10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(mark one)

þ Quarterly Report Pursuant to Section 13 or 15(d) of Securities Exchange Act of 1934

For the quarterly period ended March 31, 2014

o Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______ to _______.

Commission File No. 333-99393

Brownie’s Marine Group, Inc.

(Name of Small Business Issuer in Its Charter)

Nevada	90-0226181
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
940 N.W. 1st Street, Fort Lauderdale, Florida	33311
(Address of Principal Executive Offices)	(Zip Code)
(954) 462-5570
(Issuer’s Telephone Number, Including Area Code) (Former Name, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Website, in any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

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

Large accelerated filer	¨	Accelerated filer ¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes ¨ No x

There were 11,612,055 shares of common stock outstanding as of May 1, 2014.

PART I

Item 1. Financial Statements

Financial Information

BROWNIE'S MARINE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31,			December 31,
	2014			2013
ASSETS
Current assets
Cash	$	49,979		$	70,084
Accounts receivable, net of $39,000 and $39,000 allowance for doubtful accounts, respectively		11,711			30,298
Accounts receivable - related parties		81,611			105,942
Inventory		746,893			735,926
Prepaid expenses and other current assets		116,161			109,523
Other current assets - related parties		5,663			5,917
Deferred tax asset, net - current		233			277
Total current assets		1,012,251			1,057,967
Furniture, fixtures and equipment, net		70,663			76,265
Deferred tax asset, net - non-current		2,330			2,330
Other assets		27,635			27,635
Total assets	$	1,112,879		$	1,164,197
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	510,277		$	517,058
Customer deposits and unearned revenue		138,343			99,610
Royalties payable - related parties		133,453			137,129
Other liabilities		250,521			252,009
Other liabilities and accrued interest - related parties		93,521			90,517
Convertible debentures, net		516,800			523,576
Notes payable - current portion		12,229			12,540
Notes payable - related parties - current portion		70,833			127,619
Total current liabilities		1,725,977			1,760,058
Long-term liabilities
Notes payable - long-term portion		—			2,765
Total liabilities		1,725,977			1,762,823
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; 11,258,711 and 10,049,140 shares issued, respectively; 9,427,853 and 5,672,051 shares outstanding, respectively		943			567
Common stock payable; $0.0001 par value;  195,610 and 195,610 shares, respectively		20			20
Additional paid-in capital		8,501,643			8,478,092
Accumulated deficit		(9,116,129	)		(9,077,730	)
Total stockholders' deficit		(613,098	)		(598,626	)
Total liabilities and stockholders' deficit	$	1,112,879		$	1,164,197

See Accompanying Unaudited Notes to Consolidated Financial Statements

1

BROWNIE'S MARINE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended March 31,
	2014			2013
Net revenues
Net revenues	$	298,319		$	423,282
Net revenues - related parties		290,064			165,381
Total net revenues		588,383			588,663
Cost of net revenues
Cost of net revenues		451,847			458,255
Royalties expense - related parties		13,225			14,283
Total cost of net revenues		465,072			472,538
Gross profit		123,311			116,125
Operating expenses
Selling, general and administrative		179,967			561,674
Research and development costs		379			15,599
Total operating expenses		180,346			577,273
Loss from operations		(57,035	)		(461,148	)
Other (income) expense, net
Other (income) expense, net		(36,738	)		91,779
Change in derivative liability		—			565,689
Interest expense		13,552			68,850
Interest expense - related parties		4,506			657
Total other (income) expense, net		(18,680	)		726,975
Net loss before provision for income taxes		(38,355	)		(1,188,123	)
Provision for income tax expense		44			3,783
Net loss	$	(38,399	)	$	(1,191,906	)
Basic loss  per common share	$	(0.02	)	$	(1.27	)
Diluted loss per common share	$	(0.02	)	$	(1.27	)
Basic weighted average common shares outstanding		7,196,169			941,986
Diluted weighted average common shares outstanding		7,196,169			941,986

See Accompanying Unaudited Notes to Consolidated Financial Statements

2

BROWNIE'S MARINE GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

															Additional						Total
	Common stock						Preferred stock				Common stock payable				paid-in			Accumulated			stockholders'
	Shares			Amount			Shares		Amount		Shares		Amount		capital			deficit			deficit
Balance, December 31, 2013		5,672,051		$	567			425,000	$	425		195,610	$	20	$	8,478,092		$	(9,077,730	)	$	(598,626	)
Conversion of employee compensation payable for first  quarter of 2014 to stock		1,223,977			122			—		—		—		—		13,378			—			13,500
Conversion of accrued interest on convertible debentures to stock		307,224			31			—		—		—		—		1,669			—			1,700
Conversion of convertible debentures to stock		2,239,007			224			—		—		—		—		9,886			—			10,110
Retirement of shares returned by non-employee Board of  Director		(14,406	)		(1	)		—		—		—		—		(1,382	)		—			(1,383	)
Net loss		—			—			—		—		—		—		—			(38,399	)		(38,399	)
Balance, March 31, 2014 (Unaudited)		9,427,853		$	943			425,000	$	425		195,610	$	20	$	8,501,643		$	(9,116,129	)	$	(613,098	)

See Accompanying Unaudited Notes to Consolidated Financial Statements

3

BROWNIE'S MARINE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
	2014			2013
Cash flows provided by (used in) operating activities:
Net loss	$	(38,399	)	$	(1,191,906	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Change in derivative liability		—			565,689
Depreciation		5,602			4,724
Change in deferred tax asset, net		44			3,783
Equity based compensation for consulting, legal, and other professional services		—			44,600
Equity based compensation for product exclusivity		—			6,000
Equity based employee and consultant bonuses		—			15,075
Equity based non-employee Board of Directors' fees		—			7,500
Accretion of convertible debenture discounts		3,334			49,918
Equity based compensation and bonuses payable to Chief Executive Officer		—			93,429
Amortization of prepaid equity based compensation to Chief Executive Officer		—			125,001
Loss on extinguishment of convertible debentures		—			93,826
Changes in operating assets and liabilities:
Change in accounts receivable, net		18,587			(1,114	)
Change in accounts receivable - related parties		24,331			(15,816	)
Change in inventory		(10,967	)		(9,861	)
Change in prepaid expenses and other current assets		(8,021	)		(794	)
Change in other current assets - related parties		254			—
Change in accounts payable and accrued liabilities		8,431			150,354
Change in customer deposits and unearned revenue		38,733			45,735
Change in other liabilities		(1,488	)		(7,808	)
Change in other liabilities and accrued interest - related parties		3,004			(67,000	)
Change in  royalties payable - related parties		(3,676	)		3,703
Net cash provided by (used in) operating activities		39,769			(84,962	)
Cash flows from investing activities:		—			—
Cash flows from financing activities:
Proceeds from borrowing on convertible debentures		—			156,750
Principal payment on convertible debentures		—			(72,250	)
Principal payments on note payable		(3,088	)		(2,924	)
Principal payments on note payable - related parties		(56,786	)		(20,158	)
Net cash (used in) provided by financing activities		(59,874	)		61,418
Net change in cash		(20,105	)		(23,544	)
Cash, beginning of period		70,084			69,292
Cash, end of period	$	49,979		$	45,748

See Accompanying Unaudited Notes to Consolidated Financial Statements

4

BROWNIE'S MARINE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
	2014		2013
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,133	$	983
Cash paid for income taxes	$	—	$	—
Supplemental disclosures of non-cash investing activities and future operating activities:
Discounts on convertible debentures	$	—	$	58,720
Conversion of convertible debentures to stock	$	10,110	$	102,225
Conversion of related party employee compensation payable to stock	$	13,500	$	9,000
Conversion of accrued interest and fees on convertible debentures to stock	$	1,700	$	10,599
Conversion of accrued non-employee Board of Directors fees to stock	$	—	$	15,000
Stock issued for non-employee Board of Directors fees	$	—	$	10,000
Equity based compensation vesting to Chief Exucutive Officer	$	—	$	93,429
Equity based compensation vesting for exclusivity pursuant to agreement with Precision Paddleboards, Inc.	$	—	$	6,000
Retirement of shares returned by non-employee Board of Director	$	1,383	$	—

See Accompanying Unaudited Notes to Consolidated Financial Statements

5

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of business and summary of significant accounting policies

Description of business –Brownie’s Marine Group, Inc., (hereinafter referred to as the “Company” or “BWMG”) designs, tests, manufactures and distributes recreational hookah diving, yacht based scuba air compressor and nitrox generation systems, and scuba and water safety products through its wholly owned subsidiary Trebor Industries, Inc. The Company sells its products both on a wholesale and retail basis, and does so from its headquarters and manufacturing facility in Fort Lauderdale, Florida. The Company does business as (dba) Brownie’s Third Lung, the dba name of Trebor Industries, Inc. The Company’s common stock is quoted on the OTCBB under the symbol “BWMG”.

Basis of Presentation – The financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included.

Definition of fiscal year – The Company’s fiscal year end is December 31. 

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications – Certain reclassifications have been made to the 2013 financial statement amounts to conform to the 2014 financial statement presentation. Effective July 15, 2013 the Company effectuated a reverse stock split (1 -for- 1,350). See Note 18. CHANGE IN CAPITAL STRUCTURE for more information. Accordingly, the transactional number of shares referenced throughout the Notes has been retroactively stated unless otherwise noted.

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

Going Concern –The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. We have incurred losses since 2009, and expect to have during 2014. We have had a working capital deficit since 2009.

The Company is behind on payments due for payroll taxes and withholding, matured convertible debentures, related parties notes payable, accrued liabilities and interest – related parties, and certain vendor payables. The Company is handling delinquencies on a case by case basis. However, there can be no assurance that cooperation the Company has received thus far will continue. Payment delinquencies are further addressed in Note 7. RELATED PARTIES TRANSACTIONS, Note 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES, Note 10. OTHER LIABILITIES, Note 11. NOTES PAYABLE, and Note 12. CONVERTIBLE DEBENTURES.

6

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of business and summary of significant accounting policies (continued)

Going Concern (continued) – During the fourth quarter of 2011, the Company formed a joint venture with one dive entity, and in the first quarter of 2012, purchased the assets of another, with assumption of their retail location lease. The Company accomplished both transactions predominantly through issuance of restricted common stock in BWMG. The Company believed these transactions would help generate sufficient future working capital. Neither endeavor did or has generated profit or positive cash-flow. Therefore, effective May 31, 2013, the Company closed and ceased operations at its retail facility. The Company is still involved in the joint venture. See Note 17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT and Note 8. ASSET PURCHASE for further discussion of these transactions. As a result, the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations beyond the second quarter of 2014. This raises substantial doubt about BWMG’s ability to continue as a going concern. The Company will need to raise additional funds and is currently exploring alternative sources of financing. BWMG has issued a number of convertible debentures as an interim measure to finance working capital needs as discussed in Note 12. CONVERTIBLE DEBENTURES and may continue to raise additional capital through sale of restricted common stock or other securities, and obtaining some short term loans. The Company has paid for legal and consulting services with restricted stock to maximize working capital, and intends to continue this practice when possible. In addition, the Company implemented some cost saving measures and will continue to explore more to reduce operating expenses.

If BWMG fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back or cease operations, liquidate assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Inventory – Inventory is stated at the lower of cost or fair market value. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company’s management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when required.

Furniture, Fixtures, and Equipment – Furniture, Fixtures, and Equipment is stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Revenue recognition – Revenues from product sales are recognized when the Company’s products are shipped or when service is rendered. Revenues from fixed-price contracts are recognized on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost of each contract. This method is used because management considers the percentage of cost incurred to date to estimated total cost to be the best available measure of progress on the contracts.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Change in job performance, job conditions, and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

Revenue and costs incurred for time and material projects are recognized as the work is performed.

7

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of business and summary of significant accounting policies (continued)

Product development costs – Product development expenditures are charged to expenses as incurred.

Advertising and marketing costs – The Company expenses the costs of producing advertisements and marketing material at the time production occurs, and expenses the costs of communicating advertisements and participating in trade shows in the period in which occur. Advertising and trade show expense was $912 and $27,262 for the years ended March 31, 2014, and 2013, respectively.

Customer deposits and returns policy – The Company takes a minimum 50% deposit against custom and large tankfill systems prior to ordering and/or building the systems. The remaining balance due is payable upon delivery, shipment, or installation of the system. There is no provision for cancellation of custom orders once the deposit is accepted, nor return of the custom ordered product. Additionally, returns of all other merchandise are subject to a 15% restocking fee as stated on each sales invoice.

Income taxes – The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Comprehensive income – The Company has no components of other comprehensive income. Accordingly, net income equals comprehensive income for all periods.

Stock-based compensation – The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes valuation model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued on the effective date of the agreement in accordance with generally accepted accounting principles, which includes determination of the fair value of the share-based transaction. The fair value has been determined either through use of the quoted stock price.

8

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of business and summary of significant ACCOUNTING policies (continued)

Stock-based compensation (continued) – For the three months ended March 31, 2014 and 2013, the Company compensated and/or converted all accrued payroll to stock for one employee. For the three months ended March 31, 2014 and 2013, the Company transacted stock-based compensation transactions as follows: amortized prepaid equity based compensation for personal guarantees of Chief Executive Officer on Company’s bank debt; additional compensation expense to the Chief Executive Officer; Board of Directors’ Fees and Bonuses; certain consulting, legal, and other professional fees; equity based incentive and/or retention bonuses for some employees, and consultants; and operating expense for exclusivity pursuant to strategic alliance agreement payable. These transactions, as applicable, are also further discussed in Note 7. RELATED PARTIES TRANSACTIONS, Note 13. EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES, Note 20. EQUITY BASED INCENTIVE/RETENTION BONUSES, and Note 12. STRATEGIC ALLIANCE AGREEMENT.

Beneficial conversion features on convertible debentures – The fair value of the stock upon which to base the beneficial conversion feature (BCF) computation has been determined either through use of the quoted stock price unless the trading activity is nominal, which may indicate it does not represent the fair value. Under these circumstances, the Company determines fair value through an analysis of its fair value of net assets and comparable publicly traded companies that have higher trading volumes with similar results of operations and industries.  See Note 12. CONVERTIBLE DEBENTURES for further discussion.

Fair value of financial instruments – Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. Management considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the Company’s perceived risk of that investment.

9

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of business and summary of significant ACCOUNTING policies (continued)

Fair value of financial instruments (continued) – At March 31, 2014, and December 31, 2013, the carrying amount of cash, accounts receivable, accounts receivable – related parties, customer deposits and unearned revenue, royalties payable – related parties, other liabilities, other liabilities and accrued interest – related parties, notes payable, notes payable – related parties, and accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments. The fair value of the Company’s convertible debentures was the principal balance due at March 31, 2014, and December 31, 2013, or $516,800, and $526,910, respectively, as presented in Note 12. CONVERTIBLE DEBENTURES. The principal balance due approximates fair value because of the short maturity of these instruments. On the face of the balance sheet the convertible debentures are presented net of discount, which is less than fair market value at period end dates when discount is not fully accreted.

Earnings per common share – Basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Basic earnings per share is computed using the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. All common stock equivalent shares were excluded in the computation dilutive earnings per share for the three months ended March 31, 2014, and 2013, since their effect was antidilutive.

New accounting pronouncements – The Company believes there was no new accounting guidance adopted but not yet effective that either has not already been disclosed in prior reporting periods or is relevant to the readers of BWMG’s financial statements.

2. INVENTORY

Inventory consists of the following as of:

	March 31, 2014		December 31, 2013
Raw materials	$	318,484	$	317,187
Work in process		—		—
Finished goods		428,409		418,739
	$	746,893	$	735,926

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets totaling $116,161 at March 31, 2014, consists of $78,911 prepaid inventory, $28,676 prepaid insurance, $7,989 prepaid subcontract labor; and $585 other current assets and prepaids.

Prepaid expenses and other current assets totaling $109,523 at December 31, 2013, consists of $94,990 prepaid inventory, $14,141 prepaid insurance, and $392 other current assets.

10

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. FURNITURE, FIXTURES, AND EQUIPMENT

Furniture, fixtures, and equipment consists of the following as of:

	March 31, 2014			December 31, 2013
Furniture, fixtures, vehicles and equipment	$	204,896		$	204,896
Less:  accumulated depreciation and amortization		(134,233	)		(128,631	)
	$	70,663		$	76,265

5. OTHER ASSETS

Other assets of $27,635 at March 31, 2014 and December 31, 2013, consists of $24,740 investment in joint venture, and $2,895 refundable deposits. See Note 17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT for further information on investment in joint venture.

6. CUSTOMER CREDIT CONCENTRATIONS

The Company sells to three entities owned by the brother of Robert Carmichael, the Company’s Chief Executive officer, and two Company’s owned by the Chief Executive Officer as further discussed in Note 7. – RELATED PARTIES TRANSACTIONS. Combined sales to these five entities for three months ended March 31, 2014 and 2013, represented 49.09% and 28.09%, respectively, of total net revenues. Sales to no other customers represented greater than 10% of net revenues for three months ended March 31, 2014, and 2013.

7. RELATED PARTIES TRANSACTIONS

Notes payable – related parties

Notes payable – related parties consists of the following at March 31, 2014:

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	$	70,833
Less amounts due within one year		70,833
Long-term portion of notes payable	$	—

As of March 31, 2014, principal payments on the notes payable – related parties are as follows:

2014	$	70,833
2015		—
2016		—
2017		—
2018		—
Thereafter		—
	$	70,833

During the three months ended March 31, 2014, the Company fully satisfied the note payable due the Chief Executive Officer for $49,702, which had matured in September 2013.

11

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. RELATED PARTIES TRANSACTIONS (continued)

As of March 31, 2014, the Company was two months in arrears on payments due under the Note payable to the non-employee Board of Director. No notice of default has been received and the Company plans to make payments as able.

Notes payable – related parties consists of the following at December 31, 2013: 

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	$	—

As of December 31, 2013, the Company was approximately nine months in arrears on principal payments due under the Note payable to the Chief Executive Officer. On May 13, 2013, the Company granted the Chief Executive Officer 370,371 shares of common stock in satisfaction of $50,000 of note payable – related parties. The shares of stock were issued at the fair market value, or trading price, on the date of the transaction.

On October 30, 2013, the Company signed a secured promissory note with Mikkel Pitzner, the non-employee Board of Director (BOD), for $85,000. In addition to the terms of the Note Payable disclosed in the table above, the Company was to use its best efforts to settle the Branch Banking and Trust (“BBT”) Judgment and terminate all Uniform Commercial Code filings in favor of Mr. Pitzner within 10 business days of the date of the agreement. As further inducement to make the loan, Mr. Pitzner was granted an option to purchase 1,802,565 shares of the Company’s common stock for $.01 per share. The option is exercisable immediately and will continue for a period ending two years from the agreement date with an option for cashless exercise based on a formula within the agreement. The closing price per share of the Company’s stock closing on the OTCBB on the date of the agreement was $.025 per share. As a result of the option granted, the Company recorded $44,610 stock option expense using the Black-Scholes valuation model on date of the agreement.

Net revenues and accounts receivable – related parties – The Company sells products to Brownie’s Southport Divers, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys, owned by the brother of the Company’s Chief Executive Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers. Combined net revenues from these entities for three months ended March 31, 2014 and 2013, was $221,741 and $164,245, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at March 31, 2014, was $24,679, $17,110, and $23,833, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at December 31, 2013, was $11,926, $6,116, and $3,047, respectively.

The Company sells products to Brownie’s Logistics, LLC. And 940 Associates, Inc., fully owned by the Company’s Chief Executive Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers. Combined net revenues from these entities for three months ended March 31, 2014 and 2013, was $67,115 and $0, respectively. Accounts receivable from Brownie’s Logistics, LLC. at March 31, 2014 was $2,658.

12

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. RELATED PARTIES TRANSACTIONS (continued)

Net revenues and accounts receivable – related parties (continued) - Sales to Pompano Dive Center for the three months ended March 31, 2014, and 2013, was $1,079 and $1,137, respectively. Accounts Receivable from Pompano Dive Center at December 31, 2013, and December 31, 2012, was $13,330, and $14,029, respectively. See Note 17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT for further discussion regarding Pompano Dive Center. Sales to the Company’s Chief Executive Officer for the three months ended March 31, 2014, and 2013 was $130 and $0, respectively.

Royalties expense – related parties – The Company has Non-Exclusive License Agreements with 940 Associates, Inc. (hereinafter referred to as “940A”), an entity owned by the Company’s Chief Executive Officer, to license product patents it owns. Under the terms of the license agreements effective January 1, 2005, the Company pays 940A $2.00 per licensed product sold, rates increasing 5% annually. Also with 940A, the Company has an Exclusive License Agreement to license the trademark “Brownies Third Lung”, “Tankfill”, “Brownies Public Safety” and various other related trademarks as listed in the agreement. Based on this license agreement, the Company pays 940A 2.5% of gross revenues per quarter. Total royalty expense for the above agreements for the three months ended March 31, 2014 and 2013, is disclosed on the face of the Company’s Consolidated Statements of Operations. As of March 31, 2014, and December 31, 2013, the Company was approximately twenty-six months in arrears on royalty payments due. No default notice has been received and the Company plans to make payments as able.

Equity based compensation for Chief Executive Officer– On November 2, 2012, the Board of Directors (BODs) approved a stock incentive bonus to certain key employees and consultants to vest and pay out on May 2, 2013, contingent upon continued employment or services. The stock bonus price pershare was calculated based on last closing price per the OTCBB on the effective date of the transaction. Of the total stock incentive bonuses declared for the key employees and consultants of $75,150 or 61,852 shares of common stock, the Chief Executive was awarded $45,000 or 37,037 shares. The Company recorded compensation expense ratably over the vesting period, and for the three months ended March 31, 2013, compensation expense to the Chief Executive Officer related to this transaction was $22,500. See Note 20. EQUITY BASED INCENTIVE/RETENTION BONUSES for further discussion. In addition, on February 23, 2013, the Company declared a bonus payable for the years ended 2012 for certain employees, service providers, and consultants. As part of this bonus, the Chief Executive Officer was awarded $67,000 to be paid out in cash or stock based on later determination by the BODs. This amount is included in operating expense for the year ended December 31, 2012. See table below for inclusion in other liabilities and accrued interest – related parties. Further, pursuant to a Written Consent of the BODs of the Company on June 11, 2012, clarifying a meeting held on May 31, 2012, the BOD declared an $83,333 bonus due the Chief Executive Officer payable in shares of restricted stock. The shares vested as of January 2, 2013. The grant price per share was based on the closing price of the stock on May 31, 2012. For accounting purposes, the Company recognized $83,333 operating expense ratably over the seven months the shares vested. These shares are included in shares payable on the statement of stockholders’ deficit. These shares are included in shares payable on the statement of stockholders’ deficit.

In addition, the Chief Executive Officer’s monthly salary was increased by $16,667 per month beginning in June 2012, payable in restricted stock calculated based on a monthly weighted average share factor of .70, or a 30% discount (“incremental salary”). The shares were to vest six months after the last day of each month, continued employment was requirement for vesting, and shares would not be issuable until vested. The Company recorded $23,801 operating expense each month related to the incremental salary, which was $16,667 plus $7,144 discount added back to record at full monthly weighted average price per market. On December 23, 2013, the Chief Executive Officer forgave all incremental salary shares payable to him by the Company from 2012 and through November 2013. As a result, the Company recorded $428,578 contribution to Additional Paid in Capital for the year ended December 31, 2013, for the cancellation of the $261,904, and $166,667 stock payable from 2013 and 2012, respectively.

13

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. RELATED PARTIES TRANSACTIONS (continued)

Non-employee Board of Director fees and bonus – Effective December 23, 2013, the Board of Directors cancelled the $2,500 per month non-employee Board of Director fee agreement under which Mikkel. Pitzner was being compensated. In addition, Mr. Pitzner forgave the $27,500 BOD fees due in shares payable and/or paid him monthly through November 2013. Related to the forgiveness of the BOD fees for 2013, the Company cancelled related stock payable to him, recorded $5,917 receivable for the stock due back from him, and recorded the $27,500 as contribution to Additional Paid in Capital. During the three months ended March 31, 2014, Mr. Pitzner returned 14,406 shares, or $1,383 of $5,917.

On February 23, 2013, the Company declared a bonus payable for the years ended 2012 for certain employees, service providers, and consultants. As part of this bonus, Mr. Pitzner was awarded restricted shares of common stock with $73,000 fair market value. The shares were issued to Mr. Pitzner during the three months ended March 31, 2013.

Equity based compensation to employee – During November 2013, Alexander F. Purdon, an employee of the Company, exceeded 10% ownership whereby he was reclassified to related party. The Company pays Mr. Purdon’s employment compensation in restricted shares of stock in lieu of cash. The number of shares paid is based on the weighted average price per share during the months the services were rendered. For the three months ended March 31, 2014 and 2013, stock based compensation to Mr. Purdon was $13,500 and $9,000, respectively. In addition, of the $129,500 employee bonuses declared payable for 2012 year end, which is payable in stock or cash to be determined by the Board of Directors, Mr. Purdon is due $17,500. Further, of 61,852 total shares of common stock attributable to incentive retention bonuses declared by the Board of Directors in 2012, which vested as of May 2013, Mr. Purdon is payable 1,852 shares of stock, which were valued at $2,250. These shares are included in shares payable on the statement of stockholders’ deficit.

Patent purchase agreements – In the first quarter of 2010, the Carleigh Rae Corporation (herein referred to as “CRC”), an entity that the Company’s Chief Executive Officer has an ownership interest, transferred ownership rights to the Company of patents previously subject to Non-Exclusive License Agreements. Effective September 24, 2010, the Company finalized and executed terms of the purchase from CRC for payment of $25,500 and nominal shares of the Company’s common stock. In addition, the principals of CRC were entitled to a percentage of future sales amounting to $8,250 of products the Company is to receive in conjunction with two patent infringement lawsuits settled in the third quarter of 2010. See Other liabilities and accrued interest– related parties below for inclusion of $6,017 remaining from the original $8,250 liability due the Principals of CRC. By acquiring the IP the Company (i) has an opportunity to further develop the IP, (ii) has the ability to incorporate the IP into current and future products, and (iii) has the opportunity to license the IP to third parties.

Other liabilities and accrued interest– related parties

Other liabilities and accrued interest– related parties consists of the following at:

	March 31, 2014		December 31, 2013
Year-end 2012 bonus payable to Chief Executive Officer	$	67,000	$	67,000
Year-end 2012 bonus payable to employee		17,500		17,500
Accrued interest on note payable non-employee Board of Director		3,004		—
Due to Principals of Carleigh Rae Corp., net		6,017		6,017
	$	93,521	$	90,517

14

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. RELATED PARTIES TRANSACTIONS (continued)

Restricted common stock issued for personal guarantee – On April 21, 2011, the Company granted Robert Carmichael, the Chief Executive Officer, 14,815 shares of restricted common stock in consideration of personal guarantees he provided to secure restatement and consolidation of the first and second mortgages of the Company. The restrictions on the common stock expired 50% on April 20, 2012, and 50% on April 20, 2013, since Mr. Carmichael continued his full time employment with the Company. The company valued the stock at determined fair market value per share on the date of the transaction and has recorded $1,000,000 of compensation expense to Mr. Carmichael ratably over the two-year term in which the restrictions expired. The unearned balance of the compensation was recorded as prepaid compensation as a component of shareholders’ deficit. For the three months ended March 31, 2014 and 2013, the Company recognized $0 and $125,001, respectively, as amortization of prepaid compensation under this agreement. Compensation remaining under this agreement as of March 31, 2014, and December 31, 2013, was $0.

