Brownie's Marine Group Inc (BWMG)

[stinkeye]

I just profiled UCPJ to my subscribers...

Thought the UCPJ longs here might want to read what I sent to my subscribers...I-HUB doesn't display the proper formatting and images that were embedded, but at least you can see the content..


~~~PASTE~~~
[03/30/2007] UCPJ - Let's go Hookah Diving!

05:28:45am
2007-03-30


Since it's T-minus 2 hours until my alarms starts it's shrill beeping, I'm going to keep this one short and let the company's filings do most of the talking.

United Companies (UCPJ.ob) popped up on a couple of my scans tonight and while I normally would have dismissed it on the basis of it's paltry $7mm market cap and sub-nickel share price, the chart was compelling enough to get me to dig in to the story. I've spent the last couple hours reading the most recent 10Q's and 10K's and it looks like these guys might actually be growing a nice little niche business here.

First let's take note of the chart. This is a weekly chart of the last 3 years. Note the dramatic plunge back in 04 when the stock broke it's support at $.05? Now that same level will serve as resistance going forward. A move above this level ($.05) on heavy volume would be extremely bullish for UCPJ. My guess is that today's move was prompted by the impending release of the firm's Q4 results and 10K for the full year of '06 that should be filed sometime tomorrow as they've made no announcements that they plan to file late.







The interesting thing about UCPJ, aside from the niche business and brand they've built (which we'll get into later) is the fact that revenue growth is strong, over 30% year over year, and SG&A expenses are actually remaining flat. Of course this is a rare combination that has to be explored when it's discovered as it portends to operational leverage that drives earnings growth.

It's also worth noting in these excerpts below, that through the first nine months of 06, UCPJ has already surpassed it's revenue from the full year of '05. Through Sept '06 revs were $3.1million vs. just $2.9mm for the FULL YEAR of 2005. I'll also paste an excerpt that shows the firm has for the first time accounted for paying income tax in their filing for Q3. Evidently, they anticipate paying taxes which translates to anticipating net income going forward.

What do they sell?

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 systems, and 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 (GI-PFD), Fast float system,
Personal Life raft, Surf shuttle, lift bags, and various other safety related
accessories.









The company is growing sales of their Hookah systems by teaming up with yacht builders and putting systems in new yachts as an optional feature. Believe it or not, Tiger Woods' new yacht has a Brownie system built-in.


Tiger Woods’ new getaway is Privacy, designed to provide him relaxed comfort and water-based enjoyment away from the madding crowds.

http://www.showboats.com/Articles/New-Notables/New-Notable-Nineteenth-Hole-2.asp?ht
"The added interior volume reportedly was a draw for Woods, who is also an avid diver and angler. The extra space in the aft peak allowed for the installation of a complex dive station that has the ability to make oxygen and produce nitrox, which is appropriate for dives down to 120 feet, as well as being able to blend heliox and trimix (oxygen/helium/nitrogen) for safer and unimpaired performance at depths of 200 feet or more. Robert Carmichael, of Fort Lauderdale-based Brownie’s Tankfill.com, the company that built the system, noted that the use of mixed gas systems requires highly specialized knowledge, adding that Privacy’s owner is participating in a two-year training program through Global Underwater Explorers."

Khaki Blue is not retro, but her evocative lines and owner-authored design prove that classic American styling is always fashionable

http://www.showboats.com/Articles/New-Notables/New-Notable-Modern-Vintage-2.asp?ht
"Powered by MTU 2000 series V16s rated at 2,000 horsepower each and front and rear thrusters, Khaki Blue also sports Naiad roll stabilizers with upgraded fins and a Brownie’s dive compressor."










Here are some snippets from the Q3 results....


Net revenues. For the three months ended September 30, 2006, we had net revenues of $1,098,692 as compared to net revenues of $810,824 for the three months ended September 30, 2005, an increase of $287,868 or 35.50%. This increase is primarily attributable to several factors occurring in the third quarter of 2006: we recognized approximately $215,000 of a contract sale for a dive system with hyperbaric support, there was an overall increase in both tankfill system and hookah system sales, and price increases and material cost savings instituted in the fourth quarter of 2005 carried over into the third quarter of 2006. The Company attributes its hookah system sales increases to expanding its market beyond the scuba dive retailer and into sporting goods and boating retailers, its web-based training program that was rolled out in July 2005, and to concerted marketing and sales efforts, including a release in July 2005 of a brand new catalog featuring all our products



Operating expenses. For the three months ended September 30, 2006, we had total operating expenses of $246,282, as compared to total operating expenses of $274,547 for the three months ended September 30, 2005, a decrease of $28,265 or 10.30%.



Provision for income tax. For the three months ended September 30, 2006, we had provision for income tax of $153,442, as compared to $0 for the three months ended September 30, 2005, an increase of $153,442. The increase is primarily attributable to federal income tax expense for the period of $95,072 and $53,370 related to full utilization of the existing deferred tax asset in the third quarter of 2006 that related to a net operating loss carryforward. The period expense provides for the cumulative effect of change in accounting estimate for income tax expense. Since the Company had been experiencing net losses, there was no provision for income tax expense. Instead, the company had a provision for tax benefit for the net operating loss carryforward. As of second quarter the loss trend reversed, and the income trend is carrying forward. Accordingly, Management revised its estimate in the third quarter of 2006 to provide for a reserve for income tax expense.


Net revenues. For the nine months ended September 30, 2006, we had net revenues of $3,175,702 as compared to net revenues of $2,357,887 for the nine months ended September 30, 2005, an increase of $817,815 or 34.68%.



Gross profit. For the nine months September ended 30, 2006, we had a gross profit of $1,169,669, as compared to gross profit of $834,795 for the comparable period in 2005, an increase of $334,874 or 40.11%.




Operating expenses. For the nine months ended September 30, 2006, we had total operating expenses of $766,896, as compared to total operating expenses of $773,804 for the nine months ended June 30, 2005, a decrease of $6,908 or 0.89%.

{My note: Revenues and gross profit growing at 34% and 40% clips, and operating expenses DECREASING at the same time!)



Net income (loss) before provision for income tax. For the nine months ended September 30, 2006, we had net income before provision for income taxes of $477,353 as compared to a $27,556 net loss before provision for income taxes for the nine months ended September 30, 2005. This represents an increase in net income before provision for income taxes of $504,909 or 1,832.30%. The increase is primarily attributable to the increase in net revenues for the nine months ended September 30, 2006.





If we assume that Q4 revenues come in around $1million, that translates to full year revenues of over $4million, and gross profit of approx. $1.3 to $1.4million. With UCPJ growing revs by a healthy 30% clip while lowering operating expenses, I would argue that these results deserve more than a $7million market cap.

Related Industries: New Pick - News Event - Short Term - Technical Analysis -

Initial Stock Price: $.047

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