0001144204-07-062955.txt : 20071119 0001144204-07-062955.hdr.sgml : 20071119 20071119140332 ACCESSION NUMBER: 0001144204-07-062955 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070930 FILED AS OF DATE: 20071119 DATE AS OF CHANGE: 20071119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Brownie's Marine Group, Inc CENTRAL INDEX KEY: 0001166708 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 300024898 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 333-99393 FILM NUMBER: 071255757 BUSINESS ADDRESS: STREET 1: 940 N.W. 1 STREET CITY: FT. LAUDERDALE STATE: FL ZIP: 33311 BUSINESS PHONE: 954-462-5570 MAIL ADDRESS: STREET 1: 940 N.W. 1 STREET CITY: FT. LAUDERDALE STATE: FL ZIP: 33311 FORMER COMPANY: FORMER CONFORMED NAME: UNITED COMPANIES CORP DATE OF NAME CHANGE: 20020207 10QSB 1 v092372_10qsb.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-QSB

(MARK ONE)

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

For the quarterly period ended September 30, 2007

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. 000-28321

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. 1^st Street, Fort Lauderdale, Florida	33311
(Address of Principal Executive Offices)	(Zip Code)

(954) 462-5570

(Issuer’s Telephone Number, Including Area Code)

United Companies Corporaton

(Former Name, if Changed Since Last Report)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

There were 1,658,357 shares of common stock outstanding as of October 28, 2007.

PART I

ITEM 1. FINANCIAL STATEMENTS

Financial Information

BROWNIE'S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2007

(UNAUDITED)

ASSETS

Current assets
Cash	$	66,392
Accounts receivable, net of $35,000 allowance for doubtful accounts		58,786
Inventory		629,523
Prepaid expenses and other current assets		57,902
Deferred tax asset, net - current		15,824
Total current assets		828,427

Property, plant and equipment, net		1,221,070

Deferred tax asset, net - non-current		28,387
Other assets		6,968

Total assets	$	2,084,852

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable and accrued liabilities	$	418,217
Customer deposits		31,227
Royalties payable - related parties		23,300
Other liabilities - related parties		110,351
Other liabilities		1,852
Notes payable - current portion		46,201
Notes payable - related parties - current portion		69,314
Total current liabilities		700,462

Long-term liabilities
Notes payable - long-term portion		936,538
Notes payable - related parties - long-term portion		627,422

Total liabilities		2,264,422

Commitments and contingencies

Stockholders' deficit
Common stock; $0.1 par value; 250,000,000 shares authorized
1,658,357 shares issued and outstanding		165,836
Additional paid-in capital		675,515
Accumulated deficit		(1,020,921	)
Total stockholders' deficit		(179,570	)

Total liabilities and stockholders' deficit	$	2,084,852

See Accompanying Notes to Consolidated Financial Statements

BROWNIE'S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006

Net revenues	$	850,471		$	1,098,692		$	2,653,037		$	3,175,702

Cost of revenues		563,934			778,546			1,726,165			2,006,033

Gross profit		286,537			320,146			926,872			1,169,669

Operating expenses
Research and development costs		1,476			463			3,298			3,493
Selling, general and administrative		255,440			245,819			760,039			763,402
Total operating expenses		256,916			246,282			763,337			766,895

Income from operations		29,621			73,864			163,535			402,774

Other (income) expense
Other (income) expense		3,980			(44,863	)		(57,706	)		(129,763	)
Interest expense		34,279			16,376			91,118			55,183
Total other expense (income), net		38,259			(28,487	)		33,412			(74,580	)

Net (loss) income before provision for income taxes		(8,638	)		102,351			130,123			477,354

Provision for income tax expense		39,874			153,442			9,936			117,335

Net (loss) income	$	(48,512	)	$	(51,091	)	$	120,187		$	360,019

Basic (loss) income per common share	$	(0.03	)	$	(0.03	)	$	0.07		$	0.00
Diluted (loss) income per common share	$	(0.03	)	$	(0.03	)	$	0.07		$	0.00

Basic weighted average common
shares outstanding		1,658,357			1,556,877			1,612,425			1,499,486
Diluted weighted average common
shares outstanding		1,814,784			1,735,449			1,812,667			1,628,180

See Accompanying Notes to Consolidated Financial Statements

BROWNIE'S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

					Additional						Total
	Common Stock				Paid-in			Accumulated			Stockholders'
	Shares		Amount		Capital			Deficit			Deficit

Balance, December 31, 2006		1,556,877	$	155,688	$	585,663		$	(1,141,108	)	$	(399,757	)

Issuance of common stock as part of
February 22, 2007 purchase of real property		44,440		4,444		95,556			—			100,000

Net Income		—		—		—			23,022			23,022


Balance, March 31, 2007 (Unaudited)		1,601,317		160,132		681,219			(1,118,086	)		(276,735	)

Redemption of warrant for common stock
pursuant to warrant dated January 1, 2005		56,894		5,689		(5,689	)		—			—

Net Income		—		—		—			145,677			145,677


Balance, June 30, 2007 (Unaudited)		1,658,211		165,821		675,530			(972,409	)		(131,058	)

Issuance of common stock to roundup
fractional shares as part of the reverse stock
split effectuated on August 22, 2007		146		15		(15	)		—			—

Net Loss		—		—		—			(48,512	)		(48,512	)

Balance, September 30, 2007 (Unaudited)		1,658,357	$	165,836	$	675,515		$	(1,020,921	)	$	(179,570	)

