------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549
                       -----------------------------------

                                    FORM 10-Q

          ( / ) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

                                      -OR-

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934
                       -----------------------------------

                         Commission File No. 333-103749

                          MAINE & MARITIMES CORPORATION

                               A Maine Corporation

                  I.R.S. Employer Identification No. 30-0155348

                   209 STATE STREET, PRESQUE ISLE, MAINE 04769

                                 (207) 760-2499
                       -----------------------------------

     Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
    1934 during the preceding 12 months (or for such shorter period that the
 registrant was required to file such reports), and (2) has been subject to such
             filing requirements for the past 90 days. Yes [X]. No.

    Indicate by check mark whether the registrant is an accelerated filer (as
   defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes No [X]

    Indicate the number of shares outstanding of each of the issuer's classes
     of common stock, as of the close of the period covered by this report.

                Common Stock, $7.00 par value - 1,635,222 shares
   --------------------------------------------------------------------------

<PAGE>


----------------------------------------------------------------------
                          Glossary of Terms

----------------------------------------------------------------------
AFUDC            Allowances for the cost of equity and borrowed
                 funds used during construction
---------------- -----------------------------------------------------
AMEX             American Stock Exchange
---------------- -----------------------------------------------------
APBO             Accumulated Pension Benefit Obligation
---------------- -----------------------------------------------------
ARP              Alternative Rate Plan
---------------- -----------------------------------------------------
BHE              Bangor Hydro Electric Company
---------------- -----------------------------------------------------
CES              Competitive Energy Supplier
---------------- -----------------------------------------------------
CMLTD            Current Maturities Long-Term Debt
---------------- -----------------------------------------------------
CMP              Central Maine Power Company
---------------- -----------------------------------------------------
DETM             Duke Energy Trading and Marketing
---------------- -----------------------------------------------------
DOE              Department of Energy
---------------- -----------------------------------------------------
EA               Energy Atlantic, LLC
---------------- -----------------------------------------------------
Engage           Engage Energy America, LLC
---------------- -----------------------------------------------------
EPS              Earnings Per Share
---------------- -----------------------------------------------------
FAME             Finance Authority of Maine
---------------- -----------------------------------------------------
FAS              Financial Accounting Standards
---------------- -----------------------------------------------------
FASB             Financial Accounting Standards Board
---------------- -----------------------------------------------------
FERC             Federal Energy Regulatory Commission
---------------- -----------------------------------------------------
FIN              FASB Interpretation Number
---------------- -----------------------------------------------------
ISFSI            Independent Spent Fuel Storage Installation
---------------- -----------------------------------------------------
ISO              Independent System Operator
---------------- -----------------------------------------------------
ISO-NE           Independent System Operator - New England
---------------- -----------------------------------------------------
LIBOR            London InterBank Offering Rate
---------------- -----------------------------------------------------
LOC              Letter of Credit
---------------- -----------------------------------------------------
M&R              Morris and Richard Consulting Engineers Limited
---------------- -----------------------------------------------------
MAM              Maine & Maritimes Corporation
---------------- -----------------------------------------------------
MAMES            Maine & Maritimes Energy Services Company
---------------- -----------------------------------------------------
Maricor          Maricor Ltd
---------------- -----------------------------------------------------
ME&NB            Maine & New Brunswick Electrical Power Company,
                 Limited
---------------- -----------------------------------------------------
MEPCO            Maine Electric Power Company, Inc.
---------------- -----------------------------------------------------
<PAGE>
MPS              Maine Public Service Company
---------------- -----------------------------------------------------
MPUC             Maine Public Utilities Commission
---------------- -----------------------------------------------------
MPUFB            Maine Public Utility Financing Bank
---------------- -----------------------------------------------------
MW               Megawatt
---------------- -----------------------------------------------------
MWH              Megawatt hour
---------------- -----------------------------------------------------
NEPOOL           New England Power Pool
---------------- -----------------------------------------------------
NMISA            Northern Maine Independent System Administrator
---------------- -----------------------------------------------------
NOI              Notice of Inquiry
---------------- -----------------------------------------------------
NPCC             Northeastern Power Coordinating Council
---------------- -----------------------------------------------------
NRC              Nuclear Regulatory Commission
---------------- -----------------------------------------------------
NUG              Non-Utility Generator
---------------- -----------------------------------------------------
OATT             Open Access Transmission Tariff
---------------- -----------------------------------------------------
PBR'S            Performance Based Rates
---------------- -----------------------------------------------------
PCB              Poly Chlorinated Bi-phenol
---------------- -----------------------------------------------------
PPA              Power Purchase Agreement
---------------- -----------------------------------------------------
PURPA            Public Utilities Regulatory Policy Act
---------------- -----------------------------------------------------
QF               Qualifying Facility
---------------- -----------------------------------------------------
RES              RES Engineering, Inc.
---------------- -----------------------------------------------------
ROCE             Return on Capital Employed
---------------- -----------------------------------------------------
RTO              Regional Transmission Organization
---------------- -----------------------------------------------------
SAM              Strategic Asset Management
---------------- -----------------------------------------------------
SCADA            Supervisory Control and Data Acquisition
---------------- -----------------------------------------------------
SEC              Securities and Exchange Commission
---------------- -----------------------------------------------------
SFAS             Statement of Financial Accounting Standards
---------------- -----------------------------------------------------
SOS              Standard Offer Service
---------------- -----------------------------------------------------
T&D              Transmission and Distribution
---------------- -----------------------------------------------------
TRRP             Transmission Rate Recognition Proposal
---------------- -----------------------------------------------------
VEBA             Voluntary Employee Benefit Association
---------------- -----------------------------------------------------
VERP             Voluntary Employee Retirement Program
---------------- -----------------------------------------------------
WPS-PDI          WPS - Power Development, Inc.
---------------- -----------------------------------------------------
WS               Wheelabrator-Sherman
---------------- -----------------------------------------------------

<PAGE>

                                                                       Form 10-Q

                          PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

         See the following exhibits: Maine & Maritimes Corporation ("MAM" or the
"Company") and Subsidiaries Consolidated Financial Statements, including (1) an
unaudited statement of consolidated operations for the quarter and six months
ended June 30, 2004, and for the corresponding periods of the preceding year;
(2) an unaudited consolidated balance sheet as of June 30, 2004; (3) an audited
consolidated balance sheet as of December 31, 2003, the end of Maine & Maritimes
Corporation's preceding fiscal year; and (4) an unaudited statement of
consolidated cash flows for the period January 1 (beginning of the fiscal year)
through June 30, 2004, and for the corresponding period of the preceding year.

         In the opinion of management, the accompanying unaudited consolidated
financial statements present fairly the financial position of the Company and
its Subsidiaries at June 30, 2004, and December 31, 2003; the results of their
operations for the three and six months ended June 30, 2004 and 2003; and their
cash flows for the six months ended June 30, 2004, and 2003.

         MAM is the parent holding company for the following wholly owned
subsidiaries: (1) Maine Public Service Company ("MPS") and its wholly owned
subsidiary Maine & New Brunswick Electrical Power Company, Ltd ("ME&NB"); (2)
Energy Atlantic, LLC ("EA"); (3) The Maricor Group and its wholly owned
subsidiaries RES Engineering Inc. ("RES") and Maricor Ltd ("Maricor"); and (4)
Maricor Properties Ltd. ("Maricor Properties") and its wholly owned subsidiary
Mecel Properties Limited. ("Mecel"). The Maricor Group, formerly known as Maine
and Maritimes Energy Services ("MAMES") dba " The Maricor Group," changed its
corporate name on July 23, 2004. General descriptions of these companies are as
follows:

o    MPS is a regulated electric transmission and distribution utility serving
     all of Aroostook County and a portion of Penobscot County in northern
     Maine.
o    ME&NB, is an inactive Canadian subsidiary of MPS, which formerly owned
     MPS's Canadian electric generation assets.
o    EA is a licensed, but currently inactive, Competitive Energy Supplier
     ("CES") of retail electricity and formerly served the northern and southern
     regions of the state of Maine.
o    The Maricor Group is an asset development, mechanical and electrical
     engineering, energy efficiency and lifecycle asset management services firm
     focused on markets primarily within the New England region of the United
     States and the eastern Canadian provinces.
o    RES is a subsidiary of The Maricor Group located in Hudson and Boston,
     Massachusetts offering The Maricor Group's services primarily within New
     England.
o    Maricor is a Canadian subsidiary of The Maricor Group offering the parent
     company's defined services primarily within the eastern Canadian provinces.
o    Maricor Properties is a Canadian real estate development and investment
     company focused primarily on public infrastructure facilities, historic,
     redevelopment, coastal leisure and non-retail commercial real properties
     within Atlantic Canada. Maricor Properties Ltd was organized on June 1,
     2004 in Nova Scotia, Canada.
o    Mecel is a Canadian subsidiary of Maricor Properties and currently owns the
     office building housing the Nova Scotia operating division (the M&R
     Division) of Maricor.

<PAGE>


<TABLE>
<CAPTION>
                 MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
                      Statements of Consolidated Operations
                                   (Unaudited)
                 (Dollars in Thousands Except Per Share Amounts)

                                                           Three Months Ended June 30,       Six Months Ended June 30,
                                                        --------------------------------   --------------------------------
                                                             2004             2003               2004            2003
                                                        --------------    --------------   ---------------   --------------
Operating Revenues
<S>                                                         <C>               <C>              <C>              <C>
  Regulated                                                 $   6,882         $   6,322        $   17,090       $   15,902
  Unregulated                                                     625                 0               915                0
                                                        --------------    --------------   ---------------   --------------
          Total Revenues                                        7,507             6,322            18,005           15,902
                                                        --------------    --------------   ---------------   --------------

Operating Expenses
   Regulated Operation & Maintenance                            3,311             3,129             6,561            5,894
   Unregulated Operation & Maintenance                          1,075               409             1,680              587
   Depreciation                                                   656               663             1,290            1,326
   Amortization of Stranded Costs                               2,383             2,225             4,647            4,673
   Amortization                                                    20                51                39              103
   Taxes Other Than Income                                        302               355               668              709
   (Benefit of) Provision for Income Taxes - Regulated            (3)             (212)             1,279              879
   Benefit of Income Taxes - Unregulated                        (190)                 0             (308)                0
                                                        --------------    --------------   ---------------   --------------
          Total Operating Expenses                              7,554             6,620            15,856           14,171
                                                        --------------    --------------   ---------------   --------------

Operating (Loss) Income                                          (47)             (298)             2,149            1,731
                                                        --------------    --------------   ---------------   --------------

Other Income (Deductions)
   Equity in Income of Associated Companies                       58                66                115              137
   (Provision for) Benefit of Income Taxes                       (18)                8                (9)               (3)
   Other - Net                                                   (28)              (51)             (148)             (146)
                                                        --------------    --------------   ---------------   --------------
          Total                                                   12                23               (42)              (12)
                                                        --------------    --------------   ---------------   --------------

(Loss) Income Before Interest Charges                            (35)             (275)             2,107            1,719
                                                        --------------    --------------   ---------------   --------------

Interest Charges
   Long-Term Debt and Notes Payable                               564               331             1,130              686
   Less Stranded Costs Carrying Charges and Allowance
    for Borrowed Funds Used During Construction                 (324)             (332)             (656)            (631)
                                                        --------------    --------------   ---------------   --------------
          Total                                                   240               (1)               474               55
                                                        --------------    --------------   ---------------   --------------

(Loss) Income from Continuing Operations                        (275)             (274)             1,633            1,664

Discontinued Operations
   (Loss) Income from Discontinued Operations (including
     loss on disposal of $69 in the second quarter of 2004)      (51)               65               (649)              69
     Income Tax Benefit (Provision)                               18               (27)               258              (29)
                                                        --------------    --------------   ---------------   --------------
           (Loss) Income from Discontinued Operations            (33)               38               (391)              40

Net (Loss) Income Available for Common Stock                $   (308)         $   (236)         $   1,242        $   1,704
                                                        ==============    ==============   ===============   ==============

Average Shares Outstanding (000's)                             1,599             1,575              1,590            1,574

Basic and Diluted (Loss) Earnings Per Share of Common
   Stock from Continuing Operations                         $  (0.17)         $  (0.17)         $    1.03        $    1.06
Basic and Diluted (Loss) Earnings Per Share of Common
   Stock from Discontinued Operations                       $  (0.02)         $   0.02          $   (0.25)       $    0.02
                                                        --------------    --------------   ---------------   --------------
Basic and Diluted (Loss) Earnings Per Share of Common       $  (0.19)         $  (0.15)         $    0.78        $    1.08
   Stock from Net Income

