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Market
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unearned
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unearned
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Number of
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securities
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Number of
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shares or
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value of
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shares,
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shares,
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securities
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underlying
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securities
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units of
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shares of
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units or
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units or
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underlying
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unexercised
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underlying
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Option
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stock that
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units of
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other
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other
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unexercised
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option (#)
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unexercised
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exercise
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Option
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have not
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stock that
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rights that
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rights that
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options (#)
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un-
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unearned
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price ($)
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expiration
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vested
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have not
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have not
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have not
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Name
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exercisable
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exercisable
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options (#)
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per share
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date
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(#)
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vested ($)
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vested (#)
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vested ($)
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Robert M. Carmichael, Principal Executive Officer, and Principal Financial Officer
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234
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(1) (2)
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--
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--
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$
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1,350
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March 2, 2019
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--
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$
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--
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--
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--
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(1) | See Footnote (2) to the Summary Compensation Table above. |
(2) | See discussion of options issued for purchase of Intellectual Property as disclosed under “Item 13. Certain Relationships and Related Transactions, and Director Independence.” The number of options have been retroactively adjusted for the 1 for- 1,350 reverse stock split on July 15,2013 |
22 | ||
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Number of securities
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Number of securities
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remaining available for
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to be issued upon
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Weighted average
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future issuances under equity
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exercise of
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exercise price of
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compensation plans
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outstanding options,
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outstanding options,
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(excluding securities
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warrants and rights
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warrants and rights
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reflected in column (a))
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(a)
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(b)
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(c)
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Equity Compensation Plans
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Approved by Security Holders
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297
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(1)
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$
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1,350
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(1)
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0
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Equity Compensation Plans Not
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Approved by Security Holders
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--
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--
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--
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Total
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297
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$
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1,350
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0
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(1) | The exercise price has been retroactively adjusted for the 1 for 1,350 reverse stock split on July 15, 2013. |
23 | ||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Title of
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Name and Address of Beneficial
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Amount and Nature of
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Percent
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Class
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Owner
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Beneficial Ownership
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of Class
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Executive Officers and Directors
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Common
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Robert Carmichael
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461,291
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(1)
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5.69
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%
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Common
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Mikkel Pitzner
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2,052,837
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(2)
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20.84
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%
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Common
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All directors and executive officers as a group (2 persons)
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2,514,128
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26.53
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%
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5% Shareholders
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Common
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Alexander F. Purdon
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1,768,405
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(3)
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22.02
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%
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Executive Officers and Directors
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Series A Convertible Preferred Stock
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Robert Carmichael
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425,000
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(4)
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100.0
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%
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Series A Convertible Preferred Stock
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All directors and executive officers as a group (1 persons)
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425,000
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100.0
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%
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(1) | Includes the following: aggregate of 234 shares of common stock underlying currently exercisable options exercisable at $1,350 per share; 42,182 shares of common stock payable by the Company under 2012 bonus awards; and 31,481 shares issuable upon conversion of 425,000 shares of Series A Preferred Stock. See also footnote 4. |
(2) | Includes 1,802,621 shares underlying currently exercisable options exercisable at $0.01 per share, and 18,522 shares of common stock payable by the Company under 2012 bonus awards. |
(3) | Includes 1,854 shares of common stock payable by the Company under 2012 bonus awards. |
(4) | Mr. Carmichael owns 100% of the Series A Convertible Preferred Stock, each share of which has the number of votes 250 per share. The preferred stock votes with the Company’s common stock, except as otherwise required under Nevada law. Accordingly, Mr. Carmichael will own 93% of the combined voting power of the Common Stock and Series A Convertible Preferred Stock, voting as a single class and will control the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Carrmichael may differ from the interests of the other shareholders. |
24 | ||
Item 13. | Certain Relationships and Related Transactions, and Director Independence. |
Promissory note payable to the Chief Executive Officer of the the Company, unsecured, bearing interest at 7.5% per annum, due in monthly principal and interest payments of $7,050, maturing on August 1, 2013.
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$
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49,702
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Promissory note payable to the non-employee Board of Director, secured by up to $200,000 in and to all of the Company’s right, title and interest in its fixed assets, inventory, receivables, and all documents including its books, records, and files; bearing interest at 21.21% per annum, due in monthly principal and interest payments of $8,585, maturing on November 1, 2014.
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77,917
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127,619
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Less amounts due within one year
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127,619
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Long-term portion of notes payable
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$
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--
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2014
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$
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127,619
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2015
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--
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2016
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--
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2017
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--
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2018
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--
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Thereafter
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--
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$
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127,619
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25 | ||
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December 31, 2013
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Year-end 2012 bonus payable to Chief Executive Officer
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$
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67,000
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Due to Principals of Carleigh Rae Corp., net
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6,017
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Other liabilities related parties
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$
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73,017
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26 | ||
27 | ||
28 | ||
Item 15. | Exhibits, Financial Statements Schedules |
Exhibit No.
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Description
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Location
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2.2
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Merger Agreement, dated June 18, 2002 by and among United Companies Corporation, Merger Co., Inc. and Avid Sportswear & Golf Corp.
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Incorporated by reference to Exhibit 2.02 Amendment No. 1 to Form S-4 filed June 24, 2002.
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2.3
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Articles of Merger of Avid Sportswear & Golf Corp. with and into Merger Co., Inc.
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Incorporated by reference to Exhibit 2.03 Amendment No. 1 to Form S-4 filed June 24, 2002.
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3.1
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Articles of Incorporation
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Incorporated by reference to Exhibit 3.1 of 10-Q for the quarter ended September 30, 2009 filed on November 13, 2009.
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3.4
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Designation of Series A Preferred Stock
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Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on April 27, 2012.
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3.5
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Articles of Amendment
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Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on July 15, 2013.
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3.6
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Bylaws
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Incorporated by reference to Exhibit 3.04 to the Registration Statement on Form 10-SB.
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10.1
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Share Exchange Agreement, dated March 23, 2004 by and among the Company, Trebor Industries, Inc. and Robert Carmichael
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Incorporated by reference to Exhibit 16.1 to Current Report on Form 8-K filed April 9, 2004
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10.2
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Non-Exclusive License Agreement BC Keel Trademark
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Incorporated by reference to Exhibit 10.18 to Form 10QSB for the quarter ended December 31, 2005 filed August 15, 2005.
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10.3
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Exclusive License Agreement - Brownie's Third Lung, Brownie's Public Safety, Tankfill, and Related Trademarks and Copyrights
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Incorporated by reference to Exhibit 10.20 to Form 10QSB for the quarter ended December 31, 2005 filed August 15, 2005.
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10.4
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Exclusive License Agreement Brownie’s Third Lung and Related Trademarks and Copyright
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Incorporated by reference to Exhibit 10.26 to Form 10KSB for the year ended December 31, 2006 filed April 4, 2007.
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10.5
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Promissory Note dated January 1, 2007 payable to Robert M. Carmichael.
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Incorporated by reference to Exhibit 10.32 to Form 10KSB for the year ended year ended December 31, 2006 filed April 4, 2007.
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10.6
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Asset Purchase Agreement between Trebor Industries, Inc. and Robert Carmichael
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Incorporated by reference to Form 8K filed on August 1, 2008.
|
29 | ||
Exhibit No.
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Description
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|
Location
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10.7
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Asset Purchase Agreement between Trebor Industries, Inc. and Robert Carmichael.
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Incorporated by reference to Form 8K filed on March 5, 2009.
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10.8
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Asset Purchase Agreement between Trebor Industries, Inc. and Robert Carmichael.
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Incorporated by reference to Form 8K filed on January 19, 2010.
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10.9
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Loan Conversion for Restricted Common Stock
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|
Incorporated by reference to Form 8K filed on October 5, 2010.
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10.10
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Asset Purchase Agreement between Trebor Industries, Inc. and the Carleigh Rae Corporation
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Incorporated by reference to Form 8K filed on January 6, 2011
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10.11
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Joint Venture Equity Exchange Agreement between Brownie’s Marine Group, Inc and Pompano Dive Center, LLC.