See Accompanying Notes to Consolidated Financial Statements

BROWNIE'S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2007			2006

Cash flows from operating activities:
Net income	$	120,187		$	360,019
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization		27,679			21,660
Stock based compensation		—			77,730
Change in deferred tax asset		679			24,206
Loan payable settlement loss		777			—
Gain on extinguishment of secured convertible debentures		—			(109,517	)
Changes in operating assets and liabilities:
Change in accounts receivable, net		(152,455	)		(10,703	)
Change in inventory		(48,094	)		(114,289	)
Change in prepaid expenses and other current assets		3,538			(40,045	)
Change in accounts payable and accrued liabilities		85,118			(151,092	)
Change in lease payable - related party		—			(18,950	)
Change in customer deposits		(52,214	)		(55,600	)
Change in billings in excess of costs and estimated
earnings on uncompleted contract		—			38,371
Change in other liabilities		(41,308	)		11,025
Change in income taxes payable		(11,029	)		93,129
Change in royalties payable - related parties		14,849			(8,526	)
Net cash (used in) provided by operating activities		(52,273	)		117,418

Cash flows from investing activities:
Purchase of fixed assets		(1,118,363	)		(4,587	)
Net cash used in investing activities		(1,118,363	)		(4,587	)

Cash flows from financing activities:
Proceeds from borrowings on notes payable - related parties		100,000			—
Proceeds from borrowings on loan payable		—			266,000
Proceeds from borrowings on notes payable		1,000,000			—
Principal payments on notes payable - related parties		(40,593	)		(23,517	)
Principal payments on notes payable		(30,566	)		(7,425	)
Principal payments on secured convertible debentures		—			(210,500	)
Net cash provided by financing activities		1,028,841			24,558

Net change in cash		(141,795	)		137,389

Cash, beginning of period		208,187			30,345

Cash, end of period	$	66,392		$	167,734

See Accompanying Notes to Consolidated Financial Statements

BROWNIE'S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2007			2006

Supplemental disclosure of cash flow information:
Cash paid for interest	$	56,840		$	87,300

Cash paid for income taxes	$	6,237		$	—

Supplemental disclosure of non-cash investing activities
Common stock issued toward real property purchase on
February 21, 2007	$	100,000		$	—

Supplemental disclosure of non-cash financing activities
Conversion of Convertible Debenture into Stock as provided
in Stock Purchase Agreement	$	—		$	89,110

Redemption of warrant for common stock pursuant to
warrant dated Janaury 1, 2005	$	5,689		$	—

Amortization of loan fees related to Standby Equity
Distribution Agreement	$	—		$	86,205

Assumption of other liabilities - related parties
Loan payable	$	(266,000	)	$	—
Account receivable		156,426			—
Loan payable settlement loss		(777	)		—
	$	110,351		$	—

See Accompanying Notes to Consolidated Financial Statements

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES

Description of business - Brownie’s Marine Group, Inc. (formerly United Companies Corporation) (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.

Prior to August 22, 2007 the Company was known as United Companies Corporation (hereinafter referred to as “UCC”). The Company changed its name to Brownie’s Marine Group, Inc. during the third quarter of 2007 since it believes BWMG more closely reflects its line of business, and it also brings brand recognition to the Company as a result of its existing products.

The results of operations for the interim periods shown in this report are not necessarily indicative of the results to be expected for the full year. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature.

History -The Company was incorporated under the laws of Nevada on November 26, 2001, with authorized common stock of 250,000,000 shares with a par value of $0.001.

On March 23, 2004, UCC consummated an agreement to acquire all of the outstanding capital stock of Trebor Industries, Inc., dba Brownies Third Lung, in exchange for 95,000,000 shares of the Company’s common stock (“the UCC Transaction”). Prior to the UCC Transaction, UCC was a non-operating public shell company with no operations, nominal assets, accrued liabilities totaling $224,323 and 14,483,718 shares of common stock issued and outstanding; and Trebor Industries, Inc., dba Brownies Third Lung, was a manufacturer and distributor of hookah diving, and yacht based scuba air compressor and Nitrox Generation Systems from its factory in Ft. Lauderdale, Florida. The UCC Transaction is considered to be a capital transaction in substance, rather than a business combination. Inasmuch, the UCC Transaction is equivalent to the issuance of stock by Trebor Industries, Inc., dba Brownies Third Lung, for the net monetary assets of a non-operational public shell company, accompanied by a recapitalization. UCC issued 95,000,000 shares of its common stock for all of the issued and outstanding common stock of Trebor Industries, Inc., dba Brownies Third Lung. The accounting for the UCC Transaction is identical to that resulting from a reverse acquisition, except goodwill or other intangible assets will not be recorded. Accordingly, these financial statements are the historical financial statements of Trebor Industries, Inc., dba Brownies Third Lung. Trebor Industries, Inc., dba Brownies Third Lung, was incorporated in September 17, 1981. Therefore, these financial statements reflect activities from September 17, 1981 (date of Inception for Trebor Industries, Inc., dba Brownies Third Lung) and forward.

On August 22, 2007, the Company changed its name to Brownie’s Marine Group as discussed above.

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 2006 financial statement amounts to conform to the 2007 financial statement presentation.

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)

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.

Inventory - Inventory is stated at the lower of cost or market. 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.

Fixed assets - Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which is primarily 3 to 5 years except for the building that is being depreciated over a life of 39 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 currently as the work is performed.

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

Advertising and marketing costs - The Company recognizes advertising expenses in accordance with Statement of Position 93-7 “Reporting on Advertising Costs.” Accordingly, the Company expenses the costs of producing advertisements at the time production occurs, and expenses the costs of communicating advertisements in the period in which the advertising space or airtime is used. Advertising and trade show expense incurred for the three and nine months ended September 30, 2007 was $4,243 and $21,126, respectively. Advertising and trade show expense incurred for the three and nine months ended September 30, 2006 was $12,597 and $33,685, respectively.

