**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**






**FORM
      10-Q**


(mark
      one)





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




For
      the
      quarterly period ended **March
      31, 2008**




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




For
      the
      transition period from _______ to _______.




**Commission
      File No. 000-28321**




**Brownie’s
      Marine Group, Inc.**


(Name
      of
      Small Business Issuer in Its Charter)







**Nevada**
            
            **90-0226181**(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
                Employer Identification No.)**940
                N.W. 1****st****Street, Fort Lauderdale, Florida**
            
            **33311**(Address
                of Principal Executive Offices)
            
            (Zip
                Code)




(954)
                462-5570(Issuer’s
                Telephone Number, Including Area Code)
              
              (Former
                Name, if Changed Since Last Report)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
      (or for such shorter period that the registrant was required to file such
      reports) , and (2) has been subject to such filing requirements for the past
      90
      days. Yes x No
o




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




Large
      accelerated filer o   Accelerated
      filer o




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




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




There
      were 1,658,357 shares of common stock outstanding as of May 6, 2008.









**PART
      I**




**Item
      1.**  **Financial
      Statements**




**Financial
      Information**


BROWNIE'S
        MARINE GROUP, INC.
 CONSOLIDATED
        BALANCE SHEETS
  March
                  31,
              
              December
                  31,2008
              
              2007(Unaudited)ASSETSCurrent
                  assetsCash
              
              $
              132,137
              
              $
              142,516Accounts
                  receivable, net of $8,000 and $9,000 allowance for doubtful accounts,
                  respectively
              
              
              26,940
              
              
              38,512Inventory
              
              
              528,131
              
              
              656,303Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              334,135
              
              
              -Prepaid
                  expenses and other current assets
              
              
              64,435
              
              
              81,879Deferred
                  tax asset, net - current
              
              
              43,595
              
              
              32,328Total
                  current assets
              
              
              1,129,373
              
              
              951,538Property,
                  plant and equipment, net
              
              
              1,221,127
              
              
              1,229,898Deferred
                  tax asset, net - non-current
              
              
              40,572
              
              
              52,363Other
                  assets
              
              
              6,968
              
              
              6,968Total
                  assets
              
              $
              2,398,040
              
              $
              2,240,767LIABILITIES
                  AND STOCKHOLDERS' DEFICITCurrent
                  liabilitiesAccounts
                  payable and accrued liabilities
              
              $
              326,763
              
              $
              397,292Customer
                  deposits
              
              
              451,303
              
              
              286,220Royalties
                  payable - related parties
              
              
              23,586
              
              
              15,263Other
                  liabilities - related parties
              
              
              100,781
              
              
              117,601Income
                  taxes payable
              
              
              5,072
              
              
              -Other
                  liabilities
              
              
              6,296
              
              
              9,477Notes
                  payable - current portion
              
              
              45,726
              
              
              46,031Notes
                  payable - related parties - current portion
              
              
              72,572
              
              
              70,924Total
                  current liabilities
              
              
              1,032,099
              
              
              942,808Long-term
                  liabilitiesNotes
                  payable - long-term portion
              
              
              914,383
              
              
              925,399Notes
                  payable - related parties - long-term portion
              
              
              591,778
              
              
              609,857Total
                  liabilities
              
              
              2,538,260
              
              
              2,478,064Commitments
                  and contingenciesStockholders'
                  deficitCommon
                  stock; $0.001 par value; 250,000,000 shares authorized1,685,538
                  shares issued and outstanding
              
              
              1,685
              
              
              1,685Additional
                  paid-in capital
              
              
              839,666
              
              
              839,666Accumulated
                  deficit
              
              
              (981,571
              )
              
              (1,078,648
              )Total
                  stockholders' deficit
              
              
              (140,220
              )
              
              (237,297
              )Total
                  liabilities and stockholders' deficit
              
              $
              2,398,040
              
              $
              2,240,767




See
      Accompanying Notes to Consolidated Financial Statements





1


BROWNIE'S
        MARINE GROUP, INC.
 CONSOLIDATED
        STATEMENTS OF OPERATIONS
 (UNAUDITED)


Three
                  Months Ended March 31,2008
              
              2007Net
                  revenues
              
              $
              1,194,801
              
              $
              879,257Cost
                  of net revenues
              
              
              829,652
              
              
              585,851Gross
                  profit
              
              
              365,149
              
              
              293,406Operating
                  expensesResearch
                  and development costs
              
              
              130
              
              
              323Selling,
                  general and administrative
              
              
              232,691
              
              
              251,248Total
                  operating expenses
              
              
              232,821
              
              
              251,571Income
                  from operations
              
              
              132,328
              
              
              41,835Other
                  expenses (income)Other
                  expense (income), net
              
              
              (3,227
              )
              
              (10,766
              )Interest
                  expense
              
              
              32,882
              
              
              22,222Total
                  other expense (income)
              
              
              29,655
              
              
              11,456Net
                  income before provision for income taxes
              
              
              102,673
              
              
              30,379Provision
                  for income tax expense
              
              
              5,596
              
              
              7,357Net
                  income
              
              $
              97,077
              
              $
              23,022Basic
                  income per common share
              
              $
              0.06
              
              $
              0.01Diluted
                  income per common share
              
              $
              0.06
              
              $
              0.01Basic
                  weighted average commonshares
                  outstanding
              
              
              1,685,538
              
              
              1,575,147Diluted
                  weighted average commonshares
                  outstanding
              
              
              1,685,538
              
              
              1,752,545


See
        Accompanying Notes to Consolidated Financial Statements
 
 2


BROWNIE'S
        MARINE GROUP, INC.
 CONSOLIDATED
        STATEMENT OF STOCKHOLDERS' DEFICIT


Additional
              
              
              
              TotalCommon
                  Stock
              
              
              
              Paid-in
              
              Accumulated
              
              Stockholders'Shares
              
              Amount
              
              Capital
              
              Deficit
              
              DeficitBalance,
                  December 31, 2007
              
              
              1,685,538
              
              $
              1,685
              
              $
              839,666
              
              $
              (1,078,648
              )
              $
              (237,297
              )Net
                  income
              
              
              --
              
              
              --
              
              
              --
              
              
              97,077
              
              
              97,077Balance,
                  March 31, 2008 (Unaudited)
              
              
              1,685,538
              
              $
              1,685
              
              $
              839,666
              
              $
              (981,571
              )
              $
              (140,220
              )
  See
          Accompanying Notes to Consolidated Financial Statements
 
 3
 BROWNIE'S
          MARINE GROUP, INC.
 CONSOLIDATED
          STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Three
                    Months Ended March 31,2008
                
                2007Cash
                    flows from operating activities:Net
                    income
                
                $
                97,077
                
                $
                23,022Adjustments
                    to reconcile net income to netcash
                    provided by (used in) operating activities:Depreciation
                    and amortization
                
                
                9,803
                
                
                8,628Change
                    in deferred tax asset
                
                
                524
                
                
                --Changes
                    in operating assets and liabilities:Change
                    in accounts receivable, net
                
                
                11,572
                
                
                (76,806
                )Change
                    in inventory
                
                
                128,172
                
                
                (29,933
                )Change
                    in costs and estimated earnings in excess of
                    billings
                
                
                (334,135
                )
                