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|
Incorporated by reference to Exhibit 10.21 to From 10-Q filed on November 14, 2011
|
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10.12
|
|
Restricted Common Stock Issued for Board of Director Fees Payable, and Incentive Bonus Awards to Chief Executive Officer, Board of Director, and Certain Employees and Consultants
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|
Incorporated by reference to Form 8-K filed on November 13, 2012
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10.13
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|
Year End 2012 Bonus Awards Executive Officer, Board of Director and Certain Consultants and Service Providers
|
|
Incorporated by reference to Form 8-K filed on February 26, 2013
|
|
|
|
|
|
10.14
|
|
Settlement of Brownie’s Third Lung and Robert Carmichael, Chief Executive Officer with Branch Banking and Trust
|
|
Incorporated by reference to Form 8-K filed on November 20, 2013
|
|
|
|
|
|
10.15
|
|
Promissory Note dated November 18, 2013 payable to Mikkel Pitzner, Board of Director, and Stock Option Grant
|
|
Incorporated by reference to Form 8-K filed on November 20, 2013
|
|
|
|
|
|
31.1
|
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a)
|
|
Provided herewith.
|
|
|
|
|
|
31.2
|
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a)
|
|
Provided herewith.
|
|
|
|
|
|
32.1
|
|
Certification Pursuant to Section 1350
|
|
Provided herewith.
|
|
|
|
|
|
32.2
|
|
Certification Pursuant to Section 1350
|
|
Provided herewith.
|
|
|
|
|
|
101
|
|
XBRL Interactive Data File *
|
|
|
30 | ||
Date: March 17, 2014
|
Brownie’s marine group, Inc.
|
|
|
|
|
|
By:
|
/s/ Robert M. Carmichael
|
|
|
Robert M. Carmichael
|
|
|
President, Chief Executive Officer,
|
|
|
Chief Financial Officer and
|
|
|
Principal Accounting Officer
|
Date: March 17, 2014
|
By:
|
/s/ Robert M. Carmichael
|
|
|
Robert M. Carmichael
|
|
|
Director
|
|
|
|
Date: March 17, 2014
|
By:
|
/s/ Mikkel Pitzner
|
|
|
Mikkel Pitzner
|
|
|
Director
|
|
PAGE(S)
|
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-1
|
|
|
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2013 AND 2012
|
F-2
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
|
F-3
|
|
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
|
F-4
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
|
F-5
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
F-7 TO F-32
|
F-1 | ||
|
|
December 31,
|
|
December 31,
|
|
||
|
|
2013
|
|
2012
|
|
||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
70,084
|
|
$
|
69,292
|
|
Accounts receivable, net of $39,000 and $36,000 allowance
|
|
|
|
|
|
|
|
for doubtful accounts, respectively
|
|
|
30,298
|
|
|
20,556
|
|
Accounts receivable - related parties
|
|
|
105,942
|
|
|
51,703
|
|
Inventory
|
|
|
735,926
|
|
|
603,867
|
|
Prepaid expenses and other current assets
|
|
|
109,523
|
|
|
148,851
|
|
Other current assets - related parties
|
|
|
5,917
|
|
|
--
|
|
Deferred tax asset, net current
|
|
|
277
|
|
|
304
|
|
Total current assets
|
|
|
1,057,967
|
|
|
894,573
|
|
|
|
|
|
|
|
|
|
Furniture, fixtures and equipment, net
|
|
|
76,265
|
|
|
72,281
|
|
|
|
|
|
|
|
|
|
Deferred tax asset, net - non-current
|
|
|
2,330
|
|
|
9,781
|
|
Other assets
|
|
|
27,635
|
|
|
31,635
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,164,197
|
|
$
|
1,008,270
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
534,558
|
|
$
|
508,715
|
|
Customer deposits and unearned revenue
|
|
|
99,610
|
|
|
53,678
|
|
Royalties payable - related parties
|
|
|
137,129
|
|
|
137,563
|
|
Other liabilities
|
|
|
252,009
|
|
|
170,827
|
|
Other liabilities and accrued interest - related parties
|
|
|
73,017
|
|
|
80,517
|
|
Convertible debentures, net
|
|
|
523,576
|
|
|
638,667
|
|
Notes payable - current portion
|
|
|
12,540
|
|
|
12,152
|
|
Notes payable - related parties - current portion
|
|
|
127,619
|
|
|
168,384
|
|
Total current liabilities
|
|
|
1,760,058
|
|
|
1,770,503
|
|
|
|
|
|
|
|
|
|
Long-term liabilities
|
|
|
|
|
|
|
|
Notes payable - long-term portion
|
|
|
2,765
|
|
|
15,412
|
|
Notes payable - related parties - long-term portion
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,762,823
|
|
|
1,785,915
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
Preferred stock; $0.001 par value: 10,000,000 shares authorized; 425,000
|
|
|
|
|
|
|
|
issued and outstanding
|
|
|
425
|
|
|
425
|
|
Common stock; $0.0001 par value; 5,000,000,000 shares authorized;
|
|
|
|
|
|
|
|
10,049,140 and 2,357,589 shares issued, respectively;
|
|
|
|
|
|
|
|
5,672,051 and 401,424 shares outstanding, respectively
|
|
|
567
|
|
|
40
|
|
Common stock payable; $0.0001 par value; 200,795 and 962,940
|
|
|
|
|
|
|
|
shares, respectively
|
|
|
20
|
|
|
96
|
|
Prepaid equity based compensation
|
|
|
--
|
|
|
(137,494)
|
|
Additional paid-in capital
|
|
|
8,478,092
|
|
|
7,648,732
|
|
Accumulated deficit
|
|
|
(9,077,730)
|
|
|
(8,289,444)
|
|
Total stockholders' deficit
|
|
|
(598,626)
|
|
|
(777,645)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
1,164,197
|
|
$
|
1,008,270
|
|
F-2 | ||
|
|
Year Ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
1,924,445
|
|
$
|
2,048,364
|
|
Net revenues - related parties
|
|
|
946,243
|
|
|
815,963
|
|
Total net revenues
|
|
|
2,870,688
|
|
|
2,864,327
|
|
|
|
|
|
|
|
|
|
Cost of net revenues
|
|
|
|
|
|
|
|
Cost of net revenues
|
|
|
1,919,964
|
|
|
1,915,746
|
|
Royalties expense - related parties
|
|
|
69,591
|
|
|
66,166
|
|
Total cost of net revenues
|
|
|
1,989,555
|
|
|
1,981,912
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
881,133
|
|
|
882,415
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
1,459,137
|
|
|
2,457,484
|
|
Research and development costs
|
|
|
75,760
|
|
|
47,797
|
|
Total operating expenses
|
|
|
1,534,897
|
|
|
2,505,281
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(653,764)
|
|
|
(1,622,866)
|
|
|
|
|
|
|
|
|
|
Other expense, net
|
|
|
|
|
|
|
|
Other (income), expense net
|
|
|
(73,731)
|
|
|
81,655
|
|
Interest expense
|
|
|
198,342
|
|
|
264,243
|
|
Interest expense - related parties
|
|
|
2,433
|
|
|
6,354
|
|
Total other expense, net
|
|
|
127,044
|
|
|
352,252
|
|
|
|
|
|
|
|
|
|
Net loss before provision for income taxes
|
|
|
(780,808)
|
|
|
(1,975,118)
|
|
|
|
|
|
|
|
|
|
Provision for income tax expense
|
|
|
7,478
|
|
|
38,231
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(788,286)
|
|
$
|
(2,013,349)
|
|
|
|
|
|
|
|
|
|
Basic loss per common share
|
|
$
|
(0.32)
|
|
$
|
(14.24)
|
|
Diluted loss per common share
|
|
$
|
(0.32)
|
|
$
|
(14.24)
|
|
|
|
|
|
|
|
|
|
Basic weighted average common
|
|
|
|
|
|
|
|
shares outstanding
|
|
|
2,484,342
|
|
|
141,365
|
|
Diluted weighted average common
|
|
|
|
|
|
|
|
shares outstanding
|
|
|
2,484,342
|
|
|
141,365
|
|
F-3 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
|
|
Additional
|
|
|
|
Total
|
|
||||
|
|
Common stock
|
|
Preferred stock
|
|
Common stock payable
|
|
Equity based
|
|
paid-in
|
|
Accumulated
|
|
stockholders'
|
|
|||||||||||||
|
|
Shares
|
|
|
Amount
|
|
Shares
|
|
|
Amount
|
|
Shares
|
|
|
Amount
|
|
compensation
|
|
capital
|
|
deficit
|
|
deficit
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
35,499
|
|
$
|
4
|
|
425,000
|
|
$
|
425
|
|
7,651
|
|
$
|
1
|
|
|
(637,498)
|
|
$
|
6,150,762
|
|
$
|
(6,276,095)
|
|
$
|
(762,401)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock payable from prior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
reporting periods
|
|
7,651
|
|
|
1
|
|
--
|
|
|
--
|
|
(7,651)
|
|
|
(1)
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock granted for consulting, legal, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other professional services
|
|
36,259
|
|
|
3
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
230,909
|
|
|
--
|
|
|
230,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based incentive/retention/year end
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bonuses to consultants
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
678,519
|
|
|
68
|
|
|
--
|
|
|
280,332
|
|
|
--
|
|
|
280,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock for equity investment
|
|
494
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
5,000
|
|
|
--
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discounts on convertible debentures
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
150,129
|
|
|
--
|
|
|
150,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based compensation and incentive/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
retention bonus to Chief Executive Officer
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
102,460
|
|
|
10
|
|
|
--
|
|
|
264,989
|
|
|
--
|
|
|
264,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prepaid equity based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation to Chief Executive Officer
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
500,004
|
|
|
--
|
|
|
--
|
|
|
500,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Board of Director's fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
payable to stock
|
|
18,519
|
|
|
2
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
22,498
|
|
|
--
|
|
|
22,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based year end bonus to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-employee Board of Director
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
180,247
|
|
|
18
|
|
|
--
|
|
|
72,982
|
|
|
--
|
|
|
73,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coversion of short-term loan from Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Director to stock
|
|
1,975
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
20,000
|
|
|
--
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for assets purchased from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida Dive Industries, Inc.
