**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 **June
      30, 2006**




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**


UNITEDCOMPANIESCORPORATION


(Name
      of
      Small Business Issuer in Its Charter)





**Nevada**
            **88-0374969**(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)




A VID S PORTSWEAR &
        G OLF C ORP .


(Former
      Name)




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 155,687,722 shares of common stock outstanding as of August 1, 2006.









**PART
      I**


ITEM1.FINANCIALSTATEMENTS




**Financial
      Information**




UNITED
      COMPANIES CORPORATION


BALANCE
        SHEET
 JUNE
        30,
        2006
 (UNAUDITED)


ASSETSCurrent
                  assetsCash
              
              $
              257,116Accounts
                  receivable, net of $27,000 allowance for doubtful accounts
              
              
              115,170Inventory
              
              
              431,787Prepaid
                  expenses and other current assets
              
              
              46,185Deferred
                  tax asset, net - current
              
              
              50,233Total
                  current assets
              
              
              900,491Fixed
                  assets, net
              
              
              30,495Deferred
                  tax asset, net - non-current
              
              
              10,080Other
                  assets
              
              
              6,968Total
                  assets
              
              $
              948,034LIABILITIES
                  AND STOCKHOLDERS' DEFICITCurrent
                  liabilitiesAccounts
                  payable and accrued liabilities
              
              $
              447,710Customer
                  deposits
              
              
              40,711Royalties
                  payable - related party
              
              
              35,719Loan
                  payable
              
              
              266,000Other
                  liabilities
              
              
              45,145Billings
                  in excess of costs and estimated earnings on uncompleted
                  contract
              
              
              28,251Notes
                  payable - current portion
              
              
              10,267Notes
                  payable - related parties - current portion
              
              
              20,045Total
                  current liabilities
              
              
              893,848Long-term
                  liabilitiesNotes
                  payable - long-term portion
              
              
              8,099Notes
                  payable - related parties - long-term portion
              
              
              643,711Total
                  liabilities
              
              
              1,545,658Commitments
                  and contingenciesStockholders'
                  deficitCommon
                  stock; $0.001 par value; 250,000,000 shares authorized155,687,722
                  shares issued and outstanding
              
              
              155,688Additional
                  paid-in capital
              
              
              542,480Accumulated
                  deficit
              
              
              (1,295,792
              )Total
                  stockholders' deficit
              
              
              (597,624
              )Total
                  liabilities and stockholders' deficit
              
              $
              948,034




See
        Accompanying Notes to Financial Statements


2


UNITED
        COMPANIES CORPORATION
 STATEMENTS
        OF OPERATIONS
 (UNAUDITED)




Three
                  Months Ended June 30,
              
              Six
                  Months Ended June 30,2006
              
              2005
              
              2006
              
              2005Net
                  revenues
              
              $
              1,374,273
              
              $
              856,721
              
              $
              2,077,010
              
              $
              1,547,063Cost
                  of revenues
              
              
              790,807
              
              
              494,120
              
              
              1,227,487
              
              
              986,350Gross
                  profit
              
              
              583,466
              
              
              362,601
              
              
              849,523
              
              
              560,713Operating
                  expensesResearch
                  and development costs
              
              
              190
              
              
              —
              
              
              3,031
              
              
              5,572Selling,
                  general and administrative
              
              
              269,189
              
              
              255,393
              
              
              517,583
              
              
              493,685Total
                  operating expenses
              
              
              269,379
              
              
              255,393
              
              
              520,614
              
              
              499,257Income
                  from operations
              
              
              314,087
              
              
              107,208
              
              
              328,909
              
              
              61,456Other
                  (income) expensesOther
                  (income) expense
              
              
              (89,208
              )
              
              21,233
              
              
              (84,901
              )
              
              23,274Interest
                  expense
              
              
              18,766
              
              
              21,983
              
              
              38,808
              
              
              44,585Total
                  other (income) expenses
              
              
              (70,442
              )
              
              43,216
              
              
              (46,093
              )
              
              67,859Net
                  income (loss) before provision for income taxes
              
              
              384,529
              
              
              63,992
              
              
              375,002
              
              
              (6,403
              )Provision
                  for income tax benefit
              
              
              36,107
              
              
              —
              
              
              36,107
              
              
              —Net
                  income (loss)
              
              $
              420,636
              
              $
              63,992
              
              $
              411,109
              
              $
              (6,403
              )Basic
                  income per common share
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00Diluted
                  income per common share
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00Basic
                  weighted average commonshares
                  outstanding
              
              
              151,775,587
              
              
              116,036,285
              
              
              147,031,438
              
              
              115,266,779Diluted
                  weighted average commonshares
                  outstanding
              
              
              183,279,595
              
              
              116,036,285
              
              
              250,000,000
              
              
              115,266,779




See
        Accompanying Notes to Financial
        Statements




3


UNITED
          COMPANIES CORPORATION
 STATEMENT
          OF STOCKHOLDERS' DEFICIT
  Common
                  Stock
              
              Additional
                  Paid-in
              
              Commitment
                      Fees
                    Related
                      to
                    Standby
                      Equity
                    Distribution
              
              Accumulated
              
              Total
                  Stockholders'Shares
              
              Amount
              
              Capital
              
              Agreement
              
              Deficit
              
              DeficitBalance,
                  December 31, 2005
              
              
              136,470,677
              
              $
              136,471
              
              $
              616,489
              
              $
              (86,205
              )
              $
              (1,706,901
              )
              $
              (1,040,146
              )Conversion
                      of Secured Convertible Debenture to common stock pursuant to
                      the
                      Securities Purchase Agreement dated April 4, 2004
              
              
              12,500,000
              
              
              12,500
              
              
              17,500
              
              
              —
              
              
              —
              
              
              30,000Amortization
                    of commitment fees related to Standby Equity Distribution Agreement
              
              
              —
              
              
              —
              
              
              (35,753
              )
              
              35,753
              
              
              —
              
              
              —Consulting
                    expense recognized for stock warrants issued in conjunction with
                    the
                    consulting agreement effective January, 2005
              
              
              —
              
              
              —
              
              
              25,910
              
              
              —
              
              
              —
              
              
              25,910Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (9,527
              )
              
              (9,527
              )Balance,
                  March 31, 2006 (Unaudited)
              
              
              148,970,677
              
              
              148,971
              
              
              624,146
              
              
              (50,452
              )
              
              (1,716,428
              )
              
              (993,763
              )Conversion
                      of Secured Convertible Debenture to common stock pursuant to
                      the
                      Securities Purchase Agreement dated April 4, 2004
              
              
              6,717,045
              
              
              6,717
              
              
              52,393
              
              
              —
              
              
              —
              
              
              59,110Amortization
                    of commitment fees related to Standby Equity Distribution Agreement
              
              
              —
              
              
              —
              
              
              (50,452
              )
              
              50,452
              
              
              —
              
              
              —Consulting
                    expense recognized for stock warrants issued in conjunction with
                    the
                    consulting agreement effective January, 2005
              
              
              —
              
              
              —
              
              
              25,910
              
              
              —
              
              
              —
              
              
              25,910Extinguishment
                of Secured Convertible Debentures
                on June 2, 2006
              
              
              —
              
              
              —
              
              
              (109,517
              )
              
              —
              
              
              —
              
              
              (109,517
              )Net
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              420,636
              
              
              311,119Balance,
                  June 30, 2006 (Unaudited)
              
              
              155,687,722
              
              $
              155,688
              
              $
              651,997
              
              $
              —
              
              $
              (1,295,792
              )
              $
              (597,624
              )
  See
        Accompanying Notes to Financial
        Statements




4


UNITED
        COMPANIES CORPORATION
 STATEMENTS
        OF CASH FLOWS
 (UNAUDITED)


Six
                  Months Ended June 30,2006
              
              2005Cash
                  flows from operating activities:Net
                  income (loss)
              
              $
              411,109
              
              $
              (6,403
              )Adjustments
                  to reconcile net income (loss) to netcash
                  provided by operating activities:Depreciation
                  and amortization
              
              
              17,223
              
              
              28,021Stock
                  based compensation
              
              
              51,820
              
              
              51,821Change
                  in deferred tax asset
              
              
              (36,107
              )
              
              —Gain onextinguishmentofsecuredconvertibledebentures
              
              
              (109,517
              )
              