                --Change
                    in prepaid expenses and other current assets
                
                
                17,444
                
                
                (42,157
                )Change
                    in accounts payable and accrued liabilities
                
                
                (70,529
                )
                
                11,914Change
                    in customer deposits
                
                
                165,083
                
                
                (12,683
                )Change
                    in other liabilities
                
                
                (3,181
                )
                
                (1,360
                )Change
                    in income taxes payable
                
                
                5,072
                
                
                7,357Change
                    in other liabilities - related parties
                
                
                (16,820
                )
                
                --Change
                    in royalties payable - related parties
                
                
                8,323
                
                
                14,950Net
                    cash provided by (used in) operating activities
                
                
                18,405
                
                
                (97,068
                )Cash
                    flows from investing activities:Purchase
                    of fixed assets
                
                
                (1,032
                )
                
                (1,118,362
                )Net
                    cash used in investing activities
                
                
                (1,032
                )
                
                (1,118,362
                )Cash
                    flows from financing activities:Proceeds
                    from borrowings on notes payable - related parties
                
                
                --
                
                
                100,000Proceeds
                    from borrowings on notes payable
                
                
                --
                
                
                1,000,000Principal
                    payments on notes payable - related parties
                
                
                (11,321
                )
                
                (14,453
                )Principal
                    payments on notes payable
                
                
                (16,431
                )
                
                (5,793
                )Net
                    cash (used in) provided by financing activities
                
                
                (27,752
                )
                
                1,079,754Net
                    change in cash
                
                
                (10,379
                )
                
                (135,676
                )Cash,
                    beginning of period
                
                
                142,516
                
                
                208,187Cash,
                    end of period
                
                $
                132,137
                
                $
                72,511Supplemental
                    disclosure of cash flow information:Cash
                    paid for interest
                
                $
                31,336
                
                $
                9,521Cash
                    paid for income taxes
                
                $
                --
                
                $
                --Supplemental
                    disclosure of non-cash investing activitiesCommon
                    stock issued toward real property purchase onFebruary
                    21, 2007
                
                $
                --
                
                $
                100,000


See
        Accompanying Notes to Consolidated Financial Statements
 
 4
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION
                  OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                  POLICIES
 
 Description
        of business -
        Brownie’s Marine Group, Inc. (hereinafter referred to as the “Company” or
“BWMG”) designs, tests, manufactures and distributes recreational hookah diving,
        yacht based scuba air compressor and Nitrox Generation Systems, and scuba
        and
        water safety products through its wholly owned subsidiary Trebor Industries,
        Inc. The Company sells its products both on a wholesale and retail basis,
        and
        does so from its headquarters and manufacturing facility in Fort Lauderdale,
        Florida. The Company does business as (dba) Brownie’s Third Lung, the dba name
        of Trebor Industries, Inc.
 
 Prior
        to
        August 22, 2007 the Company was known as United Companies Corporation
        (hereinafter referred to as “UCC”). The Company changed its name to Brownie’s
        Marine Group, Inc. during the third quarter of 2007 since it believes BWMG
        more
        closely reflects its line of business, and it also brings brand recognition
        to
        the Company as a result of its existing products.
 
 History -The
        Company was incorporated under the laws of Nevada on November 26, 2001, with
        authorized common stock of 250,000,000 shares with a par value of $0.001.
        On
        August 22, 2007, the Company effectuated a 1-for-100 reverse stock split
        of the
        Common Stock whereby every one hundred shares of Common Stock outstanding
        was
        combined and reduced to one share of Common Stock. Fractional shares were
        rounded up and this resulted in an additional 146 shares issued. All footnotes
        and financial statement amounts that relate to common share data have been
        retrospectively adjusted to reflect the reverse stock split.
 
 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
        950,000 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 144,837
        shares of common stock issued and outstanding; and Trebor Industries, Inc.,
        dba
        Brownies Third Lung, was a manufacturer and distributor of hookah diving,
        and
        yacht based scuba air compressor and Nitrox Generation Systems from its factory
        in Ft. Lauderdale, Florida. The UCC Transaction is considered to be a capital
        transaction in substance, rather than a business combination. Inasmuch, the
        UCC
        Transaction is equivalent to the issuance of stock by Trebor Industries,
        Inc.,
        dba Brownies Third Lung, for the net monetary assets of a non-operational
        public
        shell company, accompanied by a recapitalization. UCC issued 950,000 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 2007 financial statement
        amounts
        to conform to the 2008 financial statement presentation.
 
 5
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION
                  OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 Cash
        and equivalents -
        Only
        highly liquid investments with original maturities of 90 days or less are
        classified as cash and equivalents. These investments are stated at cost,
        which
        approximates market value.
 
 Inventory -
        Inventory is stated at the lower of cost or market. Cost is principally
        determined by using the average cost method that approximates the First-In,
        First-Out (FIFO) method of accounting for inventory. Inventory consists of
        raw
        materials as well as finished goods held for sale. The Company’s management
        monitors the inventory for excess and obsolete items and makes necessary
        valuation adjustments when required.
 
 Fixed
        assets - Fixed
        assets are stated at cost less accumulated depreciation. Depreciation is
        provided principally on the straight-line method over the estimated useful
        lives
        of the assets, which is primarily 3 to 5 years except for the building that
        is
        being depreciated over a life of 39 years. The cost of repairs and maintenance
        is charged to expense as incurred. Expenditures for property betterments
        and
        renewals are capitalized. Upon sale or other disposition of a depreciable
        asset,
        cost and accumulated depreciation are removed from the accounts and any gain
        or
        loss is reflected in other income (expense).
 
 The
        Company periodically evaluates whether events and circumstances have occurred
        that may warrant revision of the estimated useful lives of fixed assets or
        whether the remaining balance of fixed assets should be evaluated for possible
        impairment. The Company uses an estimate of the related undiscounted cash
        flows
        over the remaining life of the fixed assets in measuring their
        recoverability.
 
 Revenue
        recognition -
        Revenues from product sales are recognized when the Company’s products are
        shipped or when service is rendered. Revenues from fixed-price contracts
        are
        recognized on the percentage-of-completion method, measured by the percentage
        of
        cost incurred to date to estimated total cost of each contract. This method
        is
        used because management considers the percentage of cost incurred to date
        to
        estimated total cost to be the best available measure of progress on the
        contracts.
 
 Contract
        costs include all direct material and labor costs and those indirect costs
        related to contract performance, such as indirect labor, supplies, tools,
        repairs, and depreciation costs. General and administrative costs are charged
        to
        expense as incurred. Provisions for estimated losses on uncompleted contracts
        are made in the period in which such losses are determined. Change in job
        performance, job conditions, and estimated profitability may result in revisions
        to costs and income and are recognized in the period in which the revisions
        are
        determined.
 
 Revenue
        and costs incurred for time and material projects are recognized 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 March 31, 2008 and 2007, was $8,524 and $10,798,
        respectively.
 
 Customer
        deposits and return policy -
        The
        Company takes a minimum 50% deposit against custom and large tankfill systems
        prior to ordering and/or building the systems. The remaining balance due
        is
        payable upon delivery, shipment, or installation of the system. There is
        no
        provision for cancellation of custom orders once the deposit has been accepted,
        nor return of the custom ordered product. Additionally, returns of all other
        merchandise are subject to a 15% restocking fee as stated on each sales invoice.
 
