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


**WASHINGTON,
      DC 20549**





**FORM
      10-KSB**





(MARK
      ONE)





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




For
      the
      fiscal year ended **December
      31, 2007**




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




For
      the
      transition period from _______ to _______.




**COMMISSION
      FILE NO. 000-28321**




**BROWNIE** **’S
      MARINE GROUP, INC.**


(Name
      Of
      Small Business Issuer In Its Charter)




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





(954)
      462-5570


(Issuer’s
      Telephone Number, Including Area Code)








Securities
      registered pursuant to Section 12(b) of the Act:


Title
                of each class
            Name
                of each exchange on which registeredNone
            None





Securities
      registered pursuant to Section 12(g) of the Act:





Common
      Stock





(Title
      of
      class)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months, and (2) has been subject
      to
      such filing requirements for the past 90 days.


Yes
x No
o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B not contained in this form, and no disclosure will be contained,
      to the best of the registrant's knowledge, in the definitive proxy or
      information statement incorporated by reference in Part III of this Form 10-KSB
      or amendment to Form 10-KSB. [   ]





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





The
      Company’s revenues during its most recent fiscal year were
      $3,204,395.





The
      aggregate market value of the Company's voting stock held by non-affiliates
      as
      of March 13, 2008 was approximately $409,671 based on the average closing bid
      and asked prices of such stock on that date as quoted on the Over the-Counter
      Bulletin Board. There were 1,685,538 shares of common stock outstanding as
      of
      March 13, 2008.









**FORWARD-LOOKING
      STATEMENTS AND ASSOCIATED RISKS**





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.





2





**PART
      I**





**Item
              1.**
            **Description
                of Business**





**Overview**





Brownie’s
      Marine Group, Inc., a Nevada corporation (formerly United Companies 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 major players in the diving industry.





The
      Company’s products are classified into three main sales categories: ***Brownie’s
      Third Lung, Brownie’s Tankfill, and Brownie’s Public
      Safety*** **.**





***Brownie’s
      Third Lung*** **,** the
      consistent product category revenue leader for the Company, is comprised of
      Surface Supplied Diving products, commonly called hookah systems. These systems
      allow one to four divers to enjoy the marine environment without the bulk and
      weight of conventional SCUBA gear. We believe that Hookah diving holds greater
      appeal to families with children of diving age than does conventional SCUBA.
      The
      reduction of weight by eliminating the tank allows smaller divers, especially
      children, to participate more actively and enjoyably. In conjunction with the
      hookah systems, Brownie’s Third Lung supplies a variety of other products to
      support this market. These products are sold through SCUBA diving, sporting,
      marine, and boating retailers. A Web-based training methodology was introduced
      in July 2005. Web-based training allows consumers to initiate the required
      training for use of the system on their own schedule. It also addresses the
      training aspect that was previously a sale consideration at point-of-sale.
      Effective July 1, 2005, all hookah units sold included on-line training
      certificates. 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). It is anticipated that the
      final phase of the training will still be completed through traditional dive
      retailers and instructors. The addition of the web based training program has
      expanded the market for Brownie’s since it can now sell hookah systems to the
      non-diving public.





The **** ***Brownie’s
      Tankfill*** ** product
      category ** also
      generates a significant portion of the Company’s revenues, through the design,
      installation and maintenance of yacht-based high-pressure and low-pressure
      compressors for diving on air and mixed gases. Many yacht owners enjoy the
      convenience and freedom of filling their own diving tanks with air, NITROX
      or
      custom mixed gases while out on cruise, freeing them from carrying extra
      cylinders or the need to locate a reputable source in various ports-of-call.
      Brownie’s Tankfill specializes in the design and installation of high-end custom
      systems to do just that. From surveying the vessel for installation requirements
      to custom fabrication of the necessary components, Brownie’s Tankfill provides
      all the services necessary to satisfy this market. The Company has established
      a
      number of relationships with yacht builders to allow shipyards to market and
      sell the Brownie’s Tankfill systems. We believe that every large vessel
      currently in service, being re-fitted, or being built is a potential customer.
      Through OEM relationships we expand our market to reach these customers. Toward
      that end we have grown our number of OEM relationships and continue to pursue
      more through direct contact with yacht-builders.




3




The **** ***Brownie’s
      Public Safety*** product
      category provides integrated and stand-alone flotation and emergency/rescue
      equipment for use by fire departments and other government agencies in their
      on-water/near-water activities. “Rescue, not Recovery” is the marketing slogan
      for this product category, and the driving force behind development. We believe
      municipalities and government agencies can increase their own safety while
      responding more quickly in emergencies through the use of our products.




**Our
      Products and Services by Category and Their Related Websites**





**Brownie’s
      Third Lung (** **www.browniedive.com** **)
      -** Surface
      Supplied Air (SSA), Hookah, (Low Pressure Units) - Recreational surface supplied
      air units (gas and electric), Commercial surface supplied air units (gas and
      electric), Pressurized snorkel (battery), Egressor packages and regulators,
      hookah hoses and regulators, Drop Weight Cummerbelt, Dive weight belts, SeaDoo
      Sea Scooters, Twin-trim, Diving hose, Diving kits, Dive Hose connections,
      Replacement SS engines, compressors, miscellaneous service parts, SSA
      accessories including but not limited to gear bags, dog snares, and keel and
      trim weight packages.





**Brownie’s
      Tankfill (** **www.tankfill.com** **)
      -** Tankfill
      Systems (High And Low Pressure Units) -Yacht pro automated compressors
      (heavy-duty service capacity), Yacht pro automated compressors (medium-duty
      service capacity), Marine basic compressors (light-duty service capacity),
      Bauer
      portable compressors (light-duty service capacity), Custom tankfill and nitrox
      generation systems for yachts, NitroxMakers, Four-way fill manifolds, Remote
      fill control panels, High pressure storage/cascade systems, Custom tank racks,
      Kaeser low pressure compressors and components, E-Reel diving systems, hookah
      diving compressor for boat installation, Design and engineering services
      including but not limited to AutoCAD, Nitrox generation, and custom gas mixing,
      Repairs and service on all products sold.





**Brownie’s
      Public Safety (** **www.browniespublicsafety.com** **)
      -** Public
      Safety Dive Gear and Accessories -SHERPA, HELO systems, Rapid Entry System
      (RES), Garment integrated personal flotation device (water extrication buoyancy
      system: WEBS), Fast float system, Personal life raft, Surf shuttle, lift bags,
      various other safety r elated
      accessories.





**Some
      of the Company’s Products in Depth**





***Surface
      Supplied Air System:*** The
      Company produces a line of Surface Supplied Diving products, commonly called
      hookah systems. These systems allow one to four divers to enjoy the marine
      environment up to 90 feet without the bulk and weight of conventional
      SCUBA-gear. We believe that hookah diving holds greater appeal to families
      with
      children of diving age than does conventional SCUBA. The reduction of weight
      by
      eliminating the tank allows smaller divers, especially children, to participate
      more actively and enjoyably. The design of our product also reduces the effort
      required to both transport and use it. We believe the PELETONTM Hose System
      revolutionizes hose management for recreational surface supplied diving. It
      reduces the work required of any single diver by dispersing the load over the
      entire group. We use a single, larger diameter hose as a main downline with
      up
      to four individual hoses attached to it. This configuration not only reduces
      the
      weight and bulk of the hose required, but also reduces drag and entanglement.
      An
      entire line of deck-mounted systems is available for commercial applications
      that demand extremely high performance. In addition to the gasoline-powered
      units, a series of electric powered systems is also available for light to
      commercial duty. Powered by battery for portability or household current for
      virtually unlimited dive duration, these units are used primarily by businesses
      that work in a marine environment.




4




***E-Reel
      and Built-in Battery Systems:*** Taking
      convenience one step further, the Company has developed two surface supplied
      air
      products that it believes makes boat diving even easier. The Built-in Battery
      System builds a battery powered electric unit into the boat, eliminating the
      need to transport the compressor/motor assembly. The need for a flotation tube
      is also removed, as the boat itself serves in that capacity. The E-Reel advances
      this idea by adding a reel system to provide compact storage of up to 150 feet
      of hose. Boaters can perform their own in-water maintenance and inspections,
      or
      just dive for enjoyment. The hose is manually pulled from the reel supporting
      up
      to two divers to a depth of fifty feet. When the dive is complete, the hose
      is
      automatically recoiled and stowed by the simple activation of a switch.





***Kayak
      Diving Hose Kits:*** **** This
      product allows the use of a conventional SCUBA cylinder, but does not require
      the diver to wear it.  The
      cylinder remains above the surface, in a kayak or boat, and a hose ranging
      from
      20 to 150 feet allow the diver to explore the surrounding area.





***Drop
      Weight Cummerbelt:*** The
      patented Drop Weight Cummerbelt is available with all our diving systems, and
      brings a new dimension to weighting systems. The belt will accommodate waist
      sizes from 24 to 54 inches and is depth compensating. It features two pockets,
      each capable of holding up to 10 pounds of block or shot weight. Each pocket
      can
      be instantly release by either hand, allowing the diver to achieve positive
      buoyancy in an emergency while retaining the belt itself. Additionally, the
      design of this belt provides for expanded capability. By adding an optional
      sleeve that zips onto the back of the belt, an egress, or bailout system, can
      be
      added. The Egressor Add-on Kit contains the sleeve, a 6 or 13 cubic foot SCUBA
      cylinder, and a SCUBA regulator. In addition to the added safety inherent in
      this design, many other uses for this present themselves, such as propeller
      clearing, overboard item retrieval and pool maintenance, to name only a
      few.





***Bell
      Bottom Flag Bag (BBFB):*** Is what
      we believe is a unique product providing the diver with a collection bag at
      depth, a marker (floating flag) at the surface and a lifting device independent
      of the diver as well as an ascent safety device. This product allows the diver
      to minimize the amount of gear needed for safety or the harvest of
      seafood.





***BC
      KEEL Counterweight System:*** Is what
      we believe is a revolutionary ballast system designed to offset the inherent
      buoyancy of a SCUBA tank and provide the diver with a more reliable ‘face -up’
surface position. We believe our product has the technical and affordable
      potential to become the “primary ballast system” with the right promotion and
      education of the diving public. There are four most popular items that almost
      ALL divers buy before the completion of Open Water I Certification: Mask,
      Snorkel, Fins, and Weight system, because these items are affordable, small,
      universal, and PERSONAL.