|
|
1,630
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
59,400
|
|
|
--
|
|
|
59,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of employee compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
payable to stock
|
|
16,537
|
|
|
2
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
98,998
|
|
|
--
|
|
|
99,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based incentive/retention bonuses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to employees
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
1,358
|
|
|
-
|
|
|
--
|
|
|
1,650
|
|
|
--
|
|
|
1,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of accrued interest on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
convertible debentures to stock
|
|
2,376
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
7,178
|
|
|
--
|
|
|
7,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible debentures
|
|
280,485
|
|
|
28
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
194,555
|
|
|
--
|
|
|
194,583
|
|
to stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extinguishment of convertible debentures
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
72,017
|
|
|
--
|
|
|
72,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based compensation for exclusivity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
pursuant to agreement with Precision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paddleboards, Inc.
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
357
|
|
|
--
|
|
|
--
|
|
|
17,333
|
|
|
--
|
|
|
17,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(2,013,349)
|
|
|
(2,013,349)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2012
|
|
401,424
|
|
$
|
40
|
|
425,000
|
|
$
|
425
|
|
962,940
|
|
$
|
96
|
|
$
|
(137,494)
|
|
$
|
7,648,732
|
|
$
|
(8,289,444)
|
|
$
|
(777,645)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock payable from prior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
reporting periods
|
|
851,852
|
|
|
85
|
|
--
|
|
|
--
|
|
(851,852)
|
|
|
(85)
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock granted or payable for consulting,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
legal, and other professional services
|
|
105,064
|
|
|
11
|
|
--
|
|
|
--
|
|
133,305
|
|
|
13
|
|
|
--
|
|
|
58,586
|
|
|
--
|
|
|
58,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based incentive/retention
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bonuses to consultants
|
|
5,185
|
|
|
1
|
|
--
|
|
|
--
|
|
8,643
|
|
|
1
|
|
|
--
|
|
|
16,299
|
|
|
--
|
|
|
16,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discounts on convertible debentures
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
72,053
|
|
|
--
|
|
|
72,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based compensation and incentive/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
retention bonus to Chief Executive Officer
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
3,375,907
|
|
|
338
|
|
|
--
|
|
|
291,566
|
|
|
--
|
|
|
291,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness and cancellation of certain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity based compensation due
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
(3,431,001)
|
|
|
(343)
|
|
|
--
|
|
|
343
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prepaid equity based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation to Chief Executive Officer
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
137,494
|
|
|
--
|
|
|
--
|
|
|
137,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of note payable - related party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Chief Executive Officer) to stock
|
|
370,370
|
|
|
37
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
49,963
|
|
|
--
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Board of Directors' fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
payable to stock
|
|
12,346
|
|
|
1
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
14,999
|
|
|
--
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based Board of Director's fees
|
|
22,635
|
|
|
2
|
|
--
|
|
|
--
|
|
216,070
|
|
|
22
|
|
|
--
|
|
|
27,476
|
|
|
--
|
|
|
27,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness of Board of Director's fees
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
(216,070)
|
|
|
(22)
|
|
|
--
|
|
|
5,939
|
|
|
--
|
|
|
5,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options granted with note payable -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- related party (Board of Director)
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
44,610
|
|
|
--
|
|
|
44,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of employee compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
payable to stock
|
|
959,870
|
|
|
96
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
53,904
|
|
|
--
|
|
|
54,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based incentive/retention bonuses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to employees
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
2,716
|
|
|
-
|
|
|
--
|
|
|
3,300
|
|
|
--
|
|
|
3,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of accrued interest and fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
convertible debentures to stock
|
|
42,444
|
|
|
4
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
7,398
|
|
|
--
|
|
|
7,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible debentures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to stock
|
|
3,017,602
|
|
|
302
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
176,832
|
|
|
--
|
|
|
177,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extinguishment of convertible debentures
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
46,913
|
|
|
--
|
|
|
46,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based compensation for exclusivity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
pursuant to agreement with Precision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paddleboards, Inc.
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
137
|
|
|
--
|
|
|
--
|
|
|
6,667
|
|
|
--
|
|
|
6,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement of certain 2012 year end equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bonuses returned by consultants
|
|
(117,284)
|
|
|
(12)
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(47,488)
|
|
|
--
|
|
|
(47,500)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for shares rounded upward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a result of 1-for-1,350 reverse split
|
|
543
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(788,286)
|
|
|
(788,286)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2013
|
|
5,672,051
|
|
$
|
567
|
|
425,000
|
|
$
|
425
|
|
200,795
|
|
$
|
20
|
|
$
|
--
|
|
$
|
8,478,092
|
|
$
|
(9,077,730)
|
|
$
|
(598,626)
|
|
F-4 | ||
|
|
Year Ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Cash flows used in operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(788,286)
|
|
$
|
(2,013,349)
|
|
Adjustments to reconcile net loss to net cash used in
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
19,616
|
|
|
35,585
|
|
Change in deferred tax asset, net
|
|
|
7,478
|
|
|
38,231
|
|
Equity based compensation for consulting, legal, and
|
|
|
|
|
|
|
|
other professional services
|
|
|
58,610
|
|
|
502,912
|
|
Equity based compensation for product exclusivity
|
|
|
6,667
|
|
|
17,333
|
|
Equity based employee and consultant bonuses
|
|
|
19,600
|
|
|
10,050
|
|
Stock options issued to non-employee Board of Director as
|
|
|
|
|
|
|
|
incentive to enter into note-payable agreement
|
|
|
44,610
|
|
|
--
|
|
Equity based non-employee Board of Directors' fees
|
|
|
27,500
|
|
|
--
|
|
Equity based non-employee Board of Directors' year end bonuses
|
|
|
--
|
|
|
73,000
|
|
Loss on foreclosure of real estate
|
|
|
--
|
|
|
116,539
|
|
Accretion of convertible debenture discounts
|
|
|
133,793
|
|
|
175,568
|
|
Equity based compensation and bonuses payable
|
|
|
|
|
|
|
|
to Chief Executive Officer
|
|
|
291,905
|
|
|
264,999
|
|
Amortization of prepaid equity based compensation
|
|
|
|
|
|
|
|
to Chief Executive Officer
|
|
|
137,494
|
|
|
500,004
|
|
Stock issued for supplies and other expensed items
|
|
|
--
|
|
|
9,360
|
|
Loss on extinguishment of convertible debentures
|
|
|
93,825
|
|
|
106,421
|
|
Retirement of certain 2012 year end consultant bonuses
|
|
|
(47,500)
|
|
|
--
|
|
Gain on forgiveness of legal accrual
|
|
|
--
|
|
|
(95,054)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Change in accounts receivable, net
|
|
|
(9,742)
|
|
|
(12,422)
|
|
Change in accounts receivable - related parties
|
|
|
(54,239)
|
|
|
340
|
|
Change in inventory
|
|
|
(132,059)
|
|
|
26,391
|
|
Change in prepaid expenses and other current assets
|
|
|
39,328
|
|
|
(73,998)
|
|
Change in other assets
|
|
|
4,000
|
|
|
7,440
|
|
Change in accounts payable and accrued liabilities
|
|
|
101,082
|
|
|
89,549
|
|
Change in customer deposits and unearned revenue
|
|
|
45,932
|
|
|
(41,486)
|
|
Change in other liabilities
|
|
|
(116,818)
|
|
|
57,507
|
|
Change in other liabilities and accrued interest - related parties
|
|
|
--
|
|
|
99,979
|
|
Change in royalties payable - related parties
|
|
|
(434)
|
|
|
(20,222)
|
|
Net cash used in operating activities
|
|
|
(117,638)
|
|
|
(125,323)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(23,600)
|
|
|
(34,768)
|
|
Net cash used in investing activities
|
|
|
(23,600)
|
|
|
(34,768)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds from borrowing on convertible debentures
|
|
|
176,750
|
|
|
379,724
|
|
Proceeds from short-term loans payable
|
|
|
200,000
|
|
|
47,000
|
|
Repayment against short-term loans
|
|
|
(2,000)
|
|
|
--
|
|
Proceeds from equity investment
|
|
|
--
|
|
|
5,000
|
|
Principal payment on convertible debentures
|
|
|
(229,696)
|
|
|
(142,724)
|
|
Proceeds from notes payable
|
|
|
--
|
|
|
2,002
|
|
Principal payments on note payable
|
|
|
(12,259)
|
|
|
(7,752)
|
|
Proceeds from notes payable - related parties
|
|
|
85,000
|
|
|
--
|
|
Principal payments on note payable - related parties
|
|
|
(75,765)
|
|
|
(81,049)
|
|
Net cash provided by financing activities
|
|
|
142,030
|
|
|
202,201
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
792
|
|
|
42,110
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period
|
|
|
69,292
|
|
|
27,182
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
70,084
|
|
$
|
69,292
|
|
F-5 | ||
|
|
Year ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
16,324
|
|
$
|
47,100
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of non-cash investing activities
|
|
|
|
|
|
|
|
and future operating activities:
|
|
|
|
|
|
|
|
Discounts on convertible debentures
|
|
$
|
72,053
|
|
$
|
150,129
|
|
|
|
|
|
|
|
|
|
Stock and additional paid-in capital for assets purchased
|
|
|
|
|
|
|
|
from Florida Dive Industries, Inc.