Dividends Declared per Common Share                         $   0.38          $   0.37          $    0.76        $    0.74

                        The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>



<TABLE>
<CAPTION>

                 MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (Unaudited)
                             (Dollars in Thousands)

ASSETS                                                                       June 30,            December 31,
                                                                               2004                  2003
Utility Plant
<S>                                                                                <C>                  <C>
   Electric Plant in Service                                                       $94,658              $92,055
   Less Accumulated Depreciation                                                    38,588               37,618
                                                                         ------------------   ------------------
      Net Electric Plant in                                                         56,070               54,437
Service
   Construction Work-in-Progress                                                     1,843                    8
                                                                         ------------------   ------------------
        Total                                                                       57,913               54,445

Investment in Associated Companies                                                   2,441                2,729
                                                                         ------------------   ------------------

Net Utility Plant and Investments in Associated Companies                           60,354               57,174
                                                                         ------------------   ------------------

Current Assets
   Cash and Cash Equivalents                                                         1,547                4,344
   Accounts Receivable - Net                                                         6,228                6,032
   Unbilled Revenue                                                                    671                1,199
   Inventory                                                                           741                  695
   Income Tax Refund Receivable                                                          0                  229
   Prepayments                                                                         470                  361
                                                                         ------------------   ------------------
      Total                                                                          9,657               12,860
                                                                         ------------------   ------------------

Regulatory Assets
   Uncollected Maine Yankee Decommissioning Costs                                   16,222               17,771
   Recoverable Seabrook Costs                                                       13,334               13,889
   Regulatory Assets - SFAS 109 & 106                                                6,585                6,648
   Deferred Fuel and Purchased Energy Costs                                         23,347               20,495
   Regulatory Asset - Power Purchase Agreement Restructuring                         3,627                4,353
   Unamortized Premium on Early Retirement of Debt                                   1,392                1,498
   Deferred Regulatory Costs, less accumulated amortization                          1,670                1,392
                                                                         ------------------   ------------------

      Total                                                                         66,177               66,046
                                                                         ------------------   ------------------

Other Assets
   Goodwill and Other Intangible Assets                                              4,134                  542
   Unamortized Debt Issuance Costs                                                     626                  625
   Restricted Investments (at cost, which approximates market)                       2,914                2,379
   Miscellaneous                                                                     1,621                1,643
                                                                         ------------------   ------------------

        Total                                                                        9,295                5,189
                                                                         ------------------   ------------------

Total Assets                                                                      $145,483             $141,269
                                                                         ==================   ==================

                     The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
                         Capitalization and Liabilities
                                   (Unaudited)
                             (Dollars in Thousands)


                                                                                June 30,              December 31,
                                                                                  2004                    2003
Capitalization
<S>                                                                                <C>                     <C>
   Common Shareholders' Equity                                                     $49,026                 $46,984
   Long-Term Debt                                                                   28,440                  29,230
                                                                         ------------------     -------------------
          Total                                                                     77,466                  76,214
                                                                         ------------------     -------------------

Current Liabilities
   Long-Term Debt Due Within One Year                                                1,535                   1,450
   Notes Payable to Banks                                                            8,418                   6,200
   Accounts Payable                                                                  4,373                   3,928
   Accounts Payable - Associated Companies                                             268                      28
   Accrued Employee Benefits                                                         1,286                   1,013
   Customer Deposits                                                                    21                      19
   Taxes Accrued                                                                       550                      20
   Interest Accrued                                                                     43                      35
                                                                         ------------------     -------------------
      Total                                                                         16,494                  12,693
                                                                         ------------------     -------------------

Deferred Credits and Other Liabilities
   Accrued Removal Obligations                                                       4,099                   4,015
   Carrying Value of Interest Rate Hedge                                               552                   1,185
   Uncollected Maine Yankee Decommissioning Costs                                   16,222                  17,771
   Income Taxes                                                                     25,894                  25,044
   Accrued Post-retirement Benefits and Pension Costs                                3,908                   3,462
   Investment Tax Credits                                                              145                     160
   Miscellaneous                                                                       703                     725
                                                                         ------------------     -------------------
      Total                                                                         51,523                  52,362
                                                                         ------------------     -------------------

Total Capitalization and Liabilities                                              $145,483                $141,269
                                                                         ==================     ===================

                          The accompanying notes are an integral part of these financial statements.

</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                 MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
              Statement of Consolidated Common Shareholders' Equity
                                   (Unaudited)
                             (Dollars in Thousands)



                                                                                              Accumulated
                                                                                                 Other
                                       Number of Shares    Par Value   Paid-In   Retained    Comprehensive
                                      Issued    Treasury     Issued    Capital   Earnings    Income (Loss)  Total
                                     ---------- ---------- ----------- --------- ---------- -------------- -------
<S>                                  <C>            <C>       <C>          <C>     <C>            <C>      <C>
Balance, December 31, 2003           1,580,512        ---     $11,064      $165    $36,476        ($721)   $46,984
                                     ---------- ---------- ----------- --------- ----------    ----------- -------
New Stock Issued                           189                      1         6                                  7
Net Income                                                                           1,550                   1,550
Other Comprehensive Income (Loss)
   Changes in Value of Foreign
       Exchange Translation Gain
       (Loss)                                                                                         8          8
   Interest Rate Hedge, Net of
        Tax Benefit of $234                                                                        (353)      (353)
                                                                                                           -------
Total Comprehensive Income                                                                                  (1,205)
Dividend ($0.38 per share)                                                           (601)                    (601)
                                     ---------- ---------- ----------- --------- ----------    ----------- -------
Balance, March 31, 2004              1,580,701        ---     $11,065      $171    $37,425      $(1,066)   $47,595
                                     ---------- ---------- ----------- --------- ----------    ----------- -------
New Stock Issued                        54,521                    382     1,302                              1,684
Net Income                                                                           (308)                    (308)
Other Comprehensive Income (Loss)
   Changes in Value of Foreign
       Exchange Translation Gain (Loss)                                                             (68)       (68)
   Interest Rate Hedge, Net of
        Tax Provision of $486                                                                        734       734
                                                                                                           -------
Total Comprehensive Income                                                                                     358
Dividend ($0.38 per share)                                                           (611)                    (611)
                                     ---------- ---------- ----------- --------- ----------    ----------- -------
Balance, June 30, 2004               1,635,222        ---     $11,447    $1,473    $36,506         $(400)  $49,026
                                     ========== ========== =========== ========= ==========    =========== =======

               The accompanying notes are an integral part of these financial statements.
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

                 MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
                      Statements of Consolidated Cash Flows
                                   (Unaudited)
                             (Dollars in Thousands)

                                                                                       Six Months Ended June 30,
Cash Flow From Operating Activities                                                       2004           2003
<S>                                                                                        <C>             <C>
    Net Income                                                                             $1,242          $1,704
    Adjustments to Reconcile Net Income to Net Cash
          Provided by Operations:
              Depreciation                                                                  1,290           1,330
             Amortization                                                                     635             658
             Amortization of Deferred Gain from Asset Sale                                      0            (443)
             Loss on Disposal of Fixed Assets                                                  69               0
             Deferred Income Taxes - Net                                                      583             160
             Income on Tax-Exempt Bonds-Restricted Funds                                        0              (7)
             Change in Deferred Regulatory and Debt Issuance Costs                         (3,025)         (2,428)
             Amortization of WS Upfront Payment                                               726             726
             Change in Benefit Obligations                                                    509             533
             Change in Current Assets and Liabilities:
                    Accounts Receivable and Unbilled Revenue                                2,136           1,421
                    Other Current Assets                                                      123             (88)
                    Accounts Payable                                                         (166)           (107)
                    Accrued Employee Benefits                                                 (77)           (546)
                    Other Current Liabilities                                                 806             243
            Other - Net                                                                      (139)           (102)
                                                                                       -----------    ------------
Net Cash Flow Provided By Operating Activities                                              4,712           3,054
                                                                                       -----------    ------------
Cash Flow From Financing Activities
     Dividend Payments                                                                     (1,212)         (1,165)
     Retirements of Long-Term Debt                                                           (705)         (2,425)
     Short-Term Debt Borrowings (Repayments), Net                                           2,090          (1,050)
                                                                                       -----------    ------------
Net Cash Flow Provided By (Used For) Financing Activities                                     173          (4,640)
                                                                                       -----------    ------------
Cash Flow From Investing Activities
     Drawdown from Tax-Exempt Bond Trust                                                        0           1,482
     Stock Redemption from Associated Company                                                 200             224
     Acquisition, Net of Cash Acquired                                                     (3,529)              0
     Change in Restricted Investments                                                        (535)              0
     Investment in Electric Plant                                                          (3,818)         (2,772)
                                                                                       -----------    ------------
Net Cash Flow Used For Investing Activities                                                (7,682)         (1,066)
                                                                                       -----------    ------------
Decrease in Cash and Cash Equivalents                                                      (2,797)         (2,652)
Cash and Cash Equivalents at Beginning of Period                                            4,344           5,956
                                                                                       -----------    ------------
Cash and Cash Equivalents at End of Period                                                 $1,547          $3,304
                                                                                       ===========    ============
Supplemental Disclosure of Cash Flow Information:
     Cash Paid (Received) During the Period For:
        Interest                                                                           $1,113            $565
        Income Taxes                                                                         ($74)           $673

Non-Cash Investing Activities:
        Value of Stock Issued for Acquisitions                                             $1,677              $0


                    The accompanying notes are an integral part of these financial statements.
</TABLE>


<PAGE>

                        NOTES TO CONSOLIDATED STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accompanying consolidated financial statements include the accounts of
Maine & Maritimes Corporation (the "Company" or "MAM") and the following
wholly-owned active subsidiaries and affiliates:

-  Maine Public Service Company ("MPS"), a U.S. regulated transmission and
   distribution company and its wholly-owned inactive Canadian subsidiary, Maine
   and New Brunswick Electrical Power Company, Limited.,
   ("ME&NB");

-  Energy Atlantic, LLC ("EA"), a U.S. unregulated competitive electricity
   marketing subsidiary, which was owned by MPS until June 30, 2003, and is now
   a wholly owned, inactive subsidiary of MAM;

-  The Maricor Group and its wholly-owned U.S. subsidiary, RES Engineering Inc.
   ("RES"), and the Maricor Group's Canadian subsidiary, Maricor Ltd
   ("Maricor"), providing asset development, energy efficiency, facility asset
   lifecycle management and mechanical and electrical engineering services.

-  Maricor Properties Ltd ("Maricor Properties"), a Canadian real estate
   development and investment subsidiary of MAM and Maricor Properties'
   wholly-owned Canadian subsidiary, Mecel Properties Limited ("Mecel").

     MAM, a holding company organized effective June 30, 2003, owns all of the
common stock of MPS. All of the shares of MPS common stock were converted into
an equal number of shares of MAM common stock, which are listed on the American
Stock Exchange ("AMEX") under the symbol MAM. The reorganization was approved by
MPS's shareholders at its annual meeting on May 30, 2003. The U.S. Securities
and Exchange Commission ("SEC") had previously accepted MAM's S-4A Registration
Statement for registration and other appropriate state and federal regulatory
agencies issued the necessary approvals on various dates in 2003. Amounts shown
for the first six months of 2003 were reported by MPS.

     The Maricor Group (formerly known as Maine & Maritimes Energy Services) and
Maricor were organized on November 6, 2003, and November 12, 2003, respectively.
On June 15, 2004, The Maricor Group acquired RES Engineering Inc., a
Massachusetts corporation providing mechanical and electrical engineering
services located in Hudson, Massachusetts with an additional office in Boston,
Massachusetts. In separate transactions, Maricor acquired Eastcan Consultants,
Inc. ("Eastcan"), a New Brunswick, Canada corporation and its subsidiaries and
affiliates effective December 1, 2003; and Morris and Richard Consulting
Engineers, Ltd. ("M&R), a Nova Scotia, Canada limited body corporation and its
subsidiaries and affiliates effective June 1, 2004. Both companies are
mechanical and electrical engineering firms with principal places of business
located in New Brunswick and Nova Scotia, Canada respectively. The subsidiaries
and affiliates of each acquired company were amalgamated into single entities,
which in turn were amalgamated into Maricor. Eastcan and M&R now serve as
operating divisions of Maricor Ltd.

     Maricor Properties was organized on June 1, 2004, in connection with the
M&R acquisition and was the entity that acquired, through the amalgamation of
the M&R subsidiaries and affiliates, Mecel Properties Limited, a Nova Scotia,
Canada limited body corporation, whose current real estate holding is the office
building currently occupied and used as the principal place of business by the
M&R Division of Maricor.