              —Loss
                  on disposal of fixed assets
              
              
              —
              
              
              2,941Changes
                  in operating assets and liabilities:Change
                  in accounts receivable, net
              
              
              (62,552
              )
              
              (33,535
              )Change
                  in inventory
              
              
              92,700
              
              
              41,303Change
                  in prepaid expenses and other current assets
              
              
              (122,819
              )
              
              (44,391
              )Change
                  in other assets
              
              
              —
              
              
              8,198Change
                  in accounts payable and accrued liabilities
              
              
              853
              
              
              (38,774
              )Change
                  in lease payable - related party
              
              
              (18,950
              )
              
              —Change
                  in customer deposits
              
              
              (88,420
              )
              
              27,861Change
                  in billings in excess of costs and estimatedearnings
                  on uncompleted contract
              
              
              28,251
              
              
              —Change
                  in other liabilities
              
              
              12,485
              
              
              12,382Change
                  in royalties payable - related parties
              
              
              18,154
              
              
              —Net
                  cash provided by operating activities
              
              
              194,230
              
              
              49,424Cash
                  flows from investing activities:Proceeds
                  from sale of fixed asset
              
              
              —
              
              
              17,434Purchase
                  of fixed assets
              
              
              —
              
              
              (4,154
              )Net
                  cash provided by investing activities
              
              
              —
              
              
              13,280Cash
                  flows from financing activities:Change
                  in due to related parties
              
              
              —
              
              
              4,484Proceeds
                  from borrowings on notes payable - related parties
              
              
              —
              
              
              8,012Proceeds
                  from borrowings on loan payable
              
              
              266,000Principal
                  payments on notes payable
              
              
              (4,911
              )
              
              (25,870
              )Principal
                  payments on notes payable - related parties
              
              
              (18,048
              )
              
              (7,748
              )Principal
                  payments on secured convertible debentures
              
              
              (210,500
              )
              
              —Net
                  cash provided (used) by financing activities
              
              
              32,541
              
              
              (21,122
              )Net
                  change in cash
              
              
              226,771
              
              
              41,582Cash,
                  beginning of period
              
              
              30,345
              
              
              2,328Cash,
                  end of period
              
              $
              257,116
              
              $
              43,910Supplemental
                  disclosure of cash flow information:Cash
                  paid for interest
              
              $
              67,711
              
              $
              17,575Cash
                  paid for income taxes
              
              $
              —
              
              $
              —Supplemental
                  disclosure of non-cash financing activitiesConversion
                  of Convertible Debenture into Stock as providedin
                  Stock Purchase Agreement
              
              $
              89,110
              
              $
              20,000Amortization
                  of loan fees related to Standby EquityDistribution
                  Agreement
              
              $
              86,205
              
              $
              71,904Common
                  stock issued/revalued/redeemed for other receivable
              
              $
              —
              
              $
              (207,143
              )




See
      Accompanying Notes to Financial
      Statements




5




UNITED
        COMPANIES CORPORATION
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


1.  DESCRIPTION
      OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Description
      of business –
      United Companies
      Corporation (hereinafter referred to as 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
      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
      results of operations for the interim periods shown in this report re 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 –
United
      Companies Corporation (UCC) 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 (UCC), 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.





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 2005 financial statement amounts to
      conform to the 2006 financial statement presentation.





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.




6
 
 UNITED
          COMPANIES CORPORATION
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


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





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. 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 months ended June 30, 2006 and 2005 was $12,758, and $11,026,
      respectively. Advertising and trade show expense incurred for the six months
      ended June 30, 2006 and 2005 was $21,088, and $24,789, respectively.





7




UNITED
        COMPANIES CORPORATION
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)




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.





As
      of
      June 30, 2006, the Company has available a net operating loss carryforward
      that
      will expire in 2024. The Company has established a valuation allowance for
      25%
      of the tax benefit of the operating loss carryover due to the uncertainty
      regarding realization.





Comprehensive
      income (loss) –
The
      Company has no components of other comprehensive income. Accordingly, net loss
      equals comprehensive 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 the three or six months ended June 30, 2006.





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 June 30, 2006 since their effect was dilutive.




8




UNITED
        COMPANIES CORPORATION
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


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




New
      accounting pronouncements –
In
      May
      2005, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standards (“SFAS”) No. 154, Accounting Changes and Error
      Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3.
      The
      statement changes the requirements for the accounting for and reporting of
      a
      voluntary change in accounting principle. The Statement requires retrospective
      application of prior periods’ financial statement of changes in accounting
      principle, unless it is impracticable to determine either the period-specific
      effects or the cumulative effect of the change. When it is impracticable to
      determine the period-specific effects of an accounting change on one of more
      individual periods presented, this Statement requires that the new accounting
      principle be applied to the balances of assets and liabilities as of the
      beginning of the earliest period for which retrospective application is
      practicable and that a corresponding adjustment be made to the opening balance
      of retained earnings (or other appropriate components of equity or net assets
      in
      the statement of financial position) for that period rather than being reported
      in an income statement. When it is impracticable to determine the cumulative
      effect of applying a change in accounting principle to all prior periods, this
      Statement requires that the new accounting principle be applied as if it were
      adopted prospectively from the earliest date practicable. The Statement carries
      forward the without change the guidance contained in APB opinion No. 20 for
      reporting the correction of an error in previously issued financial statements,
      a change in accounting estimate, and guidance regarding justification of a
      change in accounting principle on the basis of preferability. The Statement
      is
      effective for all fiscal years beginning after December 31, 2005. As allowed
      by
      the Statement, the Company adopted early application in June 2005 with no
      significant financial impact.





In
      March,
      2005, the FASB issued Summary of Interpretation No. 47, Accounting for
      Conditional Asset Retirement Obligations – an interpretation of FASB Statement
      No. 143. The Interpretation clarifies that the term “conditional asset
      retirement obligation” as used in FASB Statement No. 143, Accounting for Asset
      Retirement Obligations, refers to legal obligation to perform an asset
      retirement activity in which the timing and (or) method of settlement are
      conditional on a future event that may or may not be within control of the
      entity. The Interpretation directs that the entity is required to recognize
      a
      liability for the fair value of the conditional asset retirement obligation
      if
      the fair value of the liability can be reasonably estimated. The fair value
      of a
      liability for the conditional asset retirement obligation should be recognized
      when incurred - generally upon acquisition, construction, or development and
      (or) through the normal operation of the asset. The Interpretation further
      clarifies when an entity would have sufficient information to reasonably
      estimate the fair value of an asset retirement obligation acknowledging that
      in
      some cases this information may not be available. The Interpretation is
      effective no later than the end of the fiscal years ending after December 15,
      2005 (December 31, 2005 for calendar year enterprises). As encouraged by the
      FASB, the Company elected early application of this Interpretation in the year
      ended December 31, 2005 without significant financial impact.




In
      December 2004, the FASB issued SFAS No. 123 revised, Accounting for Stock-Based
      Compensation. Under SFAS No. 123 revised, the Company will measure 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 will be recognized over
      the
      period the employee is required to provide service in exchange for the award.
      SFAS No. 123 revised, replaces SFAS No.123, and supersedes Accounting Principles
      Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and its
      related implementation guidance. In addition, SFAS No. 123 revised amends SFAS
      No. 95, Statement of Cash Flows, to require that excess tax benefits be reported
      as financing cash inflow rather than as a reduction of taxes paid. The Company
      elected early adoption of SFAS No. 123 during the year ended December 31, 2004
      without significant financial impact. Previously, the Company had applied APB
      Opinion No. 25, in accounting for stock-based compensation to employees. For
      stock options and warrants issued to non-employees, the Company was applying
      SFAS No. 123, Accounting for Stock-Based Compensation, which requires the
      recognition of compensation cost based upon the fair value. Fair value is
      measured based on whichever is more reliable, the cost of the good or service,
      or the fair value of the equity instrument issued. SFAS No. 123 revised did
      not
      change the accounting treatment as it relates to non-employee compensation
      based
      equity awards issued.




9


UNITED
        COMPANIES CORPORATION
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)




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




In
      December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary
      Assets-Amendment of APB Opinion No. 29. This statement amends APB Opinion 29
      that is based on the principle that exchanges of nonmonetary assets should
      be
      measured based on the fair value of the assets exchanged, with certain
      exceptions. SFAS No. 153 eliminates APB No. 29’s exception for nonmonetary
      exchanges of similar productive assets and replaces it with a general exception
      for exchanges of nonmonetary assets that do not have commercial substance.
      Commercial substance is assumed if the future cash flows of the entity are
      expected to change significantly as a result of the exchange. The Company
      elected early adoption of this statement during the year ended December 31,
      2004
      with no significant financial impact.