|
|
$
|
--
|
|
$
|
59,400
|
|
|
|
|
|
|
|
|
|
Conversion of convertible debentures to stock
|
|
$
|
177,134
|
|
$
|
194,583
|
|
|
|
|
|
|
|
|
|
Conversion of accrued payroll to stock
|
|
$
|
54,000
|
|
$
|
99,000
|
|
|
|
|
|
|
|
|
|
Conversion of accrued interest and fees on convertible
|
|
|
|
|
|
|
|
debentures to stock
|
|
$
|
7,402
|
|
$
|
7,178
|
|
|
|
|
|
|
|
|
|
Conversion of accrued Non-employee Board of Directors
|
|
|
|
|
|
|
|
fees to stock
|
|
$
|
15,000
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
Stock due back from non-employee BOD for forgiveness
|
|
|
|
|
|
|
|
of BOD Fees
|
|
$
|
5,917
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
Conversion of short-term loan to stock
|
|
$
|
--
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
Write off of real estate due to foreclosure and sale
|
|
$
|
--
|
|
$
|
1,075,165
|
|
|
|
|
|
|
|
|
|
Write off of mortgage due to foreclosure and sale of real estate
|
|
$
|
--
|
|
$
|
1,053,994
|
|
|
|
|
|
|
|
|
|
Real estate foreclosure difference between court judgement and
|
|
|
|
|
|
|
|
sale amount recorded as estimated libiiliaty (adjusted to $110,000
|
|
|
|
|
|
|
|
in subsequent period)
|
|
$
|
--
|
|
$
|
110,000
|
|
|
|
|
|
|
|
|
|
Application of accounts receivable trade to accrued interest
|
|
|
|
|
|
|
|
convertible debenture
|
|
$
|
--
|
|
$
|
6,298
|
|
F-6 | ||
|
1.
|
Description of business and summary of significant accounting policies
|
F-7 | ||
|
1.
|
Description of business and summary of significant accounting policies (continued)
|
F-8 | ||
|
1.
|
Description of business and summary of significant accounting policies (continued)
|
F-9 | ||
|
1.
|
Description of business and summary of significant ACCOUNTING policies (continued)
|
F-10 | ||
|
1.
|
Description of business and summary of significant ACCOUNTING policies (continued)
|
|
2.
|
INVENTORY
|
|
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
317,187
|
|
$
|
324,459
|
|
Work in process
|
|
|
--
|
|
|
--
|
|
Finished goods
|
|
|
418,739
|
|
|
279,408
|
|
|
|
$
|
735,926
|
|
$
|
603,867
|
|
|
3.
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS
|
F-11 | ||
|
4.
|
FURNITURE, FIXTURES, AND EQUIPMENT
|
|
|
December 31, 2013
|
|
December 31, 2012
|
|
||
|
|
|
|
|
|
|
|
Furniture, fixtures, vehicles and equipment
|
|
$
|
204,896
|
|
$
|
181,296
|
|
Less: accumulated depreciation and amortization
|
|
|
(128,631)
|
|
|
(109,015)
|
|
|
|
$
|
76,265
|
|
$
|
72,281
|
|
|
5.
|
OTHER ASSETS
|
|
6.
|
CUSTOMER CREDIT CONCENTRATIONS
|
|
7.
|
RELATED PARTIES TRANSACTIONS
|
Promissory note payable to the Chief Executive Officer of the the Company, unsecured, bearing interest at 7.5% per annum, due in monthly principal and interest payments of $7,050, maturing on August 1, 2013.
|
|
$
|
49,702
|
|
|
|
|
|
|
Promissory note payable to the non-employee Board of Director, secured by up to $200,000 in and to all of the Company’s right, title and interest in its fixed assets, inventory, receivables, and all documents including its books, records, and files; bearing interest at 21.21% per annum, due in monthly principal and interest payments of $8,585, maturing on November 1, 2014.
|
|
|
77,917
|
|
|
|
|
|
|
|
|
|
127,619
|
|
|
|
|
|
|
Less amounts due within one year
|
|
|
127,619
|
|
|
|
|
|
|
Long-term portion of notes payable
|
|
$
|
--
|
|
F-12 | ||
|
7.
|
RELATED PARTIES TRANSACTIONS (continued)
|
2014
|
|
$
|
127,619
|
|
2015
|
|
|
--
|
|
2016
|
|
|
--
|
|
2017
|
|
|
--
|
|
2018
|
|
|
--
|
|
Thereafter
|
|
|
--
|
|
|
|
|
|
|
|
|
$
|
127,619
|
|
Promissory note payable to the Chief Executive Officer of the Company, unsecured, bearing interest at 7.5% per annum, due in monthly principal and interest payments of $7,050, maturing on August 1, 2013.
|
|
$
|
168,384
|
|
|
|
|
|
|
Less amounts due within one year
|
|
|
168,384
|
|
|
|
|
|
|
Long-term portion of notes payable related parties
|
|
$
|
--
|
|
F-13 | ||
|
7.
|
RELATED PARTIES TRANSACTIONS (continued)
|
F-14 | ||
|
7.
|
RELATED PARTIES TRANSACTIONS (continued)
|
|
|
December 31, 2013
|
|
December 31, 2012
|
|
||
|
|
|
|
|
|
|
|
Year-end 2012 bonus payable to Chief Executive Officer
|
|
$
|
67,000
|
|
$
|
67,000
|
|
BOD fee payable to non-employee related parties
|
|
|
--
|
|
|
7,500
|
|
Due to Principals of Carleigh Rae Corp., net
|
|
|
6,017
|
|
|
6,017
|
|
Other liabilities related parties
|
|
$
|
73,017
|
|
$
|
80,517
|
|
F-15 | ||
|
7.
|
RELATED PARTIES TRANSACTIONS (continued)
|
|
8.
|
ASSET PURCHASE
|
F-16 | ||
|
9.