Customer deposits and return 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 has been accepted, nor return of the custom ordered product. Additionally, returns of all other merchandise are subject to a 20% restocking fee as stated on each sales invoice.

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)

Income taxes - The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Comprehensive income (loss) - The Company has no components of other comprehensive income. Accordingly, net income (loss) equals comprehensive income (loss) for all periods.

Stock-based compensation - The Company accounts for stock based compensation in accordance with Statement of Financial Accounting Standards No. 123 revised that requires that the Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period the employee is required to provide service in exchange for the award.

The Company did not issue any stock, warrants or options to employees for compensation for nine months ended September 30, 2007.

Fair value of financial instruments - The carrying amounts and estimated fair values of the Company’s financial instruments approximate their fair value due to the short-term nature.

Earnings (loss) 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 included in the computation at September 30, 2007 since their effect was dilutive.

New accounting pronouncements - In February 2007, the Financial Accounting Standards Board (“FASB”) issued Financial Accounting Statement (FAS) 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115. The Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The Company shall apply the Statement in the calendar year beginning January 1, 2008 and does not anticipate significant financial impact as a result of adoption.

In September 2006 the Security and Exchange Commission issued Staff Accounting Bulletin No. 108. The Bulletin relates to the Staff’s view regarding the process of quantifying financial statement misstatements. As it relates to the Company, financial misstatements as described in this Bulletin prior to the year ended December 31, 2007 would not require restatement but rather the cumulative effect presented as an adjustment to retained earnings at the beginning of the period. For the year ended December 31, 2007, the same type of misstatements will require restatement of the financial statements for the period. The Company is currently evaluating this Bulletin and does not anticipate significant financial impact as a result of adopting the guidance contained within.

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)

In September 2006, FASB issued FAS 157, Fair Value Measurements. The Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. The provisions of FAS 157 are effective for the Company on or before January 1, 2008. The provisions of this Statement shall be applied prospectively as of the date of adoption with a limited form of retrospective application to certain financial instruments that will result in cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact of FAS 157 on its financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, (“FIN 48”) which clarifies the accounting for uncertainty in tax positions. This interpretation requires the recognition of a tax position when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position. The provisions of FIN 48 are effective for the Company on January 1, 2007, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company adopted this statement without significant financial impact in the first quarter of 2007.

INVENTORY

Inventory consists of the following as of September 30, 2007:

Raw materials	$	419,781
Work in process		—
Finished goods		209,742
	$	629,523

3.	PREPAID EXPENSE AND OTHER CURRENT ASSETS

Prepaid expense and other current assets totaling $57,902 at September 30, 2007, consists of $30,964 of prepaid insurance, advertising and software maintenance expenses, $658 overpayment of estimated payments toward federal and state income taxes, and $26,280 of prepayments for inventory.

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.	PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following as of September 30, 2007:

Building and Land	$	1,218,362
Furniture, vehicles, and equipment		221,534
Leasehold improvements		7,000
		1,446,896
Less: accumulated depreciation and amortization		(225,826	)
	$	1,221,070

For the three and nine months ended September 30, 2007, depreciation expense was $8,418 and $26,629, respectively. For the three and nine months ended September 30, 2006, depreciation expense was $1,261 and $12,132, respectively

On February 21, 2007 the Company purchased the corporate headquarters, factory and distribution center of the Company located at 936/940 NW 1st Street, Ft. Lauderdale, FL 33311 from GKR Associates, Inc, an entity in which the Chief Executive Officer has an ownership interest. The purchase price was $1,200,000, and is secured by a first mortgage payable to the bank of $1,000,000, and $100,000 secured by a second mortgage payable to the seller, GKR Associates, Inc. The balance of $100,000 was paid by 4,440,000 shares of the Company’s common stock based on market price of the stock on the purchase date. In addition, $18,362 of closing expenses were capitalized to the building.

5.	CUSTOMER CREDIT CONCENTRATIONS

Sales to Brownie’s Southport Diver’s, Inc. for the three months ended September 30, 2007 and 2006 represented 16.39% and 11.46%, respectively, of total net revenues for the period. Sales to Holiday Diver Inc for the three months ended September 30, 2007 and 2006 represented 7.24% and 13.53%, respectively, of total net revenues for the period. Sales to Brownie’s Southport Diver’s Inc. for the nine months ended September 30, 2007 and 2006 represented 21.80% and 14.87% of total net revenues for the period. Sales to no other customer represented greater than 10% of net revenues for the three or nine months ended September 30, 2007 and 2006.

The brother of Robert Carmichael, the Company’s Chief Executive Officer, as further discussed in Note 6 - RELATED PARTY TRANSACTIONS, owns Brownie’s Southport Diver’s Inc.