In
      November 2004, the FASB issued SFAS No. 151, Inventory Costs-Amendment of ARB
      No. 43. The statement amends the guidance in ARB No. 43 regarding “inventory
      pricing” to clarify the accounting for “abnormal” amounts of idle facility
      expense, freight, handling costs, and wasted material (spoilage). SFAS No.
      151
      calls for the treatment of these costs as period costs regardless of the normal
      or “abnormal” nature of them. SFAS No. 151 eliminates the “so abnormal”
classification provision found in ARB No. 43. The Company elected early adoption
      of this statement during the year ended December 31, 2004, with no significant
      financial impact.





In
      December 2003, the FASB issued Interpretation No. 46 revised , Consolidation
      of
      Variable Interest Entities, an interpretation of Accounting Research Bulletin
      No. 51, Consolidated Financial Statements. The Interpretation addresses
      consolidation by business enterprises of variable interest entities and was
      effective immediately for variable interest entities created after January
      31,
      2003. It applies in the first fiscal year or interim period beginning after
      June
      15, 2003, to variable interest entities acquired before February 1, 2003. The
      Company adopted the Interpretation during the year ended December 31, 2004
      with
      no significant financial impact.





2.  INVENTORY





Inventory
      consists of the following as of June 30, 2006:


Raw
                  materials
              
              $
              102,525Work
                  in process
              
              
              —Finished
                  goods
              
              
              329,262$
              431,787





3.  PREPAID
      EXPENSE AND OTHER CURRENT ASSETS





Prepaid
      expense and other current assets totaling $141,989 at June 30, 2006, consists
      of
      $22,119 of prepaid insurance, tradeshow, advertising and software maintenance
      expenses, and $119,870 of prepaid deposits on inventory.




4.  FIXED
      ASSETS




Fixed
      assets consists of the following as of June 30, 2006:


Furniture,
                  vehicles, and equipment
              
              $
              212,324Leasehold
                  improvements
              
              
              7,000219,324Less:
                  accumulated depreciation and amortization
              
              
              (188,829
              )$
              30,495




10




UNITED
        COMPANIES CORPORATION
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


5. CUSTOMER
      CREDIT CONCENTRATIONS





Sales
      to
      Brownie’s Southport Diver’s, Inc. for the three months ended June 30, 2006 and
      2005 represented 13.96% and 16.39%, respectively, of total Company Net revenues.
      Sales to Marlena Shadow for the three months ended June 30, 2006 and 2005
      represented 29.24% and 0%, respectively, of total Company Net revenues. Sales
      to
      Brownie’s Southport Diver’s, Inc. for the six months ended June 30, 2006 and
      2005 represented 16.88% and 16.39%, respectively, of total Company Net revenues.
      Sales to Marlena Shadow for the six months ended June 30, 2006 and 2005
      represented 19.35% and 0%, respectively, of total Company Net revenues. Sales
      to
      no other customer represented greater than 10% of Net revenues for the three
      and
      six months ended June 30, 2006 and 2005. Brownie’s Southport Diver’s Inc. is
      owned by the brother of Robert Carmichael, the Company’s Chief Executive
      Officer, as further discussed in Note 6 - RELATED
      PARTY TRANSACTIONS.





6.  RELATED
      PARTY TRANSACTIONS





Notes
      payable – related parties –
Notes
      payable – related parties consists of the following as of June 30,
      2006:


Promissory
                  note payable to the Chief Executive Officer of the Company, unsecured,
                  bearing interest at 10% per annum, due in monthly principal and
                  interest
                  payments of $3,924, maturing on March 1, 2010, with a balloon payment
                  of
                  $431,795 due. The note will be discounted 15% of the outstanding
                  principal
                  balance if it is paid in full by April, 1 2007.
              
              $
              443,966Promissory
                  note payable to an entity owned by the Company’s Chief Executive Officer,
                  unsecured, bearing interest at 10% per annum, due in monthly principal
                  and
                  interest payments of $1,802, maturing on March 1, 2010, with a
                  balloon
                  payment of $198,264 due. The note will be discounted 15% of the
                  outstanding principal balance if it is paid in full by April 1,
                  2007.
              
              
              203,749Promissory
                  note payable due an entity owned by the Company’s Chief Executive Officer,
                  unsecured, bearing 0% interest per annum, due in monthly principal
                  only
                  payments of $2,292, maturing on February 15, 2007.
              
              
              16,041663,756Less
                  amounts due within one year
              
              
              20,045Long-term
                  portion of Notes payable - related parties
              
              $
              643,711


As
      of
      June 30, 2006, principal payments on the Notes payable - related parties are
      as
      follows:




2006
              
              $
              13,3602007
              
              
              8,9002008
              
              
              4,7692009
              
              
              5,2682010
              
              
              631,459$
              663,756
  11
 
 UNITED
            COMPANIES CORPORATION
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


6. RELATED
      PARTY TRANSACTIONS (continued)





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 revenue from these entities for the
      three months ended June 30, 2006 and 2005, was $222,012 and $116,605,
      respectively. Combined revenue from these entities for the six months ended
      June
      30, 2006 and 2005, was $399,773 and $429,384, respectively. Accounts receivable
      from Brownie’s SouthPort Diver’s, Inc. and Brownie’s Palm Beach Divers at June
      30, 2006 was $0 and $2,045, respectively.





Royalties –
The
      Company has Non-Exclusive License Agreements with an entity that the Company’s
      Chief Executive Officer has an ownership interest to license product patents
      it
      owns. Based on the agreements with the entity, the Company pays royalties
      ranging from $1.00 to $50.00 per licensed products sold, with rates increasing
      5% annually. With the same entity, the Company has a Non-Exclusive License
      Agreement to license a trademark of products owned by the entity. 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 an entity owned by the
      Company’s Chief Executive Officer to license product patents it owns. Previous
      agreements in effect with this entity were renegotiated and new agreements
      were
      entered into effective January 1, 2005. Under the terms of the agreements,
      the
      Company pays the other related entity $2.00 per licensed product sold, rates
      increasing 5% annually. With the same entity, 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 the agreement, the Company pays the entity 2.5% of gross
      revenues per quarter, with a 66% royalty fee discount period through December
      31, 2006, after which time the royalty rate will return to 100%. In addition,
      the agreement provides for a $600 advertising credit per month against the
      royalties due quarterly. At December 31, 2006, whatever cumulative portion
      of
      the advertising credit the Company has not used for advertising, if any, will
      become due and payable to the related party entity as royalty.





Total
      royalty expense for the above agreements for the three months ended June 30,
      2006 and 2005, was $10,179 and $4,373, respectively. Total royalty expense
      for
      the above agreements for the six months ended June 30, 2006 and 2005, was
      $18,154 and $9,110, respectively. As of June 30, 2006, the Company was in
      arrears on royalty payments by $25,540 in addition to the royalty amounts due
      for the second quarter of 2006. On July 15, 2006, all royalties current and
      in
      arrears, totaling $35,719, were paid.





Lease
      Expense – The Company leases its facility from an entity in which the Chief
      Executive Officer has an ownership interest. For the three months ended June
      30,
      2006 and 2005, lease expense was $30,475, and $30,475, respectively. For the
      six
      months ended June 30, 2006 and 2005, lease expense was $60,950, and $60,950,
      respectively.





7.  BILLINGS
      IN EXCESS OF COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED
      CONTRACT





Billings
      in excess of costs and estimated earnings on uncompleted contract consists
      of
      the following as of June 30, 2006:




Costs
                  incurred on uncompleted contract
              
              $
              195,471Estimated
                  earnings
              
              
              206,358401,829Less:
                  billings to date
              
              
              430,080Billings
                  in excess of costs and estimated earnings on uncompleted
                  contract
              
              $
              (28,251
              )
  12
 UNITED
          COMPANIES CORPORATION
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 8.  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.





9.  LOAN
      PAYABLE





On
      June
      2, 2006 the Company borrowed $266,000 from a customer. The proceeds of the loan
      were used to satisfy the outstanding balance due under the secured convertible
      debentures. The terms of the loan are pending negotiation and
      formalization.