***Tankfill
      Compressors:*** Many
      yacht owners enjoy the convenience and freedom of filling their own diving
      tanks
      with air, NITROX or custom mixed gases while out on cruise, freeing them from
      carrying extra cylinders or the need to locate a reputable source in various
      ports-of-call. Brownie’s Tankfill specializes in the design and installation of
      high-end custom systems to do just that. From surveying the vessel for
      installation requirements to custom fabrication of the necessary components,
      Tankfill provides all the services necessary to satisfy this market. We believe
      that every large vessel currently in service, being re-fitted, or being built
      is
      a potential customer. Through OEM relationships we have expanded our market
      to
      reach these customers. Our light duty compressor, the Marine Basic is
      specifically designed and built to withstand the marine environment with all
      components and hardware impervious to spray from the elements. The Yacht Pro
      series contains models for both medium-duty applications, such as recreational
      divers and small groups, and heavy-duty use as found on research vessels,
      commercial operations and live-aboard dive boats. All Yacht Pro models come
      with
      the Digital Frequency Drive, which is a Brownie’s Tankfill innovation. The
      Digital Frequency Drive eliminates the spike previously experienced in starting
      the compressor, eliminating the need to ration the boat’s electrical usage by
      shutting down components when the compressor is needed *.* Brownie’s
      utilizes an AutoCAD industrial drawing program to design, engineer and maintain
      drawings of its various products. Custom design work is done in-house for major
      product installations and in conjunction with other entities.




5




***NitroxMakerTM:*** We
      believe Nitrox has become the gas of choice for informed recreational diving
      the
      world over. What was once only available from land based gas mixing facilities
      is now easily accessible to the yacht diver. With a Brownie’s NitroxMakerTM, the
      user simply dials-in a desired oxygen level from 21% to 40%, eliminating the
      need to transport and handle pure oxygen. The resulting diving gas mix is
      monitored with digital oxygen analyzers, removing the calculations required
      to
      blend or mix the gas.





***Rapid
      Entry System (RES) and HELO System:*** The
      Brownie’s Public Safety product line exists to address the needs of the public
      safety dive market. The inherent speed and ease of donning our Drop Weight
      Cummerbelt with Egressor Add-on Kit identified it as an obvious choice for
      rapid
      response for water-related emergencies. A first-responder or officer on-scene
      can initiate the location and extraction of victims while the dive team is
      en-route, saving valuable time and increasing the chances for survival of
      victims. The RES is a small SCUBA system that can be quickly donned over
      clothes, usually in less than sixty seconds. Its small size allows it to be
      stored in areas that would never accommodate a full set of SCUBA gear. The
      13
      cubic foot aluminum tank can provide up to 15 minutes of air at the surface.
      The
      air cell remains stowed under the protective cover and can be partially inflated
      to achieve positive flotation. The cover’s specially designed break-away zipper
      bursts open to provide instant inflation yet “heals” and can be repacked and
      fastened quickly in the field. The HELO offers all the same features, but has
      been specially designed and modified for rescue divers working from helicopters.
      By placing the cylinder in the front and adding leg straps, the HELO allows
      divers to use the standard seating configurations. The advantages of this system
      over full sized SCUBA rigs are increased mobility for the diver and diminished
      space requirements for the gear. Since the bottle is mounted at the diver’s
      waist, he can more easily control his gear during deployment, further adding
      to
      the comfort and safety.





**Market
      Data**





The
      Company operates in both the SCUBA Diving Industry and the Marine Industry.
      The
      following is general market data for both:





**SCUBA
      Diving Industry**





The
      following data is based on information reported on Professional Association
      of
      Dive Instructors’ (PADI) website, www.padi.com, as of March 15, 2006: PADI
      certifies 60% of all new divers in the United States. PADI issued 526,904 new
      divers certifications worldwide in 2000 (the most recent information available).
      (Thus, per our extrapolation, an estimated 878,173 new divers were certified
      by
      all the training agencies collectively worldwide in 2000). PADI estimates that
      the range of active divers in the United States ranges from 1.6 million to
      2.9
      million based on data it collected. Per PADI, the largest number of SCUBA
      certifications completed each year in the United States has been in Florida.
      Also, per PADI’s statistics, the number of certifications issued by PADI each
      year has increased consistently since 1967. As of March 15, 2008, this
      information is no longer published on PADI’s website, nor is any updated
      information provided. However, the Company believes the statistics should have
      remained relatively consistent. Unfortunately, the number of active Scuba divers
      and new Scuba divers certified each year is data that no known source reports
      on
      currently. It is data that many speculate on throughout the Dive industry,
      but
      that no one reports on with certainty.





**Marine
      Industry**





The
      following data is based on information published by the National Marine
      Manufacturers Association (NMMA), www.nmma.org, as of March 15, 2008:
      Recreational boating contributed approximately $39.5 billion in 2006 to the
      nation’s economy, an increase of 6% from 2005. There were 12.7 million boats
      registered in the United States in 2005, and of this amount, Florida captured
      the number one ranking with 988,652 registrations among all the states. Total
      dollars spent on new power boats, motors, trailers and accessory purchases
      in
      2006 was $16.8 billion up from $15.4 billion in 2005, with Florida ranking
      number one among all the states capturing $2.4 billion of this market, up from
      $2.1 billion. Aftermarket accessory sales fell an approximate 5% in 2006, from
      $2.9 billion in 2005 to $2.8 billion in 2006. However, from 2003 to 2006 the
      marine aftermarket accessory market has grown from $2.4 billion to $2.8 billion,
      or an increase of 16.67%. Also, over the past nine years aftermarket accessories
      sales have more than doubled from $1.2 billion in 1997 to $2.8 billion in
      2006.





6





**Product
      Target Markets**





The
      Company sells a variety of products that fall primarily into three categories,
      Brownie’s Third Lung, Brownie’s Tankfill, and Brownie’s Public Safety Diving.
      While all of our offerings are marine based, each product category targets
      a
      slightly different consumer and approaches its target group in a different
      manner. Due to the common water-based theme, some of the markets will overlap,
      thereby qualifying the same customer for more than one major product. Brownie’s
      Third Lung, the Surface Supplied Air or hookah business has both retail and
      wholesale groups.  We believe that a significant portion of the
      approximately 988,652 reported registered boat owners in Florida, are potential
      customers for our recreational systems. In past years our product was more
      likely to reach them through SCUBA diving retailers.  In mid 2005, in an
      effort to expand our Scuba diving retailer market and to reach additional,
      non-diving consumers, the Company implemented a web-based training program
      to
      expand the availability of our product to marine retailers who cater, for the
      most part, specifically to boaters.  Brownie’s Tankfill targets a similar
      group, the boating community, but concentrates its attention on boats over
      30
      feet in length.  We have enjoyed a measure of success by approaching the
      consumer directly. We also continue to establish relationships with boat yards
      building luxury vessels throughout the world by offering them an OEM policy
      and
      pricing structure. Our newest market is that for Brownie’s Public Safety
      Diving.  We have identified municipalities and government agencies, both in
      the United States and abroad, as our primary consumer. The Rapid Entry System
      (RES) is perhaps the product with the largest recognition within this product
      category. Although the United States and predominantly Florida have been our
      past focus, we continue to search for distributors both nationally and abroad
      for all of our products.





**Tradenames
      and Patents**





**Tradenames**





The
      Company has licensed from two entities in which the Chief Executive Officer
      has
      an ownership interest, the exclusive use of the following registered and
      unregistered tradenames, trademarks and service marks for the terms of their
      indefinite lives: Brownie’s Third Lung, browniedive.com, Brownie’s, Brownie’s
      Third Lung oval symbol, browniedive, NitroxMaker, HELO, RES, fast float rescue
      harness, tankfill.com, browniestankfill, browniestankfill.com,
      browniespublicsafety.com, and browniespublicsafety, Peleton Hose System,
      Twin-Trim, Kayak Diving Hose Kit, Bell Bottom Flag Bag, and Brownie’s
      Dogsnare.





The
      Company has licensed from an entity that the Chief Executive Officer has an
      ownership interest, the non-exclusive use of the following registered and
      unregistered trademarks, trade names, and service marks for the terms of their
      indefinite lives: SHERPA, BC keel, and Garment integrated personal flotation
      device (GI-PFD).





**Patents**





The
      Company has licensed from two entities that the Chief Executive Officer has
      an
      ownership interest, the non-exclusive use of the following issued and pending
      Patents for the terms of their respective lives ranging from 10 to 20
      years:





***Issued:*** ** Drop
      Weight Dive Belt (Drop Weight Cummerbelt), Combined Life Vest Buoyancy
      Compensator (BC/PFD and Separating Life Vest), Water Safety Survival System
      (Non-Releasable Tank Mounted Counterweight and Weight Ballasting Systems note:
      includes BC Keel), Separating Life Vest Multifunction Buoyancy Compensator
      (MC/PFD and Continuation in Part to the Water Safety Survival System), Garment
      Integrated Personal Flotation Device (GI-PFD), Inflatable Dive Marker Collection
      Bag (Bell Bottom Flag Bag).





***Pending:*** ** Break
      Away Keel with Neutralizing Buoyancy Offset (Advanced BC Keel Design), and
      SHERPA.





7




**Marketing**





**Print
      Literature, Public Relations, and Advertising**





We
      have
      in-house graphic design and public relations departments to create and maintain
      product support literature, catalogs, mailings, web-based advertising,
      newsletters, editorials, advertorials, and press releases. We also target
      specific markets by selectively advertising in journals and magazines that
      we
      believe reach our potential customers.





**Tradeshows**





In
      2007
      the Company was represented at the following annual trade shows: Miami Yacht
      and
      Brokerage Show, Fort Lauderdale International Boat Show, and International
      Boat
      Exhibitors Exchange (IBEX).





**Websites**





The
      Company has several web sites: www.browniedive.com, www.tankfill.com, and
      www.browniespublicsafety.com. Additionally, all our products are marketed on
      our
      primary customers’ website. In addition, to these websites, numerous other
      websites have quick links to the Company’s websites. Our products are available
      domestically and internationally. Internet sales and inquiries are also
      supported by the Company as a preferred method of many of our customers,
      particularly International customers.