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.	RELATED PARTY TRANSACTIONS

Notes payable - related parties - Notes payable - related parties consist of the following as of September 30, 2007:

Promissory note payable to the Chief Executive Officer of the Company,
secured by Company assets, bearing interest at 10% per annum,
due in monthly principal and interest payments of $6,047, maturing
on January 15, 2016.	$	412,002

Promissory note payable to an entity owned by the Company’s Chief
Executive Officer, 940 Associates, Inc., secured by Company assets,
bearing interest at 10% per annum, due in monthly principal and interest
payments of $2,861, maturing on January 1, 2016.		194,687

Promissory note payable due an entity in which the Company’s Chief
Executive Officer has a financial interest, GKR Associates, Inc., secured
by second mortgage on real property, bearing 6.99% interest per annum,
due in monthly principal and interest payments of $2,292, maturing on
February 15, 2012.		90,047


		696,736

Less amounts due within one year		69,314

Long-term portion of notes payable - related parties	$	627,422

As of September 30, 2007, principal payments on the notes payable - related parties are as follows:

2007	$	18,720
2008		68,243
2009		74,794
2010		81,986
2011		89,885
Thereafter		363,108
	$	696,736

Revenues - The Company sells products to two entities owned by the brother of the Company’s Chief Executive Officer, Brownie’s Southport Divers, Inc. and Brownie’s Palm Beach Divers. 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 the three months ended September 30, 2007 and 2006, was $176,722 and $169,438, respectively. Combined net revenues from these entities for the nine months ended September 30, 2007 and 2006, was $695,310 and $569,211, respectively. Accounts receivable from Brownie’s SouthPort Diver’s, Inc. and Brownie’s Palm Beach Divers at September 30, 2007, was $5,176 and $0, respectively.

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.	RELATED PARTY TRANSACTIONS (continued)

Royalties - The Company has Non-Exclusive License Agreements with the Carleigh Rae Corporation (herein referred to as “CRC”), an entity that the Company’s Chief Executive Officer has an ownership interest, to license product patents it owns. Based on the license agreements with CRC, the Company pays royalties ranging from $1.00 to $50.00 per licensed products sold, with rates increasing 5% annually. Also with CRC, the Company has a Non-Exclusive License Agreement to license a trademark of products owned by CRC. Based on the agreement, the Company will pay the entity $0.25 per licensed product sold, with rates increasing $0.05 annually.

The Company has Non-Exclusive License Agreements with 940 Associates, Inc. (herein referred to as “940A”), an entity owned by the Company’s Chief Executive Officer, to license product patents it owns. Previous license agreements in effect with 940A prior to 2005 were renegotiated and new agreements were entered into effective January 1, 2005. Under the terms of the license agreements, 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 and nine months ended September 30, 2007 was $23,337 and $72,295, respectively. Total royalty expense for the above agreements for the three and nine months ended September 30, 2006 was $11,926 and $30,078, respectively.

Other liabilities - related parties

At September 30, 2007, the following amounts were due to related parties as the result of full settlement of the loan payable due the customer as referred to in Note 8 - LOAN PAYABLE:

Due to Brownies Southport Diver's, Inc.	$	$ 29,570
Due to Robert M. Carmichael		37,500
Due to 940 Associates, Inc.		43,281

Other liabilities - related parties	$	$ 110,351

See Note 8 - LOAN PAYABLE for discussion of the settlement transaction that resulted in the above Other liabilities -.related parties.

7.	ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities of $418,217 at September 30, 2007 consists of $259,306 accounts payable trade, $60,574 balance of legal expenses that were a UCC expense prior to the reverse merger with Trebor Industries, Inc., $63,419 of accrued payroll and related fringe benefits, and $34,918 of other liabilities and accruals.

8.	LOAN PAYABLE

In June 2006, the Company borrowed $266,000 from a customer. The proceeds of the loan were used to satisfy the outstanding principal balance, redemption fees, and accrued interest totaling $266,777 due under the secured convertible debentures held by a third party lender. In July 2007, the Company settled the obligation due the customer through a series of transactions that resulted in cancellation of amounts due to and from the customer and related parties of the customer and the Company. The settlement resulted in cancellation of $156,426 of trade accounts receivable due the Company from the customer and its related parties, assumption of $110,351 of liabilities incurred by the customer due to related parties of the Company, and settlement loss of $777. See Note 6. - RELATED PARTIES for further information regarding the other liabilities - related parties.

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.	OTHER LIABILITIES

Other liabilities is comprised of $1,852 of on-line training liability at September 30, 2007. Effective July 1, 2005, the Company began including on-line training certificates 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 an eighteen-month redemption life after which time they expire. The eighteen-month life of the certificates begins at the time the customer purchases the unit. The Company owes the on-line training vendor the agreed upon negotiated rate for all on-line certificates redeemed payable at the time of redemption. For certificates that expire without redemption, no amount is due the on-line training vendor. The Company had no historical data with regard to the percentage of certificates that will be redeemed versus those that will expire. Therefore, until the Company accumulated historical data related to the certificate redemption ratio, it assumed that 100% of certificates issued with unit sales would be redeemed. Accordingly, at the time a unit was sold, the related on-line training liability was recorded. The same liability was reduced as certificates are redeemed and the related payments are made to the on-line training vendor.

For the nine months ended September 30, 2007, eight hundred eighty-four (884) certificates totaling $15,470 expired unused. Accordingly, the related liability was reversed and the amount recognized as other income during the nine months ended September 30, 2007. In addition, the Company further reduced the liability in the 2^nd quarter of 2007 by approximately $44,000 based on the historical certificate redemption rate the Company had compiled over the past 24 months. Accordingly, this amount was recognized as other income in the 2^nd quarter 2007. On a go forward basis the Company is maintaining a reserve for certificate redemption of 10% that approximates the historical redemption rate.