10.  OTHER
      LIABILITIES





Other
      liabilities totaling $45,145 as of June 30, 2006, consists of $31,645 on-line
      training liability, and $13,500 related to a notice of amount due from a
      government agency discussed below.





On
      July
      8, 2005, the Company received a notice of delinquency and amount due associated
      with a settlement the Company had with a government agency for payment of a
      fine. On June 28, 2005 the Company made the last payment due under the
      settlement agreement of $24,000. Pursuant to the settlement agreement, if all
      payments were not made strictly in accordance with the payment schedule then
      the
      amount due would revert back to the original assessed amount of $37,500. No
      notice of default or official change in amount due was received prior to this
      notice request.





The
      notice of delinquency asserts that the amount now due by the Company is $28,133.
      The Company is currently in the process of investigating the assertion of the
      amount due as it feels there is no basis for the total assessment. The Company
      has requested abatement of the total additional amount shown due and is awaiting
      resolution. However, based on receipt of this notice, the Company recorded
      an
      other liability in the amount of $13,500 (the $37,500 original assessment less
      the $24,000 settlement amount paid). See Note 16. SUBSEQUENT
      EVENTS regarding notice acknowledging satisfaction in full of this liability.





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 has no historical data with regard to the
      percentage of certificates that will be redeemed versus those that will expire.
      Therefore, until the Company accumulates historical data related to the
      certificate redemption ratio, it will assume that 100% of certificates issued
      with unit sales will be redeemed. Accordingly, at the time a unit is sold,
      the
      related on-line training liability is recorded. The same liability is reduced
      as
      certificates are redeemed and the related payments are made to the on-line
      training vendor.




13
 
 UNITED
          COMPANIES CORPORATION
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


11. NOTES
      PAYABLE





Notes
      payable consists of the following as of June 30, 2006:


Promissory
                  note payable secured by a vehicle of the Company having a carrying
                  value
                  of $6,486 at June 30, 2006, bearing interest at 10.16% per annum,
                  due in
                  monthly principal and interest payments of $553, maturing on October
                  28,
                  2007.
              
              $
              8,246Promissory
                  note payable secured by a vehicle of the Company having a Carrying
                  value
                  of $9,946 at June 30, 2006, bearing no interest, due in monthly
                  principal and interest payments of $349, maturing on November 14,
                  2008.
              
              
              10,12018,366Less
                  amounts due within one year:
              
              
              10,267Long-term
                  portion of Notes payable
              
              $
              8,099




As
      of
      June 30, 2006, principal payments on the Notes payable are as
      follows:


2006
              
              $
              5,0572007
              
              
              9,4712008
              
              
              3,838$
              18,366


12.  SECURED
      CONVERTIBLE DEBENTURES




On
      April
      2, 2004, the Company issued a Secured Convertible Debenture to Cornell Capital
      Partners, LP in the principal amount of $250,000. The Secured Convertible
      Debenture was convertible into shares of the Company’s common stock at a price
      per share that was equal to the lesser of: (i) an amount equal to 120% of the
      closing bid price of our common stock as of the date of the convertible
      debenture or (ii) an amount equal to 80% of the average of the lowest daily
      volume weighted average price of our common stock for the five trading days
      immediately preceding the conversion date. The Secured Convertible Debenture
      accrued interest at a rate of 5% per year and was convertible at the holder’s
      option. The Secured Convertible Debenture had a term of two (2) years. At the
      Company’s option, the Secured Convertible Debenture was payable in cash or
      convertible into shares of common stock unless converted earlier by the holder.
      Except after an event of default, as set forth in the Secured Convertible
      Debenture, Cornell Capital Partners, LP was not entitled to convert such
      debenture for a number of shares of common stock of the Company in excess of
      that number of shares which, upon giving effect to the debenture if such
      conversion would cause the aggregate number of shares of common stock
      beneficially held by such holder and its affiliated to exceed 4.99% of the
      outstanding shares of common stock of the Company. The Company had the right
      to
      redeem with fifteen (15) business days advance notice, a portion or all of
      the
      outstanding Secured Convertible Debenture. The redemption price would have
      been
      one hundred twenty (120%) of the redeemed amount plus accrued interest. In
      addition, if the Company availed itself of the redemption right, the Company
      would have, concurrent with the redemption, issued warrants to the holder at
      a
      rate of 50,000 per $100,000 redeemed on a pro-rata basis. The exercise price
      of
      the warrants would have been 120% of the closing bid price of common stock
      on
      the closing date. The warrants would have had “piggy-back” and demand
      registration rights and would have had a term of two (2) years from the closing
      date.




14


UNITED
        COMPANIES CORPORATION
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 12. SECURED
        CONVERTIBLE DEBENTURES (continued)





On
      July
      23, 2004, the Company issued a second Secured Convertible Debenture to Cornell
      Capital Partners, L.P. in the principal amount of $125,000. The Secured
      Convertible Debenture had a term of 2 years with all the same terms and
      conditions of the first secured convertible debenture issued on April 2,
      2004.





On
      June
      2, 2006, the Company fully satisfied the outstanding balance of the Secured
      Convertible Debentures. As part of the redemption, Cornell Capital Partners,
      L.P. waived its right to issuance of warrants and reduced the redemption fee
      from 20% to 10.21%. In addition, the Redemption Agreement retired the Standby
      Equity Distribution Agreement. The total amount paid Cornell Capital Partners,
      L.P. under the Redemption Agreement was $266,777 that included $210,500
      redemption amount (principal amount), $34,777 accrued interest, and $21,500
      redemption fee (10.21%) of principal amount. The Company recorded a $109,517
      gain on extinguishment of the Secured Convertible Debentures attributable to
      the
      intrinsic value of the embedded conversion feature.





The
      following table represents conversions by Cornell Capital Partners, L.P. under
      the terms of the Secured Convertible Debentures from inception through June
      30,
      2006 for free-trading common stock, which shares were registered with the
      Securities and Exchange Commission in a registration statement on Form
      SB-2:


Conversion
                  Notice Date
              
              Date
                  of Conversion
              
              Conversion
                  $ Amount
              
              Conversion
                  $ Per Share Price
              
              Number
                  of SharesFebruary
                  15, 2005
              
              
              March
                  3, 2005
              
              $
              10,000
              
              
              0.0128
              
              
              781,250March
                  8, 2005
              
              
              March
                  24, 2005
              
              
              10,000
              
              
              0.0082
              
              
              1,219,512June
                  21, 2005
              
              
              July
                  15, 2005
              
              
              10,000
              
              
              0.0028
              
              
              3,571,429August
                  3, 2005
              
              
              September
                  13, 2005
              
              
              10,000
              
              
              0.0025
              
              
              4,000,000September
                  19, 2005
              
              
              September
                  19, 2005
              
              
              10,000
              
              
              0.0046
              
              
              2,173,913October
                  19,2005
              
              
              October
                  19, 2005
              
              
              10,000
              
              
              0.0026
              
              
              3,773,585November
                  14, 2005
              
              
              November
                  14, 2005
              
              
              10,000
              
              
              0.0023
              
              
              4,347,826December
                  7, 2005
              
              
              December
                  7, 2005
              
              
              5,390
              
              
              0.0018
              
              
              2,994,444$
              75,390
              
              
              
              
              
              22,861,959





The
      following table represents conversions by Cornell Capital Partners, L.P. under
      the terms of the Secured Convertible Debentures from inception through June
      30,
      2006 for restricted common stock:


Conversion
                  Notice Date
              
              Date
                  of Conversion
              
              Conversion
                  $ Amount
              
              Conversion
                  $ Per Share Price
              
              Number
                  of SharesJanuary
                  6, 2006
              
              
              February
                  2, 2006
              
              $
              10,000
              
              
              0.0016
              
              
              6,250,000February
                  10, 2006
              
              
              March
                  7, 2006
              
              
              10,000
              
              
              0.0032
              
              
              3,125,000March
                  1, 2006
              
              
              March
                  7,2006
              
              
              10,000
              
              
              0.0032
              
              
              3,125,000May
                  3, 2006
              
              
              May
                  24,2006
              
              
              59,100
              
              
              0.0088
              
              
              6,717,045$
              89,100
              
              
              
              
              
              19,217,045
  15
  UNITED
        COMPANIES CORPORATION
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





13.  STANDBY
      EQUITY DISTRIBUTION AGREEMENT




On
      April
      2, 2004, the Company entered into a Standby Equity Distribution Agreement with
      Cornell Capital Partners, L.P. In addition, the Company issued 3,625,000 shares
      of the Company’s common stock in April 2004 for commitment fees totaling
      $290,000 related to the Standby Equity Distribution Agreement. The commitment
      fees were amortized to additional paid in-capital over the term of the Standby
      Equity Distribution Agreement. As part of the redemption of the Secured
      Convertible Debentures, the Company terminated on June 2, 2006 the Standby
      Equity Distribution Agreement that was to retire on August 6,
      2005.