Stock options outstanding from patent purchase

Effective March 3, 2009, the Company entered into a Patent Purchase Agreement with Robert M. Carmichael, the Chief Executive Officer of the Company. The Company purchased several patents it had previously been paying royalties on and several related unissued patents. In exchange for the Intellectual Property (“IP), the Company issued Mr. Carmichael 234 stock options (adjusted for 1 –for 1,350 reverse stock split) at a $1,350 exercise price with expiration ten years from the effective date of grant, or March 2, 2019. None of the options have been exercised to-date.

8. ASSET PURCHASE

On February 3, 2012, the Company entered into an asset purchase agreement with Florida Dive Industries, Inc. (“Seller”). On March 5, 2012, the same parties executed an amendment (“Amendment”) to the agreement (collectively, the “Agreement”). Under the terms of the Agreement, the Company acquired certain diving and related inventory, and Seller provided a three year non-compete agreement within a 10-mile wide radius. In addition, the Company assumed a commercial lease obligation for a retail dive store in Boca Raton, Florida beginning in April 1, 2012. The lease was automatically renewable on an annual basis through May 31, 2014, with 90 days written notice assuming the Lessee was in compliance with all terms of the lease. On May 31, 2013, the Company closed the dive store and vacated the premises. The $3,200 lease deposit was returned during the year ended December 31, 2013. As of March 31, 2014, the Company had paid Seller $9,643 toward the $22,500 cash purchase price leaving a balance of $12,857 included in other liabilities.

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities of $510,277 at March 31, 2014, consists of $231,957 accounts payable trade, $48,181 accrued payroll and related fringe benefits, $45,000 accrued year-end bonuses, $43,411 accrued payroll taxes and withholding, and $141,728 accrued interest. Accrued payroll taxes and withholding were approximately six months in arrears at March 31, 2014. Balances due certain vendors are also due in arrears to varying degrees. The Company is handling all delinquent accounts on a case by case basis.

Accounts payable and accrued liabilities of $517,058 at December 31, 2013, consists of $245,672 accounts payable trade, $50,910 accrued payroll and related fringe benefits, $45,000 accrued year-end bonuses, $42,093 accrued payroll taxes and withholding, and $133,383 accrued interest. Accrued payroll taxes and withholding were approximately six months in arrears at December 31, 2013. Balances due certain vendors are also due in arrears to varying degrees.

15

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. OTHER LIABILITIES

Other liabilities of $250,521 at March 31, 2014, consists of $235,000 short-term loans, $12,857 payable for assets purchased pursuant to Asset Purchase Agreement (Note 8. ASSET PURCHASE), and $2,664 on-line training liability. The $235,000 short-term loans is comprised of three loans due on demand from unrelated parties. The loans have no other stated terms except one for $200,000 indicated it was for settlement of debenture debt. Therefore, the Company used the proceeds from that loan toward settlement of convertible debentures referenced in (13) of Note 12. CONVERTIBLE DEBENTURES.

Other liabilities of $252,009 at December 31, 2013, consists of $235,000 short-term loans, $12,857 payable for assets purchased pursuant to Asset Purchase Agreement (Note 8. ASSET PURCHASE), $3,169 on-line training liability, and $983 other liabilities. The $235,000 short-term loans is comprised of three loans due on demand from unrelated parties. The loans have no other stated terms except one for $200,000 indicated it was for settlement of debenture debt. Therefore, the Company used the proceeds from that loan toward settlement of convertible debentures referenced in (13) of Note 12. CONVERTIBLE DEBENTURES.

On-line training certificates are included with all hookah units sold. The training certificates entitle the holder to an on-line interactive course at no additional charge to the holder. The number of on-line training certificates issued per unit is the same as the number of divers the unit as sold is designed to accommodate (i.e., a three diver unit configuration comes with three on-line training certificates). The certificates have eighteen-month redemption from the time customer purchases the unit before expiration. The Company owes the on-line training vendor an agreed upon negotiated rate for on-line certificates redeemed prior to expiration, and payment is due upon redemption. The Company estimates the on-line training liability based on the historical redemption rate of approximately 10%. The Company continues to monitor and maintain a reserve for certificate redemption that approximates the historical redemption rate.

11. NOTES PAYABLE

Notes payable consists of the following as of March 31, 2014:

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.	$	12,229
Less amounts due within one year		12,229
Long-term portion of notes payable	$	—

As of March 31, 2014, principal payments on the notes payable are as follows:

2014	$	12,229
2015		—
2016		—
2017		—
2018		—
Thereafter		—
	$	12,229

16

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. NOTES PAYABLE (continued)

The unsecured note payable in the table above and as reflected in the table below in note payable balance resulted from conversion of a vendor payable dating back to February 2011. The note payable was restructured once in June 2012 to reduce the monthly payments and to extend the maturity date.

Notes payable consists of the following as of December 31, 2013:

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

12. CONVERTIBLE DEBENTURES

Convertible debentures consist of the following at March 31, 2014:

Origination Date	Maturity Date	Interest Rate			Origination Principal Balance		Origination Discount Balance			Period End Principal Balance		Period End Discount Balance		Period End Balance, Net		Accrued Interest Balance		Ref.
11/27/2010	5/27/2011		10	%		125,000		(53,571	)	$	58,750		-	$	58,750	$	24,419		(2	)
1/7/2011	11/11/2011		5	%		76,000		(32,571	)		48,000		-		48,000		8,550		(3	)
8/8/2012	5/2/2013		8	%		42,500		(27,172	)		-		-		-		-		(4	)
10/31/2012	8/2/2013		8	%		78,500		(50,189	)		76,835		-		76,835		8,889		(4	)
5/3/2011	5/5/2012		5	%		300,000		(206,832	)		300,000		-		300,000		87,500		(6	)
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		-		10,000		1,301		(7	)
2/2/2012			10	%		See ref (9) for Discussion									-		379		(9	)
3/14/2012	2/10/2014		10	%		5,500		-			472		-		472		132		(10	)
2/10/2012	2/10/2014		10	%		39,724		-			2,743		-		2,743		3,296		(11	)
4/8/2013	4/14/2013		9.90	%		20,000		(13,333	)		20,000		-		20,000		1,935		(14	)
										$	516,800			$	516,800	$	136,401

Reference numbers in right hand column of table entitled Ref. refer to paragraphs with corresponding number that immediately follow the next paragraph. The referenced paragraphs also support the December 31, 2013 table, which appears at the end of this Note. Therefore, it is appropriate that some of the number references do not appear in the table above (i.e. Ref. 1).

During the first quarter of 2013, the Company determined based on closing market price of $.0005 (pre-reverse stock split), and based on terms of convertible debt, its convertible and/or committed shares were in excess of its authorized common stock of 5,000,000,000. Most of the Company’s convertible debentures have conversion rates at substantial discount to market price; therefore, a decline in market price impacts the number of shares convertible. As a result, the Company recorded a derivative liability of $565,689, which represented the amount of shares convertible or committed in excess of the shares authorized at $.0005 per share, the closing  

17

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. CONVERTIBLE DEBENTURES (continued)

market price at March 30, 2013, and as valued according to the Black-Scholes valuation model. On July 15, 2013, the Company effectuated a reverse stock split (1 -for- 1,350), which was applied retroactively. See Note 19. CHANGE IN CAPITAL STRUCTURE. Accordingly, this transaction resulted in significant shares authorized in excess of those committed, and the full derivative liability of $565,689 was reversed.

(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 recognized 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. 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 in exchange for convertible debenture 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 was 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 was no assurance of success and the invention was still in design and pre-prototype phase, the Company recorded the initial net value of the debenture, $71,483, as research and development expense during the year ended 2010. Both parties agreed to confidentiality regarding the invention during the pre-prototype stage. In addition, the Company 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.

On February 10, 2012, the holder of this debenture entered into an agreement with a third party to sell/assign the $125,000 principal balance, plus accrued interest. The purchase was to be in installments with transfer/assignment of the debenture upon payment, referred to as “Closings”. The first Closing was on or about February 15, 2012 for $7,500, with that amount assigned/transferred. The second Closing, occurred 90 days after the first closing for $11,750 paid/assigned. All subsequent Closings were to be for $11,750 and occur in 30 day increments after the second Closing. This was to continue until the full principal balance of $125,000, plus accrued interest has been purchased/assigned. See Ref. (9) for discussion of new terms on the assigned portions of the debenture.

(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 shares of restricted common stock. The lender at their option could 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 16. COMMITMENTS AND CONTINGENCIES for discussion of litigation involving the technology and license agreement.

18

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. CONVERTIBLE DEBENTURES (continued)

(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 in 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.

On July 2, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on April 5, 2013. Beginning 180 days after the date of the debenture, lender could convert the note to common shares at a 39% discount of the “Market Price” of the stock based on the average of the lowest three (3) closing bid prices on the date prior to the notice of conversion. In addition, if the Company granted a lower price for common stock purchase or conversion to anyone else during the term of the agreement, the lender’s conversion price would be adjusted downward to the same. The lender could not convert an amount greater than 4.99% of the outstanding common stock at any one time. The Company could have prepaid the debenture at any time before maturity at graduated amounts depending on the date of prepayment ranging from 130% to 150% of the debenture balance plus accrued and unpaid interest. There was a $2,000 per day penalty for not timely delivering shares upon conversion notice. 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 debenture. The Company valued the BCF of the convertible debenture at $35,268. Accordingly, the $78,500 debenture was discounted by the amount of the BCF and accreted to the convertible debenture through its maturity, and interest was recognized until converted. By December 31, 2013, the lender had converted $78,500 principal plus accrued interest on the convertible debenture in full satisfaction of the debt. 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.

On August 8, 2012, the Company borrowed $42,500 from this same lender in exchange for a convertible debenture maturing on May 10, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in preceding paragraph. The Company valued the BCF of the convertible debenture at $27,172. Accordingly, the $42,500 debenture was discounted by the amount of the BCF. The Company accreted the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the year ended December 31, 2013, the lender converted $34,055 principal on the convertible debenture and the remaining $8,445 during the three months ended March 31, 2014 in full satisfaction of the debenture. In addition, during the three months ended March 31, 2014 the lender converted $1,700 of accrued interest to shares of common stock. 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.

On October 31, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on August 2, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in two paragraphs preceding this one. The Company valued the BCF of the convertible debenture at $50,189. Accordingly, the $78,500 debenture was discounted by the amount of the BCF. The Company is accreting the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the three months ended March 31, 2014, the lender converted $1,665 of the convertible debenture to shares of common stock. . 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.

19

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

On February 10, 2012, the lender sold/assigned all rights and interest on the debenture having a net book value of $39,724, plus $1,552 of accrued interest. See reference (11) which discusses the terms and conditions surrounding the new debenture issued upon extinguishment of the original as well as accounting treatment of the transaction.

(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.

20

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. CONVERTIBLE DEBENTURES (continued)

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. Since that date the lender has not purchased or converted any shares pursuant to the sale/assignment agreement.

The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debenture is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. 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.

As of March 31, 2014 and December 31, 2013, the lender had assigned a cumulative $5,500 under the debenture to four separate parties, and $23,500 to another party. See reference (10) and (12), respectively, related to the assignments.

(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 in the year ended December 31, 2012.

The new debentures were issued with the same following terms and conditions: The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debentures is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 4.99% of the outstanding Common Stock of the Company at any one time. During the years ended December 31, 2013, the lender converted $3,211 of the debenture with original principal balance of $39,724 to stock. 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.

On January 18, 2013, the lender sold/assigned all rights and interest on one of its three debentures having net book value of $16,000 plus accrued interest of $1,512. On the same day, the lender sold/assigned all rights and interest on another of its three debentures having a net book value of $56,250, plus $4,825 of accrued interest. See reference (13) 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. As of March 31, 2014, the lender still held the third debenture with original principal balance of $39,724 with net book value of $2,743.

21

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

During the years ended December 31, 2012, the lender accepted assignment of $23,500, of a convertible debenture from the lender discussed in (9) above. See reference (2) for terms surrounding the original convertible debenture. In addition, the Company converted $2,125 of the assignments to stock during the year ended December 31, 2013, plus $202 of accrued interest in full satisfaction of the amount due this lender under the assignments. The stock was issued without restrictive legend pursuant to Rule 144, as the holder acquired the 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.

(13) On January 18, 2013, the Company entered into three new convertible 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 balance on these two new convertible 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.

The Company borrowed $84,500, the third debenture referred to above with this lender. The interest rate on the debenture was 10% per annum, and the conversion price was 59% of the lowest closing bid price per share in the ten trading days prior to the conversion notice. Per terms of the debenture agreement, the lender was not to convert an amount that would cause it or any of its affiliates to beneficially own in excess of 4.99% of the Company. The Company could prepay the debenture within 90 days after the effective date at 140% multiplied by outstanding principal and accrued interest. 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 debenture. The Company valued the BCF of the convertible debenture at $58,720, its intrinsic value. Accordingly, the $84,500 debenture was discounted by the amount of the BCF. The Company accreted discount to the convertible debenture and interest expense through its settlement on August 12, 2013 as discussed below. Further, the debenture agreement provided for post-closing expenses, which the lender noted was $1,000 per conversion and approximately $700 in other fees per each debenture. The Company accrued these fees on each debenture and per conversion.

The $95,000 and $30,500 debentures contained the same terms and conditions as the $84,500 debenture except there were no prepayment clause, and the conversion price was 44% of the lowest closing bid price per share in the ten trading days prior to the conversion notice. During the years ended December 31, 2013, the Company converted $30,500 plus $191 of accrued interest in full satisfaction of the $30,500 debenture, and $22,500 toward the $95,000 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.

On August 12, 2013, the Company fully settled the two debentures outstanding with $157,446 principal and $8,794 accrued interest totaling $166,240 with this lender for $170,000. All pre-payment penalties were waived and the Company recognized the difference between the $166,240 and $170,000, or $3,760, as other expense for the year ended December 31, 2013.

22

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Convertible debentures consist of the following at December 31, 2013:

Origination Date	Maturity Date	Interest Rate			Origination Principal Balance		Origination Discount Balance			Period End Principal Balance		Period End Discount Balance			Period End Balance, Net		Accrued Interest 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		22,949		(2	)
1/7/2011	11/11/2011		5	%		76,000		(32,571	)		48,000		-			48,000		7,950		(3	)
2/10/2011	1/14/2012		8	%		42,500		(42,500	)		-		-			-		-		(4	)
9/12/2011	6/14/2012		8	%		37,500		(37,500	)		-		-			-		-		(4	)
12/19/2011	9/21/2012		8	%		37,500		(37,500	)		-		-			-		-		(4	)
8/8/2012	5/2/2013		8	%		42,500		(27,172	)		8,445		-			8,445		3,949		(4	)
10/31/2012	8/2/2013		8	%		78,500		(50,189	)		78,500		-			78,500		7,325		(4	)
7/2/2012	4/5/2013		8	%		78,500		(35,268	)		-		-			-		-		(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		80,000		(6	)
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		-			10,000		1,175		(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		-			-		-			-		379		(9	)
3/14/2012	2/10/2014		10	%		5,500		-			472		-			472		120		(10	)
2/10/2012	2/10/2014		10	%		39,724		-			2,743		-			2,743		3,227		(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	)
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		9.90	%		20,000		(13,333	)		20,000		(3,334	)		16,666		1,440		(14	)
										$	526,910				$	523,576	$	128,514

Reference numbers in right hand column of table entitled Ref. refer to paragraphs above the table.

23

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES

Equity based compensation is presented on the face of the Statement of Stockholders’ Deficit for the three months ended March 31, 2014. More information on the significant components of the amounts presented for the years ended March 31, 2014 and 2013 follows:

For the three months ended March 31, 2014, the Company converted $13,500 related party employee compensation payable to 1,223,977 shares of restricted common stock. For additional information see Note 7. RELATED PARTIES - Equity based compensation to employee

Pursuant to a consulting agreement for business advisory services, during the three months ended March 31, 2013, the Company issued 32,796 shares of common stock for $19,600 in services. The stock conversion price under the agreement was calculated as a weighted average for the month the services were granted at a 30% discount. However, operating expense was recorded based on full weighted average share price of the market for the period in which the services were rendered.

On March 27, 2013, the Company entered into a consulting agreement for financial strategic advice for a term of twelve months from the date of the agreement and may be terminated by either party within 30 days written notice and any monies owed are due upon termination. As initial fee, the Company paid the consultant $25,000 in restricted stock, or 37,038 shares, during the years ended December 31, 2013. Further, upon obtaining $5,000,000 new capital into the Company, the consultant will be due $500,000, upon successfully obtaining a second $500,000 commitment of new capital, $50,000 will be due to the consultant, upon successfully obtaining a third $500,000 commitment of new capital, and the same arrangement through eleven additional commitments of new capital. Amounts due shall be paid in cash and any brokerage commissions, private placement fees or other fees in connection with obtaining the new capital shall be reduced from the fees due the consultant on a dollar per dollar basis.

14. INCOME TAXES

The components of the provision for income tax expense are as follows for the three months ended:

	March  31, 2014			March 31, 2013
Current taxes
Federal	$	—		$	—
State		—			—
Current taxes		—			—
Change in deferred taxes		(11,730	)		(5,567	)
Change in valuation allowance		11,774			9,350
Provision for income tax expense	$	44		$	3,783

24

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. INCOME TAXES (continued)

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at March 31, 2014:

Deferred tax assets:
Equity based compensation	$	97,276
Allowance for doubtful accounts		13,260
Net operating loss carryforward		1,136,206
On-line training certificate reserve		932
Total deferred tax assets		1,247,674
Valuation allowance		(1,245,111	)
Deferred tax assets net of valuation allowance		2,563
Less deferred tax assets – non-current, net of valuation allowance		2,330
Deferred tax assets – current, net of valuation allowance	$	233

The effective tax rate used for calculation of the deferred taxes as of March 31, 2014 was 34%. The Company has established a valuation allowance against deferred tax assets of $1,245,111 or 99.8%, due to the uncertainty regarding realization, comprised primarily of a 100% reserve against the net operating carryforward, 100% reserve against the allowance for doubtful accounts, and 97% reserve against the deferred tax assets attributable to the equity based compensation.

The significant differences between the statutory tax rate and the effective tax rates for the Company for the three months ended are as follows:

	March 31, 2014			March 31, 2013
Statutory tax rate		—	%		—	%
Increase (decrease) in rates resulting from:
Net operating loss carryforward or carryback		(31	)%		(7	)%
Equity based compensation and loss		—	%		7	%
Book/tax depreciation and amortization differences		—	%		—	%
Change in valuation allowance		31	%		—	%
Other		—	%		—	%
Effective tax rate		—	%		—	%

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at December 31, 2013:

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

25

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. INCOME TAXES (continued)

The effective tax rate used for calculation of the deferred taxes as of December 31, 2013 was 34%. The Company has established a valuation allowance against deferred tax assets of $1,235,879 or 99.8%, due to the uncertainty regarding realization, comprised primarily of a 100% reserve against the net operating carryforward, 100% reserve against the allowance for doubtful accounts, and 97% reserve against the deferred tax assets attributable to the equity based compensation.

15. AUTHORIZATION OF PREFERRED STOCK

During the second quarter of 2010, the holder of the majority of the Company’s outstanding shares of common stock approved an amendment to the Company’s Articles of Incorporation authorizing the issuance of 10,000,000 shares of preferred stock. The preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by our Board of Directors of the Company from time to time in accordance with the provisions of Chapter 78 of the Nevada Revised Statutes. Before modification, the existing Articles of Incorporation did not authorize the issuance of shares of preferred stock. The Company authorized the preferred stock for the purpose of added flexibility in seeking capital and potential acquisition targets.  The amendment authorizing the issuance of shares of preferred stock grants the Board authority, without further action by our stockholders, to designate and issue preferred stock in one or more series and to designate certain rights, preferences and restrictions of each series, any or all of which may be greater than the rights of the common stock. As of March 31, 2014, and December 31, 2013, the 425,000 shares of preferred stock are owned by the Company’s Chief Executive Officer. The preferred shares have 250 to 1 voting rights over the common stock, and are convertible into 31,481 shares of common stock. The preferred stock votes with the Company’s common stock, except as otherwise required under Nevada law. Accordingly, Mr. Carmichael will have approximately 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.

16. COMMITMENTS AND CONTINGENCIES

On August 16, 2012, the Company’s real estate foreclosed upon by Branch Banking and Trust (“BBT”) was sold through a court ordered auction. At the foreclosure sale, BBT was highest bidder with a bid of $1,300. On July 17, 2012, the Court entered a Final Judgment of Foreclosure against the Company for $1,123,269, plus post-judgment interest. On December 14, 2012, BBT served the Company with Notice of Final Judgment of Foreclosure. Per the Notice, the lender sought Final Judgment including post-judgment interest and costs through date of sale of $1,127,643 plus post-judgment interest and related expenses. The lender asserted the fair market value of the property on the date of sale was $1,030,000 and was seeking final judgment against the Company for the shortfall amount between the Final Judgment amount and the fair market value of the property, or approximately $100,000 plus post-judgment interest and related expenses. Accordingly, the Company recorded a foreclosure liability of $110,000 to cover the shortfall plus post-judgment expenses. At the time of the sale, carrying value of the building, building improvements, and land was $1,641,075, mortgage balance was $1,053,997, accrued interest was $15,609, and accrued real estate taxes was $45,006. After reversing all amounts associated with the foreclosed property and recording $110,000 adjustment for difference between the sale and final judgment amount the Company recorded $116,539 loss on foreclosure. The adjustment and loss include $10,000 estimate of post-judgment expenses based on managements’ best judgment, and was periodically reviewed and adjusted as applicable. On October 14, 2013, BBT. brought before the court a Motion for Deficiency Final Judgment (the “Motion”) against Trebor Industries, Inc., fully owned subsidiary of the Company, and Robert M. Carmichael, the Company’s Chief Executive Officer, and received a final judgment of $103,026, plus interest. As part of the Motion, a Fact Information sheet was to be provided the defendants for completion including all required attachments within forty-five days of delivery from plaintiff, unless the Final Judgment is satisfied or post-judgment discovery is stayed. During November 2013, the Company settled the Final Judgment with BBT for $85,000. Accordingly, BWMG recorded $18,026 to other income for the period. The 17th Judicial Circuit of the Circuit Court of Broward County recorded Satisfaction of Final Judgment on November 20, 2013.

26

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16. COMMITMENTS AND CONTINGENCIES (continued)

On November 1, 2012, the Company entered into a one year lease on the foreclosed real estate, which the Company continues to occupy as it manufacturing facility and headquarters. The terms of the lease were base rent of $3,750 plus sales tax. Either party could cancel the lease with 90 days written notice. Effective on the date of expiration, the lease was renewed with the same terms and conditions.

On June 28, 2013 the Company received notice of claim for damages in excess of $15,000 claiming personal injury due to product defect. The Company believes the case is without merit and will aggressively defend. The claim is being handled by the Company’s product liability insurance carrier. In the less than probable chance that any liability will be assigned the Company, insurance coverage is deemed adequate to address.

On January 12, 2013, the Company received notice of claim for damages in excess of $15,000 claiming personal injury due to product defect. The Company believes the case is without merit and will aggressively defend. The claim is being handled by the Company’s product liability insurance carrier. In the less than probable chance that any liability is assigned Company, insurance coverage is deemed adequate to address.

On December 18, 2012, Undersea Breathing Systems, Inc. (“UBS”) filed an amended complaint against the Company compelling purchase of Medal Model No. 4241 membranes or equivalent pursuant to pricing agreement in 2011. UBS is the holder of the convertible debenture referenced in Note 12. CONVERTIBLE DEBENTURES Ref (3). Under the complaint, UBS asserts the Company was to purchase no less than 24 membranes from the company per year for $2,000 and $1,000, cash and Company stock, respectively, per membrane. The Company took delivery, paid cash, and issued stock for 14 Medal Model No 4241 membranes pursuant to the stated pricing in 2011, plus issued an additional $24,000 stock toward future purchases of 24 membranes. However, the Company has not purchased or taken delivery of additional membranes. At the same time the stock was issued the Company granted UBS a convertible debenture of $76,000 and reduced its balance to $48,000 when the Company paid $28,000 cash and took delivery of the 14 membranes. Therefore, UBS currently has $24,000 worth of stock and a $48,000 convertible debenture for which the Company took no membrane deliveries. If judgment or settlement were to go in favor of UBS, there would be no financial impact to the statement of operations or net impact on financial position. This is because there would be corresponding decreases in amounts to convertible debenture, prepaid inventory, cash, and increase in inventory, all netting to zero. In addition any future compelled purchases would result in a decrease in cash with corresponding increase in inventory. As a result, no accrual is warranted, and the Company will await legal advisement and decision on the matter.

On or about May 3, 2012, the Company received notice of filing of an action for breach of contract, conspiracy to commit securities fraud and injunctive relief against the Company and the first party named in Note 12. CONVERTIBLE DEBENTURES Ref (1). The Plaintiff, Eventus Capital, Inc., is the second party referenced in Note 12. CONVERTIBLE DEBENTURES, Ref (1) who purchased the original debenture from the first party. The net book value, excluding interest, on the debenture as of December 31, 2012 was approximately $12,700. The amount named in the original lawsuit was “damages in excess of $15,000”, plus other fees. On July 16, 2012, the Palm Beach County Court issued an Order on the Company’s Motion to dismiss this complaint. The motion was granted without prejudice to allow the plaintiff 15 days to file an amended complaint with substantiating documentation. The plaintiff amended its complaint as required, asserted it incurred a loss of $735,616 in damages. The other Defendant in the action has asserted counter and third party claims against the plaintiff. Per the opinion of the Company’s legal counsel, the plaintiff has failed to establish any legal or factual basis for claim, and judgment or settlement against the Company is not probable.

27

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT

On November 7, 2011, the Company entered into a Joint Venture Equity Exchange Agreement (“Agreement”) with Pompano Dive Center, LLC. (“PDC”). PDC owns a retail store, several dive boats, and has a classroom for training divers. Under the terms of the Agreement, the Company will provide PDC with an assortment of Brownie’s Third Lung products on consignment, and PDC will act as a training and demonstration site for Brownie’s Third Lung products. Beginning in 2012, both parties ceased operating under the consignment inventory arrangement. Inventory not sold was returned, and inventory was purchased for sale. See Note 7. RELATED PARTIES TRANSACTIONS - Net revenues and accounts receivable – related parties for further information on sales to PDC for the three months ended March 31, 2014 and 2013, and Accounts Receivable balances at March 31, 2014, and December 31, 2013. Terms of sale to PDC are no more favorable than those granted other dealers of the Company’s products.

In addition, the Agreement provides for a non-binding letter of intent for the possible acquisition of PDC in exchange for BWMG’s stock for the yet to be agreed upon value of PDC. In anticipation of a possible purchase, the Agreement provides BWMG with a 33% interest in PDC. As part of the transaction, BWMG issued 3,394 restricted shares of its common stock with fair market value on the date of the transaction of $24,740 to PDC, reflected in other assets in the long-term portion of the Company’s balance sheet.

If BWMG purchases PDC, the stock issued by BWMG will be credited to the purchase price. Further, PDC is required to remit no later than 45 days from the end of each quarter, a 33% share in pre-tax net profits. At least 50% of the total pre-tax profits are required for distribution under the Agreement, and BWMG is not required to share in losses. If PDC decides to sell any inventory provided by the Company, the purchase price will be the same as that offered to other dealers of the Company’s products.