 6
 BROWNIE’S
          MARINE GROUP, INC.
 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 carry forwards. 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.
 
 In
        July
        2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty
        in
        Income Taxes—an interpretation of FASB Statement No. 109, (“FIN 48”) which
        clarifies the accounting for uncertainty in tax positions. FIN 48 requires
        the
        recognition of a tax position when it is more likely than not that the tax
        position will be sustained upon examination by relevant taxing authorities,
        based on the technical merits of the position. The Company adopted FIN 48
        in the
        first quarter of 2007 without significant financial impact.
 
 Comprehensive
        income (loss) - The
        Company has no components of other comprehensive income. Accordingly, net
        income
        (loss) equals comprehensive income (loss) for all periods.
 
 Stock-based
        compensation - The
        Company accounts for stock based compensation in accordance with Statement
        of
        Financial Accounting Standards No. 123 revised that requires that the Company
        measures the cost of employee services received in exchange for an award
        of
        equity instruments based on the grant-date fair value of the award. That
        cost is
        recognized over the period the employee is required to provide service in
        exchange for the award.
 
 The
        Company did not issue any stock, warrants or options to employees for
        compensation for the three months ended March 31, 2008.
 
 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 excluded in the
        computation at March 31, 2008 since their effect was antidilutive.
  New
        accounting pronouncements - In
        December 2007, the Accounting Standards Board (“FASB”) issued Financial
        Accounting Statement (“SFAS”) No. 141 (revised 2007), “Business
        Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements
        for how an acquirer recognizes and measures in its financial statements the
        identifiable assets acquired, the liabilities assumed, any noncontrolling
        interest in the acquiree, and the goodwill acquired. SFAS 141R also establishes
        disclosure requirements to enable the evaluation of the nature and financial
        effects of the business combination. SFAS 141R is effective for the Company
        with
        respect to business combinations for which the acquisition date is on or
        after
        January 1, 2009. The Company is currently evaluating the potential impact,
        if any, of the adoption of SFAS 141R on the consolidated financial position,
        results of operations, and disclosures.
 
 7
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 1.
              DESCRIPTION
                  OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES(continued)
  New
        accounting pronouncements (continued) - In December 2007, the FASB issued SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial Statements—an amendment of
        ARB No. 51” (“SFAS 160”). SFAS 160 establishes accounting and reporting
        standards for ownership interests in subsidiaries held by parties other than
        the
        parent, the amount of consolidated net income attributable to the parent
        and to
        the noncontrolling interest, changes in a parent’s ownership interest, and the
        valuation of retained noncontrolling equity investments when a subsidiary
        is
        deconsolidated. SFAS 160 also establishes disclosure requirements that clearly
        identify and distinguish between the interests of the parent and the interests
        of noncontrolling owners. SFAS 160 is effective for the Company as of
        January 1, 2009. The Company is currently evaluating the potential impact,
        if any, of the adoption of SFAS 160 on the consolidated financial position,
        results of operations, and disclosures.
 
 In
        December 2007, the Security and Exchange Commission (“SEC”) issued Staff
        Accounting Bulletin (“SAB”) No. 110 (“SAB 110”). SAB 110 relates to the use of
        the “simplified” method, as discussed in SAB No.107 (“SAB 107”), in developing
        an estimate of expected term of “plain vanilla” share option in accordance with
        SFAS No. 123 (revised 2004), Share-Based Payment. The Staff’s view in SAB 107
        was that it did not expect companies to use the simplified method for share
        option grants after December 31, 2007 since it believed that more detailed
        external information about employee exercise behavior would be available
        to
        companies by this date. Since this is not true in all cases, SAB 110 states
        that
        under certain circumstances, the Staff will continue to accept the use of
        the
        simplified method beyond December 31, 2007. The Company is currently evaluating
        this guidance and does not anticipate it will have significant financial
        impact
 
 In
        February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities-Including an amendment of FASB Statement
        No.
        115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial
        instruments and certain other items at fair value. SFAS 159 is effective
        for the
        first fiscal period beginning after November 15, 2007. The Company did not
        elect
        to measure any eligible financial instruments or assets at fair value as
        of
        March 31, 2008. As a result, the Company did not have any significant financial
        impact as a result of applying the provisions of the statement during the
        first
        quarter ended March 31, 2008.
  In
        September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB 108”).
        SAB 108 relates to the Staff’s view regarding the process of quantifying
        financial statement misstatements. As it relates to the Company, financial
        misstatements as described in SAB 108 prior to the year ended December 31,
        2007
        would not require restatement but rather the cumulative effect presented
        as an
        adjustment to retained earnings at the beginning of the period. For the year
        ended December 31, 2007, the same type of misstatements will require restatement
        of the financial statements for the period. The Company adopted the guidance
        contained within this bulletin during the year ended December 31, 2007 without
        significant financial impact.
 
 In
        September 2006, FASB issued FAS No. 157, Fair Value Measurements (“SFAS 157”).
        SFAS 157 defines fair value, establishes a framework for measuring fair value
        in
        generally accepted accounting principles, and expands disclosures about fair
        value measurements. The provisions of this SFAS 157 shall be applied
        prospectively as of the date of adoption with a limited form of retrospective
        application to certain financial instruments that will result in cumulative
        effect of the change in accounting principle recorded as an adjustment to
        opening retained earnings. The Company adopted FAS 157 on January 1, 2008
        without significant financial impact.
 
 8
  BROWNIE’S
        MARINE GROUP, INC.
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 2.
              INVENTORY
 
 Inventory
        consists of the following as of March 31, 2008:
 Raw
                    materials
                
                $
                309,687Work
                    in process
                
                
                --Finished
                    goods
                
                
                218,445$
                528,132
 
 Inventory
        consists of the following as of December 31, 2007:
 Raw
                    materials
                
                $
                418,123Work
                    in process
                
                
                --Finished
                    goods
                
                
                238,180$
                656,303
 
 3.
              COSTS
                  AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED
                  CONTRACTS
 
 Costs
        in
        excess of billings and estimated earnings on uncompleted contract consists
        of
        the following as of March, 31, 2008:
 
 Costs
                    incurred on uncompleted contracts
                
                $
                259,081Estimated
                    earnings
                
                
                180,154439,235Less:
                    billings to date
                
                
                105,100Billings
                    in excess of costs and estimatedearnings
                    on uncompleted contract
                
                $
                334,135
 
 4.
              PREPAID
                  EXPENSES AND OTHER CURRENT
                  ASSETS
 
 Prepaid
        expenses and other current assets totaling $64,435 at March 31, 2008, consists
        of $22,257 of prepaid insurance, $21,927 of prepaid inventory, $2,429 of
        other
        prepaid expenses, and $17,822 of federal and state income taxes receivable
        due
        for estimated taxes paid and net operating loss carry back.
 
 Prepaid
        expenses and other current assets totaling $81,879 at December 31, 2007,
        consists of $16,770 of prepaid insurance, advertising and software maintenance
        expenses, $17,822 of federal and state income taxes receivable due for estimated
        taxes paid and net operating loss carryback, and $47,287 of prepayments for
        inventory.
 