10.	NOTES PAYABLE

Notes payable consists of the following as of September 30, 2007:

Promissory note payable secured by a vehicle of the Company having a
carrying value of $0 at September 30, 2007, bearing interest at
10.16% per annum, due in monthly principal and interest payments of
$553, maturing on October 28, 2007.	$	548

Promissory note payable secured by a vehicle of the Company having a
carrying value of $4,711 at September 30, 2007, bearing no interest,
due in monthly principal and interest payments of $349, maturing
on November 14, 2008.		4,886

Promissory note payable secured by real property of the Company
having a carrying value of $1,202,042 at September 30, 2007, bearing
interest at 6.99% per annum, due in monthly principal and interest
payments of $9,038, maturing on January 22, 2022.		977,305

		982,739

Less amounts due within one year:		46,201
Long-term portion of notes payable	$	936,538

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.	NOTES PAYABLE (continued)

As of September 30, 2007, principal payments on the notes payable are as follows:

2007	$	11,692
2008		46,031
2009		45,238
2010		48,504
2011		52,006
Thereafter		779,268
	$	982,739

11.	REVERSE STOCK SPLIT

On August 22, 2007, the Company effectuated a 1-for-100 reverse stock split of the Common Stock whereby every one hundred shares of Common Stock outstanding was combined and reduced to one share of Common Stock. Fractional shares were rounded up and this resulted in an additional 146 shares issued.

12.	STOCK WARRANTS

As of March 31, 2007, all the rights to exercise 285,715 warrants had vested pursuant to a Warrant agreement dated January 1, 2005. The exercise price of the warrants is $.007 per share, which equaled the bid/ask price of the Company’s common stock on January 1, 2005, the effective date of the expired consulting agreement. The warrants expire twenty-four months after the vesting date of each of tranche of 71,429 at June 30, 2007, December 31, 2007, June 30, 2008, and December 31, 2008, respectively. Further, the warrants have “piggy-back” registration rights and provide for either a cash or cashless exercise. The cashless exercise provision provides for a discount in the amount of shares provided at exercise based on a formula that takes into account as one of its factors the average of the closing sale price on the common stock for five trading days immediately prior to but not including the date of exercise.

On June 27, 2007, a warrant tranche of 71,429 related to the above agreement was exercised. The cashless exercise was elected, and accordingly, 56,994 shares of common stock were issued on June 29, 2007. The Company recognized compensation expense for the stock warrants ratably over the term of the consulting agreement, January 1, 2005 to December 31, 2006, based on the fair value of the stock warrants using the Black-Scholes model. As a result, issuance of the stock in June 2007 was an equity only transaction.

On the date of the reverse stock split, the outstanding warrants underwent a 1-for-100 split as well.

BROWNIE’S MARINE GROUP, INC.

(FORMERLY UNITED COMPANIES CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.	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 400,000 shares, and no more than 100,000 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. No Options, Stock Purchase Rights or Stock Appreciation Rights were granted under the Plan for the third quarter ended September 30, 2007.

14.	INCOME TAXES

The components of the provision for income taxes for the nine months ended September 30, 2007 are as follows:

Current Taxes:
Federal	$	(6,669	)
State		(2,588	)
Current Taxes		(9,257	)
Change in deferred taxes		(14,967	)
Change in valuation allowance		14,288

Provision for income tax expense	$	9,936

The federal statutory and state tax rate for the third quarter of 2007 was 15% and 5.5%, respectively.

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at September 30, 2007:

Deferred tax assets:
Stock warrants	$	47,847
Allowance for doubtful accounts		5,250
Depreciation and amortization timing differences		5,549
On-line training certificate reserve		277
Total deferred tax assets		58,923
Valuation allowance		(14,712	)

Deferred tax assets net of valuation allowance		44,211
Less: deferred tax asset - non-current		(28,387	)

Deferred tax asset - current	$	15,824

ITEM 2. MANAGEMENT’S PLAN OF OPERATION AND DISCUSSION AND ANALYSIS

Introductory Statements

Information included or incorporated by reference in this filing may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. 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 (formerly United Companies Corporation) (referred to herein as “BWMG” or “the Company”), through its wholly owned subsidiary, Trebor Industries, Inc., d/b/a Brownie’s Third Lung, a Florida corporation, 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 does business as (dba) Brownie’s Third Lung.

Since April 16, 2004, Mr. Carmichael has served as President, Acting Principal Accounting Officer and Acting 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. Mr. Carmichael has operated Trebor as its President since 1986. He is the holder or co-holder of numerous patents that are used by Trebor and several other major players in the diving industry.

Results Of Operations For The Three Months Ended September 30, 2007, As Compared To The Three Months Ended September 30, 2006

Net revenues. For the three months ended September 30, 2007, we had net revenues of $850,471 as compared to net revenues of $1,098,692 for the three months ended September 30, 2006, a decrease of $248,221 or 22.59%. This decrease is primarily attributable to a decrease in overall sales. The Company believes this decline mirrors the decline being experienced by the dive and marine industry as a whole in 2007. The Company further believes the industry decline in sales is a result of less discretionary income available to the consumer as a result of economic conditions, including but not limited to increased fuel costs.

Cost of net revenues. For the three months ended September 30, 2007, we had cost of net revenues of $563,934 as compared with cost of net revenues of $778,546 for the three months ended September 30, 2006, a decrease of $214,612, or 27.57%. The decrease is primarily attributable to the net effect of decreased material costs of approximately $100,000 due to the decrease in sales volume, increased material costs of about $50,000 due to the sales mix and increased costs for plastics and metals, and decreased contract expenses of about $150,000. The sales mix in the third quarter of 2007 as compared to the same period in 2006 included more non-custom sales versus custom sales. Non-custom sales are more material intensive and custom sales are more labor or contract expense intensive.

Gross profit. For the three months ended September 30, 2007, we had a gross profit of $286,537 as compared to gross profit of $320,146 for the three months ended September 30, 2006, a decrease of $33,609, or 10.50%. This decrease is primarily attributable to the decrease in net revenues and cost of net revenues for the three months ended September 30, 2007 as compared to the same period in 2006.