**Distribution**





Our
      products are distributed to our customers primarily by common carrier.





**Expansion
      Goal**





The
      Company has expanded in the past through internal growth and current plans
      are
      to do the same. Should an opportunity arise in the future for a business
      acquisition that we believe will complement our business strategically or expand
      our market share, we will evaluate its feasibility at that time.





**Product
      Research and Development (R&D)**





We
      continuously work to provide our customers with both new and improved products.
      We offer research and development services to not only the related entities
      we
      license our patents and trademarks from, but also to other customers as well.
      R&D services for customers and the related entities are invoiced in the
      normal course of business. In addition, we are working on internal research
      and
      development projects toward the goal of developing some of our own patentable
      products. Research and development costs for the year ended December 31,
      2007 and 2006, were $3,780 and $7,140, respectively.





**Government
      Regulations**





The
      SCUBA
      industry is self-regulating; therefore, the Company is not subject to government
      industry specific regulation. Nevertheless, the Company strives to be a leader
      in promoting safe diving practices within the industry and believes it is at
      the
      forefront of self-regulation through responsible diving practices. The Company
      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 the Company’s operation and profitability will
      not be subject to more restrictive regulation or increased taxation by federal,
      state, or local agencies in the future.





8




**Customers**





We
      are
      predominantly a wholesale distributor to retail dive stores, marine stores,
      and
      shipyards. This includes approximately 500 independent Brownie dealers. We
      retail our products to including, but not limited to, boat owners, recreational
      divers and commercial divers. Our largest customer and Brownie dealer is
      Brownie’s Southport Diver’s, Inc. (BSD), a related entity owned by the brother
      of Robert Carmichael, the Company’s Chief Executive Officer. Sales to BSD for
      the years ended December 31, 2007 and 2006 represented, 22.4% and 16.4%,
      respectively, of total Company sales. Sales to Enpro International, Inc. for
      the
      year ended December 31, 2006 represented 17.87% of total Company net revenues.
      Sales to no other customer represented greater than 10.00% of net revenues
      for
      the years ended December 31, 2007 and 2006.





**Raw
      Materials**





Principal
      raw materials for our business include machined parts such as rods, pistons,
      bearings; hoses; regulators; compressors; engines; high-pressure valves and
      fittings; sewn goods; and various plastic parts including pans, covers, intake
      staffs, and quick release connections. Principal suppliers of these materials
      to
      us are Kuriyama, Advantage Plastics of New York, Gates Rubber, Ocean Divers
      Supply, Anderson Metals, East Coast Plastics, Center Star, Bauer, Leeson
      Electric, Sagittarius, Campbell Hausfield, Roberts Supply, Robin America Subaru,
      and Florida Fluid Systems Technology Inc. Most materials are readily available
      from multiple vendors. Some materials require greater lead times than others.
      Accordingly, we strive to avoid out of stock situations through careful
      monitoring of these inventory lead times, and through avoiding single source
      vendors whenever possible.





**Competition**





We
      consider the most significant competitive factors in our business to be low
      prices, shopping convenience, the variety of available of products,
      knowledgeable sales personnel, rapid and accurate fulfillment of orders, and
      prompt customer service. We currently recognize one significant competitor
      in
      hookah sales and two significant competitors in high pressure tankfill sales.
      Products from the hookah competitor and those from one of the tankfill
      competitors are very similar to ours as the principals in both received their
      training in the industry from Brownie’s. Brownie’s other competitor in high
      pressure tankfill is a large multi-national company that does not offer
      significant customization, thereby we believe reducing our head-to-head
      competition in many cases. We believe we do not have significant competitors
      in
      the Brownie’s Tankfill line of high-end custom yacht packages.





Overall,
      we are operating in a moderately competitive environment. We believe that the
      price structure for all the products we distribute compares favorably with
      the
      majority of our competitors based on quality and available features. While
      certain of our competitors offer lower prices on some similar products, we
      believe that few can offer products and services which are comparable to those
      of ours in terms of convenience, available features, reliability, and quality.
      In addition, most of our competitors offer only high or low-pressure products
      and services where we are able to fulfill both needs.





**Personnel**





We
      currently have eighteen (18) full time employees at our facility in Fort
      Lauderdale, Florida, seven (7) are classified as, exempt, administrative or
      management, and eleven (11) are classified as non-exempt, factory or
      administrative support. We utilize consultants when needed in the absence of
      available in-house expertise. Our employees are not covered by a collective
      bargaining agreement.





**Seasonality**





The
      current main product categories of our business, Brownie’s Third Lung and
      Brownie’s Tank Fill, are seasonal in nature. The peak season for Brownie’s Third
      Lung’s products is the second and third quarters of the year. The peak season
      for Brownie’s Tank Fill’s products is the fourth and first quarters of the year.
      Since the seasons compliment one another, we are able to shift cross-trained
      factory and warehouse personnel between the two lines of business as needed.
      Thus, the Company is able to avoid the down time normally associated with
      seasonal business.




9




**Item
              2.**
            **Description
                of Property**





The
      corporate headquarters, factory and distribution center of the Company is
      located at 936/940 NW 1st Street, Ft. Lauderdale, FL 33311. Through February
      20,
      2007, the facility was leased from GKR Associates, LLC, an entity in which
      the
      Chief Executive Officer has an ownership interest, for approximately $10,000
      per
      month. On February 21, 2007 the Company acquired the facility from the related
      party entity for cash and other consideration. The
      property and facilities were purchased for $1,100,000 and 44,440 shares of
      restricted common stock of the Company. The Company financed the majority of
      the
      purchase price under a 15-year mortgage for $1,000,000. The current interest
      rate on the mortgage is 6.99%. The Company also issued a promissory note for
      $100,000 of the purchase price, which is payable over 60-months at 6.99% annual
      interest. The promissory note provides for a late charge of 10% due on any
      payment not received within five business days of payment date. The promissory
      note is further secured by a second mortgage on the property. The shares were
      valued at $2.25 per share. The Company received an independent appraisal which
      valued the property and facilities at approximately $1,200,000. Subsequent
      to
      the closing of the sale, the shares issued to the related party entity were
      distributed to its shareholders. The Company's Chief Executive Officer received
      14,813 shares pursuant to the distribution. The
      facilities are comprised of approximately 16,000 square feet of space of which
      approximately 7,500 square feet is office, and the remainder is factory and
      warehouse space. We believe that the facilities are suitable for their intended
      purpose, are being efficiently utilized and provide adequate capacity to meet
      demand for the foreseeable future.





**Item
                3.**
              **Legal
                  Proceedings**





None.





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





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





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





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





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





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





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





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




10




**PART
      II**





**Item
                5.**
              **Market
                  for Common Equity, Related Stockholder Matters, and Small Business
                  Issuer
                  Purchases of Equity
                  Securities**





The
      Company’s common stock was quoted on the Over-the-Counter Bulletin Board under
      the symbol “UCPJ” through August 22, 2007 at which time the symbol was changed
      to “BWMG”. The Company’s high and low bid prices by quarter during 2007 and
      2006, as provided by the Over the Counter Bulletin Board are provided below
      and
      have been adjusted retrospectively for the 1-100 reverse stock split that was
      effectuated on August 23, 2007. These quotations reflect inter-dealer prices,
      without retail mark-up, mark-down or commission, and may not necessarily
      represent actual transactions. On March 13, 2008, the closing price of our
      common stock, as reported on the Over-the-Counter Bulletin Board, was $0.60
      per
      share.




**Calendar
                Year 2007****High
                Bid**
            
            **Low
                Bid**First
                Quarter
            
            $
            5.10
            
            $
            1.60Second
                Quarter
            
            $
            6.70
            
            $
            3.10Third
                Quarter
            
            $
            3.50
            
            $
            1.15Fourth
                Quarter
            
            $
            2.50
            
            $
            1.10





**Calendar
                Year 2006****High
                Bid**
            
            **Low
                Bid**First
                Quarter
            
            $
            2.60
            
            $
            0.20Second
                Quarter
            
            $
            2.20
            
            $
            0.90Third
                Quarter
            
            $
            2.60
            
            $
            1.40Fourth
                Quarter
            
            $
            2.20
            
            $
            1.40





**Holders
      of Common Stock**





As
      of
      March 13, 2008, we believe the Company had in excess of 250 shareholders of
      record.





**Dividends**





We
      have
      not paid any dividends on our common stock and do not anticipate paying any
      cash
      dividends in the foreseeable future. We intend to retain any earnings to finance
      the growth of the business. We cannot assure you that we will ever pay cash
      dividends. Whether we pay any cash dividends in the future will depend on the
      financial condition, results of operations and other factors that the Board
      of
      Directors will consider.





**Securities**  **Authorized**  **for
      Issuance Under Equity Compensation Plans**





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 year ended December 31, 2007.





11





**Sales
      of Unregistered Securities**





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





Pursuant
      to a warrant dated January 1, 2005, the Company issued 56,894 and 27,181 shares
      of common stock on June 29, 2007 and December 28, 2007, respectively. The
      issuances represented cashless exercises of two warrant tranches of 71,429
      shares each.





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





**Item
                6.**
              **Management's
                  Discussion and Analysis or Plan of
                  Operations**





**Overview**





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





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





**Financial
      Performance**





For
      the
      years ended December 31, 2007 and 2006, BWMG had net income of $62,460 and
      $565,793, respectively.





**Significant
      Accounting Policies**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      a
      wide variety of estimates and assumptions that affect (i) the reported amounts
      of assets and liabilities and disclosure of contingent assets and liabilities
      as
      of the date of the financial statements, and (ii) the reported amounts of
      revenues and expenses during the reporting periods covered by the financial
      statements. Our management routinely makes judgments and estimates about the
      effect of matters that are inherently uncertain. As the number of variables
      and
      assumptions affecting the future resolution of the uncertainties increases,
      these judgments become even more subjective and complex. We have identified
      certain accounting policies that are most important to the portrayal of our
      current financial condition and results of operations. Our significant
      accounting policies are as follows:





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)
      accounting method. 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.