If this Agreement is terminated by either party and/or a written purchase and sales agreement is not entered into by the parties, then the parties’ respective interests in each other’s business will revert back to the original party. Accordingly, if this should happen, PDC will relinquish the interest acquired in BWMG through this Agreement and BWMG will do the same. All property at PDC owned by BWMG would be returned to BWMG at that time as well. Because the joint venture is cancellable at any time by either party with return of respective interest transferred to each as per the joint venture agreement, possible acquisition of PDC is in the form of a non-binding letter of intent, each entities assets and liabilities remain their own, BWMG will not share in any of PDC losses or additional expenses unless otherwise approved, and the management and operation of PDC remains with PDC, the Company accounted for the investment in PDC under the Cost basis. Since inception of the Agreement PDC has reported pre-tax net losses. Therefore, to-date there has been no profit sharing due the Company under the agreement.

18. CHANGE IN CAPITAL STRUCTURE

Effective July 15, 2013, the Company effectuated a reverse split of all outstanding shares of Common Stock by a factor of one-for-one thousand three hundred fifty (1 -for- 1,350). Fractional shares were rounded up to the nearest whole share. The reverse split became effective as of July 15, 2013. In accordance with Securities and Exchange Commissions’ Staff Accounting Bulletin Topic 4C, when a change in capital structure occurs after the period reporting date, but before release of the financial statements the Company must apply retroactive treatment to the financial statements to reflect the change. Accordingly, the Company restated the financial statements for three months ended March 31, 2013 to reflect the change in the number of shares, as well as throughout the Note disclosures, as applicable.

Effective February 22, 2012, also with retroactive restatement, the Company increased the number of authorized shares of common stock from 250,000,000 to 5,000,000,000, and decreased the par value per share of Common Stock from $.001 to $.0001.

28

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. EQUITY INCENTIVE PLAN

On August 22, 2007, the Company adopted an Equity Incentive Plan (the “Plan”). Under the Plan, Stock Options may be granted to Employees, Directors, and Consultants in the form of Incentive Stock Options or Nonstatutory Stock Options. Stock Purchase Rights, time vested and/performance invested Restricted Stock, and Stock Appreciation Rights and Unrestricted Shares may also be granted under the Plan. The initial maximum number of shares that may be issued under the Plan shall be 297 shares, and no more than 75 Shares of Common Stock may be granted to any one Participant with respect to Options, Stock Purchase Rights and Stock Appreciation Rights during any one calendar year period. Common Stock to be issued under the Plan may be either authorized and unissued or shares held in treasury by the Company. The term of the Plan shall be ten years. The Board of Directors may amend, alter, suspend, or terminate the Plan at any time. All 297 options were issued under the plan prior to January 1, 2010, and to-date all remain outstanding.

20. EQUITY BASED INCENTIVE/RETENTION BONUSES

On November 2, 2012, the Board of Directors consented to grant equity based bonuses to certain key employees and consultants as an incentive to retain their services. Stock incentive bonuses were to vest, and be paid out on May 2, 2013, contingent upon continued employment or service. The stock bonus price per share was calculated based on last closing price as reported on per the OTCBB prior to the grant date for a total of $75,100. Shares were set aside and reserved for this transaction. As disclosed in Note 7. RELATED PARTIES TRANSACTIONS, $45,000 and $2,250 of the $75,100 bonuses, or 37,038 and 1,854 shares, were awarded to the Chief Executive Officer and the related party employee, respectively. The Company accrued operating expense ratably from the time of the awards through May 2, 2013, when vested. Of the 61,852 vested shares, only 5,185 have been issued to-date. The rest are reflected in shares payable balance on the Statement of Stockholders’ Deficit and the Balance Sheet.

21. STRATEGIC ALLIANCE AGREEMENT

On April 10, 2012, the Company entered into a strategic alliance agreement with Precision Paddleboards, Inc. The agreement provides for 12 month exclusivity granted for $24,000 in one year restricted stock, or 494 shares. Price per share was calculated as the weighted average per share for 30 days preceding the agreement or $.036 per share. The Company recognized the operating expense ratably over the twelve month vesting term with corresponding entry to shares payable. For the three months ended March 31, 2013 the Company recognized $6,000 operating expense under the agreement. As of March 31, 2014, none of the 494 shares have been paid out and are reflected in shares payable balance on the Statement of Stockholders’ Deficit and the Balance Sheet.

22.  INTEREST EXPENSE NON-RELATED PARTIES AND OTHER EXPENSE (INCOME), NET

For the three months ended March 31, 2014, non-related parties interest expense of $13,552 is comprised of $12,921 interest on convertible debentures and $631 interest on notes payable and other interest. For the three months ended March 31, 2013, non-related parties interest expense of $68,850 is comprised of approximately $67,754 interest on convertible debentures and approximately $770 interest on notes payable and other interest.

For the three months ended March 31, 2014, $36,738 other income, net is comprised primarily of $31,463 write off of accrued legal expense from prior years due to resolution of overbilling as identified by Company $5,144 royalty income on licensed patents, and $131 other income, net of individually insignificant items. For the three months ended March 31, 2013, $91,779 other expense, net is comprised primarily of $93,429 loss on extinguishment of convertible debentures and partially offset by $1,650 other income, net.

29

BROWNIE’S MARINE GROUP, INC.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

23. SUBSEQUENT EVENTS

On April 30, 2014, Mr. Alexander F. Purdon, was issued 184,202 shares of restricted common stock in lieu of cash for $4,500 employee compensation for the month of April 2014. The number of shares issued was based on the weighted average share price during the month.

Conversions of debentures to shares of common stock occurred subsequent to March 31, 2014. The stock was issued upon partial conversion of a convertible note 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. Conversions were as follows (ref. number corresponds to lender reference number in Note 12. CONVERTIBLE DEBENTURES):

Ref (4) lender –

On April 30, 2014, the lender converted $1,920 of its debenture to 400,000 shares.

On April 24, 2014, the lender converted $2,080 of its debenture to 400,000 shares

On April 21, 2014, the lender converted $2,280 of its debenture to 400,000 shares.

On April 15, 2014, the lender converted $2,160 of its debenture to 400,000 shares.

On April 9, 2014, the lender converted $2,160 of its debenture to 400,000 shares.

In addition, related to convertible debenture agreement with the above lender, the Company is required to maintain adequate shares in escrow for potential conversions. As a result, the Company replenished its escrow of shares for future conversions by issuing an additional 52,500,000 on April 30, 2014.

30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introductory Statements

Information included or incorporated by reference in this filing may contain forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology.

This filing contains forward-looking statements, including statements regarding, among other things, (a) our projected sales and profitability, (b) our Company’s growth strategies, (c) our Company’s future financing plans and (d) our Company’s anticipated needs for working capital. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this filing generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur.

Overview

Brownie’s Marine Group, Inc., a Nevada corporation (referred to herein as “BWMG”,“the Company”, “we” or “Brownie’s”), does business through its wholly owned subsidiary, Trebor Industries, Inc., d/b/a Brownie’s Third Lung, a Florida corporation. The Company designs, tests, manufactures and distributes recreational hookah diving, yacht based scuba air compressor and nitrox generation systems, and scuba and water safety products. BWMG sells its products both on a wholesale and retail basis, and does so from its headquarters and manufacturing facility in Fort Lauderdale, Florida. The Company’s common stock is quoted on the OTCBB under the symbol “BWMG”. The Company’s website is www.browniesmarinegroup.com.

Mr. Carmichael has operated Trebor as its President since 1986. Since April 16, 2004, Mr. Carmichael has served as President, Principal Accounting Officer and Chief Financial Officer of the Company. From March 23, 2004 to April 26, 2004, Mr. Carmichael served as the Company’s Executive Vice-President and Chief Operating Officer. He is the holder or co-holder of some patents that are used by Trebor and several other large original equipment manufacturers in the diving industry. Mr. Carmichael is also the holder of trademarks and tradenames used by the Company.

The Company’s diving and marine based products are generally marketed under the Brownie’s Third Lung, Brownie’s Tankfill, and Brownie’s Public Safety trade names.

Results of Operations for the Three Months Ended March 31, 2014, as Compared to the Three Months Ended March 31, 2013

Net revenues. For the three months ended March 31, 2014, we had net revenues of $588,383 as compared to net revenues of $588,663 for the three months ended March 31, 2013, a decrease of $280, or less than .05%. Sales of hookah systems was up by approximately $23,000, and was offset by approximately $6,000 decline in tankfill system and approximately $17,000 in scuba for the three months ended March 31, 2014, as compared to same period in 2013.

Cost of net revenues. For the three months ended March 31, 2014, we had cost of net revenues of $465,072 as compared with cost of net revenues of $472,538 for the three months ended March 31, 2013, a decrease of $7,466, or 1.58%.

31

Gross profit. For the three months ended March 31, 2014, we had a gross profit of $123,311 as compared to gross profit of $116,125 for the three months ended March 31, 2013, an increase of $7,186, or 6.19%. The small increase in gross profit is primarily attributable to decrease in cost of net revenues for the three months ended March 31, 2014, as compared to same period in 2013.

Operating expenses. For the three months ended March 31, 2014, we had operating expenses of $180,346 as compared to operating expenses of $577,273 for the three months ended March 31, 2013, a decrease of $396,927, or 68.76%. The $396,927 decrease is comprised of $381,707 decrease in selling, general and administrative, partially offset by $15,550 decrease in research and development costs as compared to the same period in 2013. The decrease in selling, general and administrative costs of $381,707 is primarily attributable to decrease in Chief Executive Officer’s compensation of approximately $220,000 (non-cash), approximately $46,000 lower legal expense, approximately $62,000 less consulting and other professional fees (primarily non-cash), approximately $26,000 less trade show and advertising expenses, approximately $19,000 less in health insurance costs, and $9,000 net decrease of individually insignificant increases and decreases in other operating account balances during the three months ended March 31, 2014 as compared to the same period in 2013. The primary reason for the decline in consulting and other professional fees is some of the consultants who accepted equity based compensation arrangements during the three months ended March 31, 2013, no longer desired equity in lieu of cash whereby the Company terminated those services. The decrease in health insurance is a result of a lower cost policy and less employees on in the plan in first quarter of 2014 as compared to the first quarter of 2013. The $15,550 decrease in research and development resulted due to the reduction in Chief Executive Officers salary since a percentage of his salary is allocated to research and development.

Other (income) expense, net. For the three months ended March 31, 2014, we had other income, net of $18,680 as compared to other expense, net of $726,975 for the three months ended March 31, 2013, a decrease of $745,655 other expense, net, or 102.57%. This account is comprised of other (income) expense, net; change in derivative liability and interest expense. Other (income) expense, net, increased by $128,517 income, net for the period and is comprised of transactions that are generally of a non-recurring nature; change in derivative liability decreased by $565,689; and interest expense decreased by $51,449 for the period. The $128,517 increase in other income, net is primarily attributable to transactions which occurred in either the first quarter of 2014 or 2013, without comparable transactions in both periods, including approximately $93,429 loss on extinguishment of convertible debentures in the first quarter of 2013, and $31,463 write off of accrued legal expense in the first quarter of 2014 due to of overbilling from previous years. The $565,689 reduction in derivative liability is the result of reversal of 100% of the liability in May 2013 as a result of the reverse stock split during that time period, which cured the shortfall of shares available for conversion that resulted in derivative liability. The $51,449 decrease in interest expense for the first quarter of 2014 as compared to the first quarter of 2013, is primarily due to approximately $55,000 less in convertible debenture interest due to fully accreted discounts by the first quarter of 2014, as well as lower convertible debenture balance outstanding during the first quarter of 2014 as compared to first quarter in 2013

Provision for income tax expense. For the three months ended March 31, 2014, we had a provision for income tax expense of $44 as compared to a provision for income tax expense of $3,783 for the three months ended March 31, 2013, a decrease of $3,739, or 98.84%.

Net loss. For the three months ended March 31, 2014, we had net loss of $38,399 as compared to net loss of $1,191,906 for the three months ended March 31, 2013, a decrease of $1,153,507, or 96.78%. The $1,153,507 decrease in net loss is primarily attributable to the decrease in operating expenses of $396,927 and decrease in other expense, net of $745,655 for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013.

Liquidity and Capital Resources

As of March 31, 2014, the Company had cash and current assets (primarily consisting of inventory) of $1,012,251 and current liabilities of $1,725,977, or a current ratio of .59 to 1. This represents a working capital deficit of $713,726. As of December 31, 2013, the Company had cash and current assets of $1,057,967 and current liabilities of $1,760,058, or a current ratio of .60 to 1. As of December 31, 2012, the Company had cash and current assets of $894,573 and current liabilities of $1,770,503, or a current ratio of .51 to 1.

32

The consolidated financial statements included herein have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. We have incurred losses since 2009, and expect to have losses through 2014. We have had a working capital deficit since 2009.

The Company is behind on payments due for payroll taxes and withholding, matured convertible debentures, related party notes payable, accrued liabilities and interest – related parties, and certain vendor payables. The Company is handling delinquencies on a case by case basis. However, there can be no assurance that cooperation the Company has received thus far will continue.

The Company closed and ceased operations at its retail facility. The Company is still involved in the joint venture. As a result, the Company does not expect that existing cash flow will be sufficient to fund presently anticipated operations beyond the second quarter of 2043. This raises substantial doubt about BWMG’s ability to continue as a going concern. The Company will need to raise additional funds and is currently exploring alternative sources of financing. We have issued a number of convertible debentures as an interim measure to finance our working capital needs. We have historically paid for many legal and consulting services with restricted stock to maximize working capital. We intend to continue this practice in the future when possible. We have implemented some cost saving measures and will continue to explore more to reduce operating expenses.

If we fail to raise additional funds when needed, or do not have sufficient cash flows from sales, we may be required to scale back or cease operations, liquidate our assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Certain Business Risks

The Company is subject to various risks, which may materially harm its business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase the Company’s common stock. These are not the only risks and uncertainties that the Company faces. If any of these risks or uncertainties actually occurs, the Company’s business, financial condition or operating results could be materially harmed. In that case, the trading price of the Company’s common stock could decline and you could lose all or part of your investment.

Our Ability to Continue As a Going Concern is in Substantial Doubt Absent Obtaining Adequate New Debt or Equity Financing and Achieving Sufficient Sales Levels.

We incurred net loss of approximately $38,000 for the three months ended March 31, 2014, and $788,286 and $2,484,342 for the years ended December 31, 2013 and 2012, respectively. We anticipate these losses will continue for the foreseeable future. Additionally, the Company has negative cash flows from operations, negative working capital, is behind on payments due for payroll taxes and withholding, matured convertible debentures, related party notes payable, accrued liabilities and interest –related parties, a note payable due an unrelated party, and certain vendor payables. The Company is working out all matters of delinquency on a case by case basis. However, there can be no assurance that cooperation the Company has received thus far will continue. During the year ended December 31, 2012, the Company’s real estate was foreclosed upon, and the Company now operates under a short-term lease of the property. This raises a substantial doubt about our ability to continue as a going concern. Our continued existence is dependent upon generating working capital and obtaining adequate new debt or equity financing. Because of our continuing losses, we may not have working capital to permit us to remain in business through the end of the year, without improvements in our cash flow from operations or new financing. Working capital limitations continue to impinge on our day-to-day operations, thus contributing to continued operating losses.

33

The Optional Conversion Features of a Series of Convertible Debentures Issued by the Company Could Require the Company to Issue a Substantial Number of Shares of Common Stock, Which Will Cause Dilution to the Company’s Stockholders and a Potentially Negative Effect on Our Stock Price.

Since October 4, 2010 the Company has issued convertible debentures to several lenders and other third parties. At March 31, 2014 the outstanding principal balance of these debentures was $516,800. The debentures convert under various conversion formulas, all of which are at a significant discount to market price of our common stock. The conversion of any of the debentures will result in the issuance of a significant number of shares of our common stock which will cause dilution to our existing shareholders. Furthermore, the conversion at a significant discount to the market price of our common stock may have a negative effect on our stock price.

Our Common Stock May Be Affected By Limited Trading Volume and May Fluctuate Significantly

Our common stock is traded on the Over-the-Counter Bulletin Board. There is a limited public market for our common stock and there can be no assurance that an active trading market for our common stock will develop. As a result, this could adversely affect our shareholders’ ability to sell our common stock in short time periods, or possibly at all. Thinly traded common stock can be more volatile than common stock traded in an active public market. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially.

Our Common Stock Is Deemed To Be “Penny Stock,” Which May Make It More Difficult For Investors to Sell Their Shares Due To Suitability Requirements

Our common stock is deemed to be “penny stock” as that term is defined under the Securities Exchange Act of 1934. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our common stock is covered by an SEC rule that imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors, which are generally institutions with assets in excess of $5,000,000, or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.

Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.

We Depend On the Services of Our Chief Executive Officer

Our success largely depends on the efforts and abilities of Robert M. Carmichael, our President and Chief Executive Officer. Mr. Carmichael has been instrumental in securing our existing financing arrangements. Mr. Carmichael is primarily responsible for the development of our technology and the design of our products. The loss of the services of Mr. Carmichael could materially harm our business because of the cost and time necessary to recruit and train a replacement. Such a loss would also divert management attention away from operational issues. We do not presently maintain a key-man life insurance policy on Mr. Carmichael.

We Require Additional Personnel and Could Fail To Attract or Retain Key Personnel

Our continued growth depends on our ability to attract and retain a Chief Financial Officer, a Chief Operations Officer, and additional skilled associates. We are currently utilizing the services of two professional consultants in the absence of a Chief Financial Officer and Chief Operations Officer. The loss of the services of these consultants prior to our ability to attract and retain a Chief Financial Officer or Chief Operations Officer may have a material adverse effect upon us. Also, there can be no assurance that we will be able to retain our existing personnel or attract additional qualified associates in the future.

34

Our Failure to Obtain Intellectual Property and Enforce Protection Would Have a Material Adverse Effect on Our Business

Our success depends in part on our ability, and the ability of our patent and trademark licensors, entities owned and controlled by Robert M. Carmichael, our President and Chief Executive Officer, to obtain and defend our intellectual property, including patent protection for our products and processes, preserve our trade secrets, defend and enforce our rights against infringement and operate without infringing the proprietary rights of third parties, both in the United States and in other countries. Despite our efforts to protect our intellectual proprietary rights, existing copyright, trademark and trade secret laws afford only limited protection.

Our industry is characterized by frequent intellectual property litigation based on allegations of infringement of intellectual property rights. Although we are not aware of any intellectual property claims against us, we may be a party to litigation in the future.

We May Be Unable To Manage Growth

Successful implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management and financial resources. If we fail to manage our growth effectively, our business, financial condition or operating results could be materially harmed, and our stock price may decline.

Reliance on Vendors and Manufacturers

We deal with suppliers on an order-by order basis and have no long-term purchase contracts or other contractual assurances of continued supply or pricing. In addition, we have no long-term contracts with our manufacturing sources and compete with other companies for production facility capacity. Historically, we have purchased enough inventories of products or their substitutes to satisfy demand. However, unanticipated failure of any manufacturer or supplier to meet our requirements or our inability to build or obtain substitutes could force us to curtail or cease operations.

Dependence on Consumer Spending

The success of the our business depends largely upon a number of factors related to consumer spending, including current and future economic conditions affecting disposable consumer income such as employment, business conditions, tax rates, and interest rates. In times of economic uncertainty, consumers tend to defer expenditures for discretionary items, which affect demand for our products. Any significant deterioration in overall economic conditions that diminishes consumer confidence or discretionary income can reduce our sales and adversely affect our financial results. The impact of weakening consumer credit markets; layoffs; corporate restructurings; higher fuel prices; declines in the value of investments and residential real estate; and increases in federal and state taxation can all negatively affect our results. There can be no assurance that in this type of environment consumer spending will not decline beyond current levels, thereby adversely affecting our growth, net sales and profitability or that our business will not be adversely affected by continuing or future downturns in the economy, boating industry, or dive industry. If declines in consumer spending on recreational marine accessories and dive gear are other than temporary, we could be forced to curtail operations.

Government Regulations May Impact Us

The SCUBA industry is self-regulating; therefore, Brownie’s is not subject to government industry specific regulation. Nevertheless, Brownie’s strives to be a leader in promoting safe diving practices within the industry and is at the forefront of self-regulation through responsible diving practices. Brownie’s is subject to all regulations applicable to “for profit” companies as well as all trade and general commerce governmental regulation. All required federal and state permits, licenses, and bonds to operate its facility have been obtained. There can be no assurance that our operations will not be subject to more restrictive regulations in the future, which could force us to curtail or cease operations.

35

Bad Weather Conditions Could Have an Adverse Effect on Operating Results

Our business is significantly impacted by weather patterns. Unseasonably cool weather, extraordinary amounts of rainfall, or unseasonably rough surf, may decrease boat use and diving, thereby decreasing sales. Accordingly, our results of operations for any prior period may not be indicative of results of any future period.

Investors Should Not Rely On an Investment in Our Stock for the Payment of Cash Dividends

We have not paid any cash dividends on our capital stock and we do not anticipate paying cash dividends in the future. Investors should not make an investment in our common stock if they require dividend income. Any return on an investment in our common stock will be as a result of any appreciation, if any, in our stock price.

The Manufacture and Distribution of Recreational Diving Equipment Could Result In Product Liability Claims

We, like any other retailer, distributor and manufacturer of products that are designed for recreational sporting purposes, face an inherent risk of exposure to product liability claims in the event that the use of our products results in injury. Such claims may include, among other things, that our products are designed and/or manufactured improperly or fail to include adequate instructions as to proper use and/or side effects, if any. We do not anticipate obtaining contractual indemnification from parties-supplying raw materials, manufacturing our products or marketing our products. In any event, any such indemnification if obtained will be limited by our terms and, as a practical matter, to the creditworthiness of the indemnifying party. In the event that we do not have adequate insurance or contractual indemnification, product liabilities relating to defective products could have a material adverse effect on our operations and financial conditions, which could force us to curtail or cease our business operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable to Smaller Reporting Company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation with the participation of our Chief Executive Officer who serves as our principal executive officer and principal financial and accounting officer, required by Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act.

Based on this evaluation, our Chief Executive Officer and principal financial and accounting officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were not effective such that the information relating to our company required to be disclosed in our SEC reports (i) is recorded processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management to allow timely decisions regarding required disclosures. Our management concluded that our disclosure controls and procedures were not effective as described in more detail below. A material weakness is a control deficiency, or combination of control deficiencies, that result in more than a remote likelihood that a material misstatement of our annual or interim financial statements would not be prevented or detected.

The specific weakness identified by our management was a lack of personnel with an appropriate level of SEC reporting and accounting experience and training in the application of U.S. Generally Accepted Accounting Principles (“GAAP”) commensurate with our financial reporting requirements and business environment. The weakness is principally due to lack of working capital to retain qualified employees, which are integral to the Company’s process for timely disclosure and financial reporting. Furthermore, our chief executive officer and chief financial officer, Mr. Robert Carmichael, lacks experience in U.S. GAAP and financial accounting. We rely extensively on outside service providers to comply with our financial reporting requirements. Since our inception we have relied on an outside consultant with experience in this area to assist us prepare our financial statements and disclosures in accordance with U.S. GAAP. Until such time as we have a chief executive officer and/or chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses in our internal control over financial reporting will not result in errors in our financial statements which could lead to a restatement of those financial statements. This deficiency resulted in the failure of the Company to timely file Form 8-K current reports relating to significant debenture conversions and conversion of related party employee compensation payable to restricted stock during the period covered by this report. These transactions are disclosed in the notes to the Company’s Financial Statements for the period covered by this report included herein.

36

To mitigate the chance for reoccurrence of this noted deficiency, as disclosed in the Liquidity and Capital Resources section of this Form 10-Q Quarterly Report, the Company is currently in the process of addressing its working capital shortfall whereby this would provide the needed funds to retain the legal, accounting, and external services required for timely disclosure and financial reporting.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1a.   Risk Factors

  Not Applicable to Smaller Reporting Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the period covered by this report, the Company sold securities without registration under the Securities Act of 1933 (the “Securities Act”) in reliance upon the exemption provided in Section 4(a)(2) as described below or as otherwise previously disclosed on Form 8-K. The securities were issued with a legend restricting their transferability absent registration of applicable exemption.

During the three months ended March 31, 2014, one lender converted $10,110 of convertible debenture to 2,239,007 shares of stock. In addition, the lender converted $1,700 accrued interest to 307,224 shares of stock. The stock was issued without restrictive legend because the Rule 144 holding period had been met at time of issuance. Terms of conversion as per the debenture were 61% of weighted average stock price five trading days prior to conversion notice per share consistent with terms of the debenture.

During the three months ended March 31, 2014, $13,500 related party employee compensation payable was converted to 1,223,977 shares of restricted stock.

37

Item 3. Defaults Upon Senior Securities

None

Item 4. MINE SAFETY DISCLOSURE

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description	Location
31.1 31.2	Certification Pursuant to Rule 13a-14(a)/15d-14(a) Certification Pursuant to Rule 13a-14(a)/15d-14(a)	Provided herewith. Provided herewith.
32.1	Certification Pursuant to Section 1350	Provided herewith.
32.2 101	Certification Pursuant to Section 1350 XBRL Interactive Data File *	Provided herewith.

* Attached as Exhibit 101 to this report are the following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) Consolidated Statements of Stockholders’ Deficit (iv) the Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements tagged as blocks of text. The XBRL-related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed "filed" or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of those sections.

38

SIGNATURES

In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 13, 2014	Brownie’s Marine Group, Inc.
	By: /s/ Robert M. Carmichael
	Robert M. Carmichael
	President, Chief Executive Officer,
	Chief Financial Officer/
	Principal Accounting Officer

39

EX-31.1

EXHIBIT 31.1

OFFICER’S CERTIFICATE
PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Robert Carmichael, Chief Executive Officer, certify that:

1. I have reviewed this Form 10-Q for the quarter ended March 31, 2014, of Brownie’s Marine Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: May 13, 2014	By: /s/ Robert M. Carmichael
	Name: Robert M. Carmichael
	Title: Chief Executive Officer

EX-31.2

EXHIBIT 31.2

OFFICER’S CERTIFICATE
PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Robert Carmichael, Chief Financial Officer, certify that:

1. I have reviewed this Form 10-Q for the quarter ended March 31, 2014, of Brownie’s Marine Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date:  May 13, 2014	By: /s/  Robert M. Carmichael
	Name: Robert M. Carmichael
	Title: Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Brownie’s Marine Group, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2014 as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date:  May 13, 2014	By: /s/ Robert M. Carmichael
	Name: Robert M. Carmichael
	Title: Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Brownie’s Marine Group, Inc. and will be retained by Brownie’s Marine Group, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Brownie’s Marine Group, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2014 as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date:  May 13, 2014	By: /s/ Robert M. Carmichael
	Name: Robert M. Carmichael
	Title: Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Brownie’s Marine Group, Inc. and will be retained by Brownie’s Marine Group, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request.