Operating expenses. For the three months ended September 30, 2007, we had total operating expenses of $256,916 as compared to total operating expenses of $246,282 for the three months ended September 30, 2006, an increase of $10,634, or 4.32%. No particular individual net items made up this variance, but rather numerous net changes.

Other expense (income), net. For the three months ended September 30, 2007, we had other expense of $38,259 as compared to other income of $28,487 for the three months ended September 30, 2006, an increase in other expense of $66,746, or 234.30%. The largest components of the increase in other expense are an increase in interest expense of approximately $18,000 primarily due to the new mortgages on the real estate purchased in 2007, approximately $35,000 cancellation of debt recorded as other income in the third quarter of 2006 not occurring in the third quarter of 2007, and approximately $6,000 other expense for an insurance sales premium adjustment in the third quarter of 2007.

Provision for income tax expense. For the three months ended September 30, 2007, we had provision for income tax expense of $39,874, as compared to $153,442 for the three months ended September 30, 2006, a decrease of $113,568, or 74.01%. The decrease in the tax expense is primarily attributable to changes in the deferred tax assets as well as an adjustment in the third quarter of 2006 for higher than estimated 2006 net income.

Net loss. For the three months ended September 30, 2007, we had net loss of $48,512, as compared to net loss of $51,091 for the three months ended September 30, 2006, a decrease in net loss of $2,579 or 5.05%. The net decrease is attributable to the decrease in gross profit of $33,609, the increase in operating expenses of $10,634, the increase in other expenses of $66,746, and the decrease in the provision for income tax expense of $113,568.

Results Of Operations For The Nine Months Ended September 30, 2007, As Compared To The Nine Months Ended September 30, 2006

Net revenues. For the nine months ended September 30, 2007, we had net revenues of $2,653,037 as compared to net revenues of $3,175,702 for the nine months ended September 30, 2006, a decrease of $522,665, or 16.46%. This decrease is primarily attributable to an overall decrease in sales for all product categories. The Company believes this decline mirrors the decline being experienced by the dive and marine industry as a whole in 2007. The Company further believes the industry decline in sales is a result of less discretionary income available to the consumer as a result of economic conditions, including but not limited to increased fuel costs.

Cost of net revenues. For the nine months ended September 30, 2007, we had cost of net revenues of $1,726,165 as compared with cost of net revenues of $2,006,033 for the nine months ended September 30, 2006, a decrease of $279,868, or 13.95%. Cost of revenues was down during the nine months ended September 30, 2007 over the same period in 2006 consistent with the decrease in sales volume. While net revenue decreased, the cost of material increased approximately 16,000, or 1.5%, mainly as a result of the sales mix and increased costs for plastics and metals. Contract and direct labor costs decreased approximately $300,000 primarily due to the sales mix. The sales mix for the nine months ended September 2007 as compared to the same period in 2006 included more non-custom sales versus custom sales. Non-custom sales are more material intensive and custom sales are more labor or contract expense intensive.

Gross profit. For the nine months ended September 30, 2007, we had a gross profit of $926,872 as compared to gross profit of $1,169,669 for the nine months ended September 30, 2006, a decrease of $242,797, or 20.76%. This decrease is primarily attributable to the decrease in net revenues for the nine months ended September 30, 2007 as compared to the same period in 2006 reduced by the lesser percentage decrease in cost of net revenues.

Operating expenses. For the nine months ended September 30, 2007, we had total operating expenses of $763,337 as compared to total operating expenses of $766,895 for the nine months ended September 30, 2006, a decrease of $3,558, or less than 1%.

Other expense (income), net. For the nine months ended September 30, 2007, we had other expense of $33,412 as compared to other income of $74,580 for the nine months ended September 30, 2006, an increase in other expenses of $107,992, or 144.80%. The increase in other expense primarily relates to the approximately $110,000 gain on the extinguishments of the secured convertible debentures recognized in the second quarter of 2006 with no corresponding income recognition item during the nine months ended September 30, 2007.

Provision for income tax expense. For the nine months ended September 30, 2007, we had provision for income tax expense of $9,936 as compared to $117,335 for the nine months ended September 30, 2006, a decrease of $107,399 or 91.53%. The decrease in tax expense is primarily attributable to a change in estimate related to the deferred tax assets associated with the redemption of the stock warrants as well as lower net income for the nine months ended September 30, 2007 as compared to the same period in 2006.

Net Income. For the nine months ended September 30, 2007, we had net income of $120,187 as compared to $360,019 for the nine months ended September 30, 2006, a decrease of $239,832, or 66.62%. The net decrease is primarily attributable to the decrease in gross profit, and the decrease in other income.

Liquidity And Capital Resources

As of September 30, 2007, we had cash and other current assets of $828,427 and current liabilities of $700,462, or a current ratio of 1.18%.

The Company anticipates that cash generated from operations should be sufficient to satisfy the Company’s contemplated requirements for it current operations for at least the next twelve months. The Company does not anticipate any significant purchases of equipment during fiscal year 2007. The number and level of employees at September 30, 2007 is deemed adequate to maintain the Company's operations for at least the next 12 months.

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 occur, 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 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.

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 inventory 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 products in the Brownie’s Third Lung and Brownie’s Tank Fill lines depend largely upon a number of factors related to consumer spending, including future economic conditions affecting disposable consumer income such as employment, business conditions, tax rates, and interest rates. In addition our opportunities are highly dependent upon the level of consumer spending on recreational marine accessories and dive gear, discretionary spending items. There can be no assurance that consumer spending in general will not decline, thereby adversely affecting our growth, net sales and profitability or that our business will not be adversely affected by future downturns in the economy, boating industry, or dive industry. If consumer spending on recreational marine accessories and dive gear declines, we could be forced to curtail or cease 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.