 9
  BROWNIE’S
        MARINE GROUP, INC.
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 5
              PROPERTY,
                  PLANT AND EQUIPMENT
 
 Property,
        plant and equipment consists of the following as of March 31, 2008:
 Building
                    and land
                
                $
                1,218,362Furniture,
                    fixtures, vehicles and equipment
                
                
                243,7671,462,129Less:
                    accumulated depreciation and amortization
                
                
                (241,002
                )$
                1,221,127
 
 Property,
        plant and equipment consists of the following as of December 31,
        2007:
 Building
                    and land
                
                $
                1,218,362Furniture,
                    fixtures, vehicles and equipment
                
                
                242,7351,461,097Less:
                    accumulated depreciation and amortization
                
                
                (231,199
                )$
                1,229,898
 For
        the
        three months ended March 31, 2008 and 2007, depreciation expense was $9,803
        and
        $8,278, respectively.
 
 On
        February 21, 2007 the Company purchased the corporate headquarters, factory
        and
        distribution center of the Company located at 936/940 NW 1st Street, Ft.
        Lauderdale, FL 33311 from GKR Associates, LLC, an entity in which the Chief
        Executive Officer has an ownership interest. The purchase price was $1,200,000,
        and is secured by a first mortgage payable to the bank of $1,000,000, and
        $100,000 secured by a second mortgage payable to the seller, GKR Associates,
        Inc. The balance of $100,000 was paid by 44,400 shares of the Company’s common
        stock based on market price of the stock on the purchase date. In addition,
        $18,362 of closing expenses were capitalized to the building.
 
  6.
              CUSTOMER
                  CREDIT CONCENTRATIONS
 
 Sales
        to
        Brownie’s Southport Diver’s, Inc. for the three months ended March 31, 2008 and
        2007 represented 14.60% and 34.58%, respectively, of total net revenues for
        the
        period. Sales to Shadow Marine, and Al Masaood Marine and & Engineering
        Division for the three months ended March 31, 2008 represented 19.51%, and
        17.07%, respectively of total Company net revenues. Sales to no other customer
        represented greater than 10% of net revenues for the three months ended March
        31, 2008 and 2007.
 
 The
        brother of Robert Carmichael, the Company’s Chief Executive Officer, as further
        discussed in Note 7 - RELATED
        PARTY TRANSACTIONS ,
        owns
        Brownie’s Southport Diver’s Inc.
  10
 
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 7.
              RELATED
                  PARTY TRANSACTIONS
 
 Notes
        payable - related parties - Notes
        payable - related parties consist of the following as of March 31,
        2008:
 Promissory
                    note payable to the Chief Executive Officer of the
                    Company,secured
                    by Company assets, bearing interest at 10% per annum,due
                    in monthly principal and interest payments of $6,047,
                    maturingon
                    January 15, 2016.
                
                $
                396,012Promissory
                    note payable to an entity owned by the Company’s ChiefExecutive
                    Officer, 940 Associates, Inc., secured by Company assets,bearing
                    interest at 10% per annum, due in monthly principal and interestpayments
                    of $2,861, maturing on January 1, 2016.
                
                
                187,132Promissory
                    note payable due an entity in which the Company’s ChiefExecutive
                    Officer has a financial interest, GKR Associates, LLC., securedby
                    second mortgage on real property, bearing 6.99% interest per
                    annum,due
                    in monthly principal and interest payments of $2,292, maturing
                    onFebruary
                    22, 2012.81,206664,350Less
                    amounts due within one year
                
                
                72,572Long-term
                    portion of notes payable - related parties
                
                $
                591,778
 
 As
        of
        March 31, 2008, principal payments on the notes payable - related parties
        are as
        follows:
 2008
                
                $
                54,5112009
                
                
                74,7942010
                
                
                81,9862011
                
                
                89,8852012
                
                
                78,255Thereafter
                
                
                284,919$
                664,350
  
 11
 
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 7.
              RELATED
                  PARTY TRANSACTIONS(continued)
 Notes
                    payable - related parties-
                    Notes payable - related parties consist of the following as of
                    December
                    31, 2007:Promissory
                    note payable to the Chief Executive Officer of the
                    Company,secured
                    by Company assets, bearing interest at 10% per annum,due
                    in monthly principal and interest payments of $6,047,
                    maturingon
                    January 15, 2016.
                
                $
                404,183Promissory
                    note payable to an entity owned by the Company’s ChiefExecutive
                    Officer, 940 Associates, Inc., secured by Company assets,bearing
                    interest at 10% per annum, due in monthly principal and interestpayments
                    of $2,861, maturing on January 1, 2016.
                
                
                190,941Promissory
                    note payable due an entity in which the Company’s ChiefExecutive
                    Officer has a financial interest, GKR Associates, LLC., securedby
                    second mortgage on real property, bearing 6.99% interest per
                    annum,due
                    in monthly principal and interest payments of $2,292, maturing
                    onFebruary
                    22, 2012.85,657680,781Less
                    amounts due within one year
                
                
                70,924Long-term
                    portion of notes payable - related parties
                
                $
                609,857
 
 Revenues - The
        Company sells products to three entities owned by the brother of the Company’s
        Chief Executive Officer, Brownie’s Southport Divers, Inc., Brownie’s Palm Beach
        Divers, and Brownie’s Yacht Toys. Terms of sale are no more favorable than those
        extended to any of the Company’s other customers. Combined net revenues from
        these entities for the three months ended March 31, 2008 and 2007, was $257,900
        and $352,060, respectively. Accounts receivable from Brownie’s SouthPort
        Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s Yacht Toys at March
        31, 2008, was $0, $2,903, and $718, respectively. Accounts receivable from
        Brownie’s SouthPort Diver’s, Inc., Brownie’s Palm Beach Divers, and Brownie’s
        Yacht Toys at December 31, 2007, was $2,597, $1,038, and $0, respectively.
 
 Royalties - The
        Company has Non-Exclusive License Agreements with the Carleigh Rae Corporation
        (herein referred to as “CRC”), an entity that the Company’s Chief Executive
        Officer has an ownership interest, to license product patents it owns. Based
        on
        the license agreements with CRC, the Company pays royalties ranging from
        $1.00
        to $50.00 per licensed products sold, with rates increasing 5% annually.
        Also
        with CRC, the Company has a Non-Exclusive License Agreement to license a
        trademark of products owned by CRC. Based on the agreement, the Company will
        pay
        the entity $0.25 per licensed product sold, with rates increasing $0.05
        annually.
  12
 
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 7.
              RELATED
                  PARTY TRANSACTIONS(continued)
 
 The
        Company has Non-Exclusive License Agreements with 940 Associates, Inc. (herein
        referred to as “940AI ”), an entity owned by the Company’s Chief Executive
        Officer, to license product patents it owns. Under the terms of the license
        agreements effective January 1, 2005, the Company pays 940AI $2.00 per licensed
        product sold, rates increasing 5% annually. Also with 940AI, the Company
        has an
        Exclusive License Agreement to license the trademark “Brownies Third Lung”,
“Tankfill”, “Brownies Public Safety” and various other related trademarks as
        listed in the agreement. Based on this license agreement, the Company pays
        940AI
        2.5% of gross revenues per quarter.
 