14.  COMMITMENTS
      AND CONTINGENCIES





Consulting
      Agreement –
The
      Company entered into a two-year consulting agreement effective January 1, 2005,
      for management and strategic services. The consulting agreement calls for
      payments of $6,000 per month and provides for warrants to purchase 28,571,428
      shares of the Company’s common stock. 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 agreement. The right to exercise
      the warrants shall vest in four equal tranches of 7,142,857 common shares at
      six
      months, twelve months, eighteen months, and twenty-four months. The warrants
      expiration date is twenty-four months after the vest date. 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.
      The Company can terminate the consulting agreement at any time for “Cause” as
      defined in the consulting agreement. The consultant may terminate the consulting
      agreement at any time for non-payment of monies due, and such condition remains
      uncured for a period of sixty days. If the Company terminates the consultant
      during the term of the agreement without “Cause”, the right to exercise all
      warrants will vest immediately. The Company calculated the total fair value
      of
      the stock options as $198,643 using the Black-Scholes model. For the three
      and
      six months ended June 30, 2006, the Company recognized $25,910 and $51,820,
      respectively, as compensation expense related to the stock options. As of June
      30, 2006, the rights to exercise 21,428,571 warrants had vested under the
      consulting agreement and none of the warrants had been exercised.





Property
      Lease Agreement –
The
      Company operates from a leased facility in which the Company’s Chief Executive
      Officer has an ownership interest. The lease is non-cancelable and calls for
      an
      annual base rent of approximately $115,000 plus sales tax with a 10% base rent
      increase every 5 years. The lease expires in April 2013, and has three 5- year
      renewal options. In addition, up to $15,000 in real estate taxes is provided
      for
      in the base rental payment. Any real estate taxes over and above $15,000 are
      billed as additional rent to the Company and included in rent expense. For
      the
      three months ended June 30, 2006, and 2005, total rent expense for the leased
      facility was $30,475 and $30,475, respectively. For the six months ended June
      30, 2006, and 2005, total rent expense for the leased facility was $60,950
      and
      $60,950, respectively. Additionally, the Company is responsible for all other
      operating expenses on the property such as insurance, repairs and maintenance,
      etc. as the lease is termed a triple net lease. The triple net expenses are
      recorded to the applicable expense accounts on the Company’s statement of
      operations.





16


UNITED
        COMPANIES CORPORATION
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


14.  COMMITMENTS
      AND CONTINGENCIES (continued )





Equipment
      Lease Agreement –
The
      Company leases various office equipment under either a month-to-month basis
      or
      under an operating lease. Currently there is one non-cancelable operating lease
      for an office copier at a rate of $313 per month plus sales tax. The lease
      expires in August 2009.





Future
      minimum lease payments required under the property lease and the equipment
      lease
      as of June 30, 2006, are as follows:


2006
              
              $
              61,7552007
              
              
              125,8782008
              
              
              125,8782009
              
              
              124,5522010
              
              
              121,900Thereafter
              
              
              284,433$
              844,396


15.  INCOME
      TAXES





The
      net
      deferred tax asset at June 30, 2006 was $60,313 and is recorded as $50,233
      in
      current assets, and $10,080 in non-current assets. At June 30, 2006, the Company
      had a federal operating loss carryforward of $315,057. This operating loss
      carryforward is available to offset future taxable income over the next nineteen
      years. The Company anticipates utilization of approximately $42,000 of the
      net
      operating loss carryforward for the year ended 2005 and $231,858 for the year
      ended 2006. Due to a change in management’s estimate of the utilization of the
      net operating loss carryforward at the end of 2005, the valuation allowance
      was
      decreased from $50,052 (100% of the 2004 net deferred tax asset) in 2004 to
      $24,206 (50% of the 2005 net deferred tax asset) in 2005. Based on higher than
      anticipated profits in the second quarter of 2006, management accelerated its
      estimate of the utilization of the net operating loss carryforward and
      accordingly has reduced the valuation allowance further from $24,206 at March
      31, 2006 to $20,104 which represents 25% of the net deferred tax asset at June
      30, 2006. In assessing the likelihood of the utilization of existing deferred
      tax assets, management has considered the historical results of operations
      and
      the current operating environment. As of June 30, 2006, Management believes,
      that future taxable income will be sufficient to utilize the net deferred tax
      asset of $60,313. The change of the net deferred tax asset from March 31, 2006
      to June 30, 2006 was an increase of $36,107.





16.  SUBSEQUENT
      EVENTS





On
      July
      15, 2006, all royalties current and in arrears, totaling $35,719, were
      paid.




On
      July
      18, 2006 the Company received a follow-up notice from the governmental agency
      that had earlier sent a notice of further amount due under a settlement
      agreement as discussed in Note 10. OTHER
      LIABILITIES. The
      notice acknowledged that the Company has fully paid its debt under the original
      agreement and that the government agency now considers the case close.
      Accordingly, on July 18, 2006 the Company wrote off the $13,500 contingency
      provision it had established with regard to this matter.





17




**ITEM2.**  **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**




United
      Companies Corporation, (referred to herein as “United” or “the Company”), a
      Nevada corporation, entered into a Share Exchange Agreement, dated
      March 23, 2004, by and among United, Trebor Industries, Inc., d/b/a
      Brownie’s Third Lung, a Florida corporation (referred to herein as “Trebor”),
      and Robert Carmichael. Pursuant to the Share Exchange Agreement, Mr. Carmichael
      exchanged 377 shares of common stock, par value $1.00 per share, of Trebor,
      which constituted all of the issued and outstanding shares of capital stock
      of
      Trebor, for 95,000,000 shares of common stock, par value $0.001 per share,
      of
      United. Pursuant to the Share Exchange Agreement, Trebor became a wholly-owned
      subsidiary of United.




Through
      Trebor, 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 through its wholly owned subsidiary Trebor
      Industries, Inc. United 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.




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 United’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.
      Prior to the share exchange transaction with Trebor, United had no on-going
      operations. United had been seeking potential operating businesses and business
      opportunities, with the intent to acquire or merge with such
      businesses.




On
      February 12, 2002, United filed with the Securities and Exchange Commission
      a
      Form S-4 Proxy Statement and Registration Statement in conjunction with Avid
      Sportswear & Golf Corp., a Nevada corporation (“Avid”), describing a
      proposed merger of Avid with and into Merger Co., a wholly-owned subsidiary
      of
      United (“Merger Co.”). On January 28, 2003, the Commission declared the Form S-4
      Proxy Statement and Registration Statement effective. At a special meeting
      of
      Avid shareholders held on February 20, 2003, the shareholders approved (i)
      the
      Merger Agreement, dated June 18, 2002, by and among Avid, United and Merger
      Co.
      and (ii) the related Articles of Merger. Merger Co. became the surviving entity
      and assumed all of Avid’s assets and liabilities. At the time of the merger,
      outstanding shares of Avid common stock were converted automatically into shares
      of United common stock on a one (1) for fifty (50) basis. In the opinion of
      Avid’s management, the excess of Avid’s liabilities over its assets and the lack
      of available funding made any other acquisition or merger, other than the merger
      with Merger Co., unlikely.




Effective
      March 23, 2004, United sold all of its ownership interest in its wholly-owned
      subsidiary, Merger Co., to Gateway Connections Limited, an international
      business company formed under the laws of Belize.


18




On
      April
      2, 2004, we issued a Secured Convertible Debenture to Cornell Capital Partners,
      LP in the principal amount of $250,000. On April 2, 2004, we also entered into
      a
      Standby Equity Distribution Agreement with Cornell Capital Partners, LP. On
      July
      23, 2004, we issued a second Secured Convertible Debenture to Cornell Capital
      Partners, LP. in the principal amount of $125,000. On April 2, 2006, the first
      Secured Convertible Debenture having an outstanding principal balance of
      $144,610 matured.