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. CONTROLS AND PROCEDURES

Evaluation Of Disclosure Controls And Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s Principal Executive Officer/Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving the Company’s disclosure control objectives. The Company’s Principal Executive Officer/Principal Accounting Officer has concluded that the Company’s disclosure controls and procedures are, in fact, effective at this reasonable assurance level as of the end of period covered by this report.

Changes In Internal Controls

During the period covered by this report there were no changes in our internal controls or in other factors that could significantly affect those controls since the most recent evaluation of such controls.

PART II

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

On February 22, 2007, the Company issued 44,440 shares of restricted common stock to GKR Associates, LLC, a related party, representing $100,000 toward the $1,200,000 total contract purchase price of real property. Notice of this transaction was provided on Form 8-K filed with the Securities and Exchange Commission on March 23, 2007.

On June 29, 2007, pursuant to a warrant dated January 1, 2005, the Company issued 56,894 shares of restricted common stock. The issuance represented a cashless exercise of a warrant tranche of 71,429 shares, or redemption of 25% of the warrant tranches outstanding.

The Company believes that all transactions were transactions not involving any public offering within the meaning of Section 4(2) of the Securities Act of 1933, since (a) each of the transactions involved the offering of such securities to a substantially limited number of persons; (b) each person took the securities as an investment for his own account and not with a view to distribution; (c) each person had access to information equivalent to that which would be included in a registration statement on the applicable form under the Act; (d) each person had knowledge and experience in business and financial matters to understand the merits and risk of the investment; therefore no registration statement need be in effect prior to such issuances.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At a meeting of the Board of Directors held on July 18, 2007, all the members of the Company’s Board of Directors approved and recommended the proposals below:

1. Electing Robert Carmichael to serve as the sole member to the Company’s Board of Directors to hold office until the Company’s annual meeting of stockholders to be held in 2008 and until his successor is duly elected and qualified;

2. Ratifying the appointment of L.L. Bradford & Company, LLC, as independent auditors of the Company for the fiscal year ending December 31, 2007;

3. Approval to amend the Company's articles of incorporation to change the Company's name to Brownie's Marine Group, Inc.;

4. Approving the Company to amend its Articles of Incorporation to effect up to a 1-for-100 reverse stock split of the Common Stock whereby every one hundred shares of Common Stock outstanding was combined and reduced to one share of Common Stock; and

5. Approving the adoption and implementation of a stock option plan reserving of up to Four Hundred Thousand (400,000) shares of Common Stock pursuant to incentive stock options or nonqualified stock options, stock purchase rights, stock appreciation rights and restricted and unrestricted stock awards for employees, directors and consultants.

The Company’s stockholders holding a 61% of the voting power of the Company approved the proposals, pursuant to a written consent dated July 18, 2007. In lieu of an annual meeting the Company delivered an information statement to its record shareholders at July 26, 2007 describing the proposals. The effective date of the proposals was on August 22, 2007. If the proposals were not adopted by written consent, such proposals would have been required to be considered by the Company’s stockholders at a special or annual stockholders’ meeting convened for the specific purpose of approving the proposals.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

EXHIBIT NO.	DESCRIPTION	LOCATION
2.2	Merger Agreement, dated June 18, 2002 by and among United Companies Corporation, Merger Co., Inc. and Avid Sportswear & Golf Corp.	Incorporated by reference to Exhibit 2.02 Amendment No. 1 to Form S-4 filed June 24, 2002

2.3	Articles of Merger of Avid Sportswear & Golf Corp. with and into Merger Co., Inc.	Incorporated by reference to Exhibit 2.03 Amendment No. 1 to Form S-4 filed June 24, 2002

3.1	Articles of Incorporation	Incorporated by reference to Exhibit 3.05 Amendment No. 1 to Form S-4 filed June 24, 2002

3.2	Articles of Amendment	Incorporated by reference to the appendix to the Company's Definitive Information Statement on Schedule 14C filed July 31, 2007

3.2	Bylaws	Incorporated by reference to Exhibit 3.04 to the Registration Statement on Form 10-SB

5.1	2007 Stock Option Plan	Incorporated by reference to the appendix to the Company's Definitive Information Statement on Schedule 14C filed July 31, 2007

10.1	Share Exchange Agreement, dated March 23, 2004 by and among the Company, Trebor Industries, Inc. and Robert Carmichael	Incorporated by reference to Exhibit 16.1 to Current Report on From 8-K filed April 9, 2004

10.2	Two Year Consulting Agreement with Jeff Morris effective January 1, 2005 for Manage-ment and Strategic Services and Warrants issued in conjunction with the same.	Incorporated by reference to Exhibit 10.14 to Current Report on Form 8-K filed on March 11, 2005.

10.3	Non-Exclusive License Agreement - BC Keel Trademark	Incorporated by reference to Exhibit 10.18 to United Companies Corporation's 10QSB for the quarter ended June 30, 2005 filed August 15, 2005.

10.4	Non-Exclusive License Agreement - Buoyancy Compensator (and Dive Belt) Weight System	Incorporated by reference to Exhibit 10.18 to United Companies Corporation's 10QSB for the quarter ended June 30, 2005 filed August 15, 2005.