12




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





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





Revenue
      recognition –
      Revenues from
      product sales are recognized when the Company’s products are shipped. 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.





The
      asset, “Costs and estimated earnings in excess of billings on uncompleted
      contracts”, represents revenues recognized in excess of amounts billed. The
      liability, “Billings in excess of costs and estimated earnings on uncompleted
      contracts”, represents billings in excess of revenues recognized. Claims are
      included in revenues when realization is probable and the amount can be reliably
      estimated.





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





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





Advertising
      and marketing costs– The
      Company recognizes advertising expenses in accordance with Statement of Position
      93-7 “Reporting on Advertising Costs.” Accordingly, the Company expenses the
      costs of producing advertisements at the time production occurs, and expenses
      the costs of communicating advertisements in the period in which the advertising
      space or airtime is used. Advertising and trade show expenses incurred for
      the
      year ended December 31, 2007 and 2006, were $25,590 and $44,402,
      respectively.





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





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.




13




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





The
      Company did not issue any stock, warrants or options, to employees for
      compensation for the year ended December 31, 2007.





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





Earnings
      (loss) per common share– Basic
      earnings (loss) per share excludes any dilutive effects of options, warrants
      and
      convertible securities. Basic earnings (loss) per share is computed using the
      weighted-average number of outstanding common shares during the applicable
      period. Diluted earnings (loss) 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.





**Recent
      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.





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 shall apply
      SFAS 159 in the calendar year beginning January 1, 2008 and does not anticipate
      significant financial impact as a result of adoption.





14





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 is required to adopt FAS 157 on January
      1, 2008 and does not expect significant financial impact as a result of
      adoption.





The
      following discussion and analysis of the Company’s financial condition and
      results of operations are based upon the Company’s consolidated financial
      statements, which have been prepared in accordance with accounting principles
      generally accepted in the United States. The preparation of these financial
      statements requires the Company to make estimates and judgments that affect
      the
      reported amounts of assets, liabilities, revenues and expenses, and related
      disclosure of contingent assets and liabilities. On an on-going basis, the
      Company evaluates its estimates, including those related to allowance for
      doubtful accounts and deferred income tax assets. The Company bases its
      estimates on historical experience and on various other assumptions that are
      believed to be reasonable under the circumstances, the results of which form
      the
      basis for making judgments about the carrying values of assets and liabilities
      that are not readily apparent from other sources. Actual results may differ
      from
      these estimates under different assumptions or conditions.





**Results
      of Operations for the Year Ended December 31, 2007, As Compared To the Year
      Ended December 31, 2006**





The
      following discussion of the Company’s results of operations compares BWMG year
      ended 2007 operations activities, which includes the results of operations
      for
      BWMG’s wholly-owned subsidiary Trebor Industries, Inc., d/b/a Brownie’s Third
      Lung, with 2006.





***Net
      Revenues.*** For the
      year ended December 31, 2007, we had revenues of $3,204,395 as compared to
      revenues of $4,203,025 for the year ended December 31, 2006, a decrease of
      $998,630 or 23.76%. Overall tankfill system sales and hookah system sales were
      down. This decrease is primarily attributable to an overall decrease in sales
      for all product categories. The Company believes this decline mirrors the
      decline being experienced by the dive and marine industry as a whole in 2007.
      The Company further believes the industry decline in sales is a result of less
      discretionary income available to the consumer as a result of economic
      conditions, including but not limited to increased fuel costs.





***Cost
      of Net Revenues.*** For the
      year ended December 31, 2007, we had cost of net revenues of $2,148,843 as
      compared with cost of net revenues of $2,711,984 for the year ended December
      31,
      2006, a decrease of $563,141 or 20.76%. The decrease is primarily attributable
      to the decrease in sales volume resulting in a decrease in material costs and
      contract expenses of approximately $485,000 and $80,000, respectively.





***Gross
      Profit.*** For the
      year ended December 31, 2007, we had a gross profit of $1,055,552 as compared
      to
      gross profit of $1,491,041 for the year ended December 31, 2006, a decrease
      of
      $435,489 or 29.21%. This decrease is primarily attributable to a decrease in
      net
      revenues with a slightly less percentage decrease in cost of net
      revenues.





***Operating
      Expenses.*** For the
      year ended December 31, 2007, we had total operating expenses of $957,263 as
      compared to total operating expenses of $1,014,448 for the year ended December
      31, 2006, a decrease of $57,185 or 5.64%. This decrease is comprised of numerous
      net changes. However, some of the more notable changes in 2007 are a decrease
      in
      rent expense of approximately $103,000 since the real estate that was rented
      in
      2006 was purchased in February 2007, an approximate $100,000 decrease in
      professional fees associated with warrant expense recognized in 2006 for which
      there was no related cost in 2007, an increase in trademark and royalty fees
      of
      approximately $41,000, an increase in payroll related costs of approximately
      $39,000 attributed primarily to across the board pay increases, and
      approximately $80,000 allocated out of operating costs in 2006 to a contract
      in
      process for which there was no related allocation in 2007.




15




***Other
      (Income) Expenses, Net.*** For
      the
      year ended December 31, 2007 we had other income of $28,075 as compared to
      other
      income of $150,933 for the year ended December 31, 2006, a decrease in other
      income of $122,858 or 81.40%. This decrease is primarily attributable to the
      $109,517 gain realized in 2006 on the extinguishments of the secured convertible
      debentures for which there was no such transaction in 2007.





***Interest
      Expense.*** For the
      year ended December 31, 2007, we had interest expense of $121,527 as compared
      to
      $71,388 for the year ended December 31, 2006, an increase of $50,139 or 70.23%.
      This increase is primarily attributable to a net of a decrease in interest
      of
      approximately $6,000 on the secured convertible debentures that had five months
      of interest in 2006 before satisfaction, an increase in interest expense of
      approximately $62,000 associated with the two new mortgages on the real estate
      purchased in February 2007, and the remaining decrease attributable to the
      lower
      interest on the declining principal balances on the remaining loans.





***Income
      Tax Benefit.*** For
      the
      year ended December 31, 2007, we had a tax benefit of $57,623 as compared to
      a
      $9,655 tax benefit at December 31, 2006, an increase of $47,968 or 496.82%.
      This
      increase is primarily attributable a net operating loss for 2007 that will
      carried forward as well as back to 2006, and the timing related to warrant
      expense that was recognized in previous years for financial reporting purposes
      that is deductible for tax purposes in 2007 to the extent of warrants redeemed.





***Net
      Income.*** For the
      year ended December 31, 2007, we had net income of $62,460 as compared to a
      net
      income of $565,793 for the year ended December 31, 2006, a decrease of $503,333
      or 88.96%. This decrease for the year ended December 31, 2007 is primarily
      attributable to a net
      decrease in gross profit of $435,489, a decrease in operating expenses of
      $57,185, a decrease in other income, net of $122,858, an increase in interest
      expense of $50,139, and an increase in income tax benefit of $47,968.





**Liquidity
      and Capital Resources**





As
      of
      December 31, 2007, the Company had cash and current assets of $951,538 and
      current liabilities of $942,808, or a current ratio of 1.01%.





On
      June
      2, 2006, the Company fully satisfied the outstanding balance of its Secured
      Convertible Debentures issued on April 2, 2004 and July 23, 2004 in the original
      amounts of $250,000 and $125,000 respectively. As part of the redemption,
      Cornell Capital Partners, L.P. waived its right to issuance of warrants and
      reduced the redemption fee from 20% to 10.21%. In addition, the Redemption
      Agreement retired the Company’s existing Standby Equity Distribution that the
      Company never drew down against. The total amount paid Cornell Capital Partners,
      L.P. under the Redemption Agreement was $266,777 that included $210,500
      redemption amount (principal amount), $34,777 accrued interest, and $21,500
      redemption fee (10.21%) of principal amount. The Company recorded a $109,517
      gain on extinguishment of the Secured Convertible Debentures attributable to
      the
      intrinsic value of the embedded conversion feature.





On
      March
      5, 2008, the Company secured a $100,000 variable rate revolving line of credit.
      The line of credit is evidenced by a third mortgage on the real property. The
      interest rate is the lender’s base rate (currently 6.00%), plus 1.00%, resulting
      an initial rate of 7.00%. The line of credit is secured by the Company’s assets
      and the real property up to the value of the outstanding balance due under
      the
      line of credit. Monthly interest payments are due on the outstanding principal
      balance beginning on April 05, 2008, and the line of credit matures on March
      5,
      2009.





The
      Company anticipates that cash generated from operations should be sufficient
      to
      satisfy the Company’s contemplated cash 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 December 31, 2007 is adequate to maintain the Company's
      operations for at least the next 12 months.




16




**Certain
      Business Risks**





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





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





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





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





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





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





17





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





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





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





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





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





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





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





***Reliance
      on Vendors and Manufacturers***





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





***Dependence
      on Consumer Spending***





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




18





***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
                7.**
              **Financial
                  Statements**





Our
      consolidated financial statements appear beginning at page F-1.





**Item
                8.**
              **Changes
                  In and Disagreements With Accountants On Accounting and Financial
                  Disclosure**





None.





**Item
                8A.**
              **Controls
                  and Procedures**





***Evaluation
      of disclosure controls and procedures***





As
      of the
      end of the period covered by this report, we carried out an evaluation of the
      effectiveness of the design and operation of our disclosure controls and
      procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under
      the supervision and with the participation of our Principal Executive Officer
      and Principal Financial Officer. Based upon that evaluation, our Principal
      Executive Officer and Principal Financial Officer concluded that our disclosure
      controls and procedures are effective in gathering, analyzing and disclosing
      information needed to satisfy our disclosure obligations under the Exchange
      Act.




19




***Management’s
      Report on Internal Control over Financial Reporting***





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting. A company’s internal control over financial reporting is a
      process designed to provide reasonable assurance regarding the reliability
      of
      financial reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting principles. Because
      of
      its inherent limitations, internal control over financial reporting may not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.





Management,
      including the Company's Chief Executive Officer and Principal Accounting
      Officer, has conducted an evaluation of the effectiveness of the Company’s
      internal control over financial reporting as of December 31, 2007, based on
      the
      criteria for effective internal control described in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of
      the
      Treadway Commission. Based on its assessment, management concluded that the
      Company’s internal control over financial reporting was effective as of December
      31, 2007.