XML

PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details Textual) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Prepaid Expense and Other Assets, Current [Line Items]
Prepaid expenses and other current assets	$ 116,161	$ 109,523
Prepaid Inventory	78,911	94,990
Prepaid Insurance	28,676	14,141
Other Assets, Current	585	392
Prepaid Subcontract Labor Charges	$ 7,989

XML

CONVERTIBLE DEBENTURES (Details Textual) (USD $)	0 Months Ended		3 Months Ended					0 Months Ended		1 Months Ended			12 Months Ended			1 Months Ended	12 Months Ended					12 Months Ended					0 Months Ended	1 Months Ended				3 Months Ended	12 Months Ended					0 Months Ended					0 Months Ended					3 Months Ended				1 Months Ended	3 Months Ended			1 Months Ended				3 Months Ended						1 Months Ended	3 Months Ended				1 Months Ended		3 Months Ended	1 Months Ended	12 Months Ended					0 Months Ended	1 Months Ended	12 Months Ended				12 Months Ended			1 Months Ended
	Jul. 15, 2013	Mar. 03, 2009	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Oct. 30, 2013	Feb. 22, 2012	Apr. 09, 2014 Subsequent Event [Member]	Apr. 15, 2014 Subsequent Event [Member]	Apr. 21, 2014 Subsequent Event [Member]	Apr. 24, 2014 Subsequent Event [Member]	Apr. 30, 2014 Subsequent Event [Member]	Dec. 31, 2013 Convertible Debenture One [Member]		Dec. 31, 2010 Convertible Debenture One [Member]	Feb. 29, 2012 Convertible Debenture Two [Member]	Dec. 31, 2013 Convertible Debenture Two [Member]		Mar. 31, 2014 Convertible Debenture Two [Member]		Feb. 10, 2012 Convertible Debenture Two [Member]	Dec. 31, 2013 Convertible Debenture Three [Member]		Dec. 31, 2011 Convertible Debenture Three [Member]	Mar. 31, 2014 Convertible Debenture Three [Member]		Mar. 09, 2012 Convertible Debenture Four [Member]	Oct. 31, 2012 Convertible Debenture Four [Member]	Aug. 31, 2012 Convertible Debenture Four [Member]	Jul. 31, 2012 Convertible Debenture Four [Member]	Feb. 29, 2012 Convertible Debenture Four [Member]	Sep. 30, 2012 Convertible Debenture Four [Member]	Dec. 31, 2013 Convertible Debenture Four [Member]	Dec. 31, 2012 Convertible Debenture Four [Member]	Dec. 31, 2011 Convertible Debenture Four [Member] Convertible Debt One [Member]	Dec. 31, 2011 Convertible Debenture Four [Member] Convertible Debt Two [Member]	Dec. 31, 2011 Convertible Debenture Four [Member] Convertible Debt Three [Member]	Mar. 09, 2011 Convertible Debenture Five [Member]	Dec. 31, 2013 Convertible Debenture Five [Member]		Mar. 09, 2011 Convertible Debenture Five [Member] Convertible Debt One [Member]	Mar. 09, 2011 Convertible Debenture Five [Member] Convertible Debt Two [Member]	May 03, 2011 Convertible Debenture Six [Member]	Dec. 31, 2013 Convertible Debenture Six [Member]		May 03, 2011 Convertible Debenture Six [Member] Warrant One [Member]	May 03, 2011 Convertible Debenture Six [Member] Warrant Two [Member]	Mar. 31, 2014 Convertible Debenture Seven [Member]		Dec. 31, 2013 Convertible Debenture Seven [Member]		Feb. 29, 2012 Convertible Debenture Eight [Member]	Mar. 31, 2014 Convertible Debenture Eight [Member]	Dec. 31, 2013 Convertible Debenture Eight [Member]		Nov. 30, 2012 Convertible Debenture Nine [Member]	Jul. 31, 2012 Convertible Debenture Nine [Member]	May 31, 2012 Convertible Debenture Nine [Member]	Feb. 29, 2012 Convertible Debenture Nine [Member]	Mar. 31, 2014 Convertible Debenture Nine [Member]	Dec. 31, 2013 Convertible Debenture Nine [Member]		Dec. 31, 2013 Convertible Debenture Nine [Member] Related Party One [Member]	Dec. 31, 2013 Convertible Debenture Ten [Member]		Jan. 18, 2013 Convertible Debenture Eleven [Member]	Mar. 31, 2014 Convertible Debenture Eleven [Member]		Dec. 31, 2013 Convertible Debenture Eleven [Member]		Jan. 18, 2013 Convertible Debenture Eleven [Member] Convertible Debt One [Member]	Jan. 18, 2013 Convertible Debenture Eleven [Member] Convertible Debt Two [Member]	Mar. 31, 2014 Convertible Debenture Eleven [Member] Convertible Debt Three [Member]	Apr. 30, 2012 Convertible Debenture Twelve [Member]	Dec. 31, 2013 Convertible Debenture Twelve [Member]		Dec. 31, 2012 Convertible Debenture Twelve [Member]	Mar. 31, 2014 Convertible Debenture Twelve [Member]		Aug. 12, 2013 Convertible Debenture Thirteen [Member]	Jan. 18, 2013 Convertible Debenture Thirteen [Member]	Dec. 31, 2013 Convertible Debenture Thirteen [Member]		Dec. 31, 2013 Convertible Debenture Thirteen [Member] Convertible Debt One [Member]	Jan. 18, 2013 Convertible Debenture Thirteen [Member] Convertible Debt One [Member]	Dec. 31, 2013 Convertible Debenture Thirteen [Member] Convertible Debt Two [Member]	Jan. 18, 2013 Convertible Debenture Thirteen [Member] Convertible Debt Two [Member]	Dec. 31, 2013 Convertible Debenture Thirteen [Member] Convertible Debt Three [Member]	Apr. 30, 2013 Convertible Debenture Fourteen [Member]	Mar. 31, 2014 Convertible Debenture Fourteen [Member]		Dec. 31, 2013 Convertible Debenture Fourteen [Member]		Apr. 08, 2013 Convertible Debenture Fourteen [Member]
Convertible Debentures [Line Items]
Debt Instrument, Convertible, Conversion Price																																																												$ 0.37125							$ 0.37125
Debt Instrument, Convertible, Beneficial Conversion Feature													$ 20,635				$ 53,517					$ 32,571							$ 27,172																								$ 39,724																													$ 58,720
Percentage Of Royalty On Revenue																	2.50%
Percentage Of Discount On Conversion Price																	30.00%					30.00%						39.00%	39.00%	39.00%													30.00%					30.00%					30.00%																													59.00%							40.00%
Research and development costs			379	15,599											71,483														42,500									50,000
Long-term Debt, Gross																7,500											24,500	78,500			11,000																	10,000				39,724				11,750	11,750	11,750	7,500		5,500		23,500	5,500		39,724					16,000	56,250	39,724															84,500						20,000
Debt Instrument Transfer Or Assignment In Second Closing																11,750
Debt Instrument Transfer Or Assignment In Subsequent Closing																11,750
Convertible Debenture Issued																						76,000						50,189						35,268									300,000					4,286					17,025																3,211															95,000		30,500								13,333
Stock Issued During Period, Value, Restricted Stock Award, Gross																						38,000
Repayments of Debt																								28,000
Percentage Of Prepayment Of Debenture Minimum																																		130.00%
Percentage Of Prepayment Of Debenture Maximum																																		150.00%
Penalty For Not Timely Delivering Shares Upon Conversion Notice																																		2,000
Debt Instrument Accrued Interest																											1,448				3,328	1,500																				1,552																			1,512	4,825	2,743		202		162			8,794
Class of Warrant or Right, Number of Securities Called by Warrants or Rights																																									50,000	100,000				300,000	600,000
Class of Warrant or Right, Exercise Price of Warrants or Rights																																									$ 337.50	$ 472.50				$ 337.50	$ 472.50
Debenture Discount																												78,500					42,500	78,500				34,472					206,832										17,025
Convertible Debenture Issued																																						7,500					45,000
Maximum Conversion Percentage For Debenture At Any One Time													4.99%																					4.99%									10.00%																	4.99%						4.99%																4.99%
Extinguishment of Debt, Gain (Loss), Net of Tax																																																								6,714	6,714	6,714	4,286							71,577								3,700							93,826
Percentage Of Prepayment Of Debenture																																																												150.00%						150.00%																44.00%
Origination Principal Balance													20,635	[1]			125,000	[2]	125,000	[2]	125,000	76,000	[3]		76,000	[3]						42,500							37,500	[4]				37,500	[4]			42,500	[4]	42,500	[4]			78,500	[4]				125,000		78,500	[4]		50,000	[5]		300,000	[6]	300,000	[6]				16,347	10,000	[7]	16,347	10,000	[7]			39,724	[8]		30,500		95,000			39,724	[9]	42,750	[10]
Debt Conversion, Converted Instrument, Amount				565,689				2,160	2,160	2,280	2,080	1,920																		78,500			78,500		42,500	37,500	37,500																																								23,500							30,500		22,500
Interest Payable																																																																											2,125							191
Debt Conversion Converted Instrument Issuance Date Description																																																																																		within 90 days after the effective date at 140% multiplied by outstanding principal and accrued interest.
Debt Conversion Post Closing Expenses																																																																																		1,000
Debt Conversion Other Expenses																																																																																		700
Share Price				$ 0.0005		$ 0.025
Common stock, shares authorized			5,000,000,000	5,000,000,000	5,000,000,000		5,000,000,000
Reduced Share Price				$ 0.0005
Stockholders Equity, Reverse Stock Split	1 -for- 1,350	1 for 1,350																																									1 for -1,350																	1-for-1,350							1-for-1,350
Debt Instrument Principle Amount																																	34,055																																															157,446
Debt Instrument Amount																																																																																166,240
Debt Instrument Outstanding Amount																																																																																170,000
Other Expenses, Total																																																																																$ 3,760
Debt Instrument Accrued Interest Percentage																																																																																		10.00%

[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 recognized 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. 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 in exchange for convertible debenture 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 was 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 was no assurance of success and the invention was still in design and pre-prototype phase, the Company recorded the initial net value of the debenture, $71,483, as research and development expense during the year ended 2010. Both parties agreed to confidentiality regarding the invention during the pre-prototype stage. In addition, the Company 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. On February 10, 2012, the holder of this debenture entered into an agreement with a third party to sell/assign the $125,000 principal balance, plus accrued interest. The purchase was to be in installments with transfer/assignment of the debenture upon payment, referred to as “Closings”. The first Closing was on or about February 15, 2012 for $7,500, with that amount assigned/transferred. The second Closing, occurred 90 days after the first closing for $11,750 paid/assigned. All subsequent Closings were to be for $11,750 and occur in 30 day increments after the second Closing. This was to continue until the full principal balance of $125,000, plus accrued interest has been purchased/assigned. See Ref. (9) for discussion of new terms on the assigned portions of the debenture.

[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 shares of restricted common stock. The lender at their option could 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 16. 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 in 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. On July 2, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on April 5, 2013. Beginning 180 days after the date of the debenture, lender could convert the note to common shares at a 39% discount of the “Market Price” of the stock based on the average of the lowest three (3) closing bid prices on the date prior to the notice of conversion. In addition, if the Company granted a lower price for common stock purchase or conversion to anyone else during the term of the agreement, the lender’s conversion price would be adjusted downward to the same. The lender could not convert an amount greater than 4.99% of the outstanding common stock at any one time. The Company could have prepaid the debenture at any time before maturity at graduated amounts depending on the date of prepayment ranging from 130% to 150% of the debenture balance plus accrued and unpaid interest. There was a $2,000 per day penalty for not timely delivering shares upon conversion notice. 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 debenture. The Company valued the BCF of the convertible debenture at $35,268. Accordingly, the $78,500 debenture was discounted by the amount of the BCF and accreted to the convertible debenture through its maturity, and interest was recognized until converted. By December 31, 2013, the lender had converted $78,500 principal plus accrued interest on the convertible debenture in full satisfaction of the debt. 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. On August 8, 2012, the Company borrowed $42,500 from this same lender in exchange for a convertible debenture maturing on May 10, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in preceding paragraph. The Company valued the BCF of the convertible debenture at $27,172. Accordingly, the $42,500 debenture was discounted by the amount of the BCF. The Company accreted the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the year ended December 31, 2013, the lender converted $34,055 principal on 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. On October 31, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on August 2, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in two paragraphs preceding this one. The Company valued the BCF of the convertible debenture at $50,189. Accordingly, the $78,500 debenture was discounted by the amount of the BCF. The Company is accreting the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the three months ended March 31, 2014, the lender converted $1,685 of the convertible debenture to shares of common stock. . 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.

[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. On February 10, 2012, the lender sold/assigned all rights and interest on the debenture having a net book value of $39,724, plus $1,552 of accrued interest. See reference (11) which discusses the terms and conditions surrounding the new debenture issued upon extinguishment of the original as well as accounting treatment of the transaction.

[9] 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 in the year ended December 31, 2012. The new debentures were issued with the same following terms and conditions: The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debentures is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 4.99% of the outstanding Common Stock of the Company at any one time. During the years ended December 31, 2013, the lender converted $3,211 of the debenture with original principal balance of $39,724 to stock. 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. On January 18, 2013, the lender sold/assigned all rights and interest on one of its three debentures having net book value of $16,000 plus accrued interest of $1,512. On the same day, the lender sold/assigned all rights and interest on another of its three debentures having a net book value of $56,250, plus $4,825 of accrued interest. See reference (13) 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. As of March 31, 2014, the lender still held the third debenture with original principal balance of $39,724 with net book value of $2,743.

[10] 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. Since that date the lender has not purchased or converted any shares pursuant to the sale/assignment agreement. The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debenture is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. 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. As of March 31, 2014 and December 31, 2013, the lender had assigned a cumulative $5,500 under the debenture to four separate parties, and $23,500 to another party. See reference (10) and (12), respectively, related to the assignments.

XML

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details Textual) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Accounts Payable and Accrued Liabilities [Line Items]
Accounts Payable and Accrued Liabilities	$ 510,277	$ 517,058
Accounts Payable, Trade, Current	231,957	245,672
Employee-related Liabilities, Current	48,181	50,910
Accrued Payroll Taxes, Current	43,411	42,093
Accrued Interest Current	141,728	133,383
Accrued Bonuses, Current	$ 45,000	$ 45,000

XML

EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES (Details Textual) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Equity Based Compensation [Line Items]
Stock Issued During Period, Shares, Restricted Stock Award, Gross		32,796
Restricted Stock Conversion Price Terms		The stock conversion price under the agreement was calculated as a weighted average for the month the services were granted at a 30% discount.
Total operating expenses	$ 180,346	$ 577,273
Capital Second Commitment			500,000
Adjustments To Additional Paid In Capital Conversion Of Employee Compensation Payable To Stock	13,500
Common Stock [Member]
Equity Based Compensation [Line Items]
Adjustments To Additional Paid In Capital Conversion Of Employee Compensation Payable To Stock	122
Stock Issued During Period Shares Conversion Of Employee Compensation	1,223,977
Financial Strategic Advice [Member]
Equity Based Compensation [Line Items]
Initial Consulting Fee			25,000
Initial Consulting Fee In Shares			37,038
Further Capital Amount			5,000,000
Consulting Fee Due To Obtain Second Commitment			500,000
Consulting Fee Due To Obtain Third Commitment			50,000
Capital Third Commitment			$ 500,000

XML

RELATED PARTIES TRANSACTIONS (Details Textual) (USD $)	0 Months Ended		1 Months Ended		0 Months Ended	1 Months Ended				3 Months Ended		12 Months Ended						3 Months Ended				3 Months Ended								3 Months Ended					0 Months Ended	3 Months Ended				0 Months Ended	1 Months Ended		3 Months Ended		12 Months Ended		0 Months Ended	3 Months Ended	12 Months Ended		0 Months Ended	3 Months Ended	12 Months Ended
	Oct. 30, 2013	Mar. 03, 2009	Dec. 23, 2013	Nov. 30, 2013	Jul. 15, 2013	Nov. 30, 2012	Apr. 30, 2011	Sep. 24, 2010	Aug. 22, 2007	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Apr. 20, 2013	Jun. 11, 2012	Apr. 20, 2012	Sep. 30, 2010	Mar. 31, 2014 Restricted Stock [Member]	Apr. 30, 2014 Restricted Stock [Member]	Dec. 31, 2012 Restricted Stock [Member]	Apr. 21, 2011 Restricted Stock [Member]	Mar. 31, 2014 Brownies Southport Divers Inc + Brownie Palm Beach Divers + Brownies Yacht Toys [Member]	Mar. 31, 2013 Brownies Southport Divers Inc + Brownie Palm Beach Divers + Brownies Yacht Toys [Member]	Mar. 31, 2014 Brownies Southport Divers Inc [Member]	Dec. 31, 2013 Brownies Southport Divers Inc [Member]	Mar. 31, 2014 Brownie Palm Beach Divers [Member]	Dec. 31, 2013 Brownie Palm Beach Divers [Member]	Mar. 31, 2014 Brownies Yacht Toys [Member]	Dec. 31, 2013 Brownies Yacht Toys [Member]	Mar. 31, 2014 Pompano Dive Center [Member]	Mar. 31, 2013 Pompano Dive Center [Member]	Dec. 31, 2013 Pompano Dive Center [Member]	Dec. 31, 2012 Pompano Dive Center [Member]	Feb. 23, 2013 Mikkel Pitzner [Member] Restricted Stock [Member]	May 13, 2013 Related Party [Member]	Mar. 31, 2014 Brownies Global Logistics LLC [Member]	Mar. 31, 2013 Brownies Global Logistics LLC [Member]	Mar. 31, 2014 Purdon [Member]	Mar. 31, 2013 Purdon [Member]	Nov. 02, 2012 Chief Executive Officer [Member]	Feb. 23, 2013 Chief Executive Officer [Member]	Nov. 30, 2012 Chief Executive Officer [Member]	Mar. 31, 2014 Chief Executive Officer [Member]	Mar. 31, 2013 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]	Mar. 31, 2014 Board of Directors [Member]	Dec. 31, 2013 Board of Directors [Member]	Dec. 31, 2012 Board of Directors [Member]	Oct. 30, 2013 Board of Directors [Member] Mikkel Pitzner [Member]	Mar. 31, 2014 Promissory Note Payable Unsecured [Member]	Dec. 31, 2013 Promissory Note Payable Unsecured [Member]
Related Party Transaction [Line Items]
Common stock, shares issued										11,258,711		10,049,140							184,202		14,815
Revenue, Net										$ 588,383	$ 588,663											$ 221,741	$ 164,245													$ 67,115	$ 0
Accounts Receivable, Related Parties																								24,679	11,926	17,110	6,116	23,833	3,047			13,330	14,029			2,658
Related Party Transaction, Purchases from Related Party								25,500
Liabilities, Noncurrent								8,250									8,250
Percentage Of Restrictions On Common Stock				10.00%										50.00%		50.00%				30.00%
Deferred Compensation Arrangement with Individual, Compensation Expense							1,000,000																																					22,500
Amortization Of Prepaid Equity Based Compensation Expense										0	125,001	0	125,001
Deferred Compensation Equity										0		0
Declaration Of Bonus															83,333																																			129,500
Operating Expenses										180,346	577,273							83,333																												23,801
Increase In Payment Of Salary																																														16,667		7,144
Stock Incentive Bonus Number Of Shares Reserved																																								61,852										61,852
Sales Revenue, Goods, Net										298,319	423,282																			1,079	1,137												130	0
Debt Conversion, Converted Instrument, Shares Issued																																															370,371
Debt Conversion, Converted Instrument, Amount											565,689																								50,000
Debt Instrument, Interest Rate, Stated Percentage																																													7.50%			21.21%	21.21%			5.00%	5.00%
Debt Instrument, Frequency of Periodic Payment																																																	monthly
Debt Instrument, Periodic Payment																																													7,050			8,585	8,585
Debt Instrument, Maturity Date																																													Aug. 01, 2013			Nov. 01, 2014	Nov. 01, 2014			Mar. 10, 2015	Mar. 10, 2015
Terms OF License Agreement										$2.00 per licensed product sold, rates increasing 5% annually
Due To Officers Or Stockholders										70,833		49,702																															49,702
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	1,802,565	234				5,185			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																																					13,500	9,000
Cancelled Compensation Related Party			2,500									27,500
Cancelled Stock Payable To Board Of Directors												5,917
Additional Paid In Capital, Common Stock										8,501,643		8,478,092																																	428,578
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance		$ 1,350
Stock Incentive Bonus Cash Awarded																																								45,000	67,000
Employee-Related Liabilities, Current										48,181		50,910																																	261,904	166,667
Stock Incentive Bonus Value Of Shares Awarded																																								37,037		45,000
Proceeds from Secured Notes Payable																																																200,000	200,000		85,000
Stock Incentive Bonus Value Of Shares Reserved																																								75,150										17,500
Restricted Shares Of Common Stock Fair Market Value																																		73,000
Stockholders Equity, Reverse Stock Split		1 for 1,350			1 -for- 1,350
Stock Returned For Forgiveness Of Bod Fees										14,406
Portion Of Stock Due Back For Forgiveness Of Bod Fees										1,383
Stock Issuable During Period Shares Share Based Compensation				1,852
Stock Value Payable During Period Shares Share Based Compensation				$ 2,250

XML

RELATED PARTIES TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2014

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

Notes payable – related parties consists of the following at March 31, 2014:

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	$	70,833
Less amounts due within one year		70,833
Long-term portion of notes payable	$	—

Notes payable – related parties consists of the following at December 31, 2013:

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	$	—

Schedule Of Related Party Principal Payments [Table Text Block]

As of March 31, 2014, principal payments on the notes payable – related parties are as follows:

2014	$	70,833
2015		—
2016		—
2017		—
2018		—
Thereafter		—
	$	70,833

Schedule Of Other Liabilities And Accrued Interest Related Party [Table Text Block]

Other liabilities and accrued interest– related parties consists of the following at:

	March 31, 2014		December 31, 2013
Year-end 2012 bonus payable to Chief Executive Officer	$	67,000	$	67,000
Year-end 2012 bonus payable to employee		17,500		17,500
Accrued interest on note payable non-employee Board of Director		3,004		—
Due to Principals of Carleigh Rae Corp., net		6,017		6,017
	$	93,521	$	90,517

XML

INCOME TAXES (Details 1) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Deferred tax assets:
Equity based compensation	$ 97,276	$ 97,276
Allowance for doubtful accounts	13,260	13,260
Depreciation and amortization timing differences		0
Net operating loss carryforward	1,136,206	1,124,299
On-line training certificate reserve	932	1,109
Total deferred tax assets	1,247,674	1,235,944
Valuation allowance	(1,245,111)	(1,233,337)
Deferred tax assets net of valuation allowance	2,563	2,607
Less deferred tax assets - non-current, net of valuation allowance	2,330	2,330
Deferred tax assets - current, net of valuation allowance	$ 233	$ 277

XML

EQUITY INCENTIVE PLAN

3 Months Ended

Mar. 31, 2014

Equity Incentive Plan [Abstract]

Equity Incentive Plan [Text Block]

19. EQUITY INCENTIVE PLAN

On August 22, 2007, the Company adopted an Equity Incentive Plan (the “Plan”). Under the Plan, Stock Options may be granted to Employees, Directors, and Consultants in the form of Incentive Stock Options or Nonstatutory Stock Options. Stock Purchase Rights, time vested and/performance invested Restricted Stock, and Stock Appreciation Rights and Unrestricted Shares may also be granted under the Plan. The initial maximum number of shares that may be issued under the Plan shall be 297 shares, and no more than 75 Shares of Common Stock may be granted to any one Participant with respect to Options, Stock Purchase Rights and Stock Appreciation Rights during any one calendar year period. Common Stock to be issued under the Plan may be either authorized and unissued or shares held in treasury by the Company. The term of the Plan shall be ten years. The Board of Directors may amend, alter, suspend, or terminate the Plan at any time. All 297 options were issued under the plan prior to January 1, 2010, and to-date all remain outstanding.

XML

NOTES PAYABLE (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Long-term Debt, by Category, Current and Noncurrent [Line Items]
Less amounts due within one year	$ 12,229	$ 12,540
Long-term portion of notes payable	0	2,765
Promissory Note Payable Unsecured [Member]
Long-term Debt, by Category, Current and Noncurrent [Line Items]
Notes Payable	12,229	15,305
Less amounts due within one year	12,229	12,540
Long-term portion of notes payable	$ 0	$ 2,765

XML

CUSTOMER CREDIT CONCENTRATIONS (Details Textual)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Customer Credit Concentrations [Line Items]
Concentration Risk, Percentage	10.00%	10.00%
Sales Revenue, Goods, Net [Member] | Related Party [Member]
Customer Credit Concentrations [Line Items]
Concentration Risk, Percentage	49.09%	28.09%

XML

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) (USD $)	0 Months Ended		3 Months Ended
	Jul. 15, 2013	Mar. 03, 2009	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Significant Accounting Policies [Line Items]
Marketing and Advertising Expense			$ 912	$ 27,262
Percentage Of Minimum Deposit For Custom and Large Tank Fill Systems			50.00%
Percentage Of Restocking Fees			15.00%
Period End Principal Balance			$ 516,800		$ 526,910
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

XML

NOTES PAYABLE (Details Textual) (Promissory Note Payable Unsecured [Member], USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
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

XML

INTEREST EXPENSE NON-RELATED PARTIES AND OTHER EXPENSE (INCOME), NET (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Interest Expense, Non Related Party	$ 13,552	$ 68,850
Royalty Income, Nonoperating	5,144
Other Nonoperating Income (Expense)	36,738	(91,779)
Gains Losses On Extinguishment Of Convertible Debentures	0	93,826
Other Income	131	1,650
Legal Fees	31,463
Convertible Debentures [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Interest Expense, Debt	12,921	67,754
Notes Payable [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Interest Expense, Debt	$ 631	$ 770

XML

COMMITMENTS AND CONTINGENCIES (Details Textual) (USD $)	0 Months Ended		1 Months Ended	0 Months Ended		1 Months Ended	3 Months Ended	12 Months Ended				1 Months Ended
	Jun. 28, 2013	Jan. 12, 2013	Nov. 30, 2013	Dec. 14, 2012	Nov. 01, 2012	Jul. 16, 2012	Mar. 31, 2014	Dec. 31, 2012	Oct. 14, 2013	Aug. 16, 2012	Jul. 17, 2012	Dec. 18, 2012 Undersea Breathing Systems Inc [Member]
Commitments and Contingencies [Line Items]
Net Book Value Excluding Interest Of Debentures								$ 12,700
Loss Contingency, Damages Paid, Value								15,000
Fore Closed Real Estate Sale Bid Value										1,300
Real Estate Foreclosure Sale, Final Judgment Amount and Interest Expense				1,127,643					103,026		1,123,269
Real Estate Foreclosure Sale Fair Value Of Property				1,030,000
Real Estate Foreclosure Sale, Shortfall Amount				100,000
Lease Base Rent					3,750
Description Of Terms For Cancellation Of Lease							90 days
Purchase Price Per Membrane, Cash												2,000
Purchase Price Per Membrane, Stock												1,000
Advance Purchase Price Per Membrane, Stock												24,000
Purchase Obligation, Non Cash Settlement												76,000
Purchase Obligation												48,000
Purchase Obligation, Cash Settlement												28,000
Due From Vendor, Stock												24,000
Due From Vendor, Convertible Debentures												48,000
Litigation Settlement, Amount			85,000
Loss Contingency, Damages Sought, Value	15,000	15,000
Asserted Incurred Loss						735,616
Foreclosure Liability Shortfall, Amount				110,000
Real Estate Foreclosure Sale Carrying Value Of Building And Land				1,641,075
Real Estate Foreclosure Sale Carrying Value Of Mortgage				1,053,997
Foreclosed Real Estate Accrued Expense				15,609
Foreclosed Real Estate Accrued Taxes				45,006
Real Estate Foreclosure Sale Carrying Value Of Property, Adjustment Amount				110,000
Real Estate Foreclosure Sale Final Judgments, Loss Amount				116,539
Real Estate Foreclosure Sale Post Judgments Expense Amount				10,000
Gain (Loss) Related to Litigation Settlement			$ 18,026

XML

ASSET PURCHASE (Details Textual) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Assets Purchase [Line Items]
Lease Expiration Date	May 31, 2014
Prior Notice Period For Renewal Of Lease	90 days
Operating Leases, Rent Expense		$ 3,200
Asset Purchase Price Under Purchase Agreement	22,500
Asset Purchase Price Amount Paid	9,643
Asset Purchase Price Remaining Balance	$ 12,857

XML

PREPAID EXPENSES AND OTHER CURRENT ASSETS

3 Months Ended

Mar. 31, 2014

Prepaid Expenses and Other Current Asset [Abstract]

Prepaid Expenses and Other Current Asset Disclosure [Text Block]

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets totaling $116,161 at March 31, 2014, consists of $78,911 prepaid inventory, $28,676 prepaid insurance, $7,989 prepaid subcontract labor; and $585 other current assets and prepaids.