10.5	Exclusive License Agreement - Brownie's Third Lung, Brownie's Public Safety, Tankfill, and Related Trademarks and Copyrights	Incorporated by reference to Exhibit 10.18 to United Companies Corporation's 10QSB for the quarter ended June 30, 2005 filed August 15, 2005.

10.6	Non-Exclusive License Agreement - Drop Weight Dive Belt	Incorporated by reference to Exhibit 10.18 to United Companies Corporation's 10QSB for the quarter ended June 30, 2005 filed August 15, 2005.

10.7	Non-Exclusive License Agreement - Garment Integrated or Garment Attachable Flotation Aid and/or PFD	Incorporated by reference to Exhibit 10.18 to United Companies Corporation's 10QSB for the quarter ended June 30, 2005 filed August 15, 2005.

EXHIBIT NO.	DESCRIPTION	LOCATION
10.8	Non-Exclusive License Agreement - Inflatable Dive Market and Collection Bag	Incorporated by reference to Exhibit 10.18 to United Companies Corporation's 10QSB for the quarter ended June 30, 2005 filed August 15, 2005.
10.9	Non-Exclusive License Agreement - SHERPA Trademark and Inflatable Flotation Aid/Signal Device Technology	Incorporated by reference to Exhibit 10.18 to United Companies Corporation's 10QSB for the quarter ended June 30, 2005 filed August 15, 2005.
10.10	Non-Exclusive License Agreement - Tank- Mounted Weight, BC or PFD-Mounted Trim Weight or Trim Weight Holding System	Incorporated by reference to Exhibit 10.18 to United Companies Corporation's 10QSB for the quarter ended June 30, 2005 filed August 15, 2005.
10.11	Exclusive License Agreement - Brownie’s Third Lung and Related Trademarks and Copyright	Incorporated by reference to Exhibit 10.26 to United Companies Corporation’s 10KSB for the year ended December 31, 2006.
10.12	Redemption Agreement - Cornell Capital Partner’s, LP Secured Convertible Debentures	Incorporated by reference to Form 8K filed on June 2, 2006

10.13	Agreement for Purchase and Sale of Property Between Trebor Industries, Inc. and GKR Associates, Inc. dated February 21, 2007	Incorporated by reference to Exhibit 10.28 to United Companies Corporation’s 10KSB for the year ended December 31, 2006.

10.14	First Mortgage dated February 22, 2007 between Trebor Industries, Inc. and Colonial Bank	Incorporated by reference to Exhibit 10.29 to United Companies Corporation’s 10KSB for the year ended December 31, 2006.

10.15	Note dated February 22, 2007 payable to GKR Associates, Inc.	Incorporated by reference to Exhibit 10.30 to United Companies Corporation’s 10KSB for the year ended December 31, 2006.

10.16	Second Mortgage dated February 22, 2007 between Trebor Industries, Inc. and GKR Associates, LLC	Incorporated by reference to Exhibit 10.31 to United Companies Corporation’s 10KSB for the year ended December 31, 2006.

10.17	Promissory Note dated January 1, 2007 payable to Robert M. Carmichael	Incorporated by reference to Exhibit 10.32 to United Companies Corporation’s 10KSB for the year ended December 31, 2006.

10.18	Promissory Note dated January 1, 2007 Payable to 940 Associates, Inc.	Incorporated by reference to Exhibit 10.33 to United Companies Corporation’s 10KSB for the year ended December 31, 2006.

10.19	Purchase and Sale Agreement with GKR Associates, LLC	Incorporated by reference to Form 8K filed on March 23, 2007.

31.1	Certification Pursuant to Section 3.02	Provided herewith

31.2	Certification Pursuant to Section 3.02	Provided herewith

32.1	Certification Pursuant to Section 1350	Provided herewith

32.2	Certification Pursuant to Section 1350	Provided herewith

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BROWNIE’S MARINE GROUP, INC.

Date: November 19, 2007	By:	/s/ Robert M. Carmichael
		Robert M. Carmichael
		President, Chief Executive Officer, Chief Financial Officer/ Principal Accounting Officer

EX-31.1 2 v092372_ex31-1.htm Unassociated Document

EXHIBIT 31.1

OFFICER’S CERTIFICATE

PURSUANT TO SECTION 302*

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

1. I have reviewed this form 10-QSB for the quarter ended September 30, 2007, 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)) for the small business 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) Omitted;

(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: November 19, 2007	By:	/s/ Robert M. Carmichael
		Name: Robert M. Carmichael
		Title: Chief Executive Officer

*The introductory portion of paragraph 4 of the Section 302 certification that refers to the certifying officers’ responsibility for establishing and maintaining internal control over financial reporting for the company, as well as paragraph 4(b), have been omitted in accordance with Release Nos. 33-8618 and 34-52492 (March 22, 2005) because the compliance period has been extended for small business issuers.

EX-31.2 3 v092372_ex31-2.htm Unassociated Document

EXHIBIT 31.2

OFFICER’S CERTIFICATE

PURSUANT TO SECTION 302*

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

1. I have reviewed this form 10-QSB for the quarter ended September 30, 2007, of Brownie’s Marine Group, Inc.;

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)) for the small business issuer and have:

(b) Omitted;

(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: November 19, 2007	By:	/s/ Robert M. Carmichael
		Name: Robert M. Carmichael
		Title: Chief Financial Officer

EX-32.1 4 v092372_ex32-1.htm Unassociated Document

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-QSB for the quarter ended September 30, 2007 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: November 19, 2007	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 5 v092372_ex32-2.htm Unassociated Document

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

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: November 19, 2007	By:	/s/ Robert M. Carmichael
		Name: Robert M. Carmichael
		Title: Chief Financial Officer