This
      Annual Report does not include an attestation report of the Company’s
      independent registered public accounting firm regarding internal control over
      financial reporting. Management’s report was not subject to attestation by the
      Company’s independent registered public accounting firm pursuant to temporary
      rules of the SEC that permit the Company to provide only management’s report in
      this Annual Report.





This
      report shall not be deemed to be filed for purposes of Section 18 of the
      Securities Exchange Act of 1934, or otherwise subject to the liabilities of
      that
      section, and is not incorporated by reference into any filing of the Company,
      whether made before or after the date hereof, regardless of any general
      incorporation language in such filing.





***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.





**Item
              8B.**
            **Other
                Information**





None.





**Item
        9.** **Directors,
        Executive Officers, Promoters, Control Persons And Corporate Governance;
        Compliance With Section 16(A) Of The Exchange Act**





**Directors
      and Executive Officers**





Our
      directors, executive officers and key employees as of March 13, 2008 are as
      follows:




**Name:**
            
            **Age:**
            
            **Position:**Robert
                M. Carmichael
            
            45
            
            President,
                Chief Executive Officer, Principal Financial Officer and
                Director





***Robert
      M. Carmichael.*** Since
      April 16, 2004, Mr. Carmichael has served as BWMG’s President, Chief Executive
      Officer, Principal Financial Officer, and Director. From March 23, 2004 through
      April 16, 2004, Mr. Carmichael served as United’s Executive Vice-President and
      Chief Operating Officer. Mr. Carmichael has served as president of Trebor
      Industries since 1986. Mr. Carmichael is the holder or co-holder of numerous
      patents that are used by Trebor Industries and several other major companies
      in
      the diving industry.




20




**Directors**





Our
      Board
      of Directors may consist of up to five (5) seats, with Robert Carmichael
      currently serving as the sole director. Directors serve for a term of one year
      and stand for election at our annual meeting of stockholders. Pursuant to our
      Bylaws, a majority of directors may appoint a successor to fill any vacancy
      on
      the Board of Directors.




**Committees**





Currently,
      the Company has not established any committees of the Board of Directors.
      Because the board of directors consists of only one member, the board has not
      delegated any of its functions to committees. The entire board of directors
      acts
      as our audit committee as permitted under Section 3(a)(58)(B) of the Exchange
      Act. We do not have any independent directors who would qualify as an audit
      committee financial expert. We believe that it has been, and may continue to
      be,
      impractical to recruit independent directors unless and until we are
      significantly larger. Mr. Carmichael is not considered a “financial expert” as
      defined under item 407 of Regulation S-B.





**Compensation
      of Directors**





Members
      of the Company’s Board of Directors are reimbursed for all out of pocket
      expenses incurred in connection with the attendance at any Board meeting or
      in
      connection with any services they provide for and on behalf of the
      Company.





**Compliance
      with Section 16(a) Of the Securities Act Of 1934**





Section
      16(a) of the Securities Exchange Act of 1934 requires our directors and
      executive officers, and persons who own more than 10% of a registered class
      of
      our equity securities to file with the Securities and Exchange Commission
      initial reports of ownership and reports of changes in ownership of Common
      Stock
      and other of our equity securities. Officers, directors and greater than 10%
      shareholders are required by SEC regulations to furnish us copies of all
      Section 16(a) forms they file. Based on available information, the
      following filings with respect to Section 16(a) were delinquent for the period
      covered by this report: (1) Our Chief Executive Officer filed a Form 4 on March
      23, 2008. The filing was delinquent. (2) On December 28, 2007, a beneficial
      shareholder owning in excess of 10% of the Company's common stock exercised
      a
      warrant and received 27,181 shares of the Company's common stock. This affiliate
      did not file a Form 4 disclosing the transaction.





**Code
      of Ethics**





The
      Company has adopted a formal code of ethics that applies to our principal
      executive officer and principal accounting officer, all other officers,
      directors and employees. This code of ethics was filed with the Securities
      and
      Exchange Commission as an exhibit to our Annual Report for the year ended
      December 31, 2003.




21




**Item
              10.**
            **Executive
                Compensation**





The
      following table shows all the cash compensation paid by the Company, as well
      as
      certain other compensation paid or accrued, during the fiscal years ended
      December 31, 2007 and 2006 to BWMG’s named executive officers. No restricted
      stock awards, long-term incentive plan payouts or other types of compensation,
      other than the compensation identified in the chart below, were paid to these
      executive officers during these fiscal years.





**Summary
      Compensation Table**




**Name****and**
              **Principal
                Position(s)**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock
                Awards**
              **($)**
            
            **Option**
              **Award(s)**
              **(#)**
            
            **Non
                Equity Incentive Plan**
              **Compensation**
              **($)**
            
            **Non
                Qualified Deferred**
              **Compensation**
              **Earnings**
              **($)**
            
            **All
                Other Compensation**
              **($)**Robert
                M. Carmichael,
            
            
            2007
            
            $
            97,305.00
            
            $
            --
            
            $
            --
            
            
            --
            
            $
            --
            
            $
            --
            
            $
            --President,
              Chief
              Executive Officer, and PrincipalFinancial
                Officer
            
            
            2006
            
            $
            78,037.50
            
            $
            --
            
            $
            --
            
            
            --
            
            $
            --
            
            $
            --
            
            $
            --




**Outstanding
      Equity Awards at Fiscal Year End**





None.





**Director
      Compensation**





None.





**Stock
      Option Grants**





We
      have
      not issued any grants of stock options in the past fiscal year to any officer
      or
      director.





**Employment
      Agreements**





Currently,
      we do not have employment agreements with any of our employees.





22




**Item
              11.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters**




**Security
        Ownership of Certain Beneficial Owners and
        Management**




The
      following table sets forth information about the beneficial ownership of our
      common stock as of March 13, 2008 by (i) each person who we know is the
      beneficial owner of more than 5% of the outstanding shares of common stock
      (ii) each of our directors or those nominated to be directors, and
      executive officers, and (iii) all of our directors and executive officers as
      a
      group. Applicable percentage of ownership is based on 1,685,538 shares of common
      stock outstanding as of March 13, 2008 together with securities exercisable
      or
      convertible into shares of common stock within 60 days of March 13, 2008 for
      each stockholder. Beneficial ownership is determined in accordance with the
      rules of the SEC and generally includes voting or investment power with respect
      to securities. Shares of common stock subject to securities exercisable or
      convertible into shares of common stock that are currently exercisable or
      exercisable within 60 days of March 13, 2008 are deemed to be beneficially
      owned
      by the person holding such options for the purpose of computing the percentage
      of ownership of such person, but are not treated as outstanding for the purpose
      of computing the percentage ownership of any other person.




**Title
                of Class**
            **Name
                and Address of Beneficial Owner**
            **Amount
                and Nature of**
              **Beneficial
                Owner**
            **Percent
                of Class**Common
            Robert
                M Carmichael
              C/O
                Brownie’s Marine Group, Inc.
              940
                NW 1stStreet
              Fort
                Lauderdale, FL 33311
            958,314
            52.41%Common
            Jeffrey
                William Morris
              C/O
                Brownie’s Marine Group, Inc.
              940
                NW 1stStreet
              Fort
                Lauderdale, FL 33311
            230,533
            12.61%Common
            All
                officers and directors as a
              Group
                (1 person)
            958,314
            52.41%





(1)  Includes
      142,858 shares based on warrants exercisable within 60 days.





**Securities
      Authorized for Issuance under Equity Compensation Plan**




Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
              (a)
            Weighted
                - average exercise price of outstanding options, warrants and
                rights
              (b)
            Number
                of securities remaining available for future issuances under equity
                compensation plans (excluding securities reflected in column
                (a))
              (c)Equity
                Compensation Plans
              Approved
                by Security Holders
            0
            0
            400,000Equity
                Compensation Plans Not
              Approved
                by Security Holders
            0
            0
            0Total
            0
            0
            400,000




23





**Item
              12.**
            **Certain
                Relationships and Related Transactions, and Director
                Independence**





On
      February 21, 2007 the Company acquired the property and facilities that contains
      its corporate headquarters, factory and distribution center from GKR Associates,
      LLC, an entity in which its Chief Executive Officer has an ownership interest. The
      property and facilities were purchased for $1,100,000 and 44,440 shares of
      restricted common stock of the Company. The Company financed the majority of
      the
      purchase price under a 15-year mortgage for $1,000,000. The current interest
      rate on the mortgage is 6.99%. The Company also issued a promissory note for
      $100,000 of the purchase price, which is payable over 60-months at 6.99% annual
      interest. The promissory note provides for a late charge of 10% due on any
      payment not received within five business days of payment date. The promissory
      note is further secured by a second mortgage on the property. The shares were
      valued at $2.25 per share. The Company received an independent appraisal which
      valued the property and facilities at approximately $1,200,000. Subsequent
      to
      the closing of the sale, the shares issued to the related party entity were
      distributed to its shareholders. The Company's Chief Executive Officer received
      14,813 shares pursuant to the distribution .





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, maturing on January 15,
                2016.
            
            $
            404,183Promissory
                note payable to an entity owned by the Company’s Chief Executive Officer,
                940 Associates, Inc., secured by Company assets, bearing interest
                at 10%
                per annum, due in monthly principal and interest payments of $2,861,
                maturing on January 1, 2016.
            
            
            190,941Promissory
                note payable due an entity in which the Company’s Chief Executive Officer
                has a financial interest, GKR Associates, LLC., secured by second
                mortgage
                on real property, bearing 6.99% interest per annum, due in monthly
                principal and interest payments of $2,292, maturing on February 22,
                2012.
            
            
            85,657680,781Less
                amounts due within one year
            
            
            70,924Long-term
                portion of notes payable - related parties
            
            $
            609,857





As
      of
      December 31, 2007, principal payments on the notes payable - related parties
      are
      as follows:


2008
              
              $
              70,9242009
              
              
              74,7942010
              
              
              81,9862011
              
              
              89,8852012
              
              
              78,238Thereafter
              
              
              284,954$
              680,781




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 year ended December 31, 2007 and 2006, was $886,092
      and
      $795,320, 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.