Prepaid expenses and other current assets totaling $109,523 at December 31, 2013, consists of $94,990 prepaid inventory, $14,141 prepaid insurance, and $392 other current assets.

XML

JOINT VENTURE EQUITY EXCHANGE AGREEMENT (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Joint Venture Equity Exchange Agreement [Line Items]
Common stock, shares issued	11,258,711	10,049,140
Other assets	$ 27,635	$ 27,635
Percentage Of Share In Pre Tax Net Profits	33.00%
Total Percentage Of Share In Pre Tax Net Profits	50.00%
Pompano Dive Center Llc [Member]
Joint Venture Equity Exchange Agreement [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	33.00%
Common stock, shares issued	3,394
Other assets	$ 24,740	$ 24,740

XML

RELATED PARTIES TRANSACTIONS (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
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.	$ 70,833	$ 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	70,833	77,917
Due to Employees, Current		127,619
Less amounts due within one year	70,833	127,619
Long-term portion of notes payable	$ 0	$ 0

XML

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

23. SUBSEQUENT EVENTS

On April 30, 2014, Mr. Alexander F. Purdon, was issued 184,202 shares of restricted common stock in lieu of cash for $4,500 employee compensation for the month of April 2014. The number of shares issued was based on the weighted average share price during the month.

Conversions of debentures to shares of common stock occurred subsequent to March 31, 2014. The stock was issued upon partial conversion of a convertible note 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. Conversions were as follows (ref. number corresponds to lender reference number in Note 12. CONVERTIBLE DEBENTURES):

Ref (4) lender –

On April 30, 2014, the lender converted $1,920 of its debenture to 400,000 shares.

On April 24, 2014, the lender converted $2,080 of its debenture to 400,000 shares

On April 21, 2014, the lender converted $2,280 of its debenture to 400,000 shares.

On April 15, 2014, the lender converted $2,160 of its debenture to 400,000 shares.

On April 9, 2014, the lender converted $2,160 of its debenture to 400,000 shares.

In addition, related to convertible debenture agreement with the above lender, the Company is required to maintain adequate shares in escrow for potential conversions. As a result, the Company replenished its escrow of shares for future conversions by issuing an additional 52,500,000 on April 30, 2014.

XML

INTEREST EXPENSE NON-RELATED PARTIES AND OTHER EXPENSE (INCOME), NET

3 Months Ended

Mar. 31, 2014

Interest Income (Expense), Net [Abstract]

Other Income and Other Expense Disclosure [Text Block]

22. INTEREST EXPENSE NON-RELATED PARTIES AND OTHER EXPENSE (INCOME), NET

For the three months ended March 31, 2014, non-related parties interest expense of $13,552 is comprised of $12,921 interest on convertible debentures and $631 interest on notes payable and other interest. For the three months ended March 31, 2013, non-related parties interest expense of $68,850 is comprised of approximately $67,754 interest on convertible debentures and approximately $770 interest on notes payable and other interest.

For the three months ended March 31, 2014, $36,738 other income, net is comprised primarily of $31,463 write off of accrued legal expense from prior years due to resolution of overbilling as identified by Company $5,144 royalty income on licensed patents, and $131 other income, net of individually insignificant items. For the three months ended March 31, 2013, $91,779 other expense, net is comprised primarily of $93,429 loss on extinguishment of convertible debentures and partially offset by $1,650 other income, net.

XML

INCOME TAXES (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Current taxes
Federal	$ 0	$ 0
State	0	0
Current taxes	0	0
Change in deferred taxes	(11,730)	(5,567)
Change in valuation allowance	11,774	9,350
Provision for income tax expense	$ 44	$ 3,783

XML

RELATED PARTIES TRANSACTIONS (Details 1) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
2014	$ 70,833
2015	0
2016	0
2017	0
2018	0
Thereafter	0
Due to Officers or Stockholders	$ 70,833	$ 49,702

XML

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Description Of Business [Policy Text Block]

Description of business –Brownie’s Marine Group, Inc., (hereinafter referred to as the “Company” or “BWMG”) designs, tests, manufactures and distributes recreational hookah diving, yacht based scuba air compressor and nitrox generation systems, and scuba and water safety products through its wholly owned subsidiary Trebor Industries, Inc. The Company sells its products both on a wholesale and retail basis, and does so from its headquarters and manufacturing facility in Fort Lauderdale, Florida. The Company does business as (dba) Brownie’s Third Lung, the dba name of Trebor Industries, Inc. The Company’s common stock is quoted on the OTCBB under the symbol “BWMG”.

Basis of Presentation and Significant Accounting Policies [Policy Text Block]

Basis of Presentation – The financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included

Fiscal Period, Policy [Policy Text Block]

Definition of fiscal year – The Company’s fiscal year end is December 31

Use of Estimates, Policy [Policy Text Block]

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates

Reclassification, Policy [Policy Text Block]

Reclassifications – Certain reclassifications have been made to the 2013 financial statement amounts to conform to the 2014 financial statement presentation. Effective July 15, 2013 the Company effectuated a reverse stock split (1 -for- 1,350). See Note 18. CHANGE IN CAPITAL STRUCTURE for more information. Accordingly, the transactional number of shares referenced throughout the Notes has been retroactively stated unless otherwise noted.

Cash and Cash Equivalents, Policy [Policy Text Block]

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

Going Concern [Policy Text Block]

Going Concern –The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. We have incurred losses since 2009, and expect to have during 2014. We have had a working capital deficit since 2009.

The Company is behind on payments due for payroll taxes and withholding, matured convertible debentures, related parties notes payable, accrued liabilities and interest – related parties, and certain vendor payables. The Company is handling delinquencies on a case by case basis. However, there can be no assurance that cooperation the Company has received thus far will continue. Payment delinquencies are further addressed in Note 7. RELATED PARTIES TRANSACTIONS, Note 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES, Note 10. OTHER LIABILITIES, Note 11. NOTES PAYABLE, and Note 12. CONVERTIBLE DEBENTURES.

During the fourth quarter of 2011, the Company formed a joint venture with one dive entity, and in the first quarter of 2012, purchased the assets of another, with assumption of their retail location lease. The Company accomplished both transactions predominantly through issuance of restricted common stock in BWMG. The Company believed these transactions would help generate sufficient future working capital. Neither endeavor did or has generated profit or positive cash-flow. Therefore, effective May 31, 2013, the Company closed and ceased operations at its retail facility. The Company is still involved in the joint venture. See Note 17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT and Note 8. ASSET PURCHASE for further discussion of these transactions. As a result, the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations beyond the second quarter of 2014. This raises substantial doubt about BWMG’s ability to continue as a going concern. The Company will need to raise additional funds and is currently exploring alternative sources of financing. BWMG has issued a number of convertible debentures as an interim measure to finance working capital needs as discussed in Note 12. CONVERTIBLE DEBENTURES and may continue to raise additional capital through sale of restricted common stock or other securities, and obtaining some short term loans. The Company has paid for legal and consulting services with restricted stock to maximize working capital, and intends to continue this practice when possible. In addition, the Company implemented some cost saving measures and will continue to explore more to reduce operating expenses.

If BWMG fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back or cease operations, liquidate assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Inventory, Policy [Policy Text Block]

Inventory – Inventory is stated at the lower of cost or fair market value. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company’s management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when required.

Property, Plant and Equipment, Policy [Policy Text Block]

Furniture, Fixtures, and Equipment – Furniture, Fixtures, and Equipment is stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability

Revenue Recognition, Policy [Policy Text Block]

Revenue recognition – Revenues from product sales are recognized when the Company’s products are shipped or when service is rendered. Revenues from fixed-price contracts are recognized on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost of each contract. This method is used because management considers the percentage of cost incurred to date to estimated total cost to be the best available measure of progress on the contracts.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Change in job performance, job conditions, and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

Revenue and costs incurred for time and material projects are recognized as the work is performed.

Product Development Cost [Policy Text Block]

Product development costs – Product development expenditures are charged to expenses as incurred.

Advertising Costs, Policy [Policy Text Block]

Advertising and marketing costs – The Company expenses the costs of producing advertisements and marketing material at the time production occurs, and expenses the costs of communicating advertisements and participating in trade shows in the period in which occur. Advertising and trade show expense was $912 and $27,262 for the years ended March 31, 2014, and 2013, respectively.

Customer Deposits and Returns [Policy Text Block]

Customer deposits and returns policy – The Company takes a minimum 50% deposit against custom and large tankfill systems prior to ordering and/or building the systems. The remaining balance due is payable upon delivery, shipment, or installation of the system. There is no provision for cancellation of custom orders once the deposit is accepted, nor return of the custom ordered product. Additionally, returns of all other merchandise are subject to a 15% restocking fee as stated on each sales invoice.

Income Tax, Policy [Policy Text Block]

Income taxes – The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive income – The Company has no components of other comprehensive income. Accordingly, net income equals comprehensive income for all periods.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-based compensation – The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes valuation model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued on the effective date of the agreement in accordance with generally accepted accounting principles, which includes determination of the fair value of the share-based transaction. The fair value has been determined either through use of the quoted stock price.

For the three months ended March 31, 2014 and 2013, the Company compensated and/or converted all accrued payroll to stock for one employee. For the three months ended March 31, 2014 and 2013, the Company transacted stock-based compensation transactions as follows: amortized prepaid equity based compensation for personal guarantees of Chief Executive Officer on Company’s bank debt; additional compensation expense to the Chief Executive Officer; Board of Directors’ Fees and Bonuses; certain consulting, legal, and other professional fees; equity based incentive and/or retention bonuses for some employees, and consultants; and operating expense for exclusivity pursuant to strategic alliance agreement payable. These transactions, as applicable, are also further discussed in Note 7. RELATED PARTIES TRANSACTIONS, Note 13. EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES, Note 20. EQUITY BASED INCENTIVE/RETENTION BONUSES, and Note 12. STRATEGIC ALLIANCE AGREEMENT

Beneficial Conversion Feature On Convertible Debentures [Policy Text Block]

Beneficial conversion features on convertible debentures – The fair value of the stock upon which to base the beneficial conversion feature (BCF) computation has been determined either through use of the quoted stock price unless the trading activity is nominal, which may indicate it does not represent the fair value. Under these circumstances, the Company determines fair value through an analysis of its fair value of net assets and comparable publicly traded companies that have higher trading volumes with similar results of operations and industries.  See Note 12. CONVERTIBLE DEBENTURES for further discussion.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair value of financial instruments – Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. Management considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the Company’s perceived risk of that investment.

At March 31, 2014, and December 31, 2013, the carrying amount of cash, accounts receivable, accounts receivable – related parties, customer deposits and unearned revenue, royalties payable – related parties, other liabilities, other liabilities and accrued interest – related parties, notes payable, notes payable – related parties, and accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments. The fair value of the Company’s convertible debentures was the principal balance due at March 31, 2014, and December 31, 2013, or $516,800, and $526,910, respectively, as presented in Note 12. CONVERTIBLE DEBENTURES. The principal balance due approximates fair value because of the short maturity of these instruments. On the face of the balance sheet the convertible debentures are presented net of discount, which is less than fair market value at period end dates when discount is not fully accreted.

Earnings Per Share, Policy [Policy Text Block]

Earnings per common share – Basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Basic earnings per share is computed using the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. All common stock equivalent shares were excluded in the computation dilutive earnings per share for the three months ended March 31, 2014, and 2013, since their effect was antidilutive.

New Accounting Pronouncements, Policy [Policy Text Block]

New accounting pronouncements – The Company believes there was no new accounting guidance adopted but not yet effective that either has not already been disclosed in prior reporting periods or is relevant to the readers of BWMG’s financial statements.

XML

INVENTORY (Tables)

3 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventory consists of the following as of:

	March 31, 2014		December 31, 2013
Raw materials	$	318,484	$	317,187
Work in process		—		—
Finished goods		428,409		418,739
	$	746,893	$	735,926

XML

INVENTORY

3 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

2. INVENTORY

Inventory consists of the following as of:

	March 31, 2014		December 31, 2013
Raw materials	$	318,484	$	317,187
Work in process		—		—
Finished goods		428,409		418,739
	$	746,893	$	735,926

XML

FURNITURE, FIXTURES, AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Furniture, fixtures, and equipment consists of the following as of:

	March 31, 2014		December 31, 2013
Furniture, fixtures, vehicles and equipment	$	204,896	$	204,896
Less: accumulated depreciation and amortization		(134,233)		(128,631)
	$	70,663	$	76,265

XML

FURNITURE, FIXTURES, AND EQUIPMENT (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Furniture, fixtures, vehicles and equipment	$ 204,896	$ 204,896
Less: accumulated depreciation and amortization	(134,233)	(128,631)
Furniture, fixtures, and equipment, net	$ 70,663	$ 76,265

XML

CONVERTIBLE DEBENTURES (Details) (USD $)	3 Months Ended	12 Months Ended			3 Months Ended		12 Months Ended			3 Months Ended		12 Months Ended			12 Months Ended				3 Months Ended		12 Months Ended							12 Months Ended		3 Months Ended		12 Months Ended		3 Months Ended		12 Months Ended				12 Months Ended		3 Months Ended		12 Months Ended																								3 Months Ended						12 Months Ended						3 Months Ended		12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2013 Convertible Debentures Maturity Date 4/4/2011 [Member]		Mar. 31, 2014 Convertible Debentures Maturity Date 5/27/2011 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 5/27/2011 [Member]		Feb. 10, 2012 Convertible Debentures Maturity Date 5/27/2011 [Member]	Mar. 31, 2014 Convertible Debentures Maturity Date 11/11/2011 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 11/11/2011 [Member]		Sep. 30, 2012 Convertible Debentures Maturity Date 1/14/2011 [Member]	Dec. 31, 2013 Convertible Debentures Maturity Date 6/14/2012 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 9/21/2012 [Member]		Mar. 31, 2014 Convertible Debentures Maturity Date 5/2/2013 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 5/2/2013 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 8/2/2013 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 4/5/2013 [Member]		Feb. 29, 2012 Convertible Debentures Maturity Date 4/5/2013 [Member]	Dec. 31, 2013 Convertible Debentures Maturity Date 3/9/2012 [Member]		Mar. 31, 2014 Convertible Debentures Maturity Date 5/5/2012 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 5/5/2012 [Member]		Mar. 31, 2014 Convertible Debentures Maturity Date 8/31/2013 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 8/31/2013 [Member]		Dec. 31, 2012 Convertible Debentures Maturity Date 8/31/2013 [Member]	Apr. 30, 2012 Convertible Debentures Maturity Date 8/31/2013 [Member]	Dec. 31, 2013 Convertible Debentures Maturity Date 9/20/2011 [Member]		Mar. 31, 2014 Convertible Debentures Maturity Date 2/10/2014 One [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 2/10/2014 One [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 5/18/2014 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 7/17/2014 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 11/8/2014 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 2/10/2014 Two [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 2/10/2014 Three [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 3/9/2014 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 4/4/2011 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 1/18/2014 One [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 1/18/2014 Two [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 1/18/2014 Three [Member]		Dec. 31, 2013 Convertible Debentures Maurity Date 4/14/2013 [Member]		Mar. 31, 2014 Convertible Debentures Maturity Date 8/2/2013 [Member]		Mar. 31, 2014 Convertible Debentures Maurity Date 4/14/2013 [Member]		Mar. 31, 2014 Convertible Debentures Maturity Date 2/10/2014 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 4/14/2014 [Member]		Dec. 31, 2013 Convertibel Debentures Maturity Date 2/10/2014 Four [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 4/14/2014 [Member]		Mar. 31, 2014 Convertible Debentures Maturity Date 3/31/2014 [Member]		Dec. 31, 2013 Convertible Debentures Maturity Date 1/14/2012 [Member]
Convertible Debentures [Line Items]
Origination Date			Oct. 04, 2010	[1]	Nov. 27, 2010	[2]	Nov. 27, 2010	[2]		Jan. 07, 2011	[3]	Jan. 07, 2011	[3]		Sep. 12, 2011	[4]	Dec. 19, 2011	[4]	Aug. 08, 2012	[4]	Aug. 08, 2012	[4]	Oct. 31, 2012	[4]	Jul. 02, 2012	[4]		Mar. 09, 2011	[5]	May 03, 2011	[6]	May 03, 2011	[6]	Aug. 31, 2011	[7]	Aug. 31, 2011	[7]			Sep. 08, 2011	[8]	Feb. 10, 2012	[9]	Feb. 10, 2012	[10]	May 18, 2012	[10]	Jul. 17, 2012	[10]	Nov. 08, 2012	[10]	Mar. 14, 2012	[11]	Feb. 10, 2012	[9]	Mar. 09, 2012	[9]	Apr. 19, 2012	[12]	Jan. 18, 2013	[13]	Jan. 18, 2013	[13]	Jan. 18, 2013	[13]	Apr. 08, 2013	[14]	Oct. 31, 2012	[4]	Apr. 08, 2013	[14]	Mar. 14, 2012	[11]	Nov. 07, 2012	[12]	Aug. 17, 2012	[12]	Nov. 07, 2012	[12]	Feb. 02, 2012	[10]	Feb. 10, 2011	[4]
Maturity Date			Apr. 04, 2011	[1]	May 27, 2011	[2]	May 27, 2011	[2]		Nov. 11, 2011	[3]	Nov. 11, 2011	[3]		Jun. 14, 2012	[4]	Sep. 21, 2012	[4]	May 02, 2013	[4]	May 02, 2013	[4]	Aug. 02, 2013	[4]	Apr. 05, 2013	[4]		Mar. 09, 2012	[5]	May 05, 2012	[6]	May 05, 2012	[6]	Aug. 31, 2013	[7]	Aug. 31, 2013	[7]			Sep. 20, 2011	[8]	Feb. 10, 2014	[9]	Feb. 10, 2014	[10]	May 18, 2014	[10]	Jul. 17, 2014	[10]	Nov. 08, 2014	[10]	Feb. 10, 2014	[11]	Feb. 10, 2014	[9]	Mar. 09, 2014	[9]	Apr. 04, 2011	[1]	Jan. 18, 2014	[13]	Jan. 18, 2014	[13]	Jan. 18, 2014	[13]	Apr. 14, 2013	[14]	Aug. 02, 2013	[4]	Apr. 14, 2013	[14]	Feb. 10, 2014	[11]	Apr. 14, 2014	[12]	Feb. 10, 2014	[12]	Apr. 14, 2014	[12]			Jan. 14, 2012	[4]
Interest Rate			5.00%	[1]	10.00%	[2]	10.00%	[2]		5.00%	[3]	5.00%	[3]		8.00%	[4]	8.00%	[4]	8.00%	[4]	8.00%	[4]	8.00%	[4]	8.00%	[4]		10.00%	[5]	5.00%	[6]	5.00%	[6]	5.00%	[7]	5.00%	[7]			10.00%	[8]	10.00%	[9]	10.00%	[10]	10.00%	[10]	10.00%	[10]	10.00%	[10]	10.00%	[11]	10.00%	[9]	10.00%	[9]	5.00%	[12]	10.00%	[13]	10.00%	[13]	10.00%	[13]	9.90%	[14]	8.00%	[4]	9.90%	[14]	10.00%	[11]	10.00%	[12]	5.00%	[12]	10.00%	[12]	10.00%	[10]	8.00%	[4]
Origination Principal Balance			$ 20,635	[1]	$ 125,000	[2]	$ 125,000	[2]	$ 125,000	$ 76,000	[3]	$ 76,000	[3]	$ 42,500	$ 37,500	[4]	$ 37,500	[4]	$ 42,500	[4]	$ 42,500	[4]	$ 78,500	[4]	$ 78,500	[4]	$ 125,000	$ 50,000	[5]	$ 300,000	[6]	$ 300,000	[6]	$ 10,000	[7]	$ 10,000	[7]	$ 16,347	$ 16,347	$ 39,724	[8]	$ 39,724	[9]	$ 42,750	[10]	$ 42,750	[10]	$ 42,750	[10]	$ 42,750	[10]	$ 5,500	[11]	$ 39,724	[9]	$ 56,250	[9]	$ 39,847	[12]	$ 84,500	[13]	$ 30,500	[13]	$ 95,000	[13]	$ 20,000	[14]	$ 78,500	[4]	$ 20,000	[14]	$ 5,500	[11]	$ 39,847	[12]	$ 39,847	[12]					$ 42,500	[4]
Origination Discount Balance			(20,635)	[1]	(53,571)	[2]	(53,571)	[2]		(32,571)	[3]	(32,571)	[3]		(37,500)	[4]	(37,500)	[4]	(27,172)	[4]	(27,172)	[4]	(50,189)	[4]	(35,268)	[4]		(34,472)	[5]	(206,832)	[6]	(206,832)	[6]	(4,286)	[7]	(4,286)	[7]			(17,016)	[8]	0	[9]	0	[10]	0	[10]	0	[10]	0	[10]	0	[11]	0	[9]	0	[9]	0	[12]	(58,720)	[13]	0	[13]	0	[13]	(13,333)	[14]	(50,189)	[4]	(13,333)	[14]	0	[11]	0	[12]	0	[12]					(42,500)	[4]
Period End Principal Balance	516,800	526,910	0	[1]	58,750	[2]	58,750	[2]		48,000	[3]	48,000	[3]		0	[4]	0	[4]	0	[4]	8,445	[4]	78,500	[4]	0	[4]		0	[5]	300,000	[6]	300,000	[6]	10,000	[7]	10,000	[7]			0	[8]	2,743	[9]	0	[10]	0	[10]	0	[10]	0	[10]	472	[11]	2,743	[9]	0	[9]	0	[12]	0	[13]	0	[13]	0	[13]	20,000	[14]	76,835	[4]	20,000	[14]	472	[11]	0	[12]	0	[12]					0	[4]
Period End Discount Balance			0	[1]	0	[2]	0	[2]		0	[3]	0	[3]		0	[4]	0	[4]	0	[4]	0	[4]	0	[4]	0	[4]		0	[5]	0	[6]	0	[6]	0	[7]	0	[7]			0	[8]	0	[9]	0	[10]	0	[10]	0	[10]	0	[10]	0	[11]	0	[9]	0	[9]	0	[12]	0	[13]	0	[13]	0	[13]	(3,334)	[14]	0	[4]	0	[14]	0	[11]	0	[12]	0	[12]					0	[4]
Period End Debenture, Net Balance	516,800	523,576	0	[1]	58,750	[2]	58,750	[2]		48,000	[3]	48,000	[3]		0	[4]	0	[4]	0	[4]	8,445	[4]	78,500	[4]	0	[4]		0	[5]	300,000	[6]	300,000	[6]	10,000	[7]	10,000	[7]			0	[8]	2,743	[9]	0	[10]	0	[10]	0	[10]	0	[10]	472	[11]	2,743	[9]	0	[9]	0	[12]	0	[13]	0	[13]	0	[13]	16,666	[14]	76,835	[4]	20,000	[14]	472	[11]	0	[12]	0	[12]			0	[10]	0	[4]
Debt Instrument, Increase, Accrued Interest	$ 136,401	$ 128,514	$ 0	[1]	$ 24,419	[2]	$ 22,949	[2]		$ 8,550	[3]	$ 7,950	[3]		$ 0	[4]	$ 0	[4]	$ 0	[4]	$ 3,949	[4]	$ 7,325	[4]	$ 0	[4]		$ 0	[5]	$ 87,500	[6]	$ 80,000	[6]	$ 1,301	[7]	$ 1,175	[7]			$ 0	[8]	$ 3,296	[9]	$ 379	[10]	$ 379	[10]	$ 379	[10]	$ 379	[10]	$ 120	[11]	$ 3,227	[9]	$ 0	[9]	$ 0	[12]	$ 0	[13]	$ 0	[13]	$ 0	[13]	$ 1,440	[14]	$ 8,889	[4]	$ 1,935	[14]	$ 132	[11]	$ 0	[12]	$ 0	[12]			$ 379	[10]	$ 0	[4]

[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 recognized 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. 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 in exchange for convertible debenture 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 was 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 was no assurance of success and the invention was still in design and pre-prototype phase, the Company recorded the initial net value of the debenture, $71,483, as research and development expense during the year ended 2010. Both parties agreed to confidentiality regarding the invention during the pre-prototype stage. In addition, the Company 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. On February 10, 2012, the holder of this debenture entered into an agreement with a third party to sell/assign the $125,000 principal balance, plus accrued interest. The purchase was to be in installments with transfer/assignment of the debenture upon payment, referred to as “Closings”. The first Closing was on or about February 15, 2012 for $7,500, with that amount assigned/transferred. The second Closing, occurred 90 days after the first closing for $11,750 paid/assigned. All subsequent Closings were to be for $11,750 and occur in 30 day increments after the second Closing. This was to continue until the full principal balance of $125,000, plus accrued interest has been purchased/assigned. See Ref. (9) for discussion of new terms on the assigned portions of the debenture.

[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 shares of restricted common stock. The lender at their option could 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 16. 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 in 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. On July 2, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on April 5, 2013. Beginning 180 days after the date of the debenture, lender could convert the note to common shares at a 39% discount of the “Market Price” of the stock based on the average of the lowest three (3) closing bid prices on the date prior to the notice of conversion. In addition, if the Company granted a lower price for common stock purchase or conversion to anyone else during the term of the agreement, the lender’s conversion price would be adjusted downward to the same. The lender could not convert an amount greater than 4.99% of the outstanding common stock at any one time. The Company could have prepaid the debenture at any time before maturity at graduated amounts depending on the date of prepayment ranging from 130% to 150% of the debenture balance plus accrued and unpaid interest. There was a $2,000 per day penalty for not timely delivering shares upon conversion notice. 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 debenture. The Company valued the BCF of the convertible debenture at $35,268. Accordingly, the $78,500 debenture was discounted by the amount of the BCF and accreted to the convertible debenture through its maturity, and interest was recognized until converted. By December 31, 2013, the lender had converted $78,500 principal plus accrued interest on the convertible debenture in full satisfaction of the debt. 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. On August 8, 2012, the Company borrowed $42,500 from this same lender in exchange for a convertible debenture maturing on May 10, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in preceding paragraph. The Company valued the BCF of the convertible debenture at $27,172. Accordingly, the $42,500 debenture was discounted by the amount of the BCF. The Company accreted the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the year ended December 31, 2013, the lender converted $34,055 principal on 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. On October 31, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on August 2, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in two paragraphs preceding this one. The Company valued the BCF of the convertible debenture at $50,189. Accordingly, the $78,500 debenture was discounted by the amount of the BCF. The Company is accreting the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the three months ended March 31, 2014, the lender converted $1,685 of the convertible debenture to shares of common stock. . 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.