     All inter-company transactions between MAM and its direct and indirect
subsidiaries have been eliminated in consolidation.

     The financial statements of the Company were prepared in accordance with
accounting principles generally accepted in the United States of America.

     For purposes of the statements of consolidated cash flows, the Company
considers all highly liquid securities with maturity, when purchased, of three
months or less, to be cash equivalents.

     Certain reclassifications have been made to the 2003 financial statement
amounts in order to conform to the 2004 presentation.

<PAGE>

2. DISCONTINUED OPERATIONS - ENERGY ATLANTIC

        On March 1, 2004, EA suspended all active operations and has been
classified as a discontinued operation in accordance with FASB No. 144, as
discussed in more detail below. EA participated in the wholesale power market
during 1999, and until March 1, 2000, when it began selling energy in the retail
electricity market within the state of Maine. Maine's retail electric market
consists of two sectors, Standard Offer Service ("SOS") and Competitive Energy
Supply ("CES"). The MPUC requests bids from CES providers for SOS in each
utility service territory.

     In connection with its February 21, 2003, announced intent to withdraw from
the retail electricity markets in northern Maine, EA has ceased all of its
energy marketing activities in MPS's service territory, as well as the balance
of the State, effective March 1, 2004. EA continued to serve its existing
contracts in Maine through their expiration on February 27, 2004. CES sales,
primarily in northern Maine, were approximately $6.1 million in 2003.

     Currently, EA is an inactive subsidiary and management has ceased all
active retail CES activity on behalf of EA within the state of Maine until
market conditions, the availability of supply, the mandate for stringent credit
requirements and the risk environment improve. Management will continue to
monitor both U.S. and Canadian deregulated markets to determine the appropriate
timing for possible re-entry into the deregulated retail market. Based on
current market conditions and the overall strategic direction of MAM, management
does not foresee re-entry into the Maine CES market in the foreseeable future.
Currently, EA has no employees and its operations have been discontinued.

        Through June 30, 2004, the Company recognized a loss from discontinued
operations of $0.25 per share for EA, classified as discontinued operations in
the statement of consolidated operations. This loss includes additional software
lease expense of $181,000 recognized on the buy-out of a software lease by EA,
$172,000 for employee severance payments, and a loss on disposal of fixed assets
of $69,000. The following table summarizes the statement of operations for EA
(in thousands):
<TABLE>
<CAPTION>

                                                          Three Months Ended                  Six Months Ended
                                                               June 30,                           June 30,
                                                        2004              2003             2004              2003
                                                    --------------    -------------    --------------    -------------
<S>                                                       <C>             <C>                <C>             <C>
Revenue                                                   $     0         $  1,699           $   562         $  3,487
Expenses                                                        0           (1,651)           (1,161)          (3,449)
Other income, deductions and interest                         (51)              17               (50)              31
                                                    --------------    -------------    --------------    -------------
Pretax (loss) income from discontinued                        (51)              65              (649)              69
  operations
Income taxes                                                   18              (27)              258              (29)
                                                    --------------    -------------    --------------    -------------
(Loss) income from discontinued operations                $   (33)        $     38           $  (391)        $     40
                                                    ==============    =============    ==============    =============

(Loss) income per share from discontinued
  operations (basic and diluted)                          $ (0.02)        $   0.02           $ (0.25)        $   0.02
                                                    ==============    =============    ==============    =============
</TABLE>

     The major classes of assets and liabilities of the discontinued operations
included in the Company's consolidated balance sheets as of June 30, 2004, are
as follows (in thousands):

Assets
Cash and cash equivalents                                          $334
Income tax benefit                                                  321
Other assets                                                          6
                                                                --------
     Total Assets                                                  $661
                                                                ========

Liabilities
Accounts payable                                                   $142
                                                                ========

<PAGE>

3. SEGMENT INFORMATION

     The Company is organized based on products and services. Management
monitors the operations of the Company in the following operating segments:

-    Regulated electric utility: MPS and its inactive wholly-owned Canadian
     subsidiary, ME&NB;

-    Unregulated energy marketing: EA, an inactive subsidiary; and

-    Unregulated services, which includes The Maricor Group and all of its
     subsidiaries and product and service lines.

     The "Other" column presented in the table below summarizes the expenses for
the holding company, MAM, intercompany eliminations, and the activity for
Maricor Properties and its subsidiary Mecel Properties Limited. This
presentation of operating segments is consistent with the presentation used in
the first quarter, although the column headings have been changed. The
unregulated engineering services division was first presented in the first
quarter of 2004. Additionally, this is the first quarter including the
activities of Maricor Properties Ltd and its subsidiary Mecel Properties Limited
under the column "Other" as a result of their creation during the second quarter
of 2004. Given the post-second quarter acquisition of additional real estate by
Maricor Properties Ltd, it is anticipated that future categorizations will
include unregulated real estate (Maricor Properties Ltd and its subsidiary Mecel
Properties Limited) as a separate heading.

     The accounting policies of the segments are the same as those described in
Note 1, "Summary of Significant Accounting Policies." MAM did not have any
material assets or operations until it became a holding company on June 30,
2003; however, MPS incurred expenses associated with the formation of MAM, which
totaled approximately $399,000 and $551,000 for the three and six months ended
June 30, 2003, respectively, classified as other income and deductions. These
expenses have been reclassified to unregulated operation and maintenance in the
"Other" column in the table below. MAM provides certain administrative support
services to MPS and its inactive subsidiary, The Maricor Group and its
subsidiaries, and Maricor Properties Ltd and its subsidiary. MAM also provides
minimal administrative services to its inactive subsidiary, EA. MPS provides
certain support services to MAM and its unregulated subsidiaries, which include
The Maricor Group and its subsidiaries and Maricor Properties and its
subsidiaries. Services costs are billed to the respective entities at cost
through inter-company transactions based on a combination of direct charges and
allocations.


<PAGE>


<TABLE>
<CAPTION>

                                                               Three Months Ended
                                                             (Dollars in Thousands)
                                         June 30, 2004                                     June 30, 2003
                       ------------------------------------------------------------------------------------------------------
                       Unregulated Regulated Unregulated                 Unregulated Regulated Unregulated
                          Energy   Electric  Engineering                    Energy   Electric  Engineering
                         Marketing  Utility   Services   Other*    Total  UMarketing  Utility   Services   Other*    Total
                       ------------------------------------------------------------------------------------------------------
Revenue from External
    Customers -
<S>                            <C>   <C>            <C>      <C>  <C>            <C>   <C>            <C>      <C>  <C>
Regulated                      $0    $6,881         $0       $1   $6,882         $0    $6,322         $0       $0   $6,322
Revenue from External
    Customers -
    Unregulated                 0         0        625        0      625          0         0          0        0        0
                       ------------------------------------------------------------------------------------------------------
   Total  Operating
        Revenues                0     6,881        625        1    7,507          0     6,322          0        0    6,322
                       ------------------------------------------------------------------------------------------------------
Regulated Operation &           0     3,311          0        0    3,311          0     3,129          0        0    3,129
Maintenance
Unregulated Operation
& Maintenance                   0         0        853      222    1,075          0        10          0      399      409
Depreciation                    0       656          0        0      656          0       663          0        0      663
Amortization of
   Stranded Cost                0     2,383          0        0    2,383          0     2,225          0        0    2,225
Amortization                    0        20          0        0       20          0        51          0        0       51
Taxes Other than Income         0       276         25        1      302          0       355          0        0      355
Income Taxes                    0        (3)       (89)    (101)    (193)         0      (180)         0      (32)    (212)
                       ------------------------------------------------------------------------------------------------------
Total Operating                 0     6,643        789      122    7,554          0     6,253          0      367    6,620
   Expenses
Operating Income                0       238       (164)    (121)     (47)         0        69          0     (367)    (298)
Equity in Income of
Associated Companies            0        58          0        0       58          0        66          0        0       66
(Provision for)
   Benefit of Income
   Taxes                        0       (11)         0       (7)     (18)         0         8          0        0        8
Other - Net                     0       (11)         5      (22)     (28)         0       (51)         0        0      (51)
                       ------------------------------------------------------------------------------------------------------
Income Before Interest
   Charges                      0       274       (159)    (150)     (35)         0        92          0     (367)    (275)
                       ------------------------------------------------------------------------------------------------------
Interest Charges                0       240         10      (10)     240          0        (1)         0        0       (1)
                       ------------------------------------------------------------------------------------------------------
Income from Continuing          0        34       (169)    (140)    (275)         0        93          0     (367)    (274)
Operations
(Loss) Income from
   Discontinued
   Operations                 (33)        0          0        0      (33)        38         0          0        0       38
                       ------------------------------------------------------------------------------------------------------
 Net Income                  $(33)      $34      $(169)   $(140)   $(308)       $38       $93         $0    $(367)   $(236)
                       ======================================================================================================

------------------------
* Other column includes intercompany eliminations, Maricor Properties and holding company expenses.

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                                                 Six Months Ended
                                                              (Dollars in Thousands)
                                        June 30, 2004                                      June 30, 2003
                       --------------------------------------------------------------------------------------------------------
                       Unregulated Regulated Unregulated                Unregulated Regulated Unregulated
                          Energy   Electric  Engineering                   Energy   Electric  Engineering
                         Marketing  Utility   Services  Other*  Total     Marketing  Utility    Services  Other*     Total
                       --------------------------------------------------------------------------------------------------------
Revenue from External
    Customers -
<S>                            <C>  <C>             <C>    <C> <C>              <C>  <C>              <C>      <C>   <C>
Regulated                      $0   $17,090         $0     $0  $17,090          $0   $15,902          $0       $0    $15,902
Revenue from External
    Customers -
    Unregulated                 0         0        915      0      915           0         0           0        0          0
                       --------------------------------------------------------------------------------------------------------
   Total  Operating
        Revenues                0    17,090        915      0   18,005           0    15,902           0        0     15,902
                       --------------------------------------------------------------------------------------------------------
Regulated Operation &           0     6,561          0      0    6,561           0     5,894           0        0      5,894
Maintenance
Unregulated Operation
& Maintenance                   0         0      1,262    418    1,680           0        36           0      551        587
Depreciation                    0     1,289          0      1    1,290           0     1,326           0        0      1,326
Amortization of
   Stranded Cost                0     4,647          0      0    4,647           0     4,673           0        0      4,673
Amortization                    0        39          0      0       39           0       103           0        0        103
Taxes Other than Income         0       642         25      1      668           0       709           0        0        709
Income Taxes                    0     1,279       (129)  (179)     971           0       919           0      (40)       879
                       --------------------------------------------------------------------------------------------------------
Total Operating                 0    14,457      1,158    241   15,856           0    13,660           0      511     14,171
   Expenses
Operating Income                0     2,633       (243)  (241)   2,149           0     2,242           0     (511)     1,731
Equity in Income of
Associated Companies            0       117          0     (2)     115           0       137           0        0        137
Provision for Income
   Taxes                        0        (2)         0     (7)      (9)          0        (3)          0        0         (3)
Other - Net                     0      (118)        (1)   (29)    (148)          0      (146)          0        0       (146)
                       --------------------------------------------------------------------------------------------------------
Income Before Interest
   Charges                      0     2,630       (244)  (279)   2,107           0     2,230           0     (511)     1,719
                       --------------------------------------------------------------------------------------------------------
Interest Charges                0       478         13    (17)     474           0        55           0        0         55
                       --------------------------------------------------------------------------------------------------------
Income from Continuing          0     2,152       (257)  (262)   1,633           0     2,175           0     (511)     1,664
Operations
(Loss) Income from
   Discontinued
   Operations                (391)        0          0      0     (391)         40         0           0        0         40
                       --------------------------------------------------------------------------------------------------------
 Net Income                 ($391)   $2,152      ($257) ($262)  $1,242         $40    $2,175          $0    $(511)    $1,704
                       ========================================================================================================

------------------------
* Other column includes intercompany eliminations, Maricor Properties and holding company expenses.
</TABLE>


4. REGULATORY MATTERS


MPUC Request for Approval of Alternative Rate Plan

     On April 15, 2004, MPS filed a Memorandum Of Understanding ("MOU") entered
into between MPS and the parties and supported by the MPUC's advisory staff.
Under the terms of the MOU, MPS agreed that as part of its annual OATT
Information Filing to be made with FERC in June 2004 (the "June Filing"), MPS
will incorporate the Transmission Rate Recognition Proposal ("TRRP") as agreed
to in the MOU. The parties agree that they will not contest those portions of
MPS's June Filing (and subsequent FERC filings, as applicable) that are
consistent with the TRRP. Following the entry of the order approving the
Supplemental Stipulation, the ARP proceeding was bifurcated and MPS had until
December 31, 2003, to notify the MPUC of its intention to proceed with the
remaining elements of the ARP or withdraw the ARP docket. On December 29, 2003,
MPS withdrew its request for approval for its ARP from the proceedings. On April
30, 2004, the MPUC issued its order approving the final disposition of the
matter and closing the docket. A copy of the Stipulation, Supplemental
Stipulation and the final orders approving the increase and resolving all issues
in the docket may be viewed on the MPUC website at http://www.state.me.us/mpuc/.
MPS management continues to evaluate the potential future filing of an
alternative rate plan, possibly migrating to performance based rates. However,
at this time management has made no definitive decision concerning whether it
should pursue an alternative rate plan or continue a cost-of-service regulatory
format.