 Total
        royalty expense for the above agreements for the three months ended March
        31,
        2008 and 2007, was $23,620 and $23,438, respectively.
 
 Jeff
        Morris, a greater than 10% beneficial owner of common stock of the Company,
        provides management and strategic consulting services for BWMG. For these
        services, Mr. Morris earned $30,000, and $30,000 from the Company for the
        three
        months ended March 31, 2008, and 2007, respectively.
 
 Other
        liabilities - related parties
 
 At
        March
        31, 2008, Other liabilities - related parties consists of the balance due
        related parties for full settlement of a loan payable due a customer as referred
        to in Note 9 - OTHER
        LIABILITIES - RELATED PARTIES ,
        and an
        amount outstanding due to a shareholder of the Company for consulting services
        rendered as follows:
 Due
                    to Robert M. Carmichael
                
                $
                37,500Due
                    to 940 Associates, Inc.
                
                
                43,281Loan
                    payable to related parties for settlement of customer loan
                    payable
                
                
                80,781Management
                    and strategic consulting service due Jeff Morris
                
                
                20,000Other
                    liabilities - related parties
                
                $
                100,781
 
 At
        December 31, 2007, Other liabilities - related parties consists of the balance
        due related parties for full settlement of a loan payable due a customer
        as
        referred to in Note 8 - LOAN
        PAYABLE ,
        and an
        amount outstanding due to a shareholder of the Company for consulting services
        rendered as follows:
 Due
                    to Brownies Southport Diver’s, Inc.
                
                $
                16,820Due
                    to Robert M. Carmichael
                
                
                37,500Due
                    to 940 Associates, Inc.
                
                
                43,281Loan
                    payable to related parties for settlement of customer loan
                    payable
                
                
                97,601Management
                    and strategic consulting service due Jeff Morris
                
                
                20,000Other
                    liabilities - related parties
                
                $
                117,601
 
 13
 BROWNIE’S
            MARINE GROUP, INC.
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 8.
              ACCOUNTS
                  PAYABLE AND ACCRUED LIABILITIES
 
 Accounts
        payable and accrued liabilities of $326,763 at March 31, 2008 consists of
        $178,004 accounts payable trade, $60,574 balance of legal expenses that were
        a
        Company expense prior to the reverse merger with Trebor Industries, Inc.,
        $69,975 of accrued payroll and related fringe benefits, $9,806 of accrued
        interest, and $8,404 of other liabilities and accruals.
 
 Accounts
        payable and accrued liabilities of $397,292 at December 31, 2007 consists
        of
        $258,923 accounts payable trade, $60,574 balance of legal expenses that were
        a
        UCC expense prior to the reverse merger with Trebor Industries, Inc., $66,593
        of
        accrued payroll and related fringe benefits, and $11,202 of other liabilities
        and accruals.
 
 
 9.
              OTHER
                  LIABILITIES - RELATED PARTIES
 
 In
        June
        2006, the Company borrowed $266,000 from a customer. The proceeds of the
        loan
        were used to satisfy the outstanding principal balance, redemption fees,
        and
        accrued interest totaling $266,777 due under the secured convertible debentures
        held by a third party lender. In July 2007, the Company settled the obligation
        due the customer through a series of transactions that resulted in cancellation
        of amounts due to and from the customer and related parties of the customer
        and
        the Company. The settlement resulted in cancellation of $156,426 of trade
        accounts receivable due the Company from the customer and its related parties,
        assumption of $110,351 of liabilities incurred by the customer due to related
        parties of the Company, and settlement loss of $777. See Note 7. - RELATED  PARTIES for the
        balance due each related party at March 31, 2008 under the settlement agreement.
 
 
 10.
              OTHER
                  LIABILITIES
  Other
        liabilities of $6,296 at March 31, 2008 consists of $4,157 of on-line training
        liability, and $2,139 of deferred tooling expense. Other liabilities of $9,477
        at December 31, 2007 consists of $6,538 of on-line training liability, and
        $2,939 of deferred tooling expense.
 
 Effective
        July 1, 2005, the Company began including on-line training certificates with
        all
        hookah units sold. The training certificates entitle the holder to an on-line
        interactive course at no additional charge to the holder. The number of on-line
        training certificates issued per unit is the same as the number of divers
        the
        unit as sold is designed to accommodate (i.e., a three diver unit configuration
        comes with three on-line training certificates). The certificates have an
        eighteen-month redemption life after which time they expire. The eighteen-month
        life of the certificates begins at the time the customer purchases the unit.
        The
        Company owes the on-line training vendor the agreed upon negotiated rate
        for all
        on-line certificates redeemed payable at the time of redemption. For
        certificates that expire without redemption, no amount is due the on-line
        training vendor. The Company had no historical data with regard to the
        percentage of certificates that would be redeemed versus those that would
        expire. Therefore, until the Company accumulated historical data related
        to the
        certificate redemption ratio, it assumed that 100% of certificates issued
        with
        unit sales would be redeemed. Accordingly, at the time a unit was sold, the
        related on-line training liability was recorded. The same liability was reduced
        as certificates are redeemed and the related payments are made to the on-line
        training vendor.
 
 In
        July
        2007, the Company had accumulated 24 months of historical data regarding
        redemption rates so the liability estimate was adjusted accordingly to reflect
        the actual redemption history. On a go forward basis the Company is maintaining
        a reserve for certificate redemption of 10% that approximates the historical
        redemption rate. For the three months ended March 31, 2008, approximately
        130
        certificates with a liability balance of $2,271 expired unused. Accordingly,
        the
        related liability was reversed and the amount recognized as other income
        during
        the three months ended March 31, 2008.
  14
 BROWNIE’S
            MARINE GROUP, INC.
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 11.
              NOTES
                  PAYABLE
 
 Notes
        payable consists of the following as of March 31, 2008:
 Promissory
                    note payable secured by a vehicle of the Company having acarrying
                    value of $2,617 at March 31, 2008, bearing no interest,due
                    in monthly principal and interest payments of $349,
                    maturingon
                    November 14, 2008.
                
                $
                2,791Revolving
                    Line of Credit secured by a third mortgage on the realproperty
                    of the Company with a carrying value $1,188,986 at March 31,
                    2008,bearing
                    interest at the lender’s base rate plus 1.00% per annum.
                    Interestpayments
                    are due monthly on the outstanding principal balance and theLine
                    of Credit matures on March 5, 2009.
                
                
                --Promissory
                    note payable secured by a first mortgage on the real
                    propertyOf
                    the Company having a carrying value of $1,188,986 at March 31,
                    2008,
                    bearinginterest
                    at 6.99% per annum, due in monthly principal and interestpayments
                    of $9,038, maturing on January 22, 2022.
                
                
                957,318960,109Less
                    amounts due within one year:
                
                
                45,726Long-term
                    portion of notes payable
                
                $
                914,383
  
 15
 
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  11.
              NOTES
                  PAYABLE (continued)
  As
        of
        March 31, 2008, principal payments on the notes payable are as
        follows:
 2008
                
                $
                36,7192009
                
                
                45,2392010
                
                
                48,5042011
                
                
                52,0062012
                
                
                55,760Thereafter
                
                
                721,881$
                960,109
 Notes
        payable consists of the following as of December 31, 2007:
 Promissory
                    note payable secured by a vehicle of the Company having acarrying
                    value of $3,664 at December 31, 2007, bearing no interest,due
                    in monthly principal and interest payments of $349,
                    maturingon
                    November 14, 2008.
                