[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. On February 10, 2012, the lender sold/assigned all rights and interest on the debenture having a net book value of $39,724, plus $1,552 of accrued interest. See reference (11) which discusses the terms and conditions surrounding the new debenture issued upon extinguishment of the original as well as accounting treatment of the transaction.

[9] 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 in the year ended December 31, 2012. The new debentures were issued with the same following terms and conditions: The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debentures is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 4.99% of the outstanding Common Stock of the Company at any one time. During the years ended December 31, 2013, the lender converted $3,211 of the debenture with original principal balance of $39,724 to stock. 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. On January 18, 2013, the lender sold/assigned all rights and interest on one of its three debentures having net book value of $16,000 plus accrued interest of $1,512. On the same day, the lender sold/assigned all rights and interest on another of its three debentures having a net book value of $56,250, plus $4,825 of accrued interest. See reference (13) 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. As of March 31, 2014, the lender still held the third debenture with original principal balance of $39,724 with net book value of $2,743.

[10] 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. Since that date the lender has not purchased or converted any shares pursuant to the sale/assignment agreement. The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debenture is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. 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. As of March 31, 2014 and December 31, 2013, the lender had assigned a cumulative $5,500 under the debenture to four separate parties, and $23,500 to another party. See reference (10) and (12), respectively, related to the assignments.

[11] 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.

[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. During the years ended December 31, 2012, the lender accepted assignment of $23,500, of a convertible debenture from the lender discussed in (9) above. See reference (2) for terms surrounding the original convertible debenture. In addition, the Company converted $2,125 of the assignments to stock during the year ended December 31, 2013, plus $202 of accrued interest in full satisfaction of the amount due this lender under the assignments. The stock was issued without restrictive legend pursuant to Rule 144, as the holder acquired the 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.

[13] On January 18, 2013, the Company entered into three new convertible 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 balance on these two new convertible 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. The Company borrowed $84,500, the third debenture referred to above with this lender. The interest rate on the debenture was 10% per annum, and the conversion price was 59% of the lowest closing bid price per share in the ten trading days prior to the conversion notice. Per terms of the debenture agreement, the lender was not to convert an amount that would cause it or any of its affiliates to beneficially own in excess of 4.99% of the Company. The Company could prepay the debenture within 90 days after the effective date at 140% multiplied by outstanding principal and accrued interest. 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 debenture. The Company valued the BCF of the convertible debenture at $58,720, its intrinsic value. Accordingly, the $84,500 debenture was discounted by the amount of the BCF. The Company accreted discount to the convertible debenture and interest expense through its settlement on August 12, 2013 as discussed below. Further, the debenture agreement provided for post-closing expenses, which the lender noted was $1,000 per conversion and approximately $700 in other fees per each debenture. The Company accrued these fees on each debenture and per conversion. The $95,000 and $30,500 debentures contained the same terms and conditions as the $84,500 debenture except there were no prepayment clause, and the conversion price was 44% of the lowest closing bid price per share in the ten trading days prior to the conversion notice. During the years ended December 31, 2013, the Company converted $30,500 plus $191 of accrued interest in full satisfaction of the $30,500 debenture, and $22,500 toward the $95,000 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. On August 12, 2013, the Company fully settled the two debentures outstanding with $157,446 principal and $8,794 accrued interest totaling $166,240 with this lender for $170,000. All pre-payment penalties were waived and the Company recognized the difference between the $166,240 and $170,000, or $3,760, as other expense for the year ended December 31, 2013.

[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.

XML

CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2014	Dec. 31, 2013
ASSETS
Cash	$ 49,979	$ 70,084
Accounts receivable, net of $39,000 and $39,000 allowance for doubtful accounts, respectively	11,711	30,298
Accounts receivable - related parties	81,611	105,942
Inventory	746,893	735,926
Prepaid expenses and other current assets	116,161	109,523
Other current assets - related parties	5,663	5,917
Deferred tax asset, net - current	233	277
Total current assets	1,012,251	1,057,967
Furniture, fixtures and equipment, net	70,663	76,265
Deferred tax asset, net - non-current	2,330	2,330
Other assets	27,635	27,635
Total assets	1,112,879	1,164,197
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable and accrued liabilities	510,277	517,058
Customer deposits and unearned revenue	138,343	99,610
Royalties payable - related parties	133,453	137,129
Other liabilities	250,521	252,009
Other liabilities and accrued interest - related parties	93,521	90,517
Convertible debentures, net	516,800	523,576
Notes payable - current portion	12,229	12,540
Notes payable - related parties - current portion	70,833	127,619
Total current liabilities	1,725,977	1,760,058
Long-term liabilities
Notes payable - long-term portion	0	2,765
Total liabilities	1,725,977	1,762,823
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; 11,258,711 and 10,049,140 shares issued, respectively; 9,427,853 and 5,672,051 shares outstanding, respectively	943	567
Common stock payable; $0.0001 par value; 195,610 and 195,610 shares, respectively	20	20
Additional paid-in capital	8,501,643	8,478,092
Accumulated deficit	(9,116,129)	(9,077,730)
Total stockholders' deficit	(613,098)	(598,626)
Total liabilities and stockholders' deficit	$ 1,112,879	$ 1,164,197

XML

RELATED PARTIES TRANSACTIONS (Details 2) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Year-end 2012 bonus payable to Chief Executive Officer	$ 67,000	$ 67,000
Year-end 2012 bonus payable to employee	17,500	17,500
Accrued interest on note payable non-employee Board of Director	3,004	0
Due to Principals of Carleigh Rae Corp., net	6,017	6,017
Other liabilities - related parties	$ 93,521	$ 90,517

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows provided by (used in) operating activities:
Net loss	$ (38,399)	$ (1,191,906)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Change in derivative liability	0	565,689
Depreciation	5,602	4,724
Change in deferred tax asset, net	44	3,783
Equity based compensation for consulting, legal, and other professional services	0	44,600
Equity based compensation for product exclusivity	0	6,000
Equity based employee and consultant bonuses	0	15,075
Equity based non-employee Board of Directors' fees	0	7,500
Accretion of convertible debenture discounts	3,334	49,918
Equity based compensation and bonuses payable to Chief Executive Officer	0	93,429
Amortization of prepaid equity based compensation to Chief Executive Officer	0	125,001
Loss on extinguishment of convertible debentures	0	93,826
Changes in operating assets and liabilities:
Change in accounts receivable, net	18,587	(1,114)
Change in accounts receivable - related parties	24,331	(15,816)
Change in inventory	(10,967)	(9,861)
Change in prepaid expenses and other current assets	(8,021)	(794)
Change in other current assets - related parties	254	0
Change in accounts payable and accrued liabilities	8,431	150,354
Change in customer deposits and unearned revenue	38,733	45,735
Change in other liabilities	(1,488)	(7,808)
Change in other liabilities and accrued interest - related parties	3,004	(67,000)
Change in royalties payable - related parties	(3,676)	3,703
Net cash provided by (used in) operating activities	39,769	(84,962)
Cash flows from financing activities:
Proceeds from borrowing on convertible debentures	0	156,750
Principal payment on convertible debentures	0	(72,250)
Principal payments on note payable	(3,088)	(2,924)
Principal payments on note payable - related parties	(56,786)	(20,158)
Net cash (used in) provided by financing activities	(59,874)	61,418
Net change in cash	(20,105)	(23,544)
Cash, beginning of period	70,084	69,292
Cash, end of period	49,979	45,748
Supplemental disclosures of cash flow information:
Cash paid for interest	2,133	983
Cash paid for income taxes	0	0
Supplemental disclosures of non-cash investing activities and future operating activities:
Discounts on convertible debentures	0	58,720
Conversion of convertible debentures to stock	10,110	102,225
Conversion of related party employee compensation payable to stock	13,500	9,000
Conversion of accrued interest and fees on convertible debentures to stock	1,700	10,599
Conversion of accrued non-employee Board of Directors fees to stock	0	15,000
Stock issued for non-employee Board of Directors fees	0	10,000
Equity based compensation vesting to Chief Executive Officer	0	93,429
Equity based compensation vesting for exclusivity pursuant to agreement with Precision Paddleboards, Inc.	0	6,000
Retirement of shares returned by non-employee Board of Director	$ 1,383	$ 0

XML

INCOME TAXES (Details Textual) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Income Tax [Line Items]
Effective Tax Rate For Deferred Taxes	34.00%	34.00%
Valuation allowance	$ 1,245,111	$ 1,233,337
Percentage Of Reserve Against Allowance For Doubtful Accounts	100.00%	100.00%
Deferred Tax Assets, Valuation Allowance, Percentage	99.80%	99.80%
Deferred Tax Assets Reserve Percentage	97.00%	97.00%

XML

CONVERTIBLE DEBENTURES (Tables)

3 Months Ended

Mar. 31, 2014

Convertible Debentures [Abstract]

Schedule Of Convertible Debentures [Table Text Block]

Convertible debentures consist of the following at March 31, 2014:

Origination Date	Maturity Date		Interest Rate			Origination Principal Balance		Origination Discount Balance			Period End Principal Balance	Period End Discount Balance		Period End Balance, Net		Accrued Interest Balance		Ref.
11/27/2010		5/27/2011		10	%		125,000		(53,571)	$	58,750		-	$	58,750	$	24,419		(2)
1/7/2011		11/11/2011		5	%		76,000		(32,571)		48,000		-		48,000		8,550		(3)
8/8/2012		5/2/2013		8	%		42,500		(27,172)		-		-		-		-		(4)
10/31/2012		8/2/2013		8	%		78,500		(50,189)		76,835		-		76,835		8,889		(4)
5/3/2011		5/5/2012		5	%		300,000		(206,832)		300,000		-		300,000		87,500		(6)
8/31/2011		8/31/2013		5	%		10,000		(4,286)		10,000		-		10,000		1,301		(7)
2/2/2012				10	%		See ref (9) for Discussion								-		379		(9)
3/14/2012		2/10/2014		10	%		5,500		-		472		-		472		132		(10)
2/10/2012		2/10/2014		10	%		39,724		-		2,743		-		2,743		3,296		(11)
4/8/2013		4/14/2013		9.90	%		20,000		(13,333)		20,000		-		20,000		1,935		(14)
										$	516,800			$	516,800	$	136,401

Reference numbers in right hand column of table entitled Ref. refer to paragraphs with corresponding number that immediately follow the next paragraph. The referenced paragraphs also support the December 31, 2013 table, which appears at the end of this Note. Therefore, it is appropriate that some of the number references do not appear in the table above (i.e. Ref. 1).

During the first quarter of 2013, the Company determined based on closing market price of $.0005 (pre-reverse stock split), and based on terms of convertible debt, its convertible and/or committed shares were in excess of its authorized common stock of 5,000,000,000. Most of the Company’s convertible debentures have conversion rates at substantial discount to market price; therefore, a decline in market price impacts the number of shares convertible. As a result, the Company recorded a derivative liability of $565,689, which represented the amount of shares convertible or committed in excess of the shares authorized at $.0005 per share, the closing market price at March 30, 2013, and as valued according to the Black-Scholes valuation model. On July 15, 2013, the Company effectuated a reverse stock split (1 -for- 1,350), which was applied retroactively. See Note 19. CHANGE IN CAPITAL STRUCTURE. Accordingly, this transaction resulted in significant shares authorized in excess of those committed, and the full derivative liability of $565,689 was reversed.

(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 recognized 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. 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 in exchange for convertible debenture 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 was 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 was no assurance of success and the invention was still in design and pre-prototype phase, the Company recorded the initial net value of the debenture, $71,483, as research and development expense during the year ended 2010. Both parties agreed to confidentiality regarding the invention during the pre-prototype stage. In addition, the Company 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.

On February 10, 2012, the holder of this debenture entered into an agreement with a third party to sell/assign the $125,000 principal balance, plus accrued interest. The purchase was to be in installments with transfer/assignment of the debenture upon payment, referred to as “Closings”. The first Closing was on or about February 15, 2012 for $7,500, with that amount assigned/transferred. The second Closing, occurred 90 days after the first closing for $11,750 paid/assigned. All subsequent Closings were to be for $11,750 and occur in 30 day increments after the second Closing. This was to continue until the full principal balance of $125,000, plus accrued interest has been purchased/assigned. See Ref. (9) for discussion of new terms on the assigned portions of the debenture.

(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 shares of restricted common stock. The lender at their option could 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 16. 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 in 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.

On July 2, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on April 5, 2013. Beginning 180 days after the date of the debenture, lender could convert the note to common shares at a 39% discount of the “Market Price” of the stock based on the average of the lowest three (3) closing bid prices on the date prior to the notice of conversion. In addition, if the Company granted a lower price for common stock purchase or conversion to anyone else during the term of the agreement, the lender’s conversion price would be adjusted downward to the same. The lender could not convert an amount greater than 4.99% of the outstanding common stock at any one time. The Company could have prepaid the debenture at any time before maturity at graduated amounts depending on the date of prepayment ranging from 130% to 150% of the debenture balance plus accrued and unpaid interest. There was a $2,000 per day penalty for not timely delivering shares upon conversion notice. 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 debenture. The Company valued the BCF of the convertible debenture at $35,268. Accordingly, the $78,500 debenture was discounted by the amount of the BCF and accreted to the convertible debenture through its maturity, and interest was recognized until converted. By December 31, 2013, the lender had converted $78,500 principal plus accrued interest on the convertible debenture in full satisfaction of the debt. 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. On August 8, 2012, the Company borrowed $42,500 from this same lender in exchange for a convertible debenture maturing on May 10, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in preceding paragraph. The Company valued the BCF of the convertible debenture at $27,172. Accordingly, the $42,500 debenture was discounted by the amount of the BCF. The Company accreted the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the year ended December 31, 2013, the lender converted $34,055 principal on the convertible debenture and the remaining $8,445 during the three months ended March 31, 2014 in full satisfaction of the debenture. In addition, during the three months ended March 31, 2014 the lender converted $1,700 of accrued interest to shares of common stock. 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. On October 31, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on August 2, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in two paragraphs preceding this one. The Company valued the BCF of the convertible debenture at $50,189. Accordingly, the $78,500 debenture was discounted by the amount of the BCF. The Company is accreting the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the three months ended March 31, 2014, the lender converted $1,665 of the convertible debenture to shares of common stock. . 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.

(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.

On February 10, 2012, the lender sold/assigned all rights and interest on the debenture having a net book value of $39,724, plus $1,552 of accrued interest. See reference (11) which discusses the terms and conditions surrounding the new debenture issued upon extinguishment of the original as well as accounting treatment of the transaction.

(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. Since that date the lender has not purchased or converted any shares pursuant to the sale/assignment agreement. The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debenture is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. 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. As of March 31, 2014 and December 31, 2013, the lender had assigned a cumulative $5,500 under the debenture to four separate parties, and $23,500 to another party. See reference (10) and (12), respectively, related to the assignments.

(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 in the year ended December 31, 2012.

The new debentures were issued with the same following terms and conditions: The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debentures is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 4.99% of the outstanding Common Stock of the Company at any one time. During the years ended December 31, 2013, the lender converted $3,211 of the debenture with original principal balance of $39,724 to stock. 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.

On January 18, 2013, the lender sold/assigned all rights and interest on one of its three debentures having net book value of $16,000 plus accrued interest of $1,512. On the same day, the lender sold/assigned all rights and interest on another of its three debentures having a net book value of $56,250, plus $4,825 of accrued interest. See reference (13) 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. As of March 31, 2014, the lender still held the third debenture with original principal balance of $39,724 with net book value of $2,743.

(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.

During the years ended December 31, 2012, the lender accepted assignment of $23,500, of a convertible debenture from the lender discussed in (9) above. See reference (2) for terms surrounding the original convertible debenture. In addition, the Company converted $2,125 of the assignments to stock during the year ended December 31, 2013, plus $202 of accrued interest in full satisfaction of the amount due this lender under the assignments. The stock was issued without restrictive legend pursuant to Rule 144, as the holder acquired the 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.

(13) On January 18, 2013, the Company entered into three new convertible 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 balance on these two new convertible 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.

The Company borrowed $84,500, the third debenture referred to above with this lender. The interest rate on the debenture was 10% per annum, and the conversion price was 59% of the lowest closing bid price per share in the ten trading days prior to the conversion notice. Per terms of the debenture agreement, the lender was not to convert an amount that would cause it or any of its affiliates to beneficially own in excess of 4.99% of the Company. The Company could prepay the debenture within 90 days after the effective date at 140% multiplied by outstanding principal and accrued interest. 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 debenture. The Company valued the BCF of the convertible debenture at $58,720, its intrinsic value. Accordingly, the $84,500 debenture was discounted by the amount of the BCF. The Company accreted discount to the convertible debenture and interest expense through its settlement on August 12, 2013 as discussed below. Further, the debenture agreement provided for post-closing expenses, which the lender noted was $1,000 per conversion and approximately $700 in other fees per each debenture. The Company accrued these fees on each debenture and per conversion.

The $95,000 and $30,500 debentures contained the same terms and conditions as the $84,500 debenture except there were no prepayment clause, and the conversion price was 44% of the lowest closing bid price per share in the ten trading days prior to the conversion notice. During the years ended December 31, 2013, the Company converted $30,500 plus $191 of accrued interest in full satisfaction of the $30,500 debenture, and $22,500 toward the $95,000 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.

On August 12, 2013, the Company fully settled the two debentures outstanding with $157,446 principal and $8,794 accrued interest totaling $166,240 with this lender for $170,000. All pre-payment penalties were waived and the Company recognized the difference between the $166,240 and $170,000, or $3,760, as other expense for the year ended December 31, 2013.

(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.

Convertible debentures consist of the following at December 31, 2013:

Origination Date	Maturity Date	Interest Rate			Origination Principal Balance		Origination Discount Balance		Period End Principal Balance		Period End Discount Balance		Period End Balance, Net		Accrued Interest 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		22,949		(2)
1/7/2011	11/11/2011		5	%		76,000		(32,571)		48,000		-		48,000		7,950		(3)
2/10/2011	1/14/2012		8	%		42,500		(42,500)		-		-		-		-		(4)
9/12/2011	6/14/2012		8	%		37,500		(37,500)		-		-		-		-		(4)
12/19/2011	9/21/2012		8	%		37,500		(37,500)		-		-		-		-		(4)
8/8/2012	5/2/2013		8	%		42,500		(27,172)		8,445		-		8,445		3,949		(4)
10/31/2012	8/2/2013		8	%		78,500		(50,189)		78,500		-		78,500		7,325		(4)
7/2/2012	4/5/2013		8	%		78,500		(35,268)		-		-		-		-		(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		80,000		(6)
8/31/2011	8/31/2013		5	%		10,000		(4,286)		10,000		-		10,000		1,175		(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		-		-		-		-		379		(9)
3/14/2012	2/10/2014		10	%		5,500		-		472		-		472		120		(10)
2/10/2012	2/10/2014		10	%		39,724		-		2,743		-		2,743		3,227		(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)
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		9.90	%		20,000		(13,333)		20,000		(3,334)		16,666		1,440		(14)
									$	526,910			$	523,576	$	128,514

Reference numbers in right hand column of table entitled Ref. refer to paragraphs above the table.

XML

EQUITY BASED INCENTIVE/RETENTION BONUSES (Details Textual) (USD $)	0 Months Ended		1 Months Ended		0 Months Ended	1 Months Ended
	Oct. 30, 2013	Mar. 03, 2009	Nov. 30, 2012	Aug. 22, 2007	Nov. 02, 2012 Chief Executive Officer [Member]	Nov. 30, 2012 Chief Executive Officer [Member]	Nov. 30, 2012 Related Party Employee [Member]
Equity Based Incentive Retention Bonus [Line Items]
Stock Incentive Bonus			$ 75,100			$ 75,100	$ 1,854
Stock Incentive Bonus Value Of Shares Awarded					$ 37,037	$ 45,000
Stock Incentive Bonus Number Of Shares Awarded						2,250	37,038
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares			61,852
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross	1,802,565	234	5,185	75

XML

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Legal Matters and Contingencies [Text Block]

16. COMMITMENTS AND CONTINGENCIES

On August 16, 2012, the Company’s real estate foreclosed upon by Branch Banking and Trust (“BBT”) was sold through a court ordered auction. At the foreclosure sale, BBT was highest bidder with a bid of $1,300. On July 17, 2012, the Court entered a Final Judgment of Foreclosure against the Company for $1,123,269, plus post-judgment interest. On December 14, 2012, BBT served the Company with Notice of Final Judgment of Foreclosure. Per the Notice, the lender sought Final Judgment including post-judgment interest and costs through date of sale of $1,127,643 plus post-judgment interest and related expenses. The lender asserted the fair market value of the property on the date of sale was $1,030,000 and was seeking final judgment against the Company for the shortfall amount between the Final Judgment amount and the fair market value of the property, or approximately $100,000 plus post-judgment interest and related expenses. Accordingly, the Company recorded a foreclosure liability of $110,000 to cover the shortfall plus post-judgment expenses. At the time of the sale, carrying value of the building, building improvements, and land was $1,641,075, mortgage balance was $1,053,997, accrued interest was $15,609, and accrued real estate taxes was $45,006. After reversing all amounts associated with the foreclosed property and recording $110,000 adjustment for difference between the sale and final judgment amount the Company recorded $116,539 loss on foreclosure. The adjustment and loss include $10,000 estimate of post-judgment expenses based on managements’ best judgment, and was periodically reviewed and adjusted as applicable. On October 14, 2013, BBT. brought before the court a Motion for Deficiency Final Judgment (the “Motion”) against Trebor Industries, Inc., fully owned subsidiary of the Company, and Robert M. Carmichael, the Company’s Chief Executive Officer, and received a final judgment of $103,026, plus interest. As part of the Motion, a Fact Information sheet was to be provided the defendants for completion including all required attachments within forty-five days of delivery from plaintiff, unless the Final Judgment is satisfied or post-judgment discovery is stayed. During November 2013, the Company settled the Final Judgment with BBT for $85,000. Accordingly, BWMG recorded $18,026 to other income for the period. The 17th Judicial Circuit of the Circuit Court of Broward County recorded Satisfaction of Final Judgment on November 20, 2013.

On November 1, 2012, the Company entered into a one year lease on the foreclosed real estate, which the Company continues to occupy as it manufacturing facility and headquarters. The terms of the lease were base rent of $3,750 plus sales tax. Either party could cancel the lease with 90 days written notice. Effective on the date of expiration, the lease was renewed with the same terms and conditions.

On June 28, 2013 the Company received notice of claim for damages in excess of $15,000 claiming personal injury due to product defect. The Company believes the case is without merit and will aggressively defend. The claim is being handled by the Company’s product liability insurance carrier. In the less than probable chance that any liability will be assigned the Company, insurance coverage is deemed adequate to address.

On January 12, 2013, the Company received notice of claim for damages in excess of $15,000 claiming personal injury due to product defect. The Company believes the case is without merit and will aggressively defend. The claim is being handled by the Company’s product liability insurance carrier. In the less than probable chance that any liability is assigned Company, insurance coverage is deemed adequate to address.

On December 18, 2012, Undersea Breathing Systems, Inc. (“UBS”) filed an amended complaint against the Company compelling purchase of Medal Model No. 4241 membranes or equivalent pursuant to pricing agreement in 2011. UBS is the holder of the convertible debenture referenced in Note 12. CONVERTIBLE DEBENTURES Ref (3). Under the complaint, UBS asserts the Company was to purchase no less than 24 membranes from the company per year for $2,000 and $1,000, cash and Company stock, respectively, per membrane. The Company took delivery, paid cash, and issued stock for 14 Medal Model No 4241 membranes pursuant to the stated pricing in 2011, plus issued an additional $24,000 stock toward future purchases of 24 membranes. However, the Company has not purchased or taken delivery of additional membranes. At the same time the stock was issued the Company granted UBS a convertible debenture of $76,000 and reduced its balance to $48,000 when the Company paid $28,000 cash and took delivery of the 14 membranes. Therefore, UBS currently has $24,000 worth of stock and a $48,000 convertible debenture for which the Company took no membrane deliveries. If judgment or settlement were to go in favor of UBS, there would be no financial impact to the statement of operations or net impact on financial position. This is because there would be corresponding decreases in amounts to convertible debenture, prepaid inventory, cash, and increase in inventory, all netting to zero. In addition any future compelled purchases would result in a decrease in cash with corresponding increase in inventory. As a result, no accrual is warranted, and the Company will await legal advisement and decision on the matter.

On or about May 3, 2012, the Company received notice of filing of an action for breach of contract, conspiracy to commit securities fraud and injunctive relief against the Company and the first party named in Note 12. CONVERTIBLE DEBENTURES Ref (1). The Plaintiff, Eventus Capital, Inc., is the second party referenced in Note 12. CONVERTIBLE DEBENTURES, Ref (1) who purchased the original debenture from the first party. The net book value, excluding interest, on the debenture as of December 31, 2012 was approximately $12,700. The amount named in the original lawsuit was “damages in excess of $15,000”, plus other fees. On July 16, 2012, the Palm Beach County Court issued an Order on the Company’s Motion to dismiss this complaint. The motion was granted without prejudice to allow the plaintiff 15 days to file an amended complaint with substantiating documentation. The plaintiff amended its complaint as required, asserted it incurred a loss of $735,616 in damages. The other Defendant in the action has asserted counter and third party claims against the plaintiff. Per the opinion of the Company’s legal counsel, the plaintiff has failed to establish any legal or factual basis for claim, and judgment or settlement against the Company is not probable.

XML

INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The components of the provision for income tax expense are as follows for the three months ended:

	March  31, 2014		March 31, 2013
Current taxes
Federal	$	—	$	—
State		—		—
Current taxes		—		—
Change in deferred taxes		(11,730)		(5,567)
Change in valuation allowance		11,774		9,350
Provision for income tax expense

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at March 31, 2014:

Deferred tax assets:
Equity based compensation	$	97,276
Allowance for doubtful accounts		13,260
Net operating loss carryforward		1,136,206
On-line training certificate reserve		932
Total deferred tax assets		1,247,674
Valuation allowance		(1,245,111)
Deferred tax assets net of valuation allowance		2,563
Less deferred tax assets – non-current, net of valuation allowance		2,330
Deferred tax assets – current, net of valuation allowance	$	233

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at December 31, 2013:

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

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The significant differences between the statutory tax rate and the effective tax rates for the Company for the three months ended are as follows:

	March 31, 2014			March 31, 2013
Statutory tax rate		—	%		—	%
Increase (decrease) in rates resulting from:
Net operating loss carryforward or carryback		(31)	%		(7)	%
Equity based compensation and loss		—	%		7	%
Book/tax depreciation and amortization differences		—	%		—	%
Change in valuation allowance		31	%		—	%
Other		—	%		—	%
Effective tax rate		—	%		—	%

XML

CHANGE IN CAPITAL STRUCTURE

3 Months Ended

Mar. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

18. CHANGE IN CAPITAL STRUCTURE

Effective July 15, 2013, the Company effectuated a reverse split of all outstanding shares of Common Stock by a factor of one-for-one thousand three hundred fifty (1 -for- 1,350). Fractional shares were rounded up to the nearest whole share. The reverse split became effective as of July 15, 2013. In accordance with Securities and Exchange Commissions’ Staff Accounting Bulletin Topic 4C, when a change in capital structure occurs after the period reporting date, but before release of the financial statements the Company must apply retroactive treatment to the financial statements to reflect the change. Accordingly, the Company restated the financial statements for three months ended March 31, 2013 to reflect the change in the number of shares, as well as throughout the Note disclosures, as applicable.