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
10.
|
OTHER LIABILITIES
|
F-17 | ||
|
11.
|
NOTES PAYABLE
|
Promissory note payable, unsecured, bearing interest at 5% simple interest per annum, due in weekly principal and interest payments of $250, maturing on March 10, 2015.
|
|
$
|
15,305
|
|
|
|
|
|
|
Less amounts due within one year
|
|
|
12,540
|
|
|
|
|
|
|
Long-term portion of notes payable
|
|
$
|
2,765
|
|
2014
|
|
$
|
12,540
|
|
2015
|
|
|
2,765
|
|
2016
|
|
|
--
|
|
2017
|
|
|
--
|
|
2018
|
|
|
--
|
|
Thereafter
|
|
|
--
|
|
|
|
|
|
|
|
|
$
|
15,305
|
|
Promissory note payable, unsecured, bearing interest at 5% simple interest per annum, due in weekly principal and interest payments of $250, maturing on March 10, 2015.
|
|
$
|
27,564
|
|
|
|
|
|
|
Less amounts due within one year
|
|
|
12,152
|
|
|
|
|
|
|
Long-term portion of notes payable
|
|
$
|
15,412
|
|
F-18 | ||
|
12.
|
CONVERTIBLE DEBENTURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End
|
|
|
|
|||||
|
|
|
|
|
|
Origination
|
|
Origination
|
|
Period End
|
|
Period End
|
|
Debenture,
|
|
|
|
|||||
Origination
|
|
Maturity
|
|
Interest
|
|
Principal
|
|
Discount
|
|
Principal
|
|
Discount
|
|
Net
|
|
|
|
|||||
Date
|
|
Date
|
|
Rate
|
|
Balance
|
|
Balance
|
|
Balance
|
|
Balance
|
|
Balance
|
|
Ref.
|
|
|||||
10/4/2010
|
|
4/4/2011
|
|
5%
|
|
$
|
20,635
|
|
$
|
(20,635)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
(1)
|
|
11/27/2010
|
|
5/27/2011
|
|
10%
|
|
|
125,000
|
|
|
(53,571)
|
|
|
58,750
|
|
|
-
|
|
|
58,750
|
|
(2)
|
|
1/7/2011
|
|
11/11/2011
|
|
5%
|
|
|
76,000
|
|
|
(32,571)
|
|
|
48,000
|
|
|
-
|
|
|
48,000
|
|
(3)
|
|
2/10/2011
|
|
1/14/2011
|
|
8%
|
|
|
42,500
|
|
|
(42,500)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(4)
|
|
9/12/2011
|
|
6/14/2012
|
|
8%
|
|
|
37,500
|
|
|
(37,500)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(4)
|
|
3/9/2011
|
|
3/9/2012
|
|
10%
|
|
|
50,000
|
|
|
(34,472)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(5)
|
|
5/3/2011
|
|
5/5/2012
|
|
5%
|
|
|
300,000
|
|
|
(206,832)
|
|
|
300,000
|
|
|
-
|
|
|
300,000
|
|
(6)
|
|
8/31/2011
|
|
8/31/2013
|
|
5%
|
|
|
10,000
|
|
|
(4,286)
|
|
|
10,000
|
|
|
-
|
|
|
10,000
|
|
(7)
|
|
9/8/2011
|
|
9/20/2011
|
|
10%
|
|
|
39,724
|
|
|
(17,016)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(8)
|
|
2/10, 5/18, 7/17, 11/8/2012
|
|
2/10, 5/18, 7/17, 11/8/2014
|
|
10%
|
|
|
42,750
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(9)
|
|
3/14/2012
|
|
2/10/2014
|
|
10%
|
|
|
5,500
|
|
|
-
|
|
|
472
|
|
|
-
|
|
|
472
|
|
(10)
|
|
12/19/2011
|
|
9/21/2012
|
|
8%
|
|
|
37,500
|
|
|
(37,500)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(4)
|
|
2/7/2012
|
|
2/7/2014
|
|
10%
|
|
|
16,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(11)
|
|
2/10/2012
|
|
2/10/2014
|
|
10%
|
|
|
39,724
|
|
|
-
|
|
|
2,743
|
|
|
-
|
|
|
2,743
|
|
(11)
|
|
3/9/2012
|
|
3/9/2014
|
|
10%
|
|
|
56,250
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(11)
|
|
4/19, 8/17, 11/7/2012
|
|
4/4/2011, 2/10, 4/14/2014
|
|
5%, 10%
|
|
|
39,847
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(12)
|
|
7/2/2012
|
|
4/5/2013
|
|
8%
|
|
|
78,500
|
|
|
(35,268)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(4)
|
|
8/8/2012
|
|
5/2/2013
|
|
8%
|
|
|
42,500
|
|
|
(27,172)
|
|
|
8,445
|
|
|
-
|
|
|
8,445
|
|
(4)
|
|
10/31/2012
|
|
8/2/2013
|
|
8%
|
|
|
78,500
|
|
|
(50,189)
|
|
|
78,500
|
|
|
-
|
|
|
78,500
|
|
(4)
|
|
1/18/2013
|
|
1/18/2014
|
|
10%
|
|
|
84,500
|
|
|
(58,720)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(13)
|
|
1/18/2013
|
|
1/18/2014
|
|
10%
|
|
|
30,500
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(13)
|
|
1/18/2013
|
|
1/18/2014
|
|
10%
|
|
|
95,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(13)
|
|
4/8/2013
|
|
4/14/2013
|
|
9.9%
|
|
|
20,000
|
|
|
(13,333)
|
|
|
20,000
|
|
|
(3,334)
|
|
|
16,666
|
|
(14)
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
$
|
526,910
|
|
$
|
(3,334)
|
|
$
|
523,576
|
|
|
|
F-19 | ||
|
12.
|
CONVERTIBLE DEBENTURES (continued)
|
|
(1)
|
The Company converted an accounts payable for legal services to a convertible debenture. At the option of the lender, the principal amount of the note plus any accrued interest may be converted in whole or in part into Common Stock at the conversion price per share of $.001 by written notice. The lender will be limited to maximum conversion of 4.99% of the outstanding Common Stock of the Company at any one time. The debenture and the shares referenced within the debenture may be assignable in whole or in part to a third party at any time during the term. The Company valued the beneficial conversion feature (BCF) of the convertible debenture at $20,635, the “ceiling” of its intrinsic value. The Company accreted the discount to the convertible debenture and recognize interest expense through its maturity. On the maturity date of the debenture, the lender sold and assigned the debenture to an unrelated third party for the face value of the debenture. See Note 17. COMMITMENT AND CONTINCIES regarding dismissal of lawsuit complaint filed by this party against the Company and the original lender. Because the original lender asserted default against this party, the original lender re-assigned the debenture to another party. See Ref. (12) for assignment of the debenture as well as accounting treatment of the assignment.
|
|
(2)
|
The Company purchased exclusive rights for license of certain intellectual property from an unrelated party. The parties agreed to a royalty of 2.5% of net revenues generated from the sale, sub-license or use of the technology or a reasonable negotiated rate based on similar invention. The debenture is convertible to common shares of the Company at May 27, 2011, along with accrued interest at the option of the lender. Conversion price per share is 30% discount as determined from the weighted average of the preceding 12 trading days’ closing market price. The Company valued the BCF of the convertible debenture at $53,517, its intrinsic value. The Company accreted the discount to the convertible debenture and will recognize interest expense through repayment in full or conversion. Because there is no assurance of success and the invention is still in design and pre-prototype phase, the Company recorded the initial net value of the debenture, $71,483, as research and development expense in during the years ended 2010. Both parties have agreed to confidentiality regarding the invention during the pre-prototype stage. In addition, the Company has agreed to provide the licensor with design services, as well as assist in completing the prototype and initial production at the Company’s prevailing wholesale rate for comparable services.
|
F-20 | ||
|
12.
|
CONVERTIBLE DEBENTURES (continued)
|
|
(3)
|
The Company ratified a technology and license agreement with commitment for purchase of inventory related to an agreement signed in 2010, which set pricing for products if minimum quantity purchases were met. Since the Company did not purchase the minimum quantities, but desired to maintain the technology and licensing rights along with the pricing, it agreed to purchase the 2010 balance shortage in 2011, as well as the 2011 minimum quantities. The agreement required the Company issue a convertible debenture for $76,000, and $38,000 of restricted common stock. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days. The Company valued the BCF of the convertible debenture at $32,571. The Company accreted the discount to the convertible debenture and will recognize interest expense through paid in full or converted. The Company repaid $28,000 of this debenture in 2011. See Note 17. COMMITMENTS AND CONTINGENCIES for discussion of litigation involving the technology and license agreement.