<PAGE>
MPUC Approves Stranded Cost Revenue Requirements Effective March 1, 2004

        In an Order dated February 27, 2004, MPS received final approval from
the MPUC for the stranded cost revenue component of its electric delivery rates,
effective March 1, 2004. Under Title 35-A of the Maine Revised Statutes
Annotated, Section 3208, the MPUC is required to periodically investigate and
adjust the stranded cost charges reflected in the rates of a transmission and
distribution utility. In accordance with this provision, on September 16, 2003,
in Docket No. 2003-666, the MPUC issued a notice of investigation in order to
determine whether MPS's rates must be changed effective March 1, 2004, to
reflect any changes in MPS's stranded costs. On February 27, 2004, the MPUC
issued an order approving a stipulation under which MPS is allowed to recover
$11,785,339 per year to satisfy its approved stranded cost revenue requirements
for the "rate effective period" beginning March 1, 2004, and ending on December
31, 2006. The approved revenue requirement for the rate effective period ended
February 29, 2004, was $11,540,000. Under the approved stipulation MPS's
stranded cost rates approved in Docket No. 2003-85 will remain in effect during
the rate effective period. The stipulation approved by the MPUC in Docket
2003-666 also approved and reaffirmed each of the elements and associated
balances of MPS's recoverable stranded costs.

        As explained more fully below, during the course of Docket 2003-666 the
parties reviewed the manner in which MPS was recovering and accounting for its
carrying charges associated with the deferred fuel element of its stranded
costs. As a result of the stipulation approved in Docket No. 2003-666, MPS will
record deferred income tax expense associated with deferred fuel carrying
charges during the rate effective period from March 1, 2004, through December
31, 2006, as compared to past treatment where such expense was deferred for
future recovery. Because the deferred fuel carrying charge component of MPS's
stranded costs is not expected to fully amortize until 2012, the Company
anticipates that deferred income tax expense will be incurred through 2012,
subject to future stranded cost filings with the MPUC. In Dockets 98-577 and
2001-240, the parties stipulated that MPS would accrue carrying costs on its
unrecovered fuel balance (the "deferred fuel account") during the respective
rate effective period at its net of tax cost of capital rate. Consistent with
the stipulation in Docket No. 2001-240, MPS accrued a carrying charge using the
net of tax rate of 7.98% through October 31, 2003, applied against its
unrecovered deferred fuel balance. From November 1, 2003, to December 31, 2003,
MPS accrued its carrying charge using a net of tax rate of 7.06%, based on the
cost of capital approved in Docket No. 2003-85 (described in Docket 2003-85
Partial Stipulation filed on September 2, 2003).

         During the course of the Docket 2003-666 proceeding, MPS determined
that it had not previously recognized accumulated deferred income taxes with
respect to the carrying charges on the deferred fuel account and that the
recording of a deferred tax liability to its balance sheet pursuant to FAS 109
in the amount of $2.896 million was required, of this, $2.739 million was
recorded as of December 31, 2003, and the balance was recorded on February 29,
2004. The deferred fuel balance as of March 1, 2004, prior to any adjustment is
projected to be $18,838,000. Under the stipulation MPS was allowed to adjust its
accumulated deferred income tax account and the deferred fuel balance by
$2,896,000, as of March 1, 2004, resulting in a total deferred balance as of
March 1, 2004, of $21,734,000. Under the approved stipulation the parties also
agreed that the return component on the deferred fuel balance should be reduced
in such a manner that ratepayers were held harmless on a net present value basis
as a result of the March 1, 2004, adjustment to the deferred fuel balance.
During the rate effective period ending on December 31, 2006, the overall
pre-tax return component on the deferred fuel balance will be 8.28%, reflecting
a 6.17% return on equity. The return on the deferred fuel balance will be
reviewed in future stranded cost rate setting proceedings and will be adjusted
as necessary in order that the present value of the revenue requirements of the
deferred fuel account without the adjustments described above equals the present
value of the revenue requirements of the deferred fuel account with the
adjustments. MPS concludes that as a result of this stipulation and the
foregoing described adjustment to the deferred fuel balance and the accumulated
deferred income tax liability that no further adjustment is necessary under FAS
109 in order to reflect prior unrecorded deferred income taxes.

         The decreased cost of capital rate beginning on March 1, 2004, will
have an impact on future stranded cost earnings and cash flow, but will not
impact future distribution or transmission earnings. In the year 2004, the
Company anticipates that it will record deferred income tax expense of
approximately $412,000 associated with the deferred fuel carrying charges. The
amount of deferred income tax expense recorded in future years will vary
depending upon the amount of the accrued carrying charge in any year, and the
tax rates then in effect. The Company anticipates that earnings from carrying
charges on its stranded costs in 2004 will be approximately $267,000 lower than
the amount that would have been recorded had the Company continued to use the
original cost of capital on its deferred fuel balance, for a total earnings
impact of approximately $679,000 in 2004. The impact on future earnings
resulting from the agreed upon lower cost of capital, when compared against the
cost of capital used in prior stranded cost filings, will vary. Schedules filed
by the Company as part of the stipulation in Docket No. 2003-666 reflect the
deferred fuel balance as of March 1, 2003, certain additions relating to the
Wheelabrator-Sherman above-market contract through December, 2006 and the
amortization of the deferred fuel balance though 2012. Applying these
assumptions, current tax rates and the agreed upon cost of capital, the Company
anticipates that the impact on future earnings resulting from recording deferred
income taxes on accrued carrying charges and applying a lower cost of capital to
the deferred fuel balance could range from $1.0 million in 2005, increasing to
$1.2 million in 2007, then gradually decreasing to $17,000 in 2012. These
amounts may vary with changes in the deferred fuel balance and other variables
which the Company cannot predict with certainty at this time. Management
continues to analyze and implement growth and cost reduction strategies to
mitigate the impact of this stipulation on future net income and cash flows.
However, management cannot assure with certainty that such strategies can or
will fully offset such reductions in net income.

        In addition to the return allowed on its deferred fuel account as set
forth above, under the approved stipulation MPS shall be allowed to recover the
following pre-tax returns on the applicable stranded cost rate base components
during the rate effective period: (i) the pre-tax return on unrecovered balance
of the Wheelabrator-Sherman Contract Buy-down shall be 2.79% plus its FAME
issuance costs; (ii) the pre-tax return on the unrecovered Seabrook Investment
and approved special rate contract costs shall be 11.74%; and, (iii) the pre-tax
return on the Maine Yankee decommissioning related costs shall be 8.56%.


FERC Open Access Transmission Tariff ("OATT") Filings:

     2003 OATT. Pursuant to Section 2.4 of the Settlement Agreement filed on
September 30, 2000, in Docket No. ER00-1053-009 (the "2003 OATT"), and accepted
by the FERC on September 15, 2000, MPS provided parties and FERC staff on June
10, 2003, the 2003 OATT Formula Rate charges that MPS proposed to apply on June
1, 2003, together with back-up materials. On June 1, 2003, the Formula Rate
charges became effective subject to a refund that may occur in connection with a
settlement stipulation negotiated by the parties to the proceeding. In general,
MPS sought a slight modification to its rate formula under its transmission
tariff, including, among others, changes in certain depreciation rates for
transmission property, and allocations of certain operating expenses and
revenues. The return on common equity used in determining the rate of return on
transmission rate base remained at 11% under the 2003 OATT. MPS entered into a
settlement agreement in the matter with the parties and FERC staff resolving all
outstanding issues in the filing. In February 2004, the parties executed a
settlement which was filed with the FERC on February 11, 2004. An Order
approving the 2003 informational filings and 2003 OATT revisions was issued by
the FERC on April 1, 2004. MPS filed its informational filing in connection with
the 2003 OATT changed tariff charges, effective June 1, 2004, on June 15, 2004.

     2004 OATT. On May 28, 2004, pursuant to Section 205 of the Federal Power
Act, 16 U.S.C. Section 824d, and Title 18 CFR Sections 35.11 and 35.13 of the
regulations of the FERC, MPS submitted for filing its proposed revisions to its
FERC Open Access Transmission Tariff in Docket No. ER 04-894-001 (the "2004
OATT") to modify its transmission rates. Under the proposed 2004 OATT, the new
transmission rate for wholesale customers became effective on June 1, 2004,
subject to a customer refund that may, or may not, occur as a result of the
proceeding or potential settlement negotiations. The transmission revenue
requirement was increased by $429,336 on June 1, 2004, under the 2004 OATT. This
represents an increase of 13.5% to the transmission component of delivery rates
or an overall increase to total delivery rates of 1.1%. The primary reason for
the increase was the final elimination of the 2002 revenue credit related to
wheeling revenues associated with Boralex-Fort Fairfield. MPS has received and
is responding to data requests from interveners in the proceeding. The new
transmission rate for retail customers also became effective on July 1, 2004,
and is also subject to a customer refund that may, or may not, occur as a result
of the 2004 OATT proceeding or potential settlement negotiations. MPS's related
state compliance filing for the retail transmission rates which became effective
on July 1, 2004, was approved by the MPUC on June 17, 2004. MPS cannot predict
with certainty the outcome of the 2004 OATT proceeding, potential settlement
discussions that may, or may not occur, or the likelihood of any customer
refunds that may, or may not, occur.


<PAGE>

5. INCOME TAXES

     A summary of Federal, Canadian and State income taxes charged (credited) to
income is presented below. For accounting and ratemaking purposes, income tax
provisions included in "Operating Expenses" reflect taxes applicable to revenues
and expenses allowable for ratemaking purposes on MAM's regulated activities
(which include MPS) and MAM's unregulated activities (which include EA; The
Maricor Group and its subsidiaries RES and Maricor; Maricor Properties and its
subsidiary, Mecel ; as well as MPS's unregulated and inactive Canadian
subsidiary ME&NB). The tax effect of items not included in MPS's rate base or
normal operating activities is allocated as "Other Income (Deductions)."

<TABLE>
<CAPTION>

                                    Three Months Ended                  Six Months Ended
Dollars in Thousands                     June 30,                           June 30,
                                  2004              2003             2004              2003
                            ---------------   ---------------  ---------------  ----------------
<S>                               <C>               <C>                <C>              <C>
Current income taxes              $(441)            $(408)             $266             $751
Deferred income tax                 255               223               470              175

Investment credits                   (7)               (8)              (14)             (15)
                            ---------------   ---------------  ---------------  ----------------
Total income taxes                $(193)            $(193)             $722             $911
                            ===============   ===============  ===============  ================
Allocated to:
Operating Income
- Regulated                         $(3)            $(212)           $1,279             $879

- Unregulated                      (190)                0              (301)               0
Discontinued Operations             (18)               27              (258)              29

Other income                         18                (8)                2                3
                            ---------------   ---------------  ---------------  ----------------
Total                             $(193)            $(193)             $722             $911
                            ===============   ===============  ===============  ================
</TABLE>

     For the three months ended June 30, 2004, and 2003, the effective income
tax rates were 36.8% and 34.8%, respectively. The principal reasons for the
effective tax rates differing from the US federal income tax rate are flow
through items, namely Seabrook amortization, which is required by regulation and
state income taxes, and adjustments to prior year tax reserves.

     The Company has not accrued U.S. income taxes on the undistributed earnings
of ME&NB, as the withholding taxes due on the distribution of any remaining
amount would be principally offset by foreign tax credits. No dividends were
received from ME&NB in 2004 or 2003.