Effective February 22, 2012, also with retroactive restatement, the Company increased the number of authorized shares of common stock from 250,000,000 to 5,000,000,000, and decreased the par value per share of Common Stock from $.001 to $.0001.

XML

SUBSEQUENT EVENTS (Details Textual) (USD $)	0 Months Ended	3 Months Ended			3 Months Ended				0 Months Ended		1 Months Ended
	Oct. 30, 2013	Mar. 31, 2013	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Purdon [Member]	Mar. 31, 2013 Purdon [Member]	Apr. 30, 2014 Restricted Stock [Member]	Apr. 21, 2011 Restricted Stock [Member]	Apr. 09, 2014 Subsequent Event [Member]	Apr. 15, 2014 Subsequent Event [Member]	Apr. 21, 2014 Subsequent Event [Member]	Apr. 24, 2014 Subsequent Event [Member]	Apr. 30, 2014 Subsequent Event [Member]	Apr. 30, 2014 Subsequent Event [Member] Purdon [Member]
Subsequent Event [Line Items]
Debt Conversion, Converted Instrument, Amount		$ 565,689							$ 2,160	$ 2,160	$ 2,280	$ 2,080	$ 1,920
Debt Conversion, Converted Instrument, Shares Issued									400,000	400,000	400,000	400,000	400,000
Share Based Compensation	$ 44,610				$ 13,500	$ 9,000								$ 4,500
Common Stock, Shares, Issued			11,258,711	10,049,140			184,202	14,815
Additional Shares Issued For Escrow Conversions													52,500,000

XML

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Business Description and Accounting Policies [Text Block]

1. Description of business and summary of significant accounting policies

Description of business –Brownie’s Marine Group, Inc., (hereinafter referred to as the “Company” or “BWMG”) designs, tests, manufactures and distributes recreational hookah diving, yacht based scuba air compressor and nitrox generation systems, and scuba and water safety products through its wholly owned subsidiary Trebor Industries, Inc. The Company sells its products both on a wholesale and retail basis, and does so from its headquarters and manufacturing facility in Fort Lauderdale, Florida. The Company does business as (dba) Brownie’s Third Lung, the dba name of Trebor Industries, Inc. The Company’s common stock is quoted on the OTCBB under the symbol “BWMG”.

Basis of Presentation – The financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included.

Definition of fiscal year – The Company’s fiscal year end is December 31. 

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications – Certain reclassifications have been made to the 2013 financial statement amounts to conform to the 2014 financial statement presentation. Effective July 15, 2013 the Company effectuated a reverse stock split (1 -for- 1,350). See Note 18. CHANGE IN CAPITAL STRUCTURE for more information. Accordingly, the transactional number of shares referenced throughout the Notes has been retroactively stated unless otherwise noted.

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

Going Concern –The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. We have incurred losses since 2009, and expect to have during 2014. We have had a working capital deficit since 2009.

The Company is behind on payments due for payroll taxes and withholding, matured convertible debentures, related parties notes payable, accrued liabilities and interest – related parties, and certain vendor payables. The Company is handling delinquencies on a case by case basis. However, there can be no assurance that cooperation the Company has received thus far will continue. Payment delinquencies are further addressed in Note 7. RELATED PARTIES TRANSACTIONS, Note 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES, Note 10. OTHER LIABILITIES, Note 11. NOTES PAYABLE, and Note 12. CONVERTIBLE DEBENTURES.

During the fourth quarter of 2011, the Company formed a joint venture with one dive entity, and in the first quarter of 2012, purchased the assets of another, with assumption of their retail location lease. The Company accomplished both transactions predominantly through issuance of restricted common stock in BWMG. The Company believed these transactions would help generate sufficient future working capital. Neither endeavor did or has generated profit or positive cash-flow. Therefore, effective May 31, 2013, the Company closed and ceased operations at its retail facility. The Company is still involved in the joint venture. See Note 17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT and Note 8. ASSET PURCHASE for further discussion of these transactions. As a result, the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations beyond the second quarter of 2014. This raises substantial doubt about BWMG’s ability to continue as a going concern. The Company will need to raise additional funds and is currently exploring alternative sources of financing. BWMG has issued a number of convertible debentures as an interim measure to finance working capital needs as discussed in Note 12. CONVERTIBLE DEBENTURES and may continue to raise additional capital through sale of restricted common stock or other securities, and obtaining some short term loans. The Company has paid for legal and consulting services with restricted stock to maximize working capital, and intends to continue this practice when possible. In addition, the Company implemented some cost saving measures and will continue to explore more to reduce operating expenses.

If BWMG fails to raise additional funds when needed, or does not have sufficient cash flows from sales, it may be required to scale back or cease operations, liquidate assets and possibly seek bankruptcy protection. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Inventory – Inventory is stated at the lower of cost or fair market value. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company’s management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when required.

Furniture, Fixtures, and Equipment – Furniture, Fixtures, and Equipment is stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 5 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Revenue recognition – Revenues from product sales are recognized when the Company’s products are shipped or when service is rendered. Revenues from fixed-price contracts are recognized on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost of each contract. This method is used because management considers the percentage of cost incurred to date to estimated total cost to be the best available measure of progress on the contracts.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Change in job performance, job conditions, and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

Revenue and costs incurred for time and material projects are recognized as the work is performed.

Product development costs – Product development expenditures are charged to expenses as incurred.

Advertising and marketing costs – The Company expenses the costs of producing advertisements and marketing material at the time production occurs, and expenses the costs of communicating advertisements and participating in trade shows in the period in which occur. Advertising and trade show expense was $912 and $27,262 for the years ended March 31, 2014, and 2013, respectively.

Customer deposits and returns policy – The Company takes a minimum 50% deposit against custom and large tankfill systems prior to ordering and/or building the systems. The remaining balance due is payable upon delivery, shipment, or installation of the system. There is no provision for cancellation of custom orders once the deposit is accepted, nor return of the custom ordered product. Additionally, returns of all other merchandise are subject to a 15% restocking fee as stated on each sales invoice.

Income taxes – The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Comprehensive income – The Company has no components of other comprehensive income. Accordingly, net income equals comprehensive income for all periods.

Stock-based compensation – The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes valuation model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued on the effective date of the agreement in accordance with generally accepted accounting principles, which includes determination of the fair value of the share-based transaction. The fair value has been determined either through use of the quoted stock price.

For the three months ended March 31, 2014 and 2013, the Company compensated and/or converted all accrued payroll to stock for one employee. For the three months ended March 31, 2014 and 2013, the Company transacted stock-based compensation transactions as follows: amortized prepaid equity based compensation for personal guarantees of Chief Executive Officer on Company’s bank debt; additional compensation expense to the Chief Executive Officer; Board of Directors’ Fees and Bonuses; certain consulting, legal, and other professional fees; equity based incentive and/or retention bonuses for some employees, and consultants; and operating expense for exclusivity pursuant to strategic alliance agreement payable. These transactions, as applicable, are also further discussed in Note 7. RELATED PARTIES TRANSACTIONS, Note 13. EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES, Note 20. EQUITY BASED INCENTIVE/RETENTION BONUSES, and Note 12. STRATEGIC ALLIANCE AGREEMENT.

Beneficial conversion features on convertible debentures – The fair value of the stock upon which to base the beneficial conversion feature (BCF) computation has been determined either through use of the quoted stock price unless the trading activity is nominal, which may indicate it does not represent the fair value. Under these circumstances, the Company determines fair value through an analysis of its fair value of net assets and comparable publicly traded companies that have higher trading volumes with similar results of operations and industries.  See Note 12. CONVERTIBLE DEBENTURES for further discussion.

Fair value of financial instruments – Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. Management considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the Company’s perceived risk of that investment.

At March 31, 2014, and December 31, 2013, the carrying amount of cash, accounts receivable, accounts receivable – related parties, customer deposits and unearned revenue, royalties payable – related parties, other liabilities, other liabilities and accrued interest – related parties, notes payable, notes payable – related parties, and accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments. The fair value of the Company’s convertible debentures was the principal balance due at March 31, 2014, and December 31, 2013, or $516,800, and $526,910, respectively, as presented in Note 12. CONVERTIBLE DEBENTURES. The principal balance due approximates fair value because of the short maturity of these instruments. On the face of the balance sheet the convertible debentures are presented net of discount, which is less than fair market value at period end dates when discount is not fully accreted.

Earnings per common share – Basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Basic earnings per share is computed using the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. All common stock equivalent shares were excluded in the computation dilutive earnings per share for the three months ended March 31, 2014, and 2013, since their effect was antidilutive.

New accounting pronouncements – The Company believes there was no new accounting guidance adopted but not yet effective that either has not already been disclosed in prior reporting periods or is relevant to the readers of BWMG’s financial statements.

XML

CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Mar. 31, 2014	Dec. 31, 2013
Allowance for accounts receivable (in dollars)	$ 39,000	$ 39,000
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	425,000	425,000
Preferred stock, shares outstanding	425,000	425,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	5,000,000,000	5,000,000,000
Common stock, shares issued	11,258,711	10,049,140
Common stock, shares outstanding	9,427,853	5,672,051
Common stock payable, Par value (in dollars Per share)	$ 0.0001	$ 0.0001
Common stock payable, shares outstanding	195,610	195,610

XML

NOTES PAYABLE

3 Months Ended

Mar. 31, 2014

Notes Payable Disclosure [Abstract]

Notes Payable Disclosure [Text Block]

11. NOTES PAYABLE

Notes payable consists of the following as of March 31, 2014:

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.	$	12,229
Less amounts due within one year		12,229
Long-term portion of notes payable	$	—

As of March 31, 2014, principal payments on the notes payable are as follows:

2014	$	12,229
2015		—
2016		—
2017		—
2018		—
Thereafter		—
	$	12,229

The unsecured note payable in the table above and as reflected in the table below in note payable balance resulted from conversion of a vendor payable dating back to February 2011. The note payable was restructured once in June 2012 to reduce the monthly payments and to extend the maturity date.

Notes payable consists of the following as of December 31, 2013:

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

XML

Document And Entity Information	3 Months Ended
	Mar. 31, 2014	May 01, 2014
Document Information [Line Items]
Entity Registrant Name	Brownie's Marine Group, Inc
Entity Central Index Key	0001166708
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	BWMG
Entity Common Stock, Shares Outstanding		11,612,055
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2014

XML

CONVERTIBLE DEBENTURES

3 Months Ended

Mar. 31, 2014

Convertible Debentures [Abstract]

Convertible Debentures [Text Block]

12. CONVERTIBLE DEBENTURES

Convertible debentures consist of the following at March 31, 2014:

Origination Date	Maturity Date		Interest Rate			Origination Principal Balance		Origination Discount Balance			Period End Principal Balance	Period End Discount Balance		Period End Balance, Net		Accrued Interest Balance		Ref.
11/27/2010		5/27/2011		10	%		125,000		(53,571)	$	58,750		-	$	58,750	$	24,419		(2)
1/7/2011		11/11/2011		5	%		76,000		(32,571)		48,000		-		48,000		8,550		(3)
8/8/2012		5/2/2013		8	%		42,500		(27,172)		-		-		-		-		(4)
10/31/2012		8/2/2013		8	%		78,500		(50,189)		76,835		-		76,835		8,889		(4)
5/3/2011		5/5/2012		5	%		300,000		(206,832)		300,000		-		300,000		87,500		(6)
8/31/2011		8/31/2013		5	%		10,000		(4,286)		10,000		-		10,000		1,301		(7)
2/2/2012				10	%		See ref (9) for Discussion								-		379		(9)
3/14/2012		2/10/2014		10	%		5,500		-		472		-		472		132		(10)
2/10/2012		2/10/2014		10	%		39,724		-		2,743		-		2,743		3,296		(11)
4/8/2013		4/14/2013		9.90	%		20,000		(13,333)		20,000		-		20,000		1,935		(14)
										$	516,800			$	516,800	$	136,401

Reference numbers in right hand column of table entitled Ref. refer to paragraphs with corresponding number that immediately follow the next paragraph. The referenced paragraphs also support the December 31, 2013 table, which appears at the end of this Note. Therefore, it is appropriate that some of the number references do not appear in the table above (i.e. Ref. 1).

During the first quarter of 2013, the Company determined based on closing market price of $.0005 (pre-reverse stock split), and based on terms of convertible debt, its convertible and/or committed shares were in excess of its authorized common stock of 5,000,000,000. Most of the Company’s convertible debentures have conversion rates at substantial discount to market price; therefore, a decline in market price impacts the number of shares convertible. As a result, the Company recorded a derivative liability of $565,689, which represented the amount of shares convertible or committed in excess of the shares authorized at $.0005 per share, the closing market price at March 30, 2013, and as valued according to the Black-Scholes valuation model. On July 15, 2013, the Company effectuated a reverse stock split (1 -for- 1,350), which was applied retroactively. See Note 19. CHANGE IN CAPITAL STRUCTURE. Accordingly, this transaction resulted in significant shares authorized in excess of those committed, and the full derivative liability of $565,689 was reversed.

(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 recognized 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. 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 in exchange for convertible debenture 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 was 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 was no assurance of success and the invention was still in design and pre-prototype phase, the Company recorded the initial net value of the debenture, $71,483, as research and development expense during the year ended 2010. Both parties agreed to confidentiality regarding the invention during the pre-prototype stage. In addition, the Company 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.

On February 10, 2012, the holder of this debenture entered into an agreement with a third party to sell/assign the $125,000 principal balance, plus accrued interest. The purchase was to be in installments with transfer/assignment of the debenture upon payment, referred to as “Closings”. The first Closing was on or about February 15, 2012 for $7,500, with that amount assigned/transferred. The second Closing, occurred 90 days after the first closing for $11,750 paid/assigned. All subsequent Closings were to be for $11,750 and occur in 30 day increments after the second Closing. This was to continue until the full principal balance of $125,000, plus accrued interest has been purchased/assigned. See Ref. (9) for discussion of new terms on the assigned portions of the debenture.

(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 shares of restricted common stock. The lender at their option could 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 16. 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 in 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.

On July 2, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on April 5, 2013. Beginning 180 days after the date of the debenture, lender could convert the note to common shares at a 39% discount of the “Market Price” of the stock based on the average of the lowest three (3) closing bid prices on the date prior to the notice of conversion. In addition, if the Company granted a lower price for common stock purchase or conversion to anyone else during the term of the agreement, the lender’s conversion price would be adjusted downward to the same. The lender could not convert an amount greater than 4.99% of the outstanding common stock at any one time. The Company could have prepaid the debenture at any time before maturity at graduated amounts depending on the date of prepayment ranging from 130% to 150% of the debenture balance plus accrued and unpaid interest. There was a $2,000 per day penalty for not timely delivering shares upon conversion notice. 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 debenture. The Company valued the BCF of the convertible debenture at $35,268. Accordingly, the $78,500 debenture was discounted by the amount of the BCF and accreted to the convertible debenture through its maturity, and interest was recognized until converted. By December 31, 2013, the lender had converted $78,500 principal plus accrued interest on the convertible debenture in full satisfaction of the debt. 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. On August 8, 2012, the Company borrowed $42,500 from this same lender in exchange for a convertible debenture maturing on May 10, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in preceding paragraph. The Company valued the BCF of the convertible debenture at $27,172. Accordingly, the $42,500 debenture was discounted by the amount of the BCF. The Company accreted the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the year ended December 31, 2013, the lender converted $34,055 principal on the convertible debenture and the remaining $8,445 during the three months ended March 31, 2014 in full satisfaction of the debenture. In addition, during the three months ended March 31, 2014 the lender converted $1,700 of accrued interest to shares of common stock. 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. On October 31, 2012, the Company borrowed $78,500 from this same lender in exchange for a convertible debenture maturing on August 2, 2013. Beginning 180 days after the date of the debenture, lender could have converted the note to common shares at a 39% discount pursuant to the same terms and conditions discussed in two paragraphs preceding this one. The Company valued the BCF of the convertible debenture at $50,189. Accordingly, the $78,500 debenture was discounted by the amount of the BCF. The Company is accreting the discount to the convertible debenture through its maturity and will recognize interest expense until paid in full or converted. During the three months ended March 31, 2014, the lender converted $1,665 of the convertible debenture to shares of common stock. . 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.

(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.

On February 10, 2012, the lender sold/assigned all rights and interest on the debenture having a net book value of $39,724, plus $1,552 of accrued interest. See reference (11) which discusses the terms and conditions surrounding the new debenture issued upon extinguishment of the original as well as accounting treatment of the transaction.

(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. Since that date the lender has not purchased or converted any shares pursuant to the sale/assignment agreement. The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debenture is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. 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. As of March 31, 2014 and December 31, 2013, the lender had assigned a cumulative $5,500 under the debenture to four separate parties, and $23,500 to another party. See reference (10) and (12), respectively, related to the assignments.

(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 in the year ended December 31, 2012.

The new debentures were issued with the same following terms and conditions: The Company may prepay at any time in an amount equal to 150% of the principal and accrued interest. The conversion price under the debentures is $.37125 (adjusted for 1-for-1,350 reverse stock split), and the lender may convert at any time until the debenture plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 4.99% of the outstanding Common Stock of the Company at any one time. During the years ended December 31, 2013, the lender converted $3,211 of the debenture with original principal balance of $39,724 to stock. 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.

On January 18, 2013, the lender sold/assigned all rights and interest on one of its three debentures having net book value of $16,000 plus accrued interest of $1,512. On the same day, the lender sold/assigned all rights and interest on another of its three debentures having a net book value of $56,250, plus $4,825 of accrued interest. See reference (13) 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. As of March 31, 2014, the lender still held the third debenture with original principal balance of $39,724 with net book value of $2,743.

(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.

During the years ended December 31, 2012, the lender accepted assignment of $23,500, of a convertible debenture from the lender discussed in (9) above. See reference (2) for terms surrounding the original convertible debenture. In addition, the Company converted $2,125 of the assignments to stock during the year ended December 31, 2013, plus $202 of accrued interest in full satisfaction of the amount due this lender under the assignments. The stock was issued without restrictive legend pursuant to Rule 144, as the holder acquired the 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.

(13) On January 18, 2013, the Company entered into three new convertible 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 balance on these two new convertible 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.

The Company borrowed $84,500, the third debenture referred to above with this lender. The interest rate on the debenture was 10% per annum, and the conversion price was 59% of the lowest closing bid price per share in the ten trading days prior to the conversion notice. Per terms of the debenture agreement, the lender was not to convert an amount that would cause it or any of its affiliates to beneficially own in excess of 4.99% of the Company. The Company could prepay the debenture within 90 days after the effective date at 140% multiplied by outstanding principal and accrued interest. 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 debenture. The Company valued the BCF of the convertible debenture at $58,720, its intrinsic value. Accordingly, the $84,500 debenture was discounted by the amount of the BCF. The Company accreted discount to the convertible debenture and interest expense through its settlement on August 12, 2013 as discussed below. Further, the debenture agreement provided for post-closing expenses, which the lender noted was $1,000 per conversion and approximately $700 in other fees per each debenture. The Company accrued these fees on each debenture and per conversion.

The $95,000 and $30,500 debentures contained the same terms and conditions as the $84,500 debenture except there were no prepayment clause, and the conversion price was 44% of the lowest closing bid price per share in the ten trading days prior to the conversion notice. During the years ended December 31, 2013, the Company converted $30,500 plus $191 of accrued interest in full satisfaction of the $30,500 debenture, and $22,500 toward the $95,000 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.

On August 12, 2013, the Company fully settled the two debentures outstanding with $157,446 principal and $8,794 accrued interest totaling $166,240 with this lender for $170,000. All pre-payment penalties were waived and the Company recognized the difference between the $166,240 and $170,000, or $3,760, as other expense for the year ended December 31, 2013.

(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.

Convertible debentures consist of the following at December 31, 2013:

Origination Date	Maturity Date	Interest Rate			Origination Principal Balance		Origination Discount Balance		Period End Principal Balance		Period End Discount Balance		Period End Balance, Net		Accrued Interest 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		22,949		(2)
1/7/2011	11/11/2011		5	%		76,000		(32,571)		48,000		-		48,000		7,950		(3)
2/10/2011	1/14/2012		8	%		42,500		(42,500)		-		-		-		-		(4)
9/12/2011	6/14/2012		8	%		37,500		(37,500)		-		-		-		-		(4)
12/19/2011	9/21/2012		8	%		37,500		(37,500)		-		-		-		-		(4)
8/8/2012	5/2/2013		8	%		42,500		(27,172)		8,445		-		8,445		3,949		(4)
10/31/2012	8/2/2013		8	%		78,500		(50,189)		78,500		-		78,500		7,325		(4)
7/2/2012	4/5/2013		8	%		78,500		(35,268)		-		-		-		-		(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		80,000		(6)
8/31/2011	8/31/2013		5	%		10,000		(4,286)		10,000		-		10,000		1,175		(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		-		-		-		-		379		(9)
3/14/2012	2/10/2014		10	%		5,500		-		472		-		472		120		(10)
2/10/2012	2/10/2014		10	%		39,724		-		2,743		-		2,743		3,227		(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)
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		9.90	%		20,000		(13,333)		20,000		(3,334)		16,666		1,440		(14)
									$	526,910			$	523,576	$	128,514

Reference numbers in right hand column of table entitled Ref. refer to paragraphs above the table.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net revenues
Net revenues	$ 298,319	$ 423,282
Net revenues - related parties	290,064	165,381
Total net revenues	588,383	588,663
Cost of net revenues
Cost of net revenues	451,847	458,255
Royalties expense - related parties	13,225	14,283
Total cost of net revenues	465,072	472,538
Gross profit	123,311	116,125
Operating expenses
Selling, general and administrative	179,967	561,674
Research and development costs	379	15,599
Total operating expenses	180,346	577,273
Loss from operations	(57,035)	(461,148)
Other (income) expense, net
Other (income) expense, net	(36,738)	91,779
Change in derivative liability	0	565,689
Interest expense	13,552	68,850
Interest expense - related parties	4,506	657
Total other (income) expense, net	(18,680)	726,975
Net loss before provision for income taxes	(38,355)	(1,188,123)
Provision for income tax expense	44	3,783
Net loss	$ (38,399)	$ (1,191,906)
Basic loss per common share (in dollars per share)	$ (0.02)	$ (1.27)
Diluted loss per common share (in dollars per share)	$ (0.02)	$ (1.27)
Basic weighted average common shares outstanding (in shares)	7,196,169	941,986
Diluted weighted average common shares outstanding (in shares)	7,196,169	941,986

XML

CUSTOMER CREDIT CONCENTRATIONS

3 Months Ended

Mar. 31, 2014

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

6. CUSTOMER CREDIT CONCENTRATIONS

The Company sells to three entities owned by the brother of Robert Carmichael, the Company’s Chief Executive officer, and two Company’s owned by the Chief Executive Officer as further discussed in Note 7. – RELATED PARTIES TRANSACTIONS. Combined sales to these five entities for three months ended March 31, 2014 and 2013, represented 49.09% and 28.09%, respectively, of total net revenues. Sales to no other customers represented greater than 10% of net revenues for three months ended March 31, 2014, and 2013.

XML

OTHER ASSETS

3 Months Ended

Mar. 31, 2014

Other Assets [Abstract]

Other Assets Disclosure [Text Block]

5. OTHER ASSETS

Other assets of $27,635 at March 31, 2014 and December 31, 2013, consists of $24,740 investment in joint venture, and $2,895 refundable deposits. See Note 17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT for further information on investment in joint venture.

XML

JOINT VENTURE EQUITY EXCHANGE AGREEMENT

3 Months Ended

Mar. 31, 2014

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments Disclosure [Text Block]

17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT

On November 7, 2011, the Company entered into a Joint Venture Equity Exchange Agreement (“Agreement”) with Pompano Dive Center, LLC. (“PDC”). PDC owns a retail store, several dive boats, and has a classroom for training divers. Under the terms of the Agreement, the Company will provide PDC with an assortment of Brownie’s Third Lung products on consignment, and PDC will act as a training and demonstration site for Brownie’s Third Lung products. Beginning in 2012, both parties ceased operating under the consignment inventory arrangement. Inventory not sold was returned, and inventory was purchased for sale. See Note 7. RELATED PARTIES TRANSACTIONS - Net revenues and accounts receivable – related parties for further information on sales to PDC for the three months ended March 31, 2014 and 2013, and Accounts Receivable balances at March 31, 2014, and December 31, 2013. Terms of sale to PDC are no more favorable than those granted other dealers of the Company’s products.

In addition, the Agreement provides for a non-binding letter of intent for the possible acquisition of PDC in exchange for BWMG’s stock for the yet to be agreed upon value of PDC. In anticipation of a possible purchase, the Agreement provides BWMG with a 33% interest in PDC. As part of the transaction, BWMG issued 3,394 restricted shares of its common stock with fair market value on the date of the transaction of $24,740 to PDC, reflected in other assets in the long-term portion of the Company’s balance sheet.

If BWMG purchases PDC, the stock issued by BWMG will be credited to the purchase price. Further, PDC is required to remit no later than 45 days from the end of each quarter, a 33% share in pre-tax net profits. At least 50% of the total pre-tax profits are required for distribution under the Agreement, and BWMG is not required to share in losses. If PDC decides to sell any inventory provided by the Company, the purchase price will be the same as that offered to other dealers of the Company’s products.

If this Agreement is terminated by either party and/or a written purchase and sales agreement is not entered into by the parties, then the parties’ respective interests in each other’s business will revert back to the original party. Accordingly, if this should happen, PDC will relinquish the interest acquired in BWMG through this Agreement and BWMG will do the same. All property at PDC owned by BWMG would be returned to BWMG at that time as well. Because the joint venture is cancellable at any time by either party with return of respective interest transferred to each as per the joint venture agreement, possible acquisition of PDC is in the form of a non-binding letter of intent, each entities assets and liabilities remain their own, BWMG will not share in any of PDC losses or additional expenses unless otherwise approved, and the management and operation of PDC remains with PDC, the Company accounted for the investment in PDC under the Cost basis. Since inception of the Agreement PDC has reported pre-tax net losses. Therefore, to-date there has been no profit sharing due the Company under the agreement.

XML

EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES

3 Months Ended

Mar. 31, 2014

Stock Issued For Consulting Legal and Other Professional Services [Abstract]

Stock Issued For Consulting Services [Text Block]

13. EQUITY BASED COMPENSATION FOR CONSULTING, LEGAL, AND OTHER PROFESSIONAL SERVICES

Equity based compensation is presented on the face of the Statement of Stockholders’ Deficit for the three months ended March 31, 2014. More information on the significant components of the amounts presented for the years ended March 31, 2014 and 2013 follows:

For the three months ended March 31, 2014, the Company converted $13,500 related party employee compensation payable to 1,223,977 shares of restricted common stock. For additional information see Note 7. RELATED PARTIES - Equity based compensation to employee

Pursuant to a consulting agreement for business advisory services, during the three months ended March 31, 2013, the Company issued 32,796 shares of common stock for $19,600 in services. The stock conversion price under the agreement was calculated as a weighted average for the month the services were granted at a 30% discount. However, operating expense was recorded based on full weighted average share price of the market for the period in which the services were rendered.