24




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





The
      Company has Non-Exclusive License Agreements with 940 Associates, Inc. (herein
      referred to as “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 year ended December 31,
      2007 and 2006, was $87,595 and $45,770, respectively.





Jeffrey
      Morris provides management and strategic consulting services for the Company.
      For these services, Mr. Morris earned $120,000, and $72,000 from the Company
      for
      the years ended December 31, 2007, and 2006, respectively.





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.





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 the Company's financial statements under 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




The
      Company currently has no independent directors.




25




**Item
              13.**
            **Exhibits**





**Exhibits.**




**Exhibit
                    No.**
              
              **Description**
              
              **Location**2.2
              
              Merger
                  Agreement, dated June 18, 2002 by and among United Companies Corporation,
                  Merger Co., Inc. and Avid Sportswear & Golf Corp.
              
              Incorporated
                  by reference to Exhibit 2.02 Amendment No. 1 to Form S-4 filed
                  June 24,
                  2002.2.3
              
              Articles
                  of Merger of Avid Sportswear & Golf Corp. with and into Merger Co.,
                  Inc.
              
              Incorporated
                  by reference to Exhibit 2.03 Amendment No. 1 to Form S-4 filed
                  June 24,
                  2002.3.1
              
              Articles
                  of Incorporation
              
              Incorporated
                  by reference to Exhibit 3.05 Amendment No. 1 to Form S-4 filed
                  June 24,
                  2002.3.2
              
              Articles
                  of Amendment
              
              Incorporated
                  by reference to the appendix to the Company's Definitive Information
                  Statement on Schedule 14C filed July 31, 2007.3.2
              
              Bylaws
              
              Incorporated
                  by reference to Exhibit 3.04 to the Registration Statement on Form
                  10-SB.5.1
              
              2007
                  Stock Option Plan
              
              Incorporated
                  by reference to the appendix to the Company's Definitive Information
                  Statement on Schedule 14C filed July 31, 2007.10.1
              
              Share
                  Exchange Agreement, dated March 23, 2004 by and among the Company,
                  Trebor
                  Industries, Inc. and Robert Carmichael
              
              Incorporated
                  by reference to Exhibit 16.1 to Current Report on Form 8-K filed
                  April 9,
                  2004.10.2
              
              Two
                  Year Consulting Agreement with Jeff Morris effective January 1,
                  2005 for
                  Management 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.
  26
  **Exhibit
                  No.**
              
              **Description**
              
              **Location**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,
                  2005.10.8
              
              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.
  27
  **Exhibit
                  No.**
              
              **Description**
              
              **Location**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
                  GKRAssociates, 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
                  herewith32.1
              
              Certification
                  Pursuant to Section 1350
              
              Provided
                  herewith32.2
              
              Certification
                  Pursuant to Section 1350
              
              Provided
                  herewith





**Item
              14.**
            **Principal
                Accounting Fees and
                Services**





**Fees
      to Auditors Fiscal Year ended December 31, 2007**





Audit
      Fees :
      The
      aggregate fees, including expenses, billed by the Company's principal
      accountants for professional services rendered for the audit of the Company’s
      consolidated financial statements during the fiscal year ending December 31,
      2007 and for the review of the Company’s financial information included in its
      quarterly reports on Form 10-QSB during the fiscal year ending December 31,
      2007
      or services that are normally provided in connection with statutory and
      regulatory filings or engagements during the fiscal year ending
      December 31, 2007 was $39,882.





Audit
      Related Fees :
      The
      aggregate fees, including expenses, billed by principal accountants for
      assurance and related services reasonably related to the performance of the
      Company’s audit or review of the Company’s financial statements were
      $-0-.




28




Tax
      Fees :
      The
      aggregate fees, including expenses, billed by principal accountants for tax
      compliance, tax advice and tax planning during year 2007 was $-0-.





All
      Other Fees :
      The
      aggregate fees, including expenses, billed for all other services rendered
      to
      the Company by principal accountants during year 2007 was $-0-.





**Fees
      to Auditors Fiscal Year ended December 31, 2006**





Audit
      Fees :
      The
      aggregate fees, including expenses, billed by principal accountants for
      professional services rendered for the audit of the Company’s consolidated
      financial statements during fiscal year ending December 31, 2006 and for the
      review of the Company’s financial information included in its quarterly reports
      on Form 10-QSB during the fiscal year ending December 31, 2006 or services
      that
      are normally provided in connection with statutory and regulatory filings or
      engagements during the fiscal year ending December 31, 2006 was $37,078.





Audit
      Related Fees :
      The
      aggregate fees, including expenses, billed by principal accountants for
      assurance and related services reasonably related to the performance of the
      Company’s audit or review of the Company’s financial statements during the year
      ended December 31, 2006 were $-0-.




Tax
      Fees :
      The
      aggregate fees, including expenses, billed by principal accountants for tax
      compliance, tax advice and tax planning during year 2006 was $-0-.





All
      Other Fees :
      The
      aggregate fees, including expenses, billed for all other services rendered
      to
      the Company by principal accountants during year 2006 was $-0-.





The
      Company has no audit committee. The Company's board of directors has considered
      whether the provisions of the services covered above under the captions is
      compatible with maintaining the auditor’s independence. All services were
      approved by the board of directors prior to the completion of the respective
      audit.




29




**SIGNATURES**





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




Date:March
                28, 2008
            **BROWNIE’S
                  MARINE GROUP, INC.**By:
            /s/
                Robert M. CarmichaelRobert
                  M. CarmichaelPresident,
                  Chief Executive Officer,
                Chief
                    Financial Officer and
              Principal
                Accounting Officer




30




PAGE(S)REPORT
                    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                
                
                F-1CONSOLIDATED
                    BALANCE SHEET AS OF DECEMBER 31, 2007
                
                
                F-2CONSOLIDATED
                    STATEMENTS OF OPERATIONS FOR THE YEARS ENDEDDECEMBER
                    31, 2007 AND 2006
                
                
                F-3CONSOLIDATED
                    STATEMENT OF STOCKHOLDERS' DEFICIT FOR THEYEARS
                    ENDED DECEMBER 31, 2007 AND DECEMBER 31, 2006 `
                
                
                F-4CONSOLIDATED
                    STATEMENTS OF CASH FLOWS FOR THE YEARS ENDEDDECEMBER
                    31, 2007 AND 2006
                
                
                F-5NOTES
                    TO THE CONSOLIDATED FINANCIAL STATEMENTS
                
                
                F-6
                    TO F-16
  
  /s/
          L.L.
          Bradford & Company, LLC
 March
          10,
          2008
 Las
          Vegas,
          Nevada
   F-1
 BROWNIE'S
          MARINE GROUP, INC.
 (FORMERLY
          UNITED COMPANIES CORPORATION)
 CONSOLIDATED
          BALANCE SHEET
 DECEMBER
          31, 2007
 ASSETSCurrent
                    assetsCash
                
                $
                142,516Accounts
                    receivable, net of $9,000 allowance for doubtful accounts
                
                
                38,512Inventory
                
                
                656,303Prepaid
                    expenses and other current assets
                
                
                81,879Deferred
                    tax asset, net - current
                
                
                32,328Total
                    current assets
                
                
                951,538Property,
                    plant and equipment, net
                
                
                1,229,898Deferred
                    tax asset, net - non-current
                
                
                52,363Other
                    assets
                
                
                6,968Total
                    assets
                
                $
                2,240,767LIABILITIES
                    AND STOCKHOLDERS' DEFICITCurrent
                    liabilitiesAccounts
                    payable and accrued liabilities
                
                $
                397,292Customer
                    deposits
                
                
                286,220Royalties
                    payable - related parties
                
                
                15,263Other
                    liabilities - related parties
                
                
                117,601Other
                    liabilities
                
                
                9,477Notes
                    payable - current portion
                
                
                46,031Notes
                    payable - related parties - current portion
                
                
                70,924Total
                    current liabilities
                
                
                942,808Long-term
                    liabilitiesNotes
                    payable - long-term portion
                
                
                925,399Notes
                    payable - related parties - long-term portion
                
                
                609,857Total
                    liabilities
                
                
                2,478,064Commitments
                    and contingenciesStockholders'
                    deficitCommon
                    stock; $0.001 par value; 250,000,000 shares authorized1,685,538
                    shares issued and outstanding
                
                
                1,685Additional
                    paid-in capital
                
                
                839,666Accumulated
                    deficit
                
                
                (1,078,648
                )Total
                    stockholders' deficit
                
                
                (237,297
                )Total
                    liabilities and stockholders' deficit
                
                $
                2,240,767
  See
          Accompanying Notes to Consolidated Financial Statements
 F-2
 BROWNIE'S
        MARINE GROUP, INC.
 (FORMERLY
          UNITED COMPANIES CORPORATION)
 CONSOLIDATED
          STATEMENTS OF OPERATIONS
 Year
                    Ended December 31,2007
                
                2006Net
                    revenues
                
                $
                3,204,395
                
                $
                4,203,025Cost
                    of net revenues
                
                
                2,148,843
                
                
                2,711,984Gross
                    profit
                
                
                1,055,552
                
                
                1,491,041Operating
                    expensesResearch
                    and development costs
                
                
                3,780
                
                
                7,140Selling,
                    general and administrative
                
                
                953,483
                
                
                1,007,308Total
                    operating expenses
                
                
                957,263
                
                
                1,014,448Income
                    from operations
                
                
                98,289
                
                
                476,593Other
                    expenses (income)Other
                    expense (income), net
                
                
                (28,075
                )
                
                (150,933
                )Interest
                    expense
                
                
                121,527
                
                
                71,388Total
                    other expense (income)
                
                
                93,452
                
                
                (79,545
                )Net
                    income before provision for income taxes
                
                
                4,837
                
                
                556,138Provision
                    for income tax benefit
                
                
                (57,623
                )
                
                (9,655
                )Net
                    income
                
                $
                62,460
                
                $
                565,793Basic
                    income per common share
                
                $
                0.04
                
                $
                0.37Diluted
                    income per common share
                
                $
                0.04
                
                $
                0.34Basic
                    weighted average commonshares
                    outstanding
                