|
|
(4)
|
In 2011, the Company borrowed $42,500, $37,500, and $37,500, respectively, in exchange for three convertible debentures from a lender. The Company valued the related beneficial conversion features (BCF) at $42,500, 37,500 and 37,500, respectively. On February 7, 2012, the lender sold/assigned all rights and interest on the first debenture having net book value of $11,000 plus accrued interest of $3,328. On March 9, 2012, the lender sold/assigned all rights and interest on the second debenture having a net book value of $24,500, plus $1,448 of accrued interest. See reference (11) which discusses the terms and conditions surrounding the new debentures issued upon extinguishment of the two originals as well as accounting treatment of the transactions. During the third quarter of 2012, the lender converted to stock the third convertible debenture with $37,500 principal and $1,500 accrued interest outstanding in full satisfaction of the convertible debenture. The stock was issued without restrictive legend pursuant to Rule 144, as the holder acquired convertible note issued by the Company more than six months prior to the date of conversion and did not pay any additional consideration for the shares.
|
F-21 | ||
|
12.
|
CONVERTIBLE DEBENTURES (continued)
|
|
(5)
|
On March 9, 2011, the Company borrowed $50,000 in exchange for a convertible debenture. The lender could at any time convert any portion of the debenture to common shares at a 30% discount of the “Market Price” of the stock based on the average of the previous ten (10) days weighted average closing prices on the date prior to the notice of conversion. The Company could have prepaid the debenture plus accrued interest at any time before maturity. In addition, as further inducement for loaning the Company the funds, the Company granted the lender 50,000 and 100,000 warrants at $337.50 and $472.50 per share (after restatement for 1 for -1,350- reverse stock split) , respectively. As a result, the Company allocated fair market value (“FMV”) to both the BCF and to the warrants, or $34,472, which was recorded as a discount against the debenture. The Company accreted the discount to the convertible debenture through its maturity and recognized interest expense until both the debenture and accrued interest were converted to stock in full satisfaction of amounts due, in the first and second quarter of 2012, respectively. Before discount, the Company determined the FMV of the warrants as $7,500 using the Black-Scholes valuation model.
|
|
(6)
|
On May 3, 2011, the Company borrowed $300,000 in exchange for a convertible debenture. The Debenture bears 10% interest per annum. The lender may at any time convert any portion of the debenture to common shares at a 30% discount of the “Market Price” of the stock based on the average of the previous ten (10) days weighted average closing prices on the date prior to the notice of conversion. The Company may prepay the debenture plus accrued interest at any time before maturity. In addition, as further inducement for loaning the Company the funds, the Company granted the lender 300,000 and 600,000 warrants at $337.50 and $472.50 per share (after restatement for 1 for -1,350- reverse stock split), respectively. As a result, the Company allocated fair market value (“FMV”) to both the BCF and to the warrants, or $206,832, which was recorded as a discount against the debenture. The Company accreted the discount to the convertible debenture through maturity and will recognize interest expense until paid in full or converted. Before discount, the Company determined the FMV of the warrants as $45,000 using the Black-Scholes valuation model.
|
|
(7)
|
The Company borrowed $10,000 in exchange for a convertible debenture. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days. The Company valued the BCF of the convertible debenture at $4,286. The Company accreted the discount to the convertible debenture and will recognize interest expense until paid in full or converted.
|
|
(8)
|
The Company converted a note payable and related accrued interest of $39,724 into a convertible debenture. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (30%) discount as determined from the average four (4) highest closing bid prices over the preceding five (5) trading days. The Company valued the BCF of the convertible debenture at $17,025. Because the debenture was issued and matured in the third quarter of 2011, the full amount of the discount, $17,025 was accreted and recognized as interest expense during the period.
|
F-22 | ||
|
12.
|
CONVERTIBLE DEBENTURES (continued)
|
|
(9)
|
The Company entered a new debenture agreement upon sale/assignment of the original lender under the debenture as discussed in reference (2) above. Because the stated terms of the new debenture agreement were significantly different from the original debenture, including analysis of value of the beneficial conversion feature at the assignment/purchase date, the transaction was treated as extinguishment of the old debenture and recording of the new for accounting purposes. Because the debenture is being assigned/sold in installments, the Company is calculating and recognizing gain or loss on the extinguishment as it occurs. On February 10, 2012, the new holder (lender) purchased $7,500 of the original $125,000 principal balance, and based on this transaction, the Company recorded a $4,286 loss on extinguishment. On May 18, 2012, the lender purchased another $11,750, and the Company recorded a $6,714 loss on extinguishment related to this transaction. On July 17, 2012, the lender purchased another $11,750, and the Company recorded a $6,714 loss on extinguishment related to this transaction. On November 8, 2012, the lender purchased another $11,750, and the Company recorded a $6,714 loss on the extinguishment related to this transaction.
|
|
(10)
|
This line is comprised of the assignment of $5,500 of the convertible debenture from reference (9) above with the same stated terms and conditions equally to four separate parties. Due to the smaller transaction amounts, these four debenture holders have been combined for presentation purposes.
|
|
(11)
|
The Company entered into three new debenture agreements upon sale/assignment of the original lenders under the debentures as discussed in references (4) and (8) above. Because the stated terms of the new debenture agreement and principal amounts were significantly different from the original debenture, including analysis of value of the beneficial conversion feature at the assignment/purchase date, the transactions are treated as extinguishment of the old debentures and recorded as new for accounting purposes. As a result of these three transactions, the Company recognized a combined loss on extinguishment of $71,577.
|
F-23 | ||
|
12.
|
CONVERTIBLE DEBENTURES (continued)
|
|
(12)
|
On April, 19, 2012, the original lender discussed in ref (1) above re-assigned the debenture to this party asserting default against the first assignee. The amount of assignment was the balance remaining per the original lender’s records, or $16,347. The Company recognized a $3,700 loss on this transaction. Terms of the assigned debenture are the same as the original debenture as stated in ref (1). During the year ended December 31, 2012, the new holder converted $16,347 of the debenture principal plus $162 of accrued interest in full satisfaction.
|
|
(13)
|
On January 18, 2013, the Company entered into three new debenture agreements: one new lending and two upon sale/assignment of two debentures as discussed in reference (11). Because the stated terms of the new debenture agreements and principal amounts are significantly different from the original debentures that were sold/assigned, including analysis of value of the beneficial conversion feature at the assignment/purchase date, the sale/assignment transactions are treated as extinguishment of the old debentures and recorded as new for accounting purposes. As a result of the sale/assignment transactions, the Company recognized a combined loss on extinguishment of $93,826. Principal balances on these two new debentures was $30,500 and $95,000, respectively. The Company was also required to maintain a reserve of shares sufficient to cover the lender’s conversion to common stock of the total amount of the debentures.
|
F-24 | ||
|
12.
|
CONVERTIBLE DEBENTURES (continued)
|
|
(14)
|
On April 8, 2013, the Company borrowed $20,000 in exchange for a convertible debenture. The lender at their option may convert all or part of the note plus accrued interest into common stock at a price of thirty percent (40%) discount as determined from the lowest trading price for the 5 trading days prior to the conversion notice. The Company valued the BCF of the convertible debenture at $13,333 and is accreting the discount to the convertible debenture, and will recognize interest expense until paid in full or converted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End
|
|
|
|
|
|
|
|
|
|
|
Origination
|
|
Origination
|
|
Period End
|
|
Period End
|
|
Debenture,
|
|
|
|
|||||
Origination
|
|
Maturity
|
|
Interest
|
|
Principal
|
|
Discount
|
|
Principal
|
|
Discount
|
|
Net
|
|
|
|
|||||
Date
|
|
Date
|
|
Rate
|
|
Balance
|
|
Balance
|
|
Balance
|
|
Balance
|
|
Balance
|
|
Ref.