On
      June
      2, 2006, the Company entered into a Redemption Agreement with Cornell Capital
      Partners, LP. whereby the Company fully satisfied the outstanding balance of
      the
      Secured Convertible Debentures and terminated the Standby Equity Distribution
      Agreement. The total amount paid Cornell Capital Partners, LP. under the
      Redemption Agreement was $266,777 that included $210,500 redemption amount
      (principal amount), $34,777 accrued interest, and $21,500 redemption fee (10.21%
      of principal amount). The Company recorded a $109,517 gain on the extinguishment
      of the Secured Convertible Debentures attributable to the intrinsic value of
      the
      embedded conversion feature.




**Financial
      Performance**




United
      has a history of losses. Trebor acquired by share exchange on March 23, 2004,
      has historically had both profitable and unprofitable years. For the years
      ended
      December 31, 2005 and 2004, United sustained losses of $96,310 and $510,922,
      respectively, which includes United’s wholly-owned subsidiary Trebor. For the
      three and six months ended June 30, 2006, United had a net income of $420,636
      and $411,109, respectively.




**Results
      Of Operations For The Three Months Ended June 30, 2006, As Compared To The
      Three
      Months Ended June 30, 2005**




**Net
      revenues** .
      For the
      three months ended June 30, 2006, we had net revenues of $1,374,273, as compared
      to net revenues of $856,721 for the three months ended March 31, 2005, an
      increase of $517,552 or 60.41%. This increase is primarily attributable to
      several factors occurring in the second quarter of 2006: we recognized
      approximately $400,000 of a contract sale for a dive system with hyperbaric
      support, there was an overall increase in both tankfill system and hookah system
      sales, and price increases instituted in the third and fourth quarter of 2005
      carried over into the second quarter of 2006. The Company attributes its hookah
      system sales increases to expanding its market beyond the scuba dive retailer
      and into sporting goods and boating retailers, its web-based training program
      that was rolled out in July 2005, and to concerted marketing and sales efforts,
      including a release in July 2005 of a brand new catalog featuring all our
      products. Non-custom tankfill system increases are mainly attributed to our
      standalone presence at several boat shows toward the end of 2005 where many
      new
      and old contacts were made and renewed (in earlier years shared booth space
      with
      a Brownie dealer resulted in shared tankfill revenues), three new OEM
      relationships with yacht-builders, and the release of the new catalog in July
      2005 featuring all our products. In addition, we believe that the Brownie’s
      Third Lung name continues to grow in brand recognition, and in addition to
      gaining new customers each year, we see repeat business through brand loyal
      customers.




**Cost
      of net revenues** .
      For the
      three months ended June 30, 2006, we had cost of net revenues of $790,807,
      as
      compared with cost of net revenues of $494,120 for the three months ended June
      30, 2005, an increase of $296,687 or 60.04%. This increase during the three
      months ended June 30, 2006 over the same period in 2005 is consistent with
      the
      increase in net revenues. The increase is comprised of an increase in material
      costs of $124,184, an increase in other contract expenses of $122,326, an
      increase in subcontract expenses of $12,279, an increase in shop supplies of
      $9,024, an increase in factory payroll of $6,498, an increase in freight in
      of
      $12,660, and a net increase in other cost of revenues of $9,696.




**Gross
      profit.** For the
      three months ended June 30, 2006, we had a gross profit of $583,466, as compared
      to gross profit of $362,601 for the three months ended June 30, 2005, an
      increase of $220,865 or 60.91%. This increase is primarily attributable to
      an
      increase in net revenues for the three months ended June 30, 2006.




**Operating
      expenses** .
      For the
      three months ended June 30, 2006, we had total operating expenses of $269,379,
      as compared to total operating expenses of $255,393 for the three months ended
      June 30, 2005, an increase of $13,986 or 5.48%.




**Other
      (income) expenses** .
      For the
      three months ended June 30, 2006, we had other income of $70,442, as compared
      to
      other expenses of $43,216 for the three months ended June 30, 2005, an increase
      in other income of $113,658 or 263.00%. This increase is primarily attributable
      to the $109,517 gain on the extinguishment of the secured convertible
      debentures.




**Provision
      for income tax benefit** .
      For the
      three months ended June 30, 2006, we had provision for income tax benefit of
      $36,107, as compared to $0 for the three months ended June 30, 2005, an increase
      of $36,107. The increase is primarily attributable to a 75% reduction in the
      reserve, from a 100% reserve to a 25% reserve, against the deferred tax asset.
      The deferred tax asset is comprised primarily of net operating loss (NOL)
      carryforwards. The reserve originated due to the uncertainty of recognition
      of
      the NOL carryforwards. Based on the profitable results in the second quarter
      of
      2006 and management’s judgment regarding the probability of recognition of the
      NOL carryforward, management adjusted the reserve downward, resulting in the
      $36,107 tax benefit for the three months ended June 30, 2006.


19




**Net
      Income.** For
      the
      three months ended June 30, 2006, we had net income of $420,636, as compared
      to
      a net income of $63,992 for the three months ended June 30, 2005, an increase
      of
      $356,644 or 557.33%. The increase is primarily attributable to the increase
      in
      net revenues and the gain on the extinguishment of the secured convertible
      debentures for the three months ended June 30, 2006.




**Results
      Of Operations For The Six Months Ended June 30, 2006, As Compared To The Six
      Months Ended June 30, 2005.**




**Net
      revenues** .
      For the
      six months ended June 30, 2006, we had net revenues of $2,077,017 as compared
      to
      net revenues of $1,547,063 for the six months ended June 30, 2005, an increase
      of $529,947or 34.26%. This increase is primarily attributable to several factors
      occurring during the six months ended June 30, 2006: we recognized approximately
      $400,000 of a contract sale for a dive system with hyperbaric support, there
      was
      an overall increase in both tankfill system and hookah system sales, and price
      increases instituted in the third and fourth quarter of 2005 carried over into
      the second quarter of 2006. The Company attributes its hookah system sales
      increases to expanding its market beyond the scuba dive retailer and into
      sporting goods and boating retailers, its web-based training program that was
      rolled out in July 2005, and to concerted marketing and sales efforts, including
      a release in July 2005 of a brand new catalog featuring all our products.
      Non-custom tankfill system increases are mainly attributed to our standalone
      presence at several boat shows in late 2005 where many new and old contacts
      were
      made and renewed (in earlier years shared booth space with a Brownie dealer
      resulted in shared tankfill revenues), three new OEM relationships with
      yacht-builders, and the release of the new catalog in July 2005 featuring all
      our products. In addition, we believe that the Brownie’s Third Lung name
      continues to grow in brand recognition, and in addition to gaining new customers
      each year, we see repeat business through brand loyal customers.




**Cost
      of revenues** .
      For the
      six months ended June 30, 2006, we had cost of revenues of $1,227,487 as
      compared with cost of revenues of $986,350 for the six months ended June 30,
      2005, an increase of $241,137 or 24.45%. This increase during the six months
      ended June 30, 2006 over the same period in 2005 is consistent with the increase
      in net revenues. The increase is comprised of an increase in material costs
      of
      $74,981, an increase in other contract expenses of $122,326, an increase in
      subcontract expenses of $10,262, an increase in shop supplies of 10,886, an
      increase in factory payroll of $10,330, and an increase in other cost of
      revenues of $12,372.




**Gross
      profit.** For the
      six months ended June 30, 2006, we had a gross profit of $849,523, as compared
      to gross profit of $560,713 for the comparable period in 2005, an increase
      of
      $288,810 or 51.51%. This increase is primarily attributable to an increase
      in
      net revenues for the six months ended June 30, 2006.




**Operating
      expenses** .
      For the
      six months ended June 30, 2006, we had total operating expenses of $520,614,
      as
      compared to total operating expenses of $499,257 for the six months ended June
      30, 2005, an increase of $21,357 or 4.28%.




**Other
      (income) expenses** .
      For the
      six months ended June 30, 2006, we had other income of $46,093, as compared
      to
      other expenses of $67,859 for the six months ended June 30, 2005, an increase
      in
      other income of $113,952 or 167.92%. This increase is primarily attributable
      to
      the $109,517 gain on the extinguishment of the secured convertible debentures.