                
                1,658,357
                
                
                1,513,952Diluted
                    weighted average commonshares
                    outstanding
                
                
                1,612,425
                
                
                1,663,124
   See
        Accompanying Notes to Consolidated Financial
        Statements
 F-3
 BROWNIE'S
          MARINE GROUP, INC.
 (FORMERLY
          UNITED COMPANIES CORPORATION)
 CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' DEFICIT
  Commitment
                    FeesRelated
                    toAdditional
                
                Standby
                    Equity
                
                
                
                TotalCommon
                    Stock
                
                Paid-in
                
                Distribution
                
                Accumulated
                
                Stockholders'Shares
                
                Amount
                
                Capital
                
                Agreement
                
                Deficit
                
                DeficitBalance,
                    December 31, 2005
                
                
                1,364,707
                
                $
                1,365
                
                $
                751,595
                
                $
                (86,205
                )
                $
                (1,706,901
                )
                $
                (1,040,146
                )Conversion
                    of Secured Convertible Debenture to common stock pursuant to
                    the
                    Securities Purchase Agreement dated April 4, 2004
                
                
                192,170
                
                
                192
                
                
                88,918
                
                
                --
                
                
                --
                
                
                89,110Amortization
                      of commitment fees related toStandby
                      Equity Distribution Agreement
                
                
                --
                
                
                --
                
                
                (86,205
                )
                
                86,205
                
                
                --
                
                
                --Consulting
                      expense recognized for stockwarrants
                      issued in conjunction with theconsulting
                      agreement effective January, 2005
                
                
                --
                
                
                --
                
                
                95,003
                
                
                --
                
                
                --
                
                
                95,003Extinguishment
                      of Secured Convertible Debenture on June 2, 2006
                
                
                --
                
                
                --
                
                
                (109,517
                )
                
                --
                
                
                --
                
                
                (109,517
                )Net
                    income
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                565,793
                
                
                565,793Balance,
                    December 31, 2006
                
                
                1,556,877
                
                
                1,557
                
                
                739,794
                
                
                --
                
                
                (1,141,108
                )
                
                (399,757
                )Issuance
                      of common stock as part of February21,
                      2007 purchase of real property
                
                
                44,440
                
                
                44
                
                
                99,956
                
                
                --
                
                
                --
                
                
                100,000Redemption
                      of warrant tranches for common stock pursuant to warrant dated
                      January 1,
                      2005
                
                
                84,075
                
                
                84
                
                
                (84
                )
                
                --
                
                
                --
                
                
                0Issuance
                    of common stock to roundup fractionalshares
                    as part of the reverse stock spliteffectuated
                    on August 22, 2007
                
                
                146
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Net
                    income
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                62,460
                
                
                62,460Balance,
                    December 31, 2007
                
                
                1,685,538
                
                $
                1,685
                
                $
                839,666
                
                $
                -
                
                $
                (1,078,648
                )
                $
                (237,297
                )
   See
        Accompanying Notes to Consolidated Financial Statements
 F-4
 BROWNIE'S
          MARINE GROUP, INC.
 (FORMERLY
          UNITED COMPANIES CORPORATION)
 CONSOLIDATED
          STATEMENTS OF CASH FLOWS
  Year
                    Ended December 31,2007
                
                2006Cash
                    flows from operating activities:Net
                    income
                
                $
                62,460
                
                $
                565,793Adjustments
                      to reconcile net income to netcash
                      provided by operating activities:Depreciation
                    and amortization
                
                
                40,051
                
                
                26,542Stock
                    based compensation
                
                
                --
                
                
                95,003Change
                    in deferred tax asset
                
                
                (39,801
                )
                
                (20,684
                )Loan
                    payable settlement loss
                
                
                777
                
                
                --Gain
                    on extinguishment of secured convertible debentures
                
                
                --
                
                
                (109,517
                )Changes
                    in operating assets and liabilities:Change
                    in accounts receivable, net
                
                
                (132,181
                )
                
                (10,139
                )Change
                    in inventory
                
                
                (74,874
                )
                
                (152,746
                )Change
                    in prepaid expenses and other current assets
                
                
                (20,439
                )
                
                (42,270
                )Change
                    in accounts payable and accrued liabilities
                
                
                64,193
                
                
                (113,758
                )Change
                    in lease payable - related party
                
                
                --
                
                
                (18,950
                )Change
                    in customer deposits
                
                
                202,779
                
                
                (45,690
                )Change
                    in other liabilities
                
                
                (33,683
                )
                
                10,500Change
                    in income taxes payable
                
                
                (11,029
                )
                
                11,029Change
                    in other liabilities - related parties
                
                
                7,250
                
                
                --Change
                    in royalties payable - related parties
                
                
                6,812
                
                
                (9,114
                )Net
                    cash provided by operating activities
                
                
                72,315
                
                
                185,999Cash
                    flows from investing activities:Purchase
                    of fixed assets
                
                
                (1,139,563
                )
                
                (9,210
                )Net
                    cash used in investing activities
                
                
                (1,139,563
                )
                
                (9,210
                )Cash
                    flows from financing activities:Proceeds
                    from borrowings on notes payable - related parties
                
                
                100,000
                
                
                --Proceeds
                    from borrowings on loan payable
                
                
                --
                
                
                266,000Proceeds
                    from borrowings on notes payable
                
                
                1,000,000
                
                
                --Principal
                    payments on notes payable - related parties
                
                
                (56,548
                )
                
                (44,475
                )Principal
                    payments on notes payable
                
                
                (41,875
                )
                
                (9,972
                )Principal
                    payments on secured convertible debentures
                
                
                --
                
                
                (210,500
                )Net
                    cash provided by financing activities
                
                
                1,001,577
                
                
                1,053Net
                    change in cash
                
                
                (65,671
                )
                
                177,842Cash,
                    beginning of period
                
                
                208,187
                
                
                30,345Cash,
                    end of period
                
                $
                142,516
                
                $
                208,187Supplemental
                    disclosure of cash flow information:Cash
                    paid for interest
                
                $
                119,889
                
                $
                100,400Cash
                    paid for income taxes
                
                $
                18,211
                
                $
                --Supplemental
                    disclosure of non-cash investing activitiesCommon
                      stock issued toward real property purchase onFebruary
                      21, 2007
                
                $
                100,000
                
                $
                --Supplemental
                    disclosure of non-cash financing activitiesConversion
                      of Convertible Debenture into Stock as provided in Stock Purchase
                      Agreement
                
                $
                --
                
                $
                89,110Redemption
                      of warrant for common stock pursuant to warrant dated January
                      1,
                      2005
                
                $
                8,422
                
                $
                --Amortization
                      of loan fees related to Standby Equity Distribution
                      Agreement
                
                $
                --
                
                $
                86,205Settlement
                    of loan payable
                
                $
                266,777
                
                $
                --
  See
        Accompanying Notes to Consolidated Financial Statements
 F-5
  BROWNIE’S
          MARINE GROUP, INC.
 (FORMERLY
          UNITED COMPANIES CORPORATION)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 1.
              DESCRIPTION
                  OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                  POLICIES
 
 Description
        of business –
        Brownie’s Marine Group, Inc. (formerly United Companies Corporation)
        (hereinafter referred to as the “Company” or “BWMG”) designs, tests,
        manufactures and distributes recreational hookah diving, yacht based scuba
        air
        compressor and Nitrox Generation Systems, and scuba and water safety products
        through its wholly owned subsidiary Trebor Industries, Inc. The Company sells
        its products both on a wholesale and retail basis, and does so from its
        headquarters and manufacturing facility in Fort Lauderdale, Florida. The
        Company
        does business as (dba) Brownie’s Third Lung, the dba name of Trebor Industries,
        Inc.
 
 Prior
        to
        August 22, 2007 the Company was known as United Companies Corporation
        (hereinafter referred to as “UCC”). The Company changed its name to Brownie’s
        Marine Group, Inc. during the third quarter of 2007 since it believes BWMG
        more
        closely reflects its line of business, and it also brings brand recognition
        to
        the Company as a result of its existing products.
 
 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 2006 financial statement amounts
        to
        conform to the 2007 financial statement presentation.
  F-6
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 1.
              DESCRIPTION
                  OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 Cash
        and equivalents – Only
        highly liquid investments with original maturities of 90 days or less are
        classified as cash and equivalents. These investments are stated at cost,
        which
        approximates market value.
 
 Inventory –
        Inventory is stated at the lower of cost or market. Cost is principally
        determined by using the average cost method that approximates the First-In,
        First-Out (FIFO) method of accounting for inventory. Inventory consists of
        raw
        materials as well as finished goods held for sale. The Company’s management
        monitors the inventory for excess and obsolete items and makes necessary
        valuation adjustments when required.
 
 Fixed
        assets –
Fixed
        assets are stated at cost less accumulated depreciation. Depreciation is
        provided principally on the straight-line method over the estimated useful
        lives
        of the assets, which is primarily 3 to 5 years except for the building that
        is
        being depreciated over a life of 39 years. The cost of repairs and maintenance
        is charged to expense as incurred. Expenditures for property betterments
        and
        renewals are capitalized. Upon sale or other disposition of a depreciable
        asset,
        cost and accumulated depreciation are removed from the accounts and any gain
        or
        loss is reflected in other income (expense).
 
 The
        Company periodically evaluates whether events and circumstances have occurred
        that may warrant revision of the estimated useful lives of fixed assets or
        whether the remaining balance of fixed assets should be evaluated for possible
        impairment. The Company uses an estimate of the related undiscounted cash
        flows
        over the remaining life of the fixed assets in measuring their
        recoverability.
 
 Revenue
        recognition –
        Revenues from product sales are recognized when the Company’s products are
        shipped or when service is rendered. Revenues from fixed-price contracts
        are
        recognized on the percentage-of-completion method, measured by the percentage
        of
        cost incurred to date to estimated total cost of each contract. This method
        is
        used because management considers the percentage of cost incurred to date
        to
        estimated total cost to be the best available measure of progress on the
        contracts.
 
 Contract
        costs include all direct material and labor costs and those indirect costs
        related to contract performance, such as indirect labor, supplies, tools,
        repairs, and depreciation costs. General and administrative costs are charged
        to
        expense as incurred. Provisions for estimated losses on uncompleted contracts
        are made in the period in which such losses are determined. Change in job
        performance, job conditions, and estimated profitability may result in revisions
        to costs and income and are recognized in the period in which the revisions
        are
        determined.
 