         The following summarizes accumulated deferred income tax (assets) and
liabilities established on temporary differences under SFAS 109 as of June 30,
2004 and December 31, 2003:

                                                (Dollars in Thousands)
                                              June 30,       December 31,
                                                2004             2003

Seabrook                                       $7,484            $7,577
Property                                        8,018             7,784
Flexible Pricing Revenue                          566               608
Deferred Fuel                                   9,107             8,176
Wheelabrator-Sherman up-front payment           1,447             1,736
Pension and post-retirement benefits            (808)             (610)
OCI-Interest Rate Hedge                         (221)             (473)
Other                                             301               246
                                           ----------------------------
Net accumulated deferred income taxes         $25,894           $25,044
                                           ============================

<PAGE>

6. MAINE YANKEE

Plant Closing
-------------

         MPS owns 5% of the common stock of Maine Yankee, which operated an 860
MW nuclear power plant (the "Plant") in Wiscasset, Maine. On August 6, 1997, the
Board of Directors of Maine Yankee voted to permanently cease power operations
and to begin decommissioning the Plant. Maine Yankee has made substantial
progress in decommissioning the plant and plant site. On February 27, 2004, the
transfer of spent fuel and greater-than-Class C waste ("GTCC") to Maine Yankee's
new on-site independent spent-fuel storage installation ("ISFSI") was completed.
The focus of the project is now on demolition of structures and site
restoration, in accordance with Maine Yankee's NRC-approved license termination
plan and other regulatory requirements. Based on the current schedule, which is
subject to change, Maine Yankee anticipates completion of the project in
mid-2005, with only the ISFSI and appropriate security, technical and corporate
personnel remaining thereafter.

Cost Recovery
-------------

         On September 1, 1997, Maine Yankee estimated the sum of the future
payments for the closing, decommissioning and recovery of the remaining
investment in Maine Yankee to be approximately $930 million, of which MPS's 5%
share would be approximately $46.5 million. On nine different occasions dating
back to December 1998, Maine Yankee has updated its estimate of decommissioning
costs based on the Settlement. Legislation enacted in Maine in 1997 called for
restructuring the electric utility industry and provided for recovery of
decommissioning costs, to the extent allowed by federal regulation, through the
rates charged by the transmission and distribution companies. Based on the Maine
legislation and regulation precedent established by the FERC in its opinion
relating to the decommissioning of the Yankee Atomic nuclear plant, MPS believes
that it is entitled to recover substantially all of its share of such costs from
its customers and, as of June 30, 2004, is carrying on its consolidated balance
sheet a regulatory asset and a corresponding liability in the amount of $16.2
million, which reflects MPS's 5% share of Maine Yankee's September 2003 revised
estimate of the remaining decommissioning costs, less actual decommissioning
payments made since then, and discounted by a risk-free interest rate.

         The MPUC has approved stipulations providing for the recovery of
stranded investment, until February 28, 2006, which includes MPS's share of
Maine Yankee decommissioning expenses, Maine Yankee replacement power costs, and
the remaining Maine Yankee investment.

         As of June 30, 2004, deferred fuel of $23.3 million is reflected as a
regulatory asset, which includes the Maine Yankee replacement power costs, as
well as deferred Wheelabrator-Sherman fuel costs.

         In accordance with its 1999 FERC rate case settlement, on October 21,
2003, Maine Yankee filed a revised formula rate schedule with the FERC,
proposing an effective date of January 1, 2004. The filing contained a revised
decommissioning cost estimate and collection schedule to assure that adequate
funds are available to safely and promptly decommission the Plant and operate
and manage the independent spent fuel storage installation ("ISFSI"). In the
filing, Maine Yankee also requested a change in its billing formula and an
increase in the level of collection for certain post-retirement benefits. To
meet these needs, Maine Yankee proposed to collect an additional $3.77 million
per year over current decommissioning collection levels through October 2008,
exclusive of any income-tax liability, for the decommissioning and spent-fuel
management expense, and to collect from November 2008, through October 2010, the
amounts needed to replenish its Spent Fuel Trust for funds previously used for
ISFSI construction. On December 19, 2003, the FERC issued an order accepting the
new rates effective January 1, 2004, subject to refund pending a hearing. After
engaging in discovery and settlement discussions, on July 9, 2004, the active
parties to the proceeding submitted an offer of settlement to the FERC for
certification as an uncontested settlement by the presiding administration law
judge and ultimate approval by the FERC. The terms of the offer of settlement
are substantially similar to the rate revisions proposed by Maine Yankee in its
October 2003 filing. Maine Yankee believes it is entitled to recover the costs
underlying the proposed revised rates contemplated by the offer of settlement,
but cannot predict with certainty whether or when the FERC will approve the
settlement.

Termination of Decommissioning Operations Contracts and Resulting Litigation
----------------------------------------------------------------------------

         As previously reported, in May 2000, Maine Yankee terminated its
decommissioning operations contract with Stone & Webster Engineering Corp.
("Stone & Webster") pursuant to the terms of the contract. Stone & Webster
disputed Maine Yankee's grounds for the termination. In June 2000, Stone &
Webster filed a voluntary petition under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware. Since the contract termination, Maine Yankee has managed the
decommissioning project itself.


<PAGE>

         In December 2001, Maine Yankee and Federal Insurance Company
("Federal") entered into a settlement agreement resolving litigation between the
parties, pursuant to which Federal paid Maine Yankee $44 million. That amount
represented full payment under the performance bond provided by Federal, plus an
additional amount under its payment bond reflecting certain payments previously
made by Maine Yankee to subcontractors and suppliers who had not been fully paid
by Stone & Webster. Maine Yankee deposited the payment in its decommissioning
trust fund to offset past and future expenses resulting from the failures of
Stone & Webster.

         In addition, Maine Yankee continued to pursue its claim for damages
that was originally filed against Stone & Webster and its then parent
corporations in August 2000, in the Bankruptcy Court in Delaware. After
recognizing the payment from Federal, Maine Yankee asserted a right to recover
an additional $20.8 million in that court from the bankrupt estates. After
extensive interim proceedings and negotiations, in the third quarter of 2003,
the major parties agreed to a joint plan of reorganization under which Maine
Yankee would have an allowed claim of $20.3 million against the principal
bankrupt estate, subject to certain contingencies. Under the plan, Maine Yankee
has a first lien on any distributions from a related bankrupt estate in the
proceeding on any amount needed to increase its actual cash recovery to $18.5
million. On February 3, 2004, Maine Yankee received an initial distribution of
$8.4 million, which it deposited in its decommissioning trust fund. The amount
of cash that Maine Yankee will actually recover on the balance of its claim
remains contingent on a number of factors beyond Maine Yankee's control that
affect the amount of bankrupt estate assets ultimately available to pay the
claim.

Nuclear Fuel Storage
--------------------

         Federal legislation enacted in 1987 directed the Department of Energy
("DOE") to proceed with the studies necessary to develop and operate a permanent
high-level waste (spent fuel) repository at Yucca Mountain, Nevada. The project
has encountered delays, and the DOE has indicated that the permanent disposal
site is not expected to open before 2010, although originally scheduled to open
in 1998.

         In accordance with the process set forth in the legislation, in
February 2002, the Secretary of Energy recommended the Yucca Mountain site to
the President for the development of a nuclear waste repository, and the
President then recommended development of the site to Congress. As provided in
the statutory procedure, the state of Nevada formally objected to the site in
April 2002, and in July 2002, Congress overrode the objection. Construction of
the repository requires the approval of the Nuclear Regulatory Commission
("NRC"), upon application of the DOE, and after a public adjudicatory hearing,
as well as a second NRC approval after completion of construction to operate the
facility. After the action by Congress, a number of parties, including the State
of Nevada and several environmental groups, brought legal actions challenging
the selection of the Yucca Mountain site. The legal actions were consolidated
and argued before a three-judge panel of the United States Court of Appeals for
the District of Columbia Circuit on January 14, 2004. On July 9, 2004, the
Court, although it rejected substantially all of the arguments raised by the
plaintiffs against the Yucca Mountain repository, including contentions that is
was unconstitutional for Congress to designate Nevada over its opposition as the
host state, ruled that the federal standards for protecting the public from
radiation leaks at the repository, which extend 10,000 years, were inadequate
for the duration. Maine Yankee cannot predict the outcome of any appeals or
other action taken as a result of the Court's decision, or what effect the
decision will have on the completion of the Yucca Mountain project.

         In November 1997, the U.S. Court of Appeals for the District of
Columbia Circuit confirmed the obligation of the DOE under the Nuclear Waste
Policy Act of 1982 to take responsibility for spent nuclear fuel from commercial
reactors in January 1998. After an unsuccessful effort by Maine Yankee in the
same court to compel the DOE to take Maine Yankee's spent fuel, in June 1998,
Maine Yankee filed a claim for money damages in the U.S. Court of Federal Claims
for the costs associated with the DOE's default. In November 1998, the Court
granted summary judgment in favor of Maine Yankee, ruling the DOE had violated
its contractual obligations, but leaving the amount of damages incurred by Maine
Yankee for later determination by the Court. Since then the parties have been
engaged in extensive discovery and resolution of pre-trial issues in the damages
phase of the proceeding. Subsequently the parties engaged in extensive discovery
and resolution of pretrial issues in the damages phase of the proceeding, and on
July 12, 2004, the evidential hearing on the determination of damages began.
Maine Yankee completed the transfer of sixty casks of spent fuel and four casks
of GTCC to its ISFSI on February 27, 2004. In the litigation the DOE has taken
the position that the GTCC is not covered by the terms of its contract with
Maine Yankee, and therefore it should be entitled to additional payments from
Maine Yankee for disposing of the GTCC. Maine Yankee disagrees with the DOE's
position on that and other issues. Maine Yankee is pursuing its claim for
determination of damages vigorously, but cannot predict the outcome or timing of
the final determination.


<PAGE>

         At the same time, as an interim measure until the DOE meets its
contractual obligation to dispose of Maine Yankee's spent fuel at Yucca Mountain
or elsewhere, Maine Yankee constructed an ISFSI, utilizing dry-cask storage, on
the Plant site and has completed the process of transferring the spent fuel from
the spent-fuel pool to the individual casks and the casks to the ISFSI. Maine
Yankee's total cost of maintaining the ISFSI will be substantially affected by
heightened security costs and by the length of time it is required to operate
the ISFSI before the DOE honors its contractual obligation to take the fuel from
the site. Maine Yankee's current decommissioning costs estimate is based on an
assumption that its operation of the ISFSI will end in 2023, but the actual
period of operation and cost may vary.

         On January 15, 2003, Maine Yankee notified NAC International ("NAC"),
the contractor responsible for providing for the fabrication of the spent-fuel
casks and transferring the fuel to the casks and the casks to the ISFSI, that
Maine Yankee was terminating its contract with NAC for failure to perform its
contractual obligations and to provide adequate assurance of its ability to do
so in the future, pursuant to the terms of the contract. NAC had been
experiencing financial difficulties and had requested relief from the terms of
the contract. NAC disputed Maine Yankee's basis for terminating the contract and
served Maine Yankee with a demand to arbitrate the dispute and a request for
damages. Maine Yankee, in turn, filed suit in the U.S. District Court for the
District of Maine against NAC, its bonding company, and its parent guarantor.
Maine Yankee also entered into contracts with the major subcontractors and
resumed the transfer of fuel to the ISFSI under its own management.

         In April 2003, after extensive negotiations, the parties entered into a
comprehensive settlement agreement resolving all the disputed issues and
providing for Maine Yankee to replace NAC in managing the completion of the
fuel-transfer work. The settlement included a payment for $10.4 million to Maine
Yankee to compensate Maine Yankee for higher costs incurred or to be incurred as
a result of NAC's failure to perform its contractual obligations. The transfer
of spent fuel to the ISFSI was completed February 27, 2004.

Low-Level Waste Disposal
------------------------

         The Federal Low-Level Radioactive Waste Policy Amendments Act, enacted
in 1986, required states, either alone or in multi-state compacts, to provide
for the disposal of low-level radioactive waste generated within their borders.
The States of Maine, Texas and Vermont entered into a compact for the disposal
of low-level waste over a 30 year period at a then-planned facility in west
Texas.

         The terms of the compact provided that the State of Maine would
contribute $25 million, payable (1) in two equal installments, the first after
ratification by Congress and the second upon commencement of operation of the
Texas facility, or (2) alternatively, if agreed by the three states, in
accordance with the schedule for repayment of bonds issued for the development
or operation of the facility. By statute, those costs were to be initially
assessed against the Company, as the operator of a nuclear power plant in Maine.

         As required by the 1986 Act, the United States Congress ratified the
compact in September 1998. However, in October 1998, the Texas Natural Resource
Conservation Commission denied a permit for the proposed west Texas disposal
site, and efforts to site such a facility in Texas were suspended. Maine Yankee
is shipping its low-level waste to other facilities licensed to accept such
material.