**Provision
      for income tax benefit** .
      For the
      six months ended June 30, 2006, we had provision for income tax benefit of
      $36,107, as compared to $0 for the six months ended June 30, 2005, an increase
      of $36,107. The increase is primarily attributable to a 75% reduction in the
      reserve, from a 100% reserve to a 25% reserve, against the deferred tax asset.
      The deferred tax asset is comprised primarily of net operating loss (NOL)
      carryforwards. The reserve originated due to the uncertainty of recognition
      of
      the NOL carryforwards. Based on the profitable results in the second quarter
      of
      2006 and management’s judgment regarding the probability of recognition of the
      NOL carryforward, management adjusted the reserve downward, resulting in the
      $36,107 tax benefit for the six months ended June 30, 2006.




**Net
      income.** For
      the
      six months ended June 30, 2005, we had net income of $411,109, as compared
      to a
      $6,403 net loss for the six months ended June 30, 2005, an increase of $417,512
      or 6,520.57%. The increase is primarily attributable to the increase in net
      revenues and the gain on the extinguishment of the secured convertible
      debentures for the six months ended June 30, 2006.




**Liquidity
      And Capital Resources**




As
      of
      June 30, 2006, we had cash and other current assets of $900,491. As of June
      30,
      2006, we had current liabilities of $893,848, consisting of accounts payable
      and
      accrued liabilities of $447,710, loan payable of $266,000, customer deposits
      of
      $40,711, other liabilities of $45,145, royalties payable - related parties
      of
      $35,719, billings in excess of costs and estimated earnings on uncompleted
      contracts of $28,521, notes payable - current portion of $10,267, notes payable
      - current portion - related parties of $20,045. As of June 30, 2006, we had
      a
      working capital surplus of $6,643.


20




On
      April
      2, 2004, we entered into a Standby Equity Distribution Agreement with Cornell
      Capital Partners, LP. As of June 30, 2006, we had not taken any advances under
      the Standby Equity Distribution Agreement. As part of the redemption of the
      Secured Convertible Debentures as discussed below, the Company terminated on
      June 2, 2006 the Standby Equity Distribution Agreement.




On
      April
      2, 2004, we issued a Secured Convertible Debenture to Cornell Capital Partners,
      LP in the principal amount of $250,000. The Secured Convertible Debenture was
      convertible into shares of our common stock as a price per share that was equal
      to the lesser of: (i) an amount equal to 120% of the closing bid price of our
      common stock as of the date of the convertible debenture or (ii) an amount
      equal
      to 80% of the average of the lowest daily volume weighted average price of
      our
      common stock for the five trading days immediately preceding the conversion
      date. The Secured Convertible Debenture accrued interest at a rate of 5% per
      year and was convertible at the holder’s option. The Secured Convertible
      Debenture had a term of two (2) years. At United’s option, the Secured
      Convertible Debenture was payable in cash or convertible into shares of our
      common stock unless converted earlier by the holder. Except after an event
      of
      default, as set forth in the Secured Convertible Debenture Agreement, Cornell
      Capital Partners, LP was not entitled to convert such Secured Convertible
      Debenture for a number of shares of common stock of United in excess of that
      number of shares which, upon giving effect to such conversion, would cause
      the
      aggregate number of shares of common stock beneficially held by such holder
      and
      its affiliated to exceed 4.99% of the outstanding shares of common stock of
      United. On July 23, 2004, we issued a second Secured Convertible Debenture
      in
      the principal amount of $125,000, with the same terms and conditions as the
      Secured Convertible Debenture issued on April 2, 2004, as described above.
      On
      April 2, 2006, the first Secured Convertible Debenture having an outstanding
      principal balance of $144,610 matured and was neither redeemed in shares, nor
      paid off.





On
      June
      2, 2006, the Company fully satisfied the outstanding balance of the Secured
      Convertible Debentures. The Redemption Agreement terminated the Standby Equity
      Distribution Agreement as discussed above. The total amount paid Cornell Capital
      Partners, LP under the Redemption Agreement was $266,777 that included $210,500
      redemption amount (principal amount), $34,777 accrued interest, and $21,500
      redemption fee (10.21% of principal amount). The Company
      recorded a $109,517 gain on extinguishment of the Secured Convertible Debentures
      attributable to the intrinsic value of the embedded conversion
      feature.




On
      June
      2, 2006 the Company borrowed $266,000 from a customer. The proceeds of the
      loan
      were used to satisfy the outstanding balance due under the Secured Convertible
      Debentures. The terms of the loan are pending negotiation and
      formalization.




**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.*




***We
      Have Historically Lost Money And Losses May Continue In The
      Future***




On
      March
      23, 2004, United entered into a share exchange transaction with Trebor
      Industries, Inc., d/b/a Brownie’s Third Lung and Robert Carmichael. Pursuant to
      this share exchange transaction, United acquired all of the issued and
      outstanding capital stock of Trebor and Trebor became a wholly owned subsidiary
      of United. Trebor Industries designs, manufactures and sells surface-supplied
      air units for the recreational diving industry. United has a history of losses.
      Historically, Trebor has had both profitable and unprofitable years. As of
      June
      30, 2006, we had an accumulated deficit of $1,295,792. For the six months ended
      June 30, 2006, we had a net income of $411,109. For the year ended December
      31,
      2005 we incurred a net loss of $96,310. For the year ended December 31, 2004
      we
      incurred a net loss of $510,922.




If
      we are
      not successful in maintaining profitable operations, we may not be able to
      attract sufficient capital to continue our operations. Our inability to obtain
      adequate financing will result in the need to curtail business operations and
      will likely result in a lower stock price.


21




***We
      May Need To Raise Additional Capital To Finance
      Operations***




As
      of
      June 30, 2006 we had $257,116 of cash on hand and our total current assets
      were
      $900,491. Our current liabilities were $893,848 as of June 30, 2006. We may
      need
      to raise additional capital to fund our anticipated operating expenses. Among
      other things, external financing may be required to cover our operating costs.
      Unless we obtain and maintain profitable operations, it is unlikely that we
      will
      be able to secure additional financing from external sources. As of August
      1,
      2006, we estimate that we will require $1 million to fund our anticipated
      operating expenses for the next twelve months if we maintain sales growth at
      the
      same rate. To step up sales growth at a more aggressive rate, we would require
      approximately $1.5 to $2.5 million to fund our anticipated operating expenses
      for the next twelve months. The sale of our common stock to raise capital may
      cause dilution to our existing shareholders. Our inability to obtain adequate
      financing will result in the need to curtail business operations. Any of these
      events would be materially harmful to our business and may result in a lower
      stock price. Our inability to obtain adequate financing will result in the
      need
      to curtail business operations and you could lose your entire investment. Our
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.




***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.




***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. Prior to this
      offering, there has been 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 in Rule
      3a51-1 promulgated under the Securities Exchange Act of 1934. Penny stocks
      are
      stock:




·  With
      a
      price of less than $5.00 per share;




·  That
      are
      not traded on a “recognized” national exchange;




·  Whose
      prices are not quoted on the Nasdaq automated quotation system (Nasdaq listed
      stock must still have a price of not less than $5.00 per share); or




·  In
      issuers with net tangible assets less than $2.0 million (if the issuer has
      been
      in continuous operation for at least three years) or $5.0 million (if in
      continuous operation for less than three years), or with average revenues of
      less than $6.0 million for the last three years.




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.


22




***We
      Could Fail To Attract Or Retain Key Personnel***




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.




In
      addition, 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.




Effective
      January 1, 2005, the Company entered into a two-year consulting agreement with
      one of the consultants as referred to above for management and strategic
      services. The consulting agreement calls for a monthly consulting fee and
      provides for warrants to purchase 28,571,428 shares of the Company’s common
      stock. The exercise price of the warrants is $.007 per share, which equaled
      the
      closing price of the Company’s Common stock on January 1, 2005, the effective
      date of the agreement. The rights to exercise the warrants shall vest in four
      equal tranches of 7,142,857 current shares at six months, twelve months,
      eighteen months, and twenty-four months. The Company can terminate the
      consulting agreement at any time for “Cause” as defined in the consulting
      agreement. The consultant may terminate the consulting agreement at any time
      for
      non-payment of monies due, and such condition remains uncured for a period
      of
      sixty days. As of June 30, 2006, 21,428,571 warrants had vested with none being
      exercised.