 Revenue
        and costs incurred for time and material projects are recognized 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
        year ended December 31, 2007 and 2006, was $25,590 and $47,402, 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.
  F-7
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 1.
              DESCRIPTION
                  OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 Income
        taxes –
        The Company accounts for its income taxes in accordance with Statement of
        Financial Accounting Standards No. 109, which requires recognition of deferred
        tax assets and liabilities for future tax consequences attributable to
        differences between the financial statement carrying amounts of existing
        assets
        and liabilities and their respective tax bases and tax credit carryforwards.
        Deferred tax assets and liabilities are measured using enacted tax rates
        expected to apply to taxable income in the years in which those temporary
        differences are expected to be recovered or settled. The effect on deferred
        tax
        assets and liabilities of a change in tax rates is recognized in income in
        the
        period that includes the enactment date.
 
 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 year ended December 31, 2007.
 
 Fair
        value of financial instruments –
The
        carrying amounts and estimated fair values of the Company’s financial
        instruments approximate their fair value due to the short-term
        nature.
 
 Earnings
        (loss) per common share –
Basic
        earnings per share excludes any dilutive effects of options, warrants and
        convertible securities. Basic earnings per share is computed using the
        weighted-average number of outstanding common shares during the applicable
        period. Diluted earnings per share is computed using the weighted average
        number
        of common and common stock equivalent shares outstanding during the period.
        Common stock equivalent shares are excluded from the computation if their
        effect
        is antidilutive. All common stock equivalent shares were included in the
        computation at December 31, 2007 since their effect was
        dilutive.
  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.
  F-8
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 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 shall
        apply
        SFAS 159 in the calendar year beginning January 1, 2008 and does not anticipate
        significant financial impact as a result of adoption.
 
 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 is required to adopt FAS 157 on January
        1, 2008 and does not expect significant financial impact as a result of
        adoption.
  F-9
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 2.
              INVENTORY
 
 Inventory
        consists of the following as of December 31, 2007:
 
 Raw
                  materials
              
              $
              418,123Work
                  in process
              
              
              --Finished
                  goods
              
              
              238,180$
              656,303
  3.
              PREPAID
                  EXPENSES AND OTHER CURRENT
                  ASSETS
 
 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.
  4.
              PROPERTY,
                  PLANT AND EQUIPMENT
 
 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
        year ended December 31, 2007 and 2006, depreciation expense was $36,376 and
        $16,664, 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.
  5.
              CUSTOMER
                  CREDIT CONCENTRATIONS
 
 Sales
        to
        Brownie’s Southport Diver’s, Inc. for the year ended December 31, 2007 and 2006
        represented 22.44% and 16.39%, respectively, of total net revenues for the
        period. Sales to Enpro International, Inc. for the year ended December 31,
        2006
        represented 17.87% of total Company net revenues. Sales to no other customer
        represented greater than 10% of net revenues for the year ended December
        31,
        2007 and 2006.
 
 The
        brother of Robert Carmichael, the Company’s Chief Executive Officer, as further
        discussed in Note 6 – RELATED
        PARTY TRANSACTIONS ,
        owns
        Brownie’s Southport Diver’s Inc.
 
 F-10
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 6.
              RELATED
                  PARTY TRANSACTIONS
 
 Notes
        payable – related parties –
Notes
        payable – related parties consist of the following as of 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, maturing on January
                  15,
                  2016.
              
              $
              404,183Promissory
                  note payable to an entity owned by the Company’s Chief Executive Officer,
                  940 Associates, Inc., secured by Company assets, bearing interest
                  at 10%
                  per annum, due in monthly principal and interest payments of $2,861,
                  maturing on January 1, 2016.
              
              
              190,941Promissory
                  note payable due an entity in which the Company’s Chief Executive Officer
                  has a financial interest, GKR Associates, LLC., secured by second
                  mortgage
                  on real property, bearing 6.99% interest per annum, due in monthly
                  principal and interest payments of $2,292, maturing on February
                  22,
                  2012.85,657680,781Less
                  amounts due within one year
              
              
              70,924Long-term
                  portion of notes payable – related parties
              
              $
              609,857
 
 As
        of
        December 31, 2007, principal payments on the notes payable – related parties are
        as follows:
 
 2008
              
              $
              70,9242009
              
              
              74,7942010
              
              
              81,9862011
              
              
              89,8852012
              
              
              78,238Thereafter
              
              
              284,954$
              680,781
 
 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 year ended December 31, 2007 and 2006, was $886,092
        and
        $795,320, 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.
 F-11
 
 BROWNIE’S
                  MARINE GROUP, INC.
 (FORMERLY
                  UNITED COMPANIES CORPORATION)
 NOTES
                  TO
                  CONSOLIDATED FINANCIAL STATEMENTS
 6.
                    RELATED
                        PARTY TRANSACTIONS
                        (continued)
 
 Royalties –
The
        Company has Non-Exclusive License Agreements with the Carleigh Rae Corporation
        (herein referred to as “CRC”), an entity that the Company’s Chief Executive
        Officer has an ownership interest, to license product patents it owns. Based
        on
        the license agreements with CRC, the Company pays royalties ranging from
        $1.00
        to $50.00 per licensed products sold, with rates increasing 5% annually.
        Also
        with CRC, the Company has a Non-Exclusive License Agreement to license a
        trademark of products owned by CRC. Based on the agreement, the Company will
        pay
        the entity $0.25 per licensed product sold, with rates increasing $0.05
        annually.
 
 The
        Company has Non-Exclusive License Agreements with 940 Associates, Inc. (herein
        referred to as “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 year ended December 31,
        2007
        and 2006, was $87,595 and $45,770, respectively.
 
 Jeffrey
        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 $120,000, and $72,000 from the Company for the
        years
        ended December 31, 2007, and 2006, respectively.
 
 Other
        liabilities – related parties
 
 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
  7.
              ACCOUNTS
                  PAYABLE AND ACCRUED LIABILITIES
 
 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.
 F-12
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 8.
              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 6. – RELATED  PARTIES for the
        balance due each related party at December 31, 2007 under the settlement
        agreement.
  9.
              OTHER
                  LIABILITIES
  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.
 
 For
        the
        year ended December 31, 2007, 1,895 certificates with a liability balance
        of
        $33,162 expired unused. Accordingly, the related liability was reversed and
        the
        amount recognized as other income during the year ended December 31, 2007.
        In
        addition, the Company further reduced the liability during the year ended
        December 31, 2007 by $27,175 based on the historical certificate redemption
        rate
        the Company had compiled over the past 24 months. Accordingly, the amount
        related to 2007, $16,000, was reversed from the expense account it was recorded
        to in 2007, and the amount related to prior to 2007, $11,175 was recognized
        as
        other income during the year ended December 31, 2007. On a go forward basis
        the
        Company is maintaining a reserve for certificate redemption of 10% that
        approximates the historical redemption rate.
  F-13
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 10.
              NOTES
                  PAYABLE
 
 Notes
        payable consists of the following as of December 31, 2007:
 
 Promissory
                  note payable secured by a vehicle of the Company having a carrying
                  value
                  of $3,664 at December 31, 2007, bearing no interest, due in monthly
                  principal and interest payments of $349, maturing on November 14,
                  2008.
              
              $
              3,839Promissory
                  note payable secured by real property of the Company having a carrying
                  value of $1,195,514 at December 31, 2007, bearing interest at 6.99%
                  per
                  annum, due in monthly principal and interest payments 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
 
 As
        of
        December 31, 2007, principal payments on the notes payable are as
        follows:
 
 2008
              
              $
              46,0322009
              
              
              45,2392010
              
              
              48,5042011
              
              
              52,0062012
              
              
              55,760Thereafter
              
              
              723,890$
              971,431
  11.
              REVERSE
                  STOCK SPLIT
 
 On
        August
        22, 2007, the Company effectuated a 1-for-100 reverse stock split of the
        Common
        Stock whereby every one hundred shares of Common Stock outstanding was combined
        and reduced to one share of Common Stock. Fractional shares were rounded
        up and
        this resulted in an additional 146 shares issued.
 
 F-14
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 12.
              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.
  13.
              EQUITY
                  INCENTIVE PLAN
 
 On
        August
        22, 2007 the Company adopted an Equity Incentive Plan (the “Plan”). Under the
        Plan, Stock Options may be granted to Employees, Directors, and Consultants
        in
        the form of Incentive Stock Options or Nonstatutory Stock Options. Stock
        Purchase Rights, time vested and/performance invested Restricted Stock, and
        Stock Appreciation Rights and Unrestricted Shares may also be granted under
        the
        Plan. The initial maximum number of shares that may be issued under the Plan
        shall be 400,000 shares, and no more than 100,000 Shares of Common Stock
        may be
        granted to any one Participant with respect to Options, Stock Purchase Rights
        and Stock Appreciation Rights during any one calendar year period. Common
        Stock
        to be issued under the Plan may be either authorized and unissued or shares
        held
        in treasury by the Company. The term of the Plan shall be ten years. The
        Board
        of Directors may amend, alter, suspend, or terminate the Plan at any time.
        No
        Options, Stock Purchase Rights or Stock Appreciation Rights were granted
        under
        the Plan for the year ended December 31, 2007.
 
 F-15
 
 BROWNIE’S
              MARINE GROUP, INC.
 (FORMERLY
              UNITED COMPANIES CORPORATION)
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 14.
              INCOME
                  TAXES
 
 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.
  15.
              SUBSEQUENT
                  EVENT
 
 On
        March
        5, 2008, the Company secured a $100,000 variable rate revolving line of credit.
        The line of credit is evidenced by a third mortgage on the real property.
        The
        interest rate is the lender’s base rate (currently 6.00%), plus 1.00%, resulting
        an initial rate of 7.00%. The line of credit is secured by the Company’s assets
        and the real property up to the value of the outstanding balance due under
        the
        line of credit. Monthly interest payments are due on the outstanding principal
        balance beginning on April 05, 2008, and the line of credit matures on March
        5,
        2009.
  F-16