                $
                3,839Promissory
                    note payable secured by real property of the Companyhaving
                    a carrying value of $1,195,514 at December 31, 2007,
                    bearinginterest
                    at 6.99% per annum, due in monthly principal and interestpayments
                    of $9,038, maturing on January 22, 2022.
                
                
                967,592971,431Less
                    amounts due within one year:
                
                
                46,032Long-term
                    portion of notes payable
                
                $
                925,399
  12.  REVERSE
        STOCK SPLIT
 
 On
        August
        22, 2007, the Company effectuated a 1-for-100 reverse stock split of the
        Common
        Stock whereby every one hundred shares of Common Stock outstanding was combined
        and reduced to one share of Common Stock. Fractional shares were rounded
        up and
        this resulted in an additional 146 shares issued.
  
 16
 
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 13.  STOCK
        WARRANTS
 
 As
        of
        March 31, 2007, all the rights to exercise 285,714 warrants had vested pursuant
        to a Warrant agreement dated January 1, 2005. The exercise price of the warrants
        is $.7 per share, which equaled the bid/ask price of the Company’s common stock
        on January 1, 2005, the effective date of the expired consulting agreement.
        The
        warrants expire twenty-four months after the vesting date of each of tranche
        of
        71,429 at June 30, 2007, December 31, 2007, June 30, 2008, and December 31,
        2008, respectively. Further, the warrants have “piggy-back” registration rights
        and provide for either a cash or cashless exercise. The cashless exercise
        provision provides for a discount in the amount of shares provided at exercise
        based on a formula that takes into account as one of its factors the average
        of
        the closing sale price on the common stock for five trading days immediately
        prior to but not including the date of exercise.
 
 On
        June
        29, 2007 a warrant tranche of 71,429 related to the above agreement was
        exercised. The cashless exercise was elected, and accordingly, 56,894 shares
        of
        common stock were issued. On December 28, 2007, an additional warrant tranche
        of
        71,429 related to the above agreement was exercised. The cashless exercise
        was
        elected, and accordingly, 27,181 shares of common stock were issued. The
        Company
        recognized compensation expense for the stock warrants ratably over the term
        of
        the consulting agreement, January 1, 2005 to December 31, 2006, based on
        the
        fair value of the stock warrants using the Black-Scholes model. As a result,
        issuance of the stock in June and December 2007 were equity only transactions.
 
 On
        the
        date of the reverse stock split, the outstanding warrants underwent a 1-for-100
        split, and amounts in the footnote pre-split have been adjusted to reflect
        the
        share amounts post split.
  
 14.
              EQUITY
                  INCENTIVE PLAN
 
 On
        August
        22, 2007 the Company adopted an Equity Incentive Plan (the “Plan”). Under the
        Plan, Stock Options may be granted to Employees, Directors, and Consultants
        in
        the form of Incentive Stock Options or Nonstatutory Stock Options. Stock
        Purchase Rights, time vested and/performance invested Restricted Stock, and
        Stock Appreciation Rights and Unrestricted Shares may also be granted under
        the
        Plan. The initial maximum number of shares that may be issued under the Plan
        shall be 400,000 shares, and no more than 100,000 Shares of Common Stock
        may be
        granted to any one Participant with respect to Options, Stock Purchase Rights
        and Stock Appreciation Rights during any one calendar year period. Common
        Stock
        to be issued under the Plan may be either authorized and unissued or shares
        held
        in treasury by the Company. The term of the Plan shall be ten years. The
        Board
        of Directors may amend, alter, suspend, or terminate the Plan at any time.
        No
        Options, Stock Purchase Rights or Stock Appreciation Rights were granted
        under
        the Plan for the three months ended March 31, 2008.
 
 
 17
 
 BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 15.  INCOME
        TAXES
 
 The
        components of the provision for income taxes for the three months ended March
        31, 2008 are as follows:
 Current
                    Taxes:Federal
                
                $
                --State
                
                
                (5,072
                )Current
                    Taxes
                
                
                (5,072
                )Change
                    in deferred taxes
                
                
                (698
                )Change
                    in valuation allowance
                
                
                174Provision
                    for income tax benefit
                
                $
                (5,596
                )
 
 The
        current tax federal statutory and state tax rate for the three months ended
        March 31, 2008 was 34% and 15%, respectively. The effective tax rate used
        for
        calculation of the deferred taxes as of March 31, 2008 was 34%.
  The
        following is a summary of the significant components of the Company’s deferred
        tax assets and liabilities at March 31, 2008:
 Deferred
                    tax assets:Stock
                    warrants
                
                $
                33,769Allowance
                    for doubtful accounts
                
                
                2,720Depreciation
                    and amortization timing differences
                
                
                22,174Net
                    loss carry forward
                
                
                52,936On-line
                    training certificate reserve
                
                
                624Total
                    deferred tax assets
                
                
                112,223Valuation
                    allowance
                
                
                (28,056
                )Deferred
                    tax assets net of valuation allowance
                
                
                84,167Less:
                    deferred tax asset - non-current
                
                
                43,595Deferred
                    tax asset - current
                
                $
                40,572
 
 As
        of
        March 31, 2008, the Company has available a net operating loss carry forward
        that will expire in 2026. The Company has established a valuation allowance
        for
        25% of the tax benefit due to the uncertainty regarding
        realization.
 
 
 18
  BROWNIE’S
          MARINE GROUP, INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  15.
              INCOME
                  TAXES(continued)
 
 The
        components of the provision for income taxes for the year ended December
        31,
        2007 are as follows:
 Current
                    Taxes:Federal
                
                $
                12,196State
                
                
                5,626Current
                    Taxes
                
                
                17,822Change
                    in deferred taxes
                
                
                39,030Change
                    in valuation allowance
                
                
                771Provision
                    for income tax benefit
                
                $
                57,623
 
 The
        current tax federal statutory and state tax rate for the year ended December
        31,
        2007 was 0% and 0%, respectively. The effective tax rate used for calculation
        of
        the deferred taxes as of December 31, 2007 was 34%.
  The
        following is a summary of the significant components of the Company’s deferred
        tax assets and liabilities at December 31, 2007:
 Deferred
                    tax assets:Stock
                    warrants
                
                $
                33,769Allowance
                    for doubtful accounts
                
                
                3,060Depreciation
                    and amortization timing differences
                
                
                22,174Net
                    loss carryforward
                
                
                52,936On-line
                    training certificate reserve
                
                
                981Total
                    deferred tax assets
                
                
                112,920Valuation
                    allowance
                
                
                (28,229
                )Deferred
                    tax assets net of valuation allowance
                
                
                84,691Less:
                    deferred tax asset - non-current
                
                
                (52,363
                )Deferred
                    tax asset - current
                
                $
                32,328
 
 As
        of
        December 31, 2007, the Company has available a net operating loss carryforward
        that will expire in 2026. The Company has established a valuation allowance
        for
        25% of the tax benefit due to the uncertainty regarding
        realization.
 