***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.


23




***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.




***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.


24




**ITEM3.**  **CONTROLSAND
      PROCEDURES**




**(A)**  **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 of period
      covered.




**(B)**  **Changes
      In Internal Controls Over Financial Reporting**




In
      connection with the evaluation of the Company’s internal controls during the
      Company’s last fiscal quarter, the Company’s Principal Executive
      Officer/Principal Financial Officer has determined that there are no changes
      to
      the Company’s internal controls over financial reporting that has materially
      affected, or is reasonably likely to materially effect, the Company’s internal
      controls over financial reporting.




25




**PART
      II**




**ITEM1.**  **LEGAL
      PROCEEDINGS**




None




**ITEM
      2.**  **CHANGES
      IN
      SECURITIES
      AND
      USE
      OF
      PROCEEDS**




On
      February 14, 2006, Cornell Capital Partners LP was issued 6,250,000 shares
      of
      common stock representing a $10,000 conversion under the terms of the Secured
      Convertible Debenture.




On
      March
      7, 2006, Cornell Capital Partners LP was issued 6,250,000 shares of common
      stock
      representing a $20,000 conversion under the terms of the Secured Convertible
      Debenture.




On
      May
      24, 2006, Cornell Capital Partners LP was issued 6,717,045 shares of common
      stock representing a $59,100 conversion under the terms of the Secured
      Convertible Debenture.




United
      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**




On
      April
      2, 2006, the first Secured Convertible Debenture due to Cornell Capital
      Partners, LP having an outstanding principal balance of $144,610 matured. On
      June 2, 2006, the Company fully satisfied the outstanding balance on the Secured
      Convertible Debentures. The Redemption Agreement also terminated the Standby
      Equity Distribution Agreement. The total amount paid Cornell Capital Partners,
      LP under the Redemption Agreement was $266,777 that included $210,500 redemption
      amount (principal amount), $34,777 accrued interest, and $21,500 redemption
      fee
      (10.21% of principal amount).




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




None.




**ITEM
      5.**  **OTHER
      INFORMATION**




Not
      applicable.


26




**Item
      6. Exhibits, Lists And Reports On Form 8-K**




**(a)**  **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 to Avid Sportswear & Golf Corp.’s
                Amendment No. 1 to Form S-4 filed June 24, 20022.3
            
            Articles
                of Merger of Avid Sportswear & Golf Corp. with and into Merger Co.,
                Inc.
            
            Incorporated
                by reference to Exhibit 2.03 to Avid Sportswear & Golf Corp.’s
                Amendment No. 1 to Form S-4 filed June 24, 20023.1
            
            Articles
                of Incorporation
            
            Incorporated
                by reference to Exhibit 3.05 to United Companies Corporation’s Amendment
                No. 1 to Form S-4 filed June 24, 20023.2
            
            Bylaws
            
            Incorporated
                by reference to Exhibit 3.04 to the Registration Statement on Form
                10-SB10.1
            
            Share
                Exchange Agreement, dated March 23, 2004 by and among United, Trebor
                Industries, Inc. and Robert Carmichael
            
            Incorporated
                by reference to Exhibit 16.1 to Current Report on From 8-K filed
                April 9,
                200410.2
            
            Securities
                Purchase Agreement, dated April 2, 2004 by and between United and
                Cornell
                Capital Partners, L.P.
            
            Incorporated
                by reference to Exhibit 10.2 to United Companies Corporation’s
                Registration Statement on Form SB-2 filed July 16,
                200410.3
            
            Investor
                Registration Rights Agreement, dated April 2, 2004 by and between
                United
                and Cornell Capital Partners, L.P.
            
            Incorporated
                by reference to Exhibit 10.3 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.4
            
            Security
                Agreement, dated April 2, 2004 by and between United and Cornell
                Capital
                Partners, L.P.
            
            Incorporated
                by reference to Exhibit 10.4 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.5
            
            Irrevocable
                Transfer Agent Instructions, dated April 2, 2004, by and among United,
                Cornell Capital Partners, L.P. and First American Stock
                Transfer
            
            Incorporated
                by reference to Exhibit 10.5 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.6
            
            Escrow
                Agreement, dated April 2, 2004 by and among United, Cornell Capital
                Partners, L.P. and Butler Gonzalez, LP
            
            Incorporated
                by reference to Exhibit 10.6 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.7
            
            Form
                of Secured Convertible Debenture
            
            Incorporated
                by reference to Exhibit 10.7 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.8
            
            Form
                of Warrant
            
            Incorporated
                by reference to Exhibit 10.8 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.9
            
            Standby
                Equity Distribution Agreement, dated April 2, 2004 by and between
                United
                and Cornell Capital Partners, L.P.
            
            Incorporated
                by reference to Exhibit 10.9 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.10
            
            Registration
                Rights Agreement, dated April 2, 2004 by and between United and Cornell
                Capital Partners, L.P.
            
            Incorporated
                by reference to Exhibit 10.10 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                2004




27




**EXHIBIT
                NO.**
            
            **DESCRIPTION**
            
            **LOCATION**


10.11
            
            Escrow
                Agreement, dated April 2, 2004 by and among United, Cornell Capital
                Partners, L.P. and Butler Gonzalez, LP
            
            Incorporated
                by reference to Exhibit 10.11 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.12
            
            Placement
                Agent Agreement, dated April 2, 2004, by and among United, Cornell
                Capital
                Partners, L.P. and Newbridge Securities Corporation
            
            Incorporated
                by reference to Exhibit 10.12 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.13
            
            Irrevocable
                Transfer Agent Instructions, dated April 2, 2004 by and among United,
                Cornell Capital Partners, L.P. and First American Stock
                Transfer
            
            Incorporated
                by reference to Exhibit 10.13 to United Companies Corporation’s
                Registration Statement on Form SB filed July 16,
                200410.14
            
            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,
              2005.10.15
            
            Promissory
                Note, dated February 15, 2005, principal amount of $54,998.00 payable
                to
                Robert M. Carmichael.
            
            Incorporated
                by reference to Exhibit 10.15 to United Companies Corporation's 10QSB
                for
                the quarter ended March 31, 2005 filed May 13, 2005.10.16
            
            Promissory
                Note, dated March 7, 2005, in the principal amount of $205,296.53
                payable
                to 940 Associates, Inc.
            
            Incorporated
                by reference to Exhibit 10.16 to United Companies Corporation's 10QSB
                for
                the quarter ended March 31, 2005 filed May 13, 2005.10.17
            
            Promissory
                Note, dated March 7, 2005, in the principal amount of $447,111.13
                payable
                to Robert M. Carmichael.
            
            Incorporated
                by reference to Exhibit 10.17 to United Companies Corporation's 10QSB
                for
                the quarter ended March 31, 2005 filed May 13, 2005.10.18
            
            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, 2005.10.19
            
            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, 2005.10.20
            
            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, 2005.10.21
            
            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, 2005.10.22
            
            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.




28




**EXHIBIT
                NO.**
            
            **DESCRIPTION**
            
            **LOCATION**


10.23
            
            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, 2005.10.24
            
            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, 2005.10.25
            
            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, 2005.10.26
            
            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, 2005 filed March 30, 2006.10.27
            
            Redemption
                Agreement - Cornell Capital Partners, LP Secured Convertible
                Debentures
            
            Incorporated
                by reference to Exhibit 10.27 to
              Current
                Report on Form 8-K filed on June 2,
              2006.31.1
            
            Certification
                Pursuant to Section 302
            
            Provided
                herewith31.2
            
            Certification
                Pursuant to Section 302
            
            Provided
                herewith32.1
            
            Certification
                Pursuant to Section 1350
            
            Provided
                herewith32.2
            
            Certification
                Pursuant to Section 1350
            
            Provided
                herewith




**(b)**  **Reports
      On Form 8-K.**




We
      filed
      a Current Report on Form 8-K on June 2, 2006 with respect to Item 1.01 - Entry
      into a Material Definitive Agreement as referenced to in Exhibit No.
      10.27.




29




**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.


Date:August
              11, 2006
            **UNITED
                COMPANIES
                CORPORATION**By:
            /s/ Robert M. CarmichaelRobert
                M. Carmichael
                President,
                  Chief Executive Officer,
                  Chief
                    Financial Officer/
                    Principal
                      Accounting Officer




30