         At its 2002 session the Maine legislature enacted legislation providing
for the withdrawal of the State of Maine from the Texas compact pursuant to the
terms of the compact. The legislation cited the 1997 closure of the Maine Yankee
plant and the inability of the State of Texas to cause a disposal facility to be
built in a timely manner under the compact as the reasons for initiating the
withdrawal process. However, in its 2003 session the Texas legislature enacted a
bill that reactivated the process of siting a disposal facility in Texas and
provides for Texas to seek payment from Maine of $12.5 million under the
compact. By letter dated September 10, 2003, the Attorney General of Texas
requested payment of $12.5 million from the State of Maine, to which the State
of Maine responded by denying liability. Maine Yankee believes that withdrawal
from the compact by the State of Maine is legally justified, but cannot predict
the results of the Texas legislation on the State of Maine or Maine Yankee or of
any attempt by any party to challenge through litigation or otherwise the State
of Maine's withdrawal from the compact or to assess Maine Yankee for any
payments under the compact.


<PAGE>

7. STOCK COMPENSATION PLAN

         Upon approval by Maine Public Service Company's shareholders in June
2002, MPS adopted the 2002 Stock Option Plan (the "Plan"). Effective June 30,
2003, pursuant to the Agreement and Plan of Merger among MPS and MAM, the
outstanding shares of Common Stock, $7.00 par value, of MPS were exchanged
automatically on a share-for-share basis of Common Stock, $7.00 par value of
MAM, and MPS became a subsidiary of MAM. Accordingly, all stock offered under
the Maine Public Service Company 2002 Stock Option Plan will be shares of MAM
Common Stock under the Maine & Maritimes Corporation 2002 Stock Option Plan.

         The Plan provides designated employees of the Company and its
subsidiaries with stock ownership opportunities and additional incentives to
contribute to the success of the Company, and to attract, reward and retain
employees of outstanding ability. The Plan is administered by the members of the
Performance and Compensation Committee of the Board, who are not employees of
the Company or any subsidiaries. The Company may grant options to its employees
for up to 150,000 shares of common stock, provided that the maximum aggregate
number of shares, which may be issued under the plan pursuant to incentive stock
options, shall be 120,000 shares. The exercise price for shares to be issued
under any incentive stock option shall not be less than one hundred percent
(100%) of the fair market value of such shares on the date the option is
granted. An option's maximum term is 10 years and a three-year vesting schedule
is followed.

         The Company accounts for the fair value of its grants under the plan in
accordance with the expense provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. The effect of
the grants on compensation expense for the quarter ended June 30, 2004, was
immaterial.

         The fair value of each option grant is estimated on the date of the
grant using the Black-Scholes option-pricing model, with the following
weighted-average assumptions used for grants: dividend yield of 4.75%, expected
volatility of 20%, risk-free interest rate 4.33%, and expected lives of 7 years.

         A summary of the status of the Company's stock option plan as of June
30, 2004, and changes during the quarter then ended is presented below:

Options                                                 Shares       Exercise
                                                                      Price

Outstanding at December 31, 2003                           10,500       $31.48
Granted                                                     5,250        32.00
Exercised                                                       0         0.00
Forfeited                                                       0         0.00
                                                        ------------------------
Outstanding at June 30, 2004                               15,750       $31.65
                                                        ========================
Options exercisable at June 30, 2004                            0
                                                        ============
Weighted-average fair value of options granted to date     $ 4.65
                                                        ============

The following table summarizes information about fixed stock options outstanding
at June 30, 2004:

<TABLE>
<CAPTION>
                   Options Outstanding                                    Options Exercisable

                        Number        Weighted-Average       Weighted          Number
 Range of Exercise  Outstanding at        Remaining           Average      Exercisable at     Weighted-Average
      Prices           6/30/04        Contractual Life    Exercise Price      6/30/04          Exercise Price

<S>       <C>           <C>                  <C>              <C>                <C>                  <C>
   $30.45-32.51         15,750               9.0              $31.65             0                    0
</TABLE>

8. BENEFIT PLANS

         The Company has an insured non-contributory defined benefit pension
plan covering substantially all MPS and certain former MPS employees that were
transferred to MAM. Benefits under the plan are based on employees' years of
service and compensation prior to retirement. No defined benefit pension plan is
currently offered to MAM's unregulated subsidiaries. In addition to the
referenced defined benefit pension plan, employees of MPS are eligible to
participate in a 401(k) program with a maximum Company match of 2%.

         The Company is integrating the unregulated subsidiary plans in
accordance with allowable ERISA regulations. The existing 401(k) plan at RES
Engineering will continue for the next several months as decisions to finalize
the integration of the 401(k) plans are made. The Canadian subsidiaries are
offered participation in a Multi-Employer Defined Contribution Plan with a
maximum Company match of 1% and additional 2-3% discretionary contribution based
on performance/profitability measures. Eastcan Engineering is scheduled for
employee enrollments in August. Morris and Richard Engineering will be scheduled
in the fall.


<PAGE>

         In addition to providing retirement plans the Company provides certain
health care and welfare benefits to employees and MPS's retirees. Eligible
participants share in the cost of healthcare premiums. Life, Long Term
Disability, and Accidental Death insurance premiums are paid for by the Company.
Plans at the subsidiaries are continuing with the Company taking advantage of
market based cost savings at plan renewal.

         The following table sets forth the plans' net periodic benefit cost for
June 30, 2004, and 2003 (in thousands):

<TABLE>
<CAPTION>
                                           Pension Benefits                                Other Benefits

                                    Three Months         Six Months Ended         Three Months         Six Months Ended
                                   Ended June 30,            June 30,            Ended June 30,            June 30,
                                    2004     2003          2004     2003          2004     2003         2004       2003
                                    ----     ----          ----     ----          ----     ----         ----       ----
<S>                                 <C>      <C>           <C>      <C>            <C>      <C>         <C>         <C>
Service Cost                        $118     $107          $236     $214           $55      $48         $110        $96
Interest Cost                        289      286           578      572           146      135          292        270
Expected Return on Plan
   Assets                          (304)    (310)         (608)    (620)          (51)     (49)        (102)       (98)
Amortization of Prior
   Service Cost                       23       23            46       46          (15)       36         (30)         72
Amortization of Transition
   Obligation                          0      (4)             0      (8)            36     (15)           72       (30)
Amortization of net (gain)
   loss                                0        0             0        0            53       48          106         96
                               ---------- --------    ---------- --------    ---------- --------    --------- ----------
Net Periodic Benefit Cost           $126     $102          $252     $204          $224     $203         $448       $406
</TABLE>

         Effective for interim and annual periods ending on or after June 15,
2004, the FASB staff issued FASB Statement of Position 106-2, "Account and
Disclosure Requirements Related to the Medicare Prescription Drug, Improvement
and Modernization Act of 2003" ("FSP 106-2"). Under the Act, the Company may be
entitled to a subsidy for their prescription drug benefit costs. The Company is
in the process of determining, in accordance with FSP 106-2, whether or not the
prescription drug benefit provided by the Company's postretirement plan is
actuarially equivalent to the prescription drug benefit provided by Medicare
Part D. The measures of the net periodic postretirement benefit cost disclosed
above do not reflect any amount associated with the subsidy because the Company
has not yet concluded whether or not the benefits provided by the plan are
actuarially equivalent to Medicare Part D under the Act.

         The Company previously disclosed in its financial statements for the
year ended December 31, 2003, that it expected to contribute $400,000 to its
pension plan in 2004. As of June 30, 2004, no contributions have been made. The
Company has revised this estimate, and currently anticipates contributing
$450,000 to fund its pension plan in 2004.

         The Company previously disclosed in its financial statements for the
year ended December 31, 2003, that it expected to contribute approximately
$506,000 to its postretirement health plan in 2004. As of June 30, 2004, no
contributions have been made. The Company has revised this estimate, and
currently anticipates contributing approximately $463,000 to fund its
postretirement health plan in 2004.

9. NEW ACCOUNTING PRONOUNCEMENTS

         The FASB issued the FASB Statement of Position 106-1, "Accounting and
Disclosure Requirements Related to the Medicare Prescription Drug, Improvements
and Modernization Act of 2003" ("FSP 106-1") on January 12, 2004. FSP 106-1 was
superseded by FASB Statement of Position 106-2 ("FSP 106-2"), of the same title.
FSP 106-2 is applicable to sponsors of a single-employer defined benefit
postretirement health care plan for which the prescription drug benefits
available under the plan are actuarially equivalent to Medicare Part D and
therefore the sponsor is qualified for the subsidy under the Medicare
Prescription Drug, Improvements and Modernization Act of 2003 (the "Act"). The
expected subsidy must also offset or reduce the sponsor's share of the cost of
the underlying postretirement prescription drug coverage on which the subsidy is
based. The determination of whether or not the benefits of the MAM
postretirement plan are actuarially equivalent to the provision of the Act has
not yet been completed. Refer to Note 8 of these Consolidated Financial
Statements for additional disclosures.

<PAGE>

         In December 2003, the FASB issued FASB Interpretation No. 46R,
"Consolidation of Variable Interest Entities, an interpretation of ARB 51" ("FIN
46R"). The adoption of the provisions of FIN 46R did not have a material impact
on the consolidated financial statements as of June 30, 2004. The Company does
not have any variable interest entities as defined by FIN 46R.

         In December 2003, the FASB also issued the revision of Financial
Accounting Standards No. 132, "Employer's Disclosures about Pension and Other
Postretirement Benefits - An Amendment of FASB Statements No. 87, 88 and 106"
("FAS 132"). FAS 132 revises employer's disclosure requirements for pension
plans and other postretirement plans by requiring additional disclosures about
the assets, obligations, cash flows and net periodic benefit cost of defined
benefit pension plans and other defined benefit postretirement plans. There are
additional disclosure requirements for both annual and interim reporting
periods. FAS 132, as revised, is effective for fiscal years ending after
December 15, 2003, and for interim reporting periods starting after December 15,
2003. The revisions to FAS 132 did not impact the Company's financial position
or statement of operations.

10. COMMITMENTS AND CONTINGENCIES

         Except for operating leases used for office and field equipment,
vehicles and computer hardware and software, accounted for in accordance with
Financial Accounting Standards No. 13, "Accounting for Leases," ("FAS 13") the
Company has no other form of off-balance sheet arrangements. The following
summarizes payments for leases for a period in excess of one year for the six
months ended June 30, 2004 and 2003:


                                          (Dollars in Thousands)
                                              Six Months Ended
                                                  June 30,
                                            2004              2003
                                   ------------------------------------
Office Equipment                             $0                $2
Vehicles                                      1                 1
Computer Hardware and Software                0                29
Building                                     16                 0
Rights of Way                                58                29
Field Equipment                              40                20
                                   ------------------------------------
Total                                      $115               $81
                                   ====================================

11. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

         MPS has three issues of long-term debt with variable interest rates, as
discussed in detail in the Company's 2003 Form 10-K. Pursuant to its rate order
in MPUC Docket 2003-85, MPS agreed to fix its interest rates and the MPUC
allowed recovery of the fixed interest costs in rates. On September 9, 2003, MPS
executed swap agreements for the three variable rate issues, locking in the
rates over the remaining terms of the issues. For the Finance Authority of Maine
("FAME"), 1998 Taxable Elective Rate Stabilization Revenue Notes due 2008, the
effective fixed interest rate has been set at 2.79%. For the two series of
tax-exempt bonds issued by the Maine Public Utilities Financing Bank ("MPUFB"),
the effective fixed interest rates for the 1996 Series due 2021 and the 2000
Series due 2025 are 4.57% and 4.68%, respectively.


<PAGE>

         At June 30, 2004, the fair value of these qualified cash flow hedges
was $(552,000), reflecting a change in swap rates since the execution date. For
the three and six months ended June 30, 2004, the difference between the fixed
rates and the underlying variable rates on the issues of approximately $228,000
and $462,000, respectively was charged to interest expense. Although the fixed
interest rates were higher than the underlying variable rates, a portion of the
MPUC approved rate increase was to cover this difference. Management believes
that the fixing of interest rates over the terms of the Company's debt will
prove to protect both shareholders and consumers from upward variable debt
pressures. The gain in fair value on the interest rate swaps from the beginning
of 2004 as compared to June 30, 2004, of $633,000 less the deferred tax of
$252,000 has been recorded as Other Comprehensive Income (Loss). Gains or losses
in the fair market value of the interest rate swaps do not impact net income or
the revenues of the Company, unless shareholder's common equity falls below the
minimum allowable 48 percent.