On March 27, 2013, the Company entered into a consulting agreement for financial strategic advice for a term of twelve months from the date of the agreement and may be terminated by either party within 30 days written notice and any monies owed are due upon termination. As initial fee, the Company paid the consultant $25,000 in restricted stock, or 37,038 shares, during the years ended December 31, 2013. Further, upon obtaining $5,000,000 new capital into the Company, the consultant will be due $500,000, upon successfully obtaining a second $500,000 commitment of new capital, $50,000 will be due to the consultant, upon successfully obtaining a third $500,000 commitment of new capital, and the same arrangement through eleven additional commitments of new capital. Amounts due shall be paid in cash and any brokerage commissions, private placement fees or other fees in connection with obtaining the new capital shall be reduced from the fees due the consultant on a dollar per dollar basis.

XML

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2014

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities of $510,277 at March 31, 2014, consists of $231,957 accounts payable trade, $48,181 accrued payroll and related fringe benefits, $45,000 accrued year-end bonuses, $43,411 accrued payroll taxes and withholding, and $141,728 accrued interest. Accrued payroll taxes and withholding were approximately six months in arrears at March 31, 2014. Balances due certain vendors are also due in arrears to varying degrees. The Company is handling all delinquent accounts on a case by case basis.

Accounts payable and accrued liabilities of $517,058 at December 31, 2013, consists of $245,672 accounts payable trade, $50,910 accrued payroll and related fringe benefits, $45,000 accrued year-end bonuses, $42,093 accrued payroll taxes and withholding, and $133,383 accrued interest. Accrued payroll taxes and withholding were approximately six months in arrears at December 31, 2013. Balances due certain vendors are also due in arrears to varying degrees.

XML

AUTHORIZATION OF PREFERRED STOCK (Details Textual)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2010
AUTHORIZATION OF PREFERRED STOCK [Line Items]
Preferred stock, shares authorized	10,000,000	10,000,000	10,000,000
Preferred stock, shares issued	425,000	425,000
Preferred Stock, Voting Rights	250 to 1
Percentage of Voting Rights	93.00%
Series A Convertible Preferred Stock [Member]
AUTHORIZATION OF PREFERRED STOCK [Line Items]
Convertible Preferred Stock, Shares Issued upon Conversion	31,481

XML

RELATED PARTIES TRANSACTIONS

3 Months Ended

Mar. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

7. RELATED PARTIES TRANSACTIONS

Notes payable – related parties

Notes payable – related parties consists of the following at March 31, 2014:

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	$	70,833
Less amounts due within one year		70,833
Long-term portion of notes payable	$	—

As of March 31, 2014, principal payments on the notes payable – related parties are as follows:

2014	$	70,833
2015		—
2016		—
2017		—
2018		—
Thereafter		—
	$	70,833

During the three months ended March 31, 2014, the Company fully satisfied the note payable due the Chief Executive Officer for $49,702, which had matured in September 2013.

As of March 31, 2014, the Company was two months in arrears on payments due under the Note payable to the non-employee Board of Director. No notice of default has been received and the Company plans to make payments as able.

Notes payable – related parties consists of the following at December 31, 2013:

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	$	—

As of December 31, 2013, the Company was approximately nine months in arrears on principal payments due under the Note payable to the Chief Executive Officer. On May 13, 2013, the Company granted the Chief Executive Officer 370,371 shares of common stock in satisfaction of $50,000 of note payable – related parties. The shares of stock were issued at the fair market value, or trading price, on the date of the transaction.

On October 30, 2013, the Company signed a secured promissory note with Mikkel Pitzner, the non-employee Board of Director (BOD), for $85,000. In addition to the terms of the Note Payable disclosed in the table above, the Company was to use its best efforts to settle the Branch Banking and Trust (“BBT”) Judgment and terminate all Uniform Commercial Code filings in favor of Mr. Pitzner within 10 business days of the date of the agreement. As further inducement to make the loan, Mr. Pitzner was granted an option to purchase 1,802,565 shares of the Company’s common stock for $.01 per share. The option is exercisable immediately and will continue for a period ending two years from the agreement date with an option for cashless exercise based on a formula within the agreement. The closing price per share of the Company’s stock closing on the OTCBB on the date of the agreement was $.025 per share. As a result of the option granted, the Company recorded $44,610 stock option expense using the Black-Scholes valuation model on date of the agreement.

Net revenues and accounts receivable – related parties – The Company sells products to Brownie’s Southport Divers, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys, owned by the brother of the Company’s Chief Executive Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers. Combined net revenues from these entities for three months ended March 31, 2014 and 2013, was $221,741 and $164,245, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at March 31, 2014, was $24,679, $17,110, and $23,833, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at December 31, 2013, was $11,926, $6,116, and $3,047, respectively.

The Company sells products to Brownie’s Logistics, LLC. And 940 Associates, Inc., fully owned by the Company’s Chief Executive Officer. Terms of sale are no more favorable than those extended to any of the Company’s other customers. Combined net revenues from these entities for three months ended March 31, 2014 and 2013, was $67,115 and $0, respectively. Accounts receivable from Brownie’s Logistics, LLC. at March 31, 2014 was $2,658.

Sales to Pompano Dive Center for the three months ended March 31, 2014, and 2013, was $1,079 and $1,137, respectively. Accounts Receivable from Pompano Dive Center at December 31, 2013, and December 31, 2012, was $13,330, and $14,029, respectively. See Note 17. JOINT VENTURE EQUITY EXCHANGE AGREEMENT for further discussion regarding Pompano Dive Center. Sales to the Company’s Chief Executive Officer for the three months ended March 31, 2014, and 2013 was $130 and $0, respectively.

Royalties expense – related parties – The Company has Non-Exclusive License Agreements with 940 Associates, Inc. (hereinafter referred to as “940A”), an entity owned by the Company’s Chief Executive Officer, to license product patents it owns. Under the terms of the license agreements effective January 1, 2005, the Company pays 940A $2.00 per licensed product sold, rates increasing 5% annually. Also with 940A, the Company has an Exclusive License Agreement to license the trademark “Brownies Third Lung”, “Tankfill”, “Brownies Public Safety” and various other related trademarks as listed in the agreement. Based on this license agreement, the Company pays 940A 2.5% of gross revenues per quarter. Total royalty expense for the above agreements for the three months ended March 31, 2014 and 2013, is disclosed on the face of the Company’s Consolidated Statements of Operations. As of March 31, 2014, and December 31, 2013, the Company was approximately twenty-six months in arrears on royalty payments due. No default notice has been received and the Company plans to make payments as able.

Equity based compensation for Chief Executive Officer– On November 2, 2012, the Board of Directors (BODs) approved a stock incentive bonus to certain key employees and consultants to vest and pay out on May 2, 2013, contingent upon continued employment or services. The stock bonus price per share was calculated based on last closing price per the OTCBB on the effective date of the transaction. Of the total stock incentive bonuses declared for the key employees and consultants of $75,150 or 61,852 shares of common stock, the Chief Executive was awarded $45,000 or 37,037 shares. The Company recorded compensation expense ratably over the vesting period, and for the three months ended March 31, 2013, compensation expense to the Chief Executive Officer related to this transaction was $22,500. See Note 20. EQUITY BASED INCENTIVE/RETENTION BONUSES for further discussion. In addition, on February 23, 2013, the Company declared a bonus payable for the years ended 2012 for certain employees, service providers, and consultants. As part of this bonus, the Chief Executive Officer was awarded $67,000 to be paid out in cash or stock based on later determination by the BODs. This amount is included in operating expense for the year ended December 31, 2012. See table below for inclusion in other liabilities and accrued interest – related parties. Further, pursuant to a Written Consent of the BODs of the Company on June 11, 2012, clarifying a meeting held on May 31, 2012, the BOD declared an $83,333 bonus due the Chief Executive Officer payable in shares of restricted stock. The shares vested as of January 2, 2013. The grant price per share was based on the closing price of the stock on May 31, 2012. For accounting purposes, the Company recognized $83,333 operating expense ratably over the seven months the shares vested. These shares are included in shares payable on the statement of stockholders’ deficit. These shares are included in shares payable on the statement of stockholders’ deficit.

In addition, the Chief Executive Officer’s monthly salary was increased by $16,667 per month beginning in June 2012, payable in restricted stock calculated based on a monthly weighted average share factor of .70, or a 30% discount (“incremental salary”). The shares were to vest six months after the last day of each month, continued employment was requirement for vesting, and shares would not be issuable until vested. The Company recorded $23,801 operating expense each month related to the incremental salary, which was $16,667 plus $7,144 discount added back to record at full monthly weighted average price per market. On December 23, 2013, the Chief Executive Officer forgave all incremental salary shares payable to him by the Company from 2012 and through November 2013. As a result, the Company recorded $428,578 contribution to Additional Paid in Capital for the year ended December 31, 2013, for the cancellation of the $261,904, and $166,667 stock payable from 2013 and 2012, respectively.

Non-employee Board of Director fees and bonus – Effective December 23, 2013, the Board of Directors cancelled the $2,500 per month non-employee Board of Director fee agreement under which Mikkel. Pitzner was being compensated. In addition, Mr. Pitzner forgave the $27,500 BOD fees due in shares payable and/or paid him monthly through November 2013. Related to the forgiveness of the BOD fees for 2013, the Company cancelled related stock payable to him, recorded $5,917 receivable for the stock due back from him, and recorded the $27,500 as contribution to Additional Paid in Capital. During the three months ended March 31, 2014, Mr. Pitzner returned 14,406 shares, or $1,383 of $5,917.

On February 23, 2013, the Company declared a bonus payable for the years ended 2012 for certain employees, service providers, and consultants. As part of this bonus, Mr. Pitzner was awarded restricted shares of common stock with $73,000 fair market value. The shares were issued to Mr. Pitzner during the three months ended March 31, 2013.

Equity based compensation to employee – During November 2013, Alexander F. Purdon, an employee of the Company, exceeded 10% ownership whereby he was reclassified to related party. The Company pays Mr. Purdon’s employment compensation in restricted shares of stock in lieu of cash. The number of shares paid is based on the weighted average price per share during the months the services were rendered. For the three months ended March 31, 2014 and 2013, stock based compensation to Mr. Purdon was $13,500 and $9,000, respectively. In addition, of the $129,500 employee bonuses declared payable for 2012 year end, which is payable in stock or cash to be determined by the Board of Directors, Mr. Purdon is due $17,500. Further, of 61,852 total shares of common stock attributable to incentive retention bonuses declared by the Board of Directors in 2012, which vested as of May 2013, Mr. Purdon is payable 1,852 shares of stock, which were valued at $2,250. These shares are included in shares payable on the statement of stockholders’ deficit.

Patent purchase agreements – In the first quarter of 2010, the Carleigh Rae Corporation (herein referred to as “CRC”), an entity that the Company’s Chief Executive Officer has an ownership interest, transferred ownership rights to the Company of patents previously subject to Non-Exclusive License Agreements. Effective September 24, 2010, the Company finalized and executed terms of the purchase from CRC for payment of $25,500 and nominal shares of the Company’s common stock. In addition, the principals of CRC were entitled to a percentage of future sales amounting to $8,250 of products the Company is to receive in conjunction with two patent infringement lawsuits settled in the third quarter of 2010. See Other liabilities and accrued interest– related parties below for inclusion of $6,017 remaining from the original $8,250 liability due the Principals of CRC. By acquiring the IP the Company (i) has an opportunity to further develop the IP, (ii) has the ability to incorporate the IP into current and future products, and (iii) has the opportunity to license the IP to third parties.

Other liabilities and accrued interest– related parties

Other liabilities and accrued interest– related parties consists of the following at:

	March 31, 2014		December 31, 2013
Year-end 2012 bonus payable to Chief Executive Officer	$	67,000	$	67,000
Year-end 2012 bonus payable to employee		17,500		17,500
Accrued interest on note payable non-employee Board of Director		3,004		—
Due to Principals of Carleigh Rae Corp., net		6,017		6,017
	$	93,521	$	90,517

Restricted common stock issued for personal guarantee – On April 21, 2011, the Company granted Robert Carmichael, the Chief Executive Officer, 14,815 shares of restricted common stock in consideration of personal guarantees he provided to secure restatement and consolidation of the first and second mortgages of the Company. The restrictions on the common stock expired 50% on April 20, 2012, and 50% on April 20, 2013, since Mr. Carmichael continued his full time employment with the Company. The company valued the stock at determined fair market value per share on the date of the transaction and has recorded $1,000,000 of compensation expense to Mr. Carmichael ratably over the two-year term in which the restrictions expired. The unearned balance of the compensation was recorded as prepaid compensation as a component of shareholders’ deficit. For the three months ended March 31, 2014 and 2013, the Company recognized $0 and $125,001, respectively, as amortization of prepaid compensation under this agreement. Compensation remaining under this agreement as of March 31, 2014, and December 31, 2013, was $0.

Stock options outstanding from patent purchase

Effective March 3, 2009, the Company entered into a Patent Purchase Agreement with Robert M. Carmichael, the Chief Executive Officer of the Company. The Company purchased several patents it had previously been paying royalties on and several related unissued patents. In exchange for the Intellectual Property (“IP), the Company issued Mr. Carmichael 234 stock options (adjusted for 1 –for 1,350 reverse stock split) at a $1,350 exercise price with expiration ten years from the effective date of grant, or March 2, 2019. None of the options have been exercised to-date.

XML

ASSET PURCHASE

3 Months Ended

Mar. 31, 2014

Asset Purchase [Abstract]

Asset Purchase [Text Block]

8. ASSET PURCHASE

On February 3, 2012, the Company entered into an asset purchase agreement with Florida Dive Industries, Inc. (“Seller”). On March 5, 2012, the same parties executed an amendment (“Amendment”) to the agreement (collectively, the “Agreement”). Under the terms of the Agreement, the Company acquired certain diving and related inventory, and Seller provided a three year non-compete agreement within a 10-mile wide radius. In addition, the Company assumed a commercial lease obligation for a retail dive store in Boca Raton, Florida beginning in April 1, 2012. The lease was automatically renewable on an annual basis through May 31, 2014, with 90 days written notice assuming the Lessee was in compliance with all terms of the lease. On May 31, 2013, the Company closed the dive store and vacated the premises. The $3,200 lease deposit was returned during the year ended December 31, 2013. As of March 31, 2014, the Company had paid Seller $9,643 toward the $22,500 cash purchase price leaving a balance of $12,857 included in other liabilities.

XML

OTHER LIABILITIES

3 Months Ended

Mar. 31, 2014

Other Liabilities Disclosure [Abstract]

Other Liabilities Disclosure [Text Block]

10. OTHER LIABILITIES

Other liabilities of $250,521 at March 31, 2014, consists of $235,000 short-term loans, $12,857 payable for assets purchased pursuant to Asset Purchase Agreement (Note 8. ASSET PURCHASE), and $2,664 on-line training liability. The $235,000 short-term loans is comprised of three loans due on demand from unrelated parties. The loans have no other stated terms except one for $200,000 indicated it was for settlement of debenture debt. Therefore, the Company used the proceeds from that loan toward settlement of convertible debentures referenced in (13) of Note 12. CONVERTIBLE DEBENTURES.

Other liabilities of $252,009 at December 31, 2013, consists of $235,000 short-term loans, $12,857 payable for assets purchased pursuant to Asset Purchase Agreement (Note 8. ASSET PURCHASE), $3,169 on-line training liability, and $983 other liabilities. The $235,000 short-term loans is comprised of three loans due on demand from unrelated parties. The loans have no other stated terms except one for $200,000 indicated it was for settlement of debenture debt. Therefore, the Company used the proceeds from that loan toward settlement of convertible debentures referenced in (13) of Note 12. CONVERTIBLE DEBENTURES.

On-line training certificates are included with all hookah units sold. The training certificates entitle the holder to an on-line interactive course at no additional charge to the holder. The number of on-line training certificates issued per unit is the same as the number of divers the unit as sold is designed to accommodate (i.e., a three diver unit configuration comes with three on-line training certificates). The certificates have eighteen-month redemption from the time customer purchases the unit before expiration. The Company owes the on-line training vendor an agreed upon negotiated rate for on-line certificates redeemed prior to expiration, and payment is due upon redemption. The Company estimates the on-line training liability based on the historical redemption rate of approximately 10%. The Company continues to monitor and maintain a reserve for certificate redemption that approximates the historical redemption rate.

XML

EQUITY INCENTIVE PLAN (Details Textual)	0 Months Ended		1 Months Ended
	Oct. 30, 2013	Mar. 03, 2009	Nov. 30, 2012	Aug. 22, 2007
Equity Incentive Plan [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period				297
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	1,802,565	234	5,185	75
Employee Stock Option Plan Term				10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number				297

XML

STRATEGIC ALLIANCE AGREEMENT (Details Textual) (USD $)	3 Months Ended			0 Months Ended	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2013 Precision Paddleboards Inc [Member]	Apr. 10, 2012 Restricted Stock [Member]	Mar. 31, 2014 Restricted Stock [Member]
Strategic Alliance Agreement [Line Items]
Stock for equity investment				$ 24,000
Stock for equity investment (in shares)				494
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price				$ 0.036
Total operating expenses	$ 180,346	$ 577,273	$ 6,000		$ 83,333
Strategic Alliance Agreement Description	none of the 494 shares have been paid out and are reflected in shares payable balance on the Statement of Stockholders’ Deficit and the Balance Sheet

XML

CHANGE IN CAPITAL STRUCTURE (Details Textual) (USD $)	0 Months Ended
	Jul. 15, 2013	Mar. 03, 2009	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Feb. 22, 2012
Change In Capital Structure [Line Items]
Increase In Common Stock Shares Authorized						$ 250,000,000
Common stock, shares authorized			5,000,000,000	5,000,000,000	5,000,000,000	5,000,000,000
Decrease In Common Stock Par Or Stated Value Per Share (in dollars per share)						$ 0.001
Common stock, par value (in dollars per share)			$ 0.0001	$ 0.0001		$ 0.0001
Stockholders Equity, Reverse Stock Split	1 -for- 1,350	1 for 1,350

XML

NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2014

Notes Payable Disclosure [Abstract]

Schedule Of Notes Payable [Table Text Block]

Notes payable consists of the following as of March 31, 2014:

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.	$	12,229
Less amounts due within one year		12,229
Long-term portion of notes payable	$	—

Notes payable consists of the following as of December 31, 2013:

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

Schedule Of Principal Payments On Notes Payable [Table Text Block]

As of March 31, 2014, principal payments on the notes payable are as follows:

2014	$	12,229
2015		—
2016		—
2017		—
2018		—
Thereafter		—
	$	12,229

XML

NOTES PAYABLE (Details 1) (Notes Payable [Member], USD $)	Mar. 31, 2014
Notes Payable [Member]
Long-term Debt, by Category, Current and Noncurrent [Line Items]
2014	$ 12,229
2015	0
2016	0
2017	0
2018	0
Thereafter	0
Notes Payable	$ 12,229

XML

AUTHORIZATION OF PREFERRED STOCK

3 Months Ended

Mar. 31, 2014

Disclosure Text Block Supplement [Abstract]

Preferred Stock [Text Block]

15. AUTHORIZATION OF PREFERRED STOCK

During the second quarter of 2010, the holder of the majority of the Company’s outstanding shares of common stock approved an amendment to the Company’s Articles of Incorporation authorizing the issuance of 10,000,000 shares of preferred stock. The preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by our Board of Directors of the Company from time to time in accordance with the provisions of Chapter 78 of the Nevada Revised Statutes. Before modification, the existing Articles of Incorporation did not authorize the issuance of shares of preferred stock. The Company authorized the preferred stock for the purpose of added flexibility in seeking capital and potential acquisition targets.  The amendment authorizing the issuance of shares of preferred stock grants the Board authority, without further action by our stockholders, to designate and issue preferred stock in one or more series and to designate certain rights, preferences and restrictions of each series, any or all of which may be greater than the rights of the common stock. As of March 31, 2014, and December 31, 2013, the 425,000 shares of preferred stock are owned by the Company’s Chief Executive Officer. The preferred shares have 250 to 1 voting rights over the common stock, and are convertible into 31,481 shares of common stock. The preferred stock votes with the Company’s common stock, except as otherwise required under Nevada law. Accordingly, Mr. Carmichael will have approximately 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.

XML

EQUITY BASED INCENTIVE/RETENTION BONUSES

3 Months Ended

Mar. 31, 2014

Equity Based Year End Bonuses and Conversion Of Board Of Directors Liability [Abstract]

Equity Based Year End Bonuses and Conversion Of Board Of Directors Liability [Text Block]

20. EQUITY BASED INCENTIVE/RETENTION BONUSES

On November 2, 2012, the Board of Directors consented to grant equity based bonuses to certain key employees and consultants as an incentive to retain their services. Stock incentive bonuses were to vest, and be paid out on May 2, 2013, contingent upon continued employment or service. The stock bonus price per share was calculated based on last closing price as reported on per the OTCBB prior to the grant date for a total of $75,100. Shares were set aside and reserved for this transaction. As disclosed in Note 7. RELATED PARTIES TRANSACTIONS, $45,000 and $2,250 of the $75,100 bonuses, or 37,038 and 1,854 shares, were awarded to the Chief Executive Officer and the related party employee, respectively. The Company accrued operating expense ratably from the time of the awards through May 2, 2013, when vested. Of the 61,852 vested shares, only 5,185 have been issued to-date. The rest are reflected in shares payable balance on the Statement of Stockholders’ Deficit and the Balance Sheet.

XML

OTHER LIABILITIES (Details Textual) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Other Liabilities [Line Items]
Other liabilities	$ 250,521	$ 252,009
Short-term Bank Loans and Notes Payable	12,857	12,857
Online Training Liability	2,664	3,169
Foreclosure Liability	235,000	235,000
Online Training Liability Historical Redemption Rate		10.00%
Proceeds Towards Settlement Of Convertible Debentures	200,000	200,000
Short-term Debt	235,000	235,000
Miscellaneous Liabilities		$ 983

XML

OTHER ASSETS (Details Textual) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Other Assets [Line Items]
Other Assets, Noncurrent	$ 27,635	$ 27,635
Refundable Deposits Assets Noncurrent	2,895	2,895
Pompano Dive Center Llc [Member]
Other Assets [Line Items]
Other Assets, Noncurrent	$ 24,740	$ 24,740

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (USD $)	Total	Common Stock [Member]	Preferred Stock [Member]	Common Stock Payable [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
Balance at Dec. 31, 2013	$ (598,626)	$ 567	$ 425	$ 20	$ 8,478,092	$ (9,077,730)
Balance (in shares) at Dec. 31, 2013		5,672,051	425,000	195,610
Conversion of employee compensation payable for first quarter of 2014 to stock	13,500	122	0	0	13,378	0
Conversion of employee compensation payable for first quarter of 2014 to stock (in shares)		1,223,977	0	0
Conversion of accrued interest on convertible debentures to stock	1,700	31	0	0	1,669	0
Conversion of accrued interest on convertible debentures to stock (in shares)		307,224	0	0
Conversion of convertible debentures to stock	10,110	224	0	0	9,886	0
Conversion of convertible debentures to stock (in shares)		2,239,007	0	0
Retirement of shares returned by non-employee Board of Director	(1,383)	(1)	0	0	(1,382)	0
Retirement of shares returned by non-employee Board of Director (in shares)		(14,406)	0	0
Net loss	(38,399)	0	0	0	0	(38,399)
Balance at Mar. 31, 2014	$ (613,098)	$ 943	$ 425	$ 20	$ 8,501,643	$ (9,116,129)
Balance (in shares) at Mar. 31, 2014		9,427,853	425,000	195,610

XML

FURNITURE, FIXTURES, AND EQUIPMENT

3 Months Ended

Mar. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

4. FURNITURE, FIXTURES, AND EQUIPMENT

Furniture, fixtures, and equipment consists of the following as of:

	March 31, 2014		December 31, 2013
Furniture, fixtures, vehicles and equipment	$	204,896	$	204,896
Less: accumulated depreciation and amortization		(134,233)		(128,631)
	$	70,663	$	76,265

XML

INCOME TAXES (Details 2)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Tax [Line Items]
Statutory tax rate	0.00%	0.00%
Increase (decrease) in rates resulting from:
Net operating loss carryforward or carryback	(31.00%)	(7.00%)
Equity based compensation and loss	0.00%	7.00%
Book/tax depreciation and amortization differences	0.00%	0.00%
Change in valuation allowance	31.00%	0.00%
Other	0.00%	0.00%
Effective tax rate	0.00%	0.00%

XML

STRATEGIC ALLIANCE AGREEMENT

3 Months Ended

Mar. 31, 2014

Strategic Alliance Agreement [Abstract]

Strategic Alliance Agreement [Text Block]

21. STRATEGIC ALLIANCE AGREEMENT

On April 10, 2012, the Company entered into a strategic alliance agreement with Precision Paddleboards, Inc. The agreement provides for 12 month exclusivity granted for $24,000 in one year restricted stock, or 494 shares. Price per share was calculated as the weighted average per share for 30 days preceding the agreement or $.036 per share. The Company recognized the operating expense ratably over the twelve month vesting term with corresponding entry to shares payable. For the three months ended March 31, 2013 the Company recognized $6,000 operating expense under the agreement. As of March 31, 2014, none of the 494 shares have been paid out and are reflected in shares payable balance on the Statement of Stockholders’ Deficit and the Balance Sheet.

XML

INVENTORY (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Inventory [Line Items]
Raw materials	$ 318,484	$ 317,187
Work in process	0	0
Finished goods	428,409	418,739
Inventory	$ 746,893	$ 735,926

XML

INCOME TAXES

3 Months Ended

Mar. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

14. INCOME TAXES

The components of the provision for income tax expense are as follows for the three months ended:

	March  31, 2014		March 31, 2013
Current taxes
Federal	$	—	$	—
State		—		—
Current taxes		—		—
Change in deferred taxes		(11,730)		(5,567)
Change in valuation allowance		11,774		9,350
Provision for income tax expense	$	44	$	3,783

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at March 31, 2014:

Deferred tax assets:
Equity based compensation	$	97,276
Allowance for doubtful accounts		13,260
Net operating loss carryforward		1,136,206
On-line training certificate reserve		932
Total deferred tax assets		1,247,674
Valuation allowance		(1,245,111)
Deferred tax assets net of valuation allowance		2,563
Less deferred tax assets – non-current, net of valuation allowance		2,330
Deferred tax assets – current, net of valuation allowance	$	233

The effective tax rate used for calculation of the deferred taxes as of March 31, 2014 was 34%. The Company has established a valuation allowance against deferred tax assets of $1,245,111 or 99.8%, due to the uncertainty regarding realization, comprised primarily of a 100% reserve against the net operating carryforward, 100% reserve against the allowance for doubtful accounts, and 97% reserve against the deferred tax assets attributable to the equity based compensation.

The significant differences between the statutory tax rate and the effective tax rates for the Company for the three months ended are as follows:

	March 31, 2014			March 31, 2013
Statutory tax rate		—	%		—	%
Increase (decrease) in rates resulting from:
Net operating loss carryforward or carryback		(31)	%		(7)	%
Equity based compensation and loss		—	%		7	%
Book/tax depreciation and amortization differences		—	%		—	%
Change in valuation allowance		31	%		—	%
Other		—	%		—	%
Effective tax rate		—	%		—	%

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at December 31, 2013:

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

The effective tax rate used for calculation of the deferred taxes as of December 31, 2013 was 34%. The Company has established a valuation allowance against deferred tax assets of $1,235,879 or 99.8%, due to the uncertainty regarding realization, comprised primarily of a 100% reserve against the net operating carryforward, 100% reserve against the allowance for doubtful accounts, and % reserve against the deferred tax assets attributable to the equity based compensation.