|
|
|||||
10/4/2010
|
|
4/4/2011
|
|
5%
|
|
$
|
20,635
|
|
$
|
(20,635)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
(1)
|
|
11/27/2010
|
|
5/27/2011
|
|
10%
|
|
|
125,000
|
|
|
(53,571)
|
|
|
58,750
|
|
|
-
|
|
|
58,750
|
|
(2)
|
|
1/7/2011
|
|
11/11/2011
|
|
5%
|
|
|
76,000
|
|
|
(32,571)
|
|
|
48,000
|
|
|
-
|
|
|
48,000
|
|
(3)
|
|
2/10/2011
|
|
1/14/2011
|
|
8%
|
|
|
42,500
|
|
|
(42,500)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(4)
|
|
9/12/2011
|
|
6/14/2012
|
|
8%
|
|
|
37,500
|
|
|
(37,500)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(4)
|
|
3/9/2011
|
|
3/9/2012
|
|
10%
|
|
|
50,000
|
|
|
(34,472)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(5)
|
|
5/3/2011
|
|
5/5/2012
|
|
5%
|
|
|
300,000
|
|
|
(206,832)
|
|
|
300,000
|
|
|
-
|
|
|
300,000
|
|
(6)
|
|
8/31/2011
|
|
8/31/2013
|
|
5%
|
|
|
10,000
|
|
|
(4,286)
|
|
|
10,000
|
|
|
(1,427)
|
|
|
8,573
|
|
(7)
|
|
9/8/2011
|
|
9/20/2011
|
|
10%
|
|
|
39,724
|
|
|
(17,016)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(8)
|
|
2/10, 5/18, 7/17, 11/8/2012
|
|
2/10, 5/18, 7/17, 11/8/2014
|
|
10%
|
|
|
42,750
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(9)
|
|
3/14/2012
|
|
2/10/2014
|
|
10%
|
|
|
5,500
|
|
|
-
|
|
|
472
|
|
|
-
|
|
|
472
|
|
(10)
|
|
12/19/2011
|
|
9/21/2012
|
|
8%
|
|
|
37,500
|
|
|
(37,500)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(4)
|
|
2/7/2012
|
|
2/7/2014
|
|
10%
|
|
|
16,000
|
|
|
-
|
|
|
16,000
|
|
|
-
|
|
|
16,000
|
|
(11)
|
|
2/10/2012
|
|
2/10/2014
|
|
10%
|
|
|
39,724
|
|
|
-
|
|
|
12,643
|
|
|
-
|
|
|
12,643
|
|
(11)
|
|
3/9/2012
|
|
3/9/2014
|
|
10%
|
|
|
56,250
|
|
|
-
|
|
|
56,250
|
|
|
-
|
|
|
56,250
|
|
(11)
|
|
4/19, 8/17, 11/7/2012
|
|
4/4/2011, 2/10, 4/14/2014
|
|
5%, 10%
|
|
|
39,847
|
|
|
-
|
|
|
2,125
|
|
|
-
|
|
|
2,125
|
|
(12)
|
|
7/2/2012
|
|
4/5/2013
|
|
8%
|
|
|
78,500
|
|
|
(35,268)
|
|
|
78,500
|
|
|
(11,754)
|
|
|
66,746
|
|
(4)
|
|
8/8/2012
|
|
5/2/2013
|
|
8%
|
|
|
42,500
|
|
|
(27,172)
|
|
|
42,500
|
|
|
(12,856)
|
|
|
29,644
|
|
(4)
|
|
10/31/2012
|
|
8/2/2013
|
|
8%
|
|
|
78,500
|
|
|
(50,189)
|
|
|
78,500
|
|
|
(39,036)
|
|
|
39,464
|
|
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
$
|
703,740
|
|
$
|
(65,073)
|
|
$
|
638,667
|
|
|
|
F-25 | ||
|
13.
|
EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES
|
F-26 | ||
|
14.
|
INCOME TAXES
|
|
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
Current taxes
|
|
|
|
|
|
|
|
Federal
|
|
$
|
--
|
|
$
|
--
|
|
State
|
|
|
--
|
|
|
--
|
|
Current taxes
|
|
|
--
|
|
|
--
|
|
Change in deferred taxes
|
|
|
85,065
|
|
|
331,211
|
|
Change in valuation allowance
|
|
|
(77,587)
|
|
|
(292,880)
|
|
|
|
|
|
|
|
|
|
Provision for income tax expense
|
|
$
|
7,478
|
|
$
|
38,231
|
|
Deferred tax assets:
|
|
|
|
|
Equity based compensation
|
|
$
|
97,276
|
|
Allowance for doubtful accounts
|
|
|
13,260
|
|
Depreciation and amortization timing differences
|
|
|
--
|
|
Net operating loss carryforward
|
|
|
1,124,299
|
|
On-line training certificate reserve
|
|
|
1,109
|
|
Total deferred tax assets
|
|
|
1,235,944
|
|
Valuation allowance
|
|
|
(1,233,337)
|
|
|
|
|
|
|
Deferred tax assets net of valuation allowance
|
|
|
2,607
|
|
|
|
|
|
|
Less deferred tax assets non-current, net of valuation allowance
|
|
|
2,330
|
|
|
|
|
|
|
Deferred tax assets current, net of valuation allowance
|
|
$
|
277
|
|
F-27 | ||
|
15.
|
INCOME TAXES (continued)
|
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
Statutory tax rate
|
|
--
|
%
|
|
--
|
%
|
|
Increase (decrease) in rates resulting from:
|
|
|
|
|
|
|
|
Net operating loss carryforward or carryback
|
|
(7)
|
%
|
|
28
|
%
|
|
Equity based compensation and loss
|
|
18
|
%
|
|
(11)
|
%
|
|
Book/tax depreciation and amortization differences
|
|
--
|
%
|
|
--
|
%
|
|
Change in valuation allowance
|
|
(10)
|
%
|
|
(15)
|
%
|
|
Other
|
|
--
|
%
|
|
--
|
%
|
|
Effective tax rate
|
|
1
|
%
|
|
2
|
%
|
|
Deferred tax assets:
|
|
|
|
|
Equity based compensation
|
|
$
|
236,145
|
|
Allowance for doubtful accounts
|
|
|
12,240
|
|
Depreciation and amortization timing differences
|
|
|
--
|
|
Net operating loss carryforward
|
|
|
1,071,409
|
|
On-line training certificate reserve
|
|
|
1,215
|
|
Total deferred tax assets
|
|
|
1,321,009
|
|
Valuation allowance
|
|
|
(1,310,924)
|
|
|
|
|
|
|
Deferred tax assets net of valuation allowance
|
|
|
10,085
|
|
|
|
|
|
|
Less deferred tax assets non-current, net of valuation allowance
|
|
|
9,781
|
|
|
|
|
|
|
Deferred tax assets current, net of valuation allowance
|
|
$
|
304
|
|
|
16.
|
AUTHORIZATION OF PREFERRED STOCK
|
F-28 | ||
|
17.
|
COMMITMENTS AND CONTINGENCIES
|
F-29 | ||
|
17.
|
COMMITMENTS AND CONTINGENCIES (continued)
|
|
18.
|
JOINT VENTURE EQUITY EXCHANGE AGREEMENT
|
F-30 | ||
|
19.
|
CHANGE IN CAPITAL STRUCTURE
|
|
20.
|
EQUITY INCENTIVE PLAN
|
|
21.
|
EQUITY BASED INCENTIVE/RETENTION BONUSES
|
|
22.
|
STRATEGIC ALLIANCE AGREEMENT
|
F-31 | ||
|
23.
|
INTEREST EXPENSE NON-RELATED PARTIES AND OTHER EXPENSE (INCOME), NET
|
|
24.
|
SECURITIES PURCHASE AGREEMENT
|
|
25.