12. ACQUISITIONS

         During the second quarter of 2004, the Company acquired three entities,
none of which individually is deemed material. The total cost of the
acquisitions was $5,486,000, consisting of 54,332 shares of MAM common stock,
valued at $1,677,000, $3,624,000 of cash and $185,000 of external costs for the
acquisition. The per share value of the 54,332 common shares issued was
determined based on the average market price of the Company's common shares over
the ten business days ending on the fifth day prior to the acquisitions. The
aggregate amount of goodwill and other intangible assets arising from the
acquisitions was $4,046,000, and is reported in the unregulated engineering
services operating segment. The Company is still in the process of valuing
certain assets and liabilities related to this acquisition. Accordingly,
allocation of the purchase price is subject to modification in the future.

     Following is a brief description of each of the entities acquired:

     |1|  Morris and Richard Consulting Engineers Limited ("M&R"), a mechanical
          and electrical engineering services firm headquartered in Halifax,
          Nova Scotia, Canada, acquired on June 1, 2004;

     |2|  Mecel Properties Limited, a real estate holding company headquartered
          in Halifax, Nova Scotia, Canada, acquired on June 1, 2004; and

     |3|  RES Engineering Inc. ("RES"), a mechanical and electrical engineering
          services firm headquartered in Hudson, Massachusetts, acquired on June
          15, 2004.

         Under the terms of the agreements, the former shareholders of these
companies are prohibited from selling their shares of stock for a certain period
after the acquisition. For a period following that restricted period, if the
former shareholders sell their stock for a price less than the value per share
used to calculate the purchase price, additional cash consideration will be paid
to the former shareholders for that difference. Also, the former shareholders
are entitled to additional cash consideration of up to $1,723,000, payable at
specific dates through 2007, if certain future targets are met. If these targets
are met, the value of the consideration ultimately paid will be added to the
cost of the acquisition, increasing the amount of goodwill. Currently, $535,000
of this additional consideration has been placed in escrow and is recorded on
the balance sheet at a restricted investment.

13. SUBSEQUENT EVENT - ACQUISITION

         On August 13, 2004, the Company's Canadian subsidiary, Maricor
Properties Ltd, completed a transaction to acquire a multi-tenant office complex
in Moncton, New Brunswick, with a total investment and estimated redevelopment
cost of approximately $2.0 million.


<PAGE>

                                                                       Form 10-Q

                          PART 1. FINANCIAL INFORMATION


Item 2. Management's Analysis of Financial Conditions and Results of Operations

Forward-Looking Statements

         The discussion below may contain "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995, related to
expected future performance of our plans and objectives, such as expected future
earnings from The Maricor Group. There can be no assurance that actual results
will not materially differ from expectations. Factors that could cause actual
results to differ materially from our projections include, among other matters,
electric utility restructuring; future economic conditions; changes in tax
rates; interest rates or rates of inflation; developments in our legislative,
regulatory, and competitive environment; technology displacement; consumer
decisions; and the decommissioning cost of Maine Yankee.

Discussion and Description of the Company's Growth Strategy

         As more fully described in MAM's most recent Form 10-K, Management and
the Board of Directors have adopted what they believe to be a realistic,
conservative and necessary growth strategy to preserve and create shareholder
value, focusing primarily, but not exclusively, on market opportunities within
New England and Atlantic Canada. Due to a combination of economic, regulatory
and legislative factors, including, but not limited to:

     (a)  The impacts of deregulation and generation divestiture on MPS's
          revenue model;

     (b)  MPS's little to no growth service area;

     (c)  MPS's increasing costs of operations associated with difficult and
          less controllable expenses including, but not limited to workers
          compensation rates, taxes, increasing costs of petroleum derived
          fuels, increasing liability-related insurances, increasing employee
          health benefits costs, and increasing regulatory compliance costs,
          including Sarbanes-Oxley compliance; and

     (d)  MPS's declining regulatory rate base as a result of reductions in
          stranded costs rates of return and declining regulatory assets; and
          Management and the Board of Directors belief that growth through
          geographic and business diversification is essential, while working to
          ensure continued viability of MPS.

         MAM's growth strategy centers on a diversification approach that
expands the Company's business and revenue model to include, without limitation,
facilities infrastructure mechanical and electrical engineering services, energy
efficiency and reliability solutions, air emissions reductions through enhanced
energy efficiency solutions, facility lifecycle asset management solutions and
services, energy management, and energy asset and real estate asset development
and ownership.

         The acquisition of two engineering firms during the second quarter was
part of the Company's acquisition strategy, described more fully in the
Company's 2003 Form 10-K. Within this strategy, the Company is seeking to
acquire and grow mechanical and electrical engineering firms, utilizing these
platform engineering services to expand The Maricor Group's asset development,
facility lifecycle asset management, and energy efficiency business activities
within eastern Canada and New England. The creation of Maricor Properties and
the acquisition of Mecel was the first step in the Company's real estate
development and investment strategy, also described more fully in the Company's
2003 Form 10-K.


<PAGE>

         As a result of the recent acquisitions, Maine & Maritimes Corporation's
corporate structure is presented in the following organizational chart:






                     Maine & Maritimes Organizational Chart

           [SEE SUPPLEMENTAL PDF FOR GRAPHIC OF ORGANIZATIONAL CHART]



         MAM's proposed portfolio growth strategy involves three specific
investment and business areas more fully defined in the following chart and
referred to as "revenue funds." The utilization of the term funds is intended to
highlight the differences and characteristics of revenue models and is not
intended to reflect any connotation that any or all of the "revenue funds" are
actually mutual or any other form of investment fund. As shown in the following
chart, MAM's growth strategy involves a combination of platform acquisitions and
organic growth. The proposed overall strategy seeks to leverage over the mid to
long-term the asset management capabilities of The Maricor Group and its
subsidiaries (as mechanical and electrical engineers and as asset developers and
managers), as well as other potential inter-company services. Both MPS, as a
regulated transmission and distribution infrastructure asset business, and
Maricor Properties Ltd, as a real estate infrastructure asset business, have the
ability to provide increasingly integrated inter-company services in support of
growth, improved productivity and enhanced capabilities.

         While significant progress in implementing the following model has been
made since the creation of MAM as a holding company on June 30, 2003, the
Company is continuing to identify and evaluate a diverse array of opportunities
within the defined "revenue fund" or revenue model areas. Although Management
and the Board of Directors believe the defined strategy and existing and future
acquisitions will create additional long-term shareholder value, the Company
cannot assure that the strategy, individual acquisitions, collective
acquisitions and/or organic growth initiatives will be successful. MAM's
proposed overall growth strategy will be heavily influenced by the Company's
ability to identify and acquire asset and business acquisition targets that meet
certain desired strategic and financial criteria within the general categories
defined as "revenue funds" or revenue models. Continued successful
implementation of the defined strategy is dependent upon, among other things,
MAM's and its subsidiaries' ability to raise sufficient capital and attract and
retain key management and staff talent. MAM believes it can raise the necessary
capital and retain key management and staff talent to implement the strategy,
but cannot assure investors of this ability.

The following chart is intended to provide an overview of MAM's portfolio growth
strategy and to provide examples of potential acquisition or business growth
target categories. MAM has implemented a number of the following highlighted
growth initiatives. Based on this model, MAM has acquired three regional
mechanical and electrical engineering firms under its "growth revenue fund,"
known as The Maricor Group, which include its Canadian subsidiary Maricor Ltd
and RES Engineering Inc. In addition, The Maricor Group has acquired exclusive
geographic and sector marketing rights to a leading asset lifecycle management
and strategic capital planning software system owned by Delinea Corporation, a
Dallas-based technology company. Further, The Maricor Group has staffed and
begun operations of a small asset development group focusing on the sale of
sustainable lifecycle asset management services and the development or
acquisition of end-user energy assets. MAM has created its Canadian real estate
investment and development subsidiary, Maricor Properties Ltd, and acquired its
subsidiary Mecel Properties Limited.

<PAGE>

                   [SEE SUPPLEMENTAL PDF FOR GRAPHIC OF CHART]

         As previously described, in addition to diversification strategies,
part of the Company's growth and business improvement strategies, focus and
investments are being placed on potential initiatives to improve the overall
performance, system reliability, economics and efficiencies of MPS's
transmission and distribution systems. These strategies include the adoption of
new productivity enhancing technologies, changes in core business processes,
adoption of integrated asset management strategies, and development and
implementation of long-term transmission and distribution plans. MPS's
transmission plan, subject to regulatory approvals, includes the construction of
additional regulated transmission assets increasing the interconnection capacity
between MPS and NB Power, as well as the possible construction of a diesel
peaking generation farm to provide necessary transmission voltage support. The
collective goals of these efforts are to reduce overall annual capital,
operating, and maintenance expenditures, while improving system reliability,
security and customer service performance. MAM believes it will receive
regulatory approval to proceed with construction of at least one additional 138
KV transmission line connecting with NB Power and may receive permission to
construct a diesel peaking generation farm for voltage support and system
security purposes; however, MAM cannot assure investors it will receive
regulatory approval or will proceed with these projects.

         As described, the Company is continuing to evaluate potential
unregulated non-utility, regulated and unregulated utility business
acquisitions, assets, and projects, that include without limitation small
electric utilities, merchant transmission assets or projects, local natural gas
distribution companies, fuel oil and propane distributors, regulated electric
transmission projects, mid-stream natural gas assets, central utility plant
assets, and real estate assets, primarily, but not necessarily limited to North
America. The Company cannot assure that such acquisitions can or will be
accomplished. Non-utility and utility-related acquisitions are intended to seek
to leverage MPS's and other subsidiaries' existing operating infrastructure,
including without limitation, call center and collections operations,
telecommunications technologies, billing and information technology
applications, engineering capabilities, asset management systems, regulatory
experience, accounting services, and management expertise. As previously stated,
MAM's ability to implement its defined strategy is dependent upon, among other
things, its ability to raise necessary capital and to attract and retain key
management and staff talent. MAM's Management and Board of Directors believe
they can raise the necessary capital and retain key talent, but cannot assure
investors of this ability.


<PAGE>

Results of Operations

         Second quarter, 2004 consolidated financial and operating results for
MAM were impacted by a number of factors and resulted in a loss from continuing
operations of $275,000 (or $0.17 per share), as expected by Management. Although
MPS revenues were up on a quarter to quarter comparison basis, due to MPS's rate
design, second and third quarter revenues are typically significantly lower than
first and fourth quarters. Generally, MAM's second quarter loss is attributable
to increasing MPS costs, non-capital acquisition costs, start-up costs and
general increases in operating costs, but not necessarily limited to only these
factors. Specifically, increased expenses include, but are not limited to: (a)
increased legal and regulatory expenses associated with MPS's stranded cost case
with the MPUC and its FERC transmission filing and other FERC regulatory related
costs; (b) internal non-capital expenses associated with the acquisitions of M&R
and RES by The Maricor Group and Maricor Ltd; (c) non-capital costs associated
with the creation of Maricor Properties Ltd and its subsidiary Mecel Properties
Limited, including non-capital costs associated with the post-second quarter
acquisition of a mid-rise office building in Moncton, New Brunswick described
under the "Acquisitions" section; (d) MPS's increased amortization costs of its
stranded costs; (e) increased compliance related costs; and (f) costs associated
with The Maricor Group's asset development and sales group.

         Management's focus for 2004 is on corporate growth, creating a
diversified platform for long-term and sustainable growth. Through current
efforts to reduce costs among all operating subsidiaries and reduce corporate
allocation costs, combined with initiatives to increase unregulated revenues,
Management is taking steps to help ensure improved profitability on a
quarter-on-quarter and annualized basis. Management believes it is necessary to
grow and diversify its revenue base to ensure sustainable profitability, given
MPS's declining stranded costs, reduction in stranded cost returns, and
correlated reduction in MPS's rate base. Given MAM's limited earnings coverage
and lack of free cash flow from MPS operations, Management recognizes that
growth initiatives, as well as costs associated with Sarbanes-Oxley compliance,
increasing employee health care and other benefits costs, increasing insurance
costs and other mandated costs may impact net income until new unregulated
operations begin positive contributions to earnings. Management is focused on
ensuring attainment of profitability within its unregulated operations in a
timely manner. However, Management cannot warrant or predict the outcome of
future regulated rate cases and cannot warrant or predict with certainty when
unregulated operations will achieve material profitability.

         Management does believe that its current growth strategy and efforts to
control costs, particularly in the regulated sector can result in positive and
sustainable returns for the Company. During MAM's transitional period,
Management's focus is on year-on-year versus quarter-on-quarter results,
particularly given the earnings fluctuations among quarters based on MPS's net
income quarterly contributions and existing rate design.