 19


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




**Introductory
      Statements**




Information
      included or incorporated by reference in this filing may contain forward-looking
      statements within the meaning of Section 27A of the Securities Act and
      Section 21E of the Exchange Act. This information may involve known and
      unknown risks, uncertainties and other factors which may cause our actual
      results, performance or achievements to be materially different from the future
      results, performance or achievements expressed or implied by any forward-looking
      statements. Forward-looking statements, which involve assumptions and describe
      our future plans, strategies and expectations, are generally identifiable by
      use
      of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,”
“believe,” “intend” or “project” or the negative of these words or other
      variations on these words or comparable terminology.




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




**Overview**




Brownie’s
      Marine Group, Inc., a Nevada corporation (referred to herein as “BWMG” or “the
      Company”), does business through its wholly owned subsidiary, Trebor Industries,
      Inc., d/b/a Brownie’s Third Lung, a Florida corporation. The Company designs,
      tests, manufactures and distributes recreational hookah diving, yacht based
      scuba air compressor and Nitrox Generation Systems, and scuba and water safety
      products. BWMG sells its products both on a wholesale and retail basis, and
      does
      so from its headquarters and manufacturing facility in Fort Lauderdale, Florida.




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




**Results
      of Operations for the Three Months Ended March 31, 2008, As Compared To the
      Three Months Ended March 31, 2007**




**Net
      revenues** .
      For the
      three months ended March 31, 2008, we had net revenues of $1,194,801 as compared
      to net revenues of $879,257 for the three months ended March 31, 2007, an
      increase of $315,544, or 35.89%. The increase is primarily a result of three
      large custom tankfill projects in process at March 31, 2008 that contributed
      approximately $439,000 to revenue for the period. This increase was partially
      offset by a slight decline in low pressure hookah system sales of approximately
      $10,000, and a decrease in other high pressure tankfill sales of approximately
      $100,000.




**Cost
      of net revenues** .
      For the
      three months ended March 31, 2008, we had cost of net revenues of $829,652
      as
      compared with cost of net revenues of $585,851 for the three months ended March
      31, 2007, an increase of $243,801, or 41.61%. The increase was primarily to
      support the increase in sales volume for the three months ended March 31, 2008
      as compared to same period in 2007. As a percentage of net revenues, cost of
      net
      revenues was up 3%, and this was primarily attributable to the sales mix that
      included the large custom tankfill sales in progress during the first quarter
      of
      2008 without comparable sales contributing to the mix in the first quarter
      of
      2007.




**Gross
      profit.** For the
      three months ended March 31, 2008, we had a gross profit of $365,149 as compared
      to gross profit of $293,406 for the three months ended March 31, 2007, an
      increase of $71,743, or 24.45%. This increase is primarily attributable to
      the
      increase in net revenues for the three months ended March 31, 2008 as compared
      to the same period in 2007.




20




**Operating
      expenses** .
      For the
      three months ended March 31, 2008, we had total operating expenses of $232,821
      as compared to total operating expenses of $251,571 for the three months ended
      March 31, 2007, a decrease of $18,750, or 7.45%. No individual significant
      items
      made up this variance, but rather numerous net changes.




**Other
      (income) expenses, net** .
      For the
      three months ended March 31, 2008, we had other expense of $29,655 as compared
      to other expense of $11,456 for the three months ended March 31, 2007, an
      increase in other expense of $18,199, or 158.86%. The largest components of
      the
      increase in other expense are an increase in interest expense of $10,660
      resulting from three months of interest during the first quarter of 2008 on
      mortgages on the real estate acquired in late February 2007 compared to
      approximately one month of interest on the mortgages during the same period
      in
      2007, and $7,539 decrease in other income primarily from less training liability
      certificates expiring unused during the first quarter of 2008 as compared to
      the
      first quarter of 2007.




**Provision
      for income tax expense** .
      For the
      three months ended March 31, 2008, we had a provision for income tax expense
      of
      $5,596, as compared to $7,357 for the three months ended March 31, 2007, a
      decrease of $1,761, or 23.94%.




**Net
      income.** For
      the
      three months ended March 31, 2008, we had net income of $97,077, as compared
      to
      net income of $23,022 for the three months ended March 31, 2007, an increase
      of
      $74,055, or 321.67%. The net increase is attributable to an increase in
      gross profit of $71,743, a decrease in operating expenses of
      $18,750, an increase in other expenses of $18,199, and a decrease in
      the provision for income tax expense of $1,761.




**Liquidity
      and Capital Resources**




As
      of
      March 31, 2008, we had cash and other current assets of $1,129,373 and current
      liabilities of $1,032,099, or a current ratio of 1.09%.




The
      Company anticipates that cash generated from operations should be sufficient
      to
      satisfy the Company’s contemplated requirements for its current operations for
      at least the next twelve months. The Company does not anticipate any significant
      purchases of equipment during fiscal year 2008. The number and level of
      employees at March 31, 2008 is deemed adequate to maintain the Company's
      operations for at least the next 12 months.




**Certain
      Business Risks**




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




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




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




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




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




21


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




***We
      Depend On the Services of Our Chief Executive Officer***




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




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




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




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




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




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




***We
      May Be Unable To Manage Growth***




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




***Reliance
      on Vendors and Manufacturers***




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




22




***Dependence
      on Consumer Spending***




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




***Government
      Regulations May Impact Us***




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




***Bad
      Weather Conditions Could Have an Adverse Effect on Operating
      Results***




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




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




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




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




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




**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk.**




Market
      risk generally represents the risk of loss that may be expected to result from
      the potential change in value of a financial instrument as a result of
      fluctuations in credit ratings of the issuer, equity prices, interest rates
      or
      foreign currency exchange rates. We do not use derivative financial instruments
      for any purpose.




We
      are
      also subject to interest rate risk on the balance of our revolving credit
      facility that matures on March 5, 2009 with Colonial Bank. Interest on the
      credit facility is variable based on the lender’s base rate plus 1%. Our balance
      at March 31, 2008 under the facility was $0. We do not believe there would
      be a
      large enough increase or decrease in the lender’s base through March 5, 2009
      that would have a material effect on our future results of operations.




23




**Item
      4T. Controls and Procedures**




**Evaluation
      of Disclosure Controls and Procedures**




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




**Changes
      in Internal Controls**




There
      were no changes in our internal controls or in other factors during the period
      covered by this report that have materially affected or are likely to materially
      affect the Company’s internal controls over financial reporting.





24




**PART
      II - OTHER INFORMATION**




**Item
      1.**  **Legal
      Proceedings**




None.




**Item
      1a.**  **Risk
      Factors**




Not
      Applicable to Smaller Reporting Company.




**Item
        2.**  **Unregistered
        sales of equity securities**
  Not
        Applicable.


**Item
      3.**  **Defaults
      Upon Senior Securities**




None.




**Item
      4.**  **Submission
      Of Matters To A Vote Of Security Holders**




None.




**Item
      5.**  **Other
      Information**




Not
      Applicable.





25




**Item
      6. Exhibits**


**Exhibit
                  No.**
              
              **Description**
              
              **Location**2.2
              
              Merger
                  Agreement, dated June 18, 2002 by and among United Companies Corporation,
                  Merger Co., Inc. and Avid Sportswear & Golf Corp.
              