|
SUBSEQUENT EVENTS
|
F-32 | ||
Date: March 17, 2014
|
By:
|
/s/ Robert M. Carmichael
|
|
Name:
|
Robert M. Carmichael
|
|
Title:
|
Principal Executive Officer
|
Date: March 17, 2014
|
By:
|
/s/ Robert M. Carmichael
|
|
Name:
|
Robert M. Carmichael
|
|
Title:
|
Principal Financial Officer
|
Date: March 17, 2014
|
By:
|
/s/ Robert M. Carmichael
|
|
Name:
|
Robert M. Carmichael
|
|
Title:
|
Principal Executive Officer
|
Date: March 17, 2014
|
By:
|
/s/ Robert M. Carmichael
|
|
Name:
|
Robert M. Carmichael
|
|
Title:
|
Principal Financial Officer
|
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) (USD $)
|
0 Months Ended | 12 Months Ended | |
---|---|---|---|
Jul. 15, 2013
|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Significant Accounting Policies [Line Items] | |||
Marketing and Advertising Expense | $ 43,583 | $ 19,380 | |
Percentage Of Minimum Deposit For Custom and Large Tank Fill Systems | 50.00% | ||
Percentage Of Restocking Fees | 15.00% | ||
Period End Principal Balance | $ 526,910 | $ 703,740 | |
Stockholders Equity, Reverse Stock Split | 1 -for- 1,350 | 1 -for- 1,350 | |
Minimum [Member]
|
|||
Significant Accounting Policies [Line Items] | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Maximum [Member]
|
|||
Significant Accounting Policies [Line Items] | |||
Property, Plant and Equipment, Useful Life | 5 years |
NOTES PAYABLE (Details Textual) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Long-term Debt, by Category, Current and Noncurrent [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 7.50% | 7.50% |
Maturity Date | Aug. 01, 2013 | Aug. 01, 2013 |
Debt Instrument, Periodic Payment | $ 7,050 | $ 7,050 |
Promissory Note Payable Unsecured [Member]
|
||
Long-term Debt, by Category, Current and Noncurrent [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | 5.00% |
Maturity Date | Mar. 10, 2015 | Mar. 10, 2015 |
Debt Instrument, Annual Principal Payment | $ 250 | $ 250 |
Debt Instrument, Payment Terms | due in weekly principal and interest payments of $250 | due in weekly principal and interest payments of $250 |
RELATED PARTIES TRANSACTIONS (Details Textual) (USD $)
|
0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 2 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 30, 2013
|
Dec. 23, 2013
|
Jun. 20, 2012
|
Apr. 30, 2011
|
Sep. 30, 2010
|
Mar. 31, 2009
|
Aug. 22, 2007
|
Mar. 31, 2013
|
Dec. 31, 2013
|
Dec. 31, 2012
|
Apr. 20, 2013
|
Nov. 02, 2012
|
May 31, 2012
|
Apr. 30, 2012
|
Apr. 19, 2012
|
Sep. 24, 2010
|
Mar. 03, 2009
|
Dec. 31, 2013
Common Stock [Member]
|
Dec. 31, 2012
Common Stock [Member]
|
Mar. 05, 2014
Subsequent Event [Member]
|
Mar. 13, 2014
Subsequent Event [Member]
|
Feb. 04, 2014
Subsequent Event [Member]
|
Feb. 07, 2014
Subsequent Event [Member]
|
Jan. 07, 2014
Subsequent Event [Member]
|
Feb. 26, 2014
Subsequent Event [Member]
|
Jan. 17, 2014
Subsequent Event [Member]
|
Jan. 24, 2014
Subsequent Event [Member]
|
Jan. 28, 2014
Subsequent Event [Member]
|
Dec. 31, 2013
Restricted Stock [Member]
|
Mar. 31, 2012
Restricted Stock [Member]
|
Apr. 21, 2011
Restricted Stock [Member]
|
Feb. 28, 2014
Restricted Stock [Member]
Subsequent Event [Member]
|
Jan. 31, 2014
Restricted Stock [Member]
Subsequent Event [Member]
|
Dec. 31, 2013
Brownies Southport Divers Inc + Brownie Palm Beach Divers + Brownies Yacht Toys
|
Dec. 31, 2012
Brownies Southport Divers Inc + Brownie Palm Beach Divers + Brownies Yacht Toys
|
Dec. 31, 2013
Brownies Southport Divers Inc [Member]
|
Dec. 31, 2012
Brownies Southport Divers Inc [Member]
|
Dec. 31, 2013
Brownie Palm Beach Divers [Member]
|
Dec. 31, 2012
Brownie Palm Beach Divers [Member]
|
Dec. 31, 2013
Brownies Yacht Toys [Member]
|
Dec. 31, 2012
Brownies Yacht Toys [Member]
|
Dec. 31, 2013
Pompano Dive Center [Member]
|
Dec. 31, 2012
Pompano Dive Center [Member]
|
Dec. 31, 2012
Mikkel Pitzner [Member]
|
Dec. 31, 2013
Mikkel Pitzner [Member]
Restricted Stock [Member]
|
Dec. 31, 2013
Related Party [Member]
|
Dec. 31, 2013
940 Associates Inc [Member]
|
Dec. 31, 2012
940 Associates Inc [Member]
|
Dec. 31, 2013
Brownies Global Logistics LLC [Member]
|
Dec. 31, 2012
Brownies Global Logistics LLC [Member]
|
Dec. 31, 2013
Purdon [Member]
|
Dec. 31, 2012
Purdon [Member]
|
Dec. 31, 2011
Purdon [Member]
|
Feb. 28, 2014
Purdon [Member]
Subsequent Event [Member]
|
Nov. 02, 2012
Chief Executive Officer [Member]
|
Nov. 30, 2012
Chief Executive Officer [Member]
|
Dec. 31, 2013
Chief Executive Officer [Member]
|
Dec. 31, 2012
Chief Executive Officer [Member]
|
May 13, 2013
Chief Executive Officer [Member]
Common Stock [Member]
|
Apr. 30, 2011
Director [Member]
|
Dec. 31, 2013
Director [Member]
|
Oct. 30, 2013
Director [Member]
|
Dec. 31, 2013
Board of Directors Chairman [Member]
|
Dec. 31, 2013
Promissory Note Payable Unsecured [Member]
|
Dec. 31, 2012
Promissory Note Payable Unsecured [Member]
|
|
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock, Shares, Issued | 14,815 | 402,610 | 387,530 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Net | $ 2,870,688 | $ 2,864,327 | $ 836,872 | $ 804,381 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Related Parties | 11,926 | 27,759 | 6,116 | 15,226 | 3,047 | 8,457 | 14,029 | 5,863 | 70,823 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation Related Party | 27,500 | 37,500 | 2,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Issued During Period Value Convertible Debentures | 20,000 | 20,000 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction, Purchases from Related Party | 25,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Noncurrent | 8,250 | 8,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage Of Restrictions On Common Stock | 50.00% | 50.00% | 50.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Compensation Arrangement with Individual, Compensation Expense | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization Of Prepaid Equity Based Compensation Expense | 137,494 | 500,004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Compensation Equity | 0 | 137,494 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of accrued payroll to stock | 54,000 | 99,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Declaration Of Bonus | 83,333 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Expenses | 1,534,897 | 2,505,281 | 83,333 | 23,801 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase In Payment Of Salary | 7,144 | 16,667 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage Of Discount On Restricted Shares | 30.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Bonus Number Of Shares Reserved | 75,100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Board Of Directors Fees Had Been Converted To Stock | 15,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BOD fee payable to non-employee - related party | 0 | 7,500 | 75,100 | 7,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock granted for consulting, legal, and other professional services (in shares) | 73,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales Revenue, Goods, Net | 1,924,445 | 2,048,364 | 23,322 | 11,531 | 4,340 | 0 | 80,613 | 0 | 1,097 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 370,370 | 196,000 | 196,226 | 195,918 | 196,591 | 196,486 | 195,918 | 196,364 | 195,455 | 195,455 | 370,371 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Conversion, Converted Instrument, Amount | 565,689 | 50,000 | 37 | 980 | 1,040 | 960 | 865 | 727 | 960 | 648 | 645 | 645 | 50,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.50% | 7.50% | 5.00% | 5.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Frequency of Periodic Payment | monthly | monthly | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Periodic Payment | 7,050 | 7,050 | 8,585 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Maturity Date | Aug. 01, 2013 | Aug. 01, 2013 | Mar. 10, 2015 | Mar. 10, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terms OF License Agreement | $2.00 per licensed product sold, rates increasing 5% annually | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Secured for Due to Officers Or Stockholders | 200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt, Weighted Average Interest Rate | 21.21% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Due To Officers Or Stockholders | 49,702 | 168,384 | 85,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,802,565 | 234 | 75 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Price | $ 0.025 | $ 0.0005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Per Share Weighted Average Price of Shares Purchased | $ 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation, Total | 44,610 | 4,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cancelled Compensation RelatedParty | 2,500 | 27,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cancelled Stock Payable To Board Of Directors | 5,917 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Paid In Capital, Common Stock | 8,478,092 | 7,648,732 | 428,578 | 27,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Payroll For Services | 54,000 | 99,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion Of Accrued Payroll Into Restricted Stock, Shares | 959,870 | 16,537 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 1,350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Bonus Cash Awarded | 67,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee-Related Liabilities, Current | 50,910 | 50,352 | 261,904 | 166,667 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Bonus Value Of Shares Awarded | $ 45,000 | $ 45,000 |
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