              Incorporated
                  by reference to Exhibit 2.02 Amendment No. 1 to Form S-4 filed
                  June 24,
                  20022.3
              
              Articles
                  of Merger of Avid Sportswear & Golf Corp. with and into Merger Co.,
                  Inc.
              
              Incorporated
                  by reference to Exhibit 2.03 Amendment No. 1 to Form S-4 filed
                  June 24,
                  20023.1
              
              Articles
                  of Incorporation
              
              Incorporated
                  by reference to Exhibit 3.05 Amendment No. 1 to Form S-4 filed
                  June 24,
                  20023.2
              
              Articles
                  of Amendment
              
              Incorporated
                  by reference to the appendix to the Company's Definitive Information
                  Statement on Schedule 14C filed July 31, 20073.2
              
              Bylaws
              
              Incorporated
                  by reference to Exhibit 3.04 to the Registration Statement on Form
                  10-SB5.1
              
              2007
                  Stock Option Plan
              
              Incorporated
                  by reference to the appendix to the Company's Definitive Information
                  Statement on Schedule 14C filed July 31, 200710.1
              
              Share
                  Exchange Agreement, dated March 23, 2004 by and among the Company,
                  Trebor
                  Industries, Inc. and Robert Carmichael
              
              Incorporated
                  by reference to Exhibit 16.1 to Current Report on Form 8-K filed
                  April 9,
                  200410.2
              
              Two
                  Year Consulting Agreement with Jeff Morris effective January 1,
                  2005 for
                  Manage-ment and Strategic Services and Warrants issued in conjunction
                  with
                  the same.
              
              Incorporated
                  by reference to Exhibit 10.14 to Current Report on Form 8-K filed
                  on March
                  11, 2005.10.3
              
              Non-Exclusive
                  License Agreement - BC Keel Trademark
              
              Incorporated
                  by reference to Exhibit 10.18 to United Companies Corporation's
                  10QSB for
                  the quarter ended June 30, 2005 filed August 15, 2005.10.4
              
              Non-Exclusive
                  License Agreement - Buoyancy Compensator (and Dive Belt) Weight
                  System
              
              Incorporated
                  by reference to Exhibit 10.18 to United Companies Corporation's
                  10QSB for
                  the quarter ended June 30, 2005 filed August 15, 2005.10.5
              
              Exclusive
                  License Agreement - Brownie's Third Lung, Brownie's Public Safety,
                  Tankfill, and Related Trademarks and Copyrights
              
              Incorporated
                  by reference to Exhibit 10.18 to United Companies Corporation's
                  10QSB for
                  the quarter ended June 30, 2005 filed August 15, 2005.10.6
              
              Non-Exclusive
                  License Agreement - Drop Weight Dive Belt
              
              Incorporated
                  by reference to Exhibit 10.18 to United Companies Corporation's
                  10QSB for
                  the quarter ended June 30, 2005 filed August 15, 2005.10.7
              
              Non-Exclusive
                  License Agreement - Garment Integrated or Garment Attachable Flotation
                  Aid
                  and/or PFD
              
              Incorporated
                  by reference to Exhibit 10.18 to United Companies Corporation's
                  10QSB for
                  the quarter ended June 30, 2005 filed August 15, 2005.
  26
  **Exhibit
                  No.**
              
              **Description**
              
              **Location**10.8
              
              Non-Exclusive
                  License Agreement - Inflatable Dive Market and Collection Bag
              
              Incorporated
                  by reference to Exhibit 10.18 to United Companies Corporation's
                  10QSB for
                  the quarter ended June 30, 2005 filed August 15, 2005.10.9
              
              Non-Exclusive
                  License Agreement - SHERPA Trademark and Inflatable Flotation Aid/Signal
                  Device Technology
              
              Incorporated
                  by reference to Exhibit 10.18 to United Companies Corporation's
                  10QSB for
                  the quarter ended June 30, 2005 filed August 15, 2005.10.10
              
              Non-Exclusive
                  License Agreement - Tank- Mounted Weight, BC or PFD-Mounted Trim
                  Weight or
                  Trim Weight Holding System
              
              Incorporated
                  by reference to Exhibit 10.18 to United Companies Corporation's
                  10QSB for
                  the quarter ended June 30, 2005 filed August 15, 2005.10.11
              
              Exclusive
                  License Agreement - Brownie’s Third Lung and Related Trademarks and
                  Copyright
              
              Incorporated
                  by reference to Exhibit 10.26 to United Companies Corporation’s 10KSB for
                  the year ended December 31, 2006.10.12
              
              Redemption
                  Agreement - Cornell Capital Partner’s, LP Secured Convertible
                  Debentures
              
              Incorporated
                  by reference to Form 8K filed on June 2, 200610.13
              
              Agreement
                  for Purchase and Sale of Property Between Trebor Industries, Inc.
                  and GKR
                  Associates, Inc. dated February 21, 2007
              
              Incorporated
                  by reference to Exhibit 10.28 to United Companies Corporation’s 10KSB for
                  the year ended December 31, 2006.10.14
              
              First
                  Mortgage dated February 22, 2007 between Trebor Industries, Inc.
                  and
                  Colonial Bank
              
              Incorporated
                  by reference to Exhibit 10.29 to United Companies Corporation’s 10KSB for
                  the year ended December 31, 2006.10.15
              
              Note
                  dated February 22, 2007 payable to GKR Associates, Inc.
              
              Incorporated
                  by reference to Exhibit 10.30 to United Companies Corporation’s 10KSB for
                  the year ended December 31, 2006.10.16
              
              Second
                  Mortgage dated February 22, 2007 between Trebor Industries, Inc.
                  and GKR
                  Associates, LLC
              
              Incorporated
                  by reference to Exhibit 10.31 to United Companies Corporation’s 10KSB for
                  the year ended December 31, 2006.10.17
              
              Promissory
                  Note dated January 1, 2007 payable to Robert M. Carmichael
              
              Incorporated
                  by reference to Exhibit 10.32 to United Companies Corporation’s 10KSB for
                  the year ended December 31, 2006.10.18
              
              Promissory
                  Note dated January 1, 2007 Payable to 940 Associates, Inc.
              
              Incorporated
                  by reference to Exhibit 10.33 to United Companies Corporation’s 10KSB for
                  the year ended December 31, 2006.10.19
              
              Purchase
                  and Sale Agreement with GKR Associates, LLC
              
              Incorporated
                  by reference to Form 8K filed on March 23, 2007.31.1
              
              Certification
                  Pursuant to Rule 13a-14(a)/15d-14(a)
              
              Provided
                  herewith31.2
              
              Certification
                  Pursuant to Rule 13a-14(a)/15d-14(a)
              
              Provided
                  herewith
  27
  **Exhibit
                  No.**
              
              **Description**
              
              **Location**32.1
              
              Certification
                  Pursuant to Section 1350
              
              Provided
                  herewith32.2
              
              Certification
                  Pursuant to Section 1350
              
              Provided
                  herewith







28




**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:
              May 14, 2008
            **Brownie’s
                Marine Group, Inc.**By:*/s/*   
                Robert
                M. CarmichaelRobert
                M. CarmichaelPresident,
                Chief Executive Officer,Chief
                Financial Officer/Principal
                Accounting Officer








29