         For the second quarter of 2004, the Company earned revenue from the
transmission and distribution ("T&D") operations of Maine Public Service Company
and wholly-owned unregulated energy services company, The Maricor Group. MPS's
wholly-owned unregulated Canadian subsidiary, ME&NB, and the Company's
wholly-owned unregulated energy marketing company, EA, are inactive at this
time. For purposes of the discussion below, ME&NB results, if any, are included
under the heading of "Core T&D" below. EA results are included under the heading
"Discontinued Operations." The following discussion has been segregated into
four categories, consistent with the presentation of the segment information in
Note 3 of the Consolidated Statements.


<PAGE>

Regulated Operations

         The following discussion includes the operations of MPS and ME&NB, the
Company's regulated subsidiary and inactive MPS unregulated Canadian subsidiary:


                                                     Three Months Ended
                                                          June 30,
                                                     -----------------
Net Income (Loss)                                      2004       2003
 Net Income (Loss) - Regulated Electric Utility         $34       $ 93
                                                     ------     ------

Earnings (Loss) per Share
 Earnings (Loss) per Share from Regulated Electric
     Utilities                                        $0.02      $0.06
                                                     ------     ------

         MPS core T&D earnings were $34,000 for the second quarter of 2004,
compared to earnings of $93,000 in the second quarter of 2003. Earnings per
share were $0.02 for the second quarter of 2004, while earnings per share was
$0.06 for the same quarter last year. Other changes in earnings associated with
increases in operating revenues and operating expenses are discussed further in
the "Regulated Operating Revenue" and "Regulated Utility Expenses" sections
below.

Regulated Operating Revenue

         Consolidated revenues and Megawatt Hours ("MWH") for the quarters ended
June 30, 2004, and 2003, are as follows (dollars in thousands):

                                   2004                      2003
                         ------------------------- --------------------------
                           Dollars        MWH        Dollars        MWH
                         ------------ ------------ ------------ -------------
Residential                   $3,278       41,783       $3,079        40,824
Large Commercial               1,038       41,099          974        41,273
Medium Commercial                982       25,337          964        25,230
Small Commercial               1,257       20,728        1,208        20,749
Other Retail                     326          849           97           842
                         ------------ ------------ ------------ -------------
Total Regulated Retail        $6,881      129,796       $6,322       128,918
                         ============ ============ ============ =============

         Regulated retail sales for MPS for the second quarter increased 0.7%
from 128,918 MWH for the second quarter of 2003, compared to 129,796 MWH for the
second quarter of this year. Management believes the increase in MWH usage is
attributable to a combination of weather factors and a modest increase in the
number of residential customers. Residential retail sales for the quarter were
2.3% more than the same quarter last year, reflecting a modest increase in the
number of residential customers.

         Sales to MPS's large commercial customers during the second quarter of
2004 decreased by 0.4% over sales for the same quarter last year due to, but not
limited to economic conditions as a result of NAFTA, which have placed pressures
on both the agricultural and forest products sectors, as well as component
manufacturing. MPS's second largest customer, JM Huber, was closed for
maintenance for several days during May 2004. Sales to MPS's forest or wood
products customers decreased by 0.6%. These decreases were partly offset by a
5.4% increase in sales to McCain Foods, Inc., MPS's largest customer.

         Sales to MPS's medium commercial customers during the second quarter of
2004 were 0.4% higher than the second quarter of 2003. Small commercial sales
were slightly less in the second quarter of 2004 compared to the second quarter
of 2003.

         The Maine Public Utilities Commission ("MPUC") has jurisdiction over
MPS's retail rates. The MPUC approved an increase in MPS's retail rates of
approximately 3.8%, effective November 1, 2003. This retail rate increase
included the retail portion of previously approved transmission increases by the
Federal Energy Regulatory Commission ("FERC"). The FERC has jurisdiction over
MPS's transmission rates, including the rates charged for wheeling revenues. For
more information on the regulatory orders approving the recent rate increases,
see Note 4 to the Consolidated Financial Statements, "Regulatory Matters." The
retail rate increase described above and the increase of sales mentioned above
resulted in an increase of $330,000 from the four customer classes.


<PAGE>

         During the second quarter of 2004, other regulated operating revenues
were $326,000 compared to $97,000 for the second quarter of 2003. Wheeling
revenues for the second quarter of 2004 increased by $70,000 with the FERC's
approval of increases in wheeling rates effective June 1, 2004, and June 1,
2003, of 8.3% and 18.4%, respectively. As more fully explained in Note 4 to the
Consolidated Financial Statements, "Regulatory Matters," the MPUC, in its
stranded cost orders effective March 1, 2004, and March 1, 2002, adjusted the
treatment of certain customer discounts through flexible pricing adjustments. As
a result, the revenues recognized from the flexible pricing adjustments in the
second quarter of 2004 were $73,000 more than the same quarter of 2003.

Regulated Utility Expenses

For the quarters ended June 30, 2004 and 2003, regulated operation and
maintenance expenses and stranded costs are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                               June 30,
                                                                    -------------------------------
                                                                         2004            2003
                                                                    --------------- ---------------
Regulated Operation and Maintenance
<S>                                                                          <C>             <C>
   Transmission and Distribution                                             $ 821           $ 728
   Customer Service                                                            271             270
   Administrative and General                                                2,219           2,131
                                                                    --------------- ---------------
     Total Regulated Operation and Maintenance                              $3,311          $3,129
                                                                    =============== ===============

Stranded Costs
   Wheelabrator-Sherman                                                     $1,804          $1,883
   Maine Yankee                                                                788             715
   Seabrook                                                                    277             277
   Amortization of Wheelabrator-Sherman Restructuring Payment                  363             363
   Deferred Fuel                                                             (919)         (1,083)
   Special Discounts                                                            70              70
                                                                    --------------- ---------------
     Total Stranded Costs                                                   $2,383          $2,225
                                                                    =============== ===============
</TABLE>

         Transmission and distribution expenses for the second quarter increased
approximately $93,000 or 13% from 2003 to 2004. The primary reason for the
increase was a shift to maintenance projects, including vegetation management
and maintenance of substation equipment, in the second quarter of 2004, compared
to more labor time spent on capital projects, such as the installation of
automated meter readers in the second quarter of 2003.

         Customer service expenses for the second quarter of 2004 were flat when
compared to the same period of the prior year. This line item includes meter
reading, customer records and collections expenses.

         Administrative and general expenses increased approximately $88,000
from the second quarter of 2003 to the second quarter of 2004. Regulatory
expenses were up approximately $183,000 compared to 2003 due to an increase in
legal expenses related to regulatory issues, principally due to the FERC
transmission filing and the stranded cost case.

         Amortization of stranded costs also increased approximately $158,000
from the second quarter of 2003. MPS began recovering stranded costs from its
retail customers starting March 1, 2000. Subsequently, on March 1, 2004, and
March 1, 2003, the MPUC reviewed MPS's stranded costs and adjusted recovery of
these stranded costs in accordance with approved stranded cost revenue
requirements. Based on these regulatory decisions, MPS recognized stranded costs
of $2,383,000 and $2,225,000 for the three months ended June 30, 2004, and 2003,
respectively. The stranded costs for Maine Yankee and Wheelabrator-Sherman
represent actual cash expenses during the years, while other costs reflect the
amortization or recognition of regulatory assets and regulatory liabilities.

Unregulated Energy Marketing - Energy Atlantic Discontinued Operations

        On March 1, 2004, EA suspended all active operations and has been
classified as a discontinued operation in accordance with FASB No. 144, as
discussed in more detail below. EA participated in the wholesale power market
during 1999, and until March 1, 2000, when it began selling energy in the retail
electricity market within the state of Maine. The retail market consists of two
sectors, Standard Offer Service ("SOS") and Competitive Energy Supply ("CES").
The MPUC requests bids from CES providers for SOS in each utility service
territory.


<PAGE>

         In connection with its February 21, 2003, announced intent to withdraw
from the retail electricity markets in northern Maine, EA has ceased all of its
energy marketing activities in MPS's service territory, as well as the balance
of the State, effective March 1, 2004. EA continued to serve its existing
contracts within Maine through their expiration on February 27, 2004. CES sales,
primarily in northern Maine, were approximately $6.1 million in 2003.

         Currently, EA is an inactive subsidiary and management has ceased all
active retail CES activity on behalf of EA within the state of Maine until
market conditions, the availability of supply, the mandate for stringent credit
requirements and the risk environment improve. Management will continue to
monitor both U.S. and Canadian deregulated markets to determine the appropriate
timing for possible re-entry into the deregulated retail market. Based on
current conditions, management does not foresee re-entry into the CES market in
the near future and cannot predict if or when it may re-activate EA.

         Through June 30, 2004, the Company recognized a loss from discontinued
operations of $0.25 per share for EA, classified as discontinued operations in
the statement of consolidated operations. This loss includes additional lease
expense of $181,000 recognized on the buy-out of a software lease by EA,
$172,000 for employee severance payments, and a loss on disposal of fixed assets
of $69,000. The following table summarizes the statement of operations for EA
(in thousands):

<TABLE>
<CAPTION>
                                                          Three Months Ended                  Six Months Ended
                                                               June 30,                           June 30,
                                                        2004              2003             2004              2003
                                                    --------------    -------------    --------------    -------------
<S>                                                          <C>            <C>                <C>            <C>
Revenue                                                      $  0           $1,699             $ 562          $ 3,487
Expenses                                                        0           (1,651)           (1,161)          (3,449)
Other income, deductions and interest                         (51)              17               (50)              31
                                                    --------------    -------------    --------------    -------------
Pretax (loss) income from discontinued                        (51)              65              (649)              69
  operations
Income taxes                                                   18              (27)              258              (29)
                                                    --------------    -------------    --------------    -------------
(Loss) income from discontinued operations                   $(33)          $   38            $ (391)         $    40
                                                    ==============    =============    ==============    =============

(Loss) income per share from discontinued
  operations (basic and diluted)                           $(0.02)          $ 0.02           $ (0.25)         $  0.02
                                                    ==============    =============    ==============    =============
</TABLE>


Unregulated Engineering Services

         The following section details the operations of the unregulated
engineering services operating segment, including The Maricor Group and its
subsidiaries, RES Engineering Inc., and Maricor Ltd. Unregulated engineering
services operations began in late 2003 with the creation of The Maricor Group
and Maricor Ltd in November, and the acquisition of Eastcan in December. M&R and
RES were acquired on June 1, 2004, and June 15, 2004, respectively. Therefore,
comparative information is not available from the second quarter of 2003. Net
loss and the related loss per share from unregulated engineering services for
the three months ended June 30, 2004, were as follows:

                                                        Three Months
                                                       Ended June 30,
Net Loss                                                    2004
                                                      -------------------
Net Loss - Unregulated Engineering Services                    $ (169)

Loss per Share
 Loss per Share from Unregulated Engineering
     Services                                                  $(0.11)

         Although this segment reduced net income by approximately $169,000,
expenses associated with the acquisitions impacted the quarter's earnings. The
largest contributions to earnings from this segment were RES, a subsidiary of
The Maricor Group, and the Eastcan Division of Maricor Ltd. RES had net income
of $17,000, or $0.01 per share. The Eastcan Division's net income was $43,000 or
$0.03 per share. The M&R Division's revenue approximated its expenses, and did
not materially impact earnings per share. Because of their recent acquisition,
only one month's revenues and expenses were contributed by the M&R Division of
Maricor Ltd and only one-half a month's revenues and expenses were contributed
by The Maricor Group's subsidiary, RES Engineering.
<PAGE>

         The most significant reductions of earnings in the unregulated
engineering services segments were attributable to corporate allocations,
corporate staff costs, and non-capital acquisition expenses allocated to The
Maricor Group and Maricor Ltd. In addition, expenses associated with The Maricor
Group's business development group impacted total expenses.

Unregulated Engineering Services - Revenue

         Consolidated revenues for the quarter ended June 30, 2004, are as
follows (dollars in thousands):

                                                                 Three Months
                                                                Ended June 30,
                                                                     2004

Maricor Ltd                                                          $381
RES Subsidiary of The Maricor Group                                   244
                                                              --------------
Mechanical and Electrical Engineering Services (The Maricor
   Group)                                                            $625
                                                              ==============


         The revenue attributable to RES and the M&R Division of Maricor Ltd was
earned since the companies were acquired on June 15, 2004, and June 1, 2004,
respectively. The principal businesses of these three companies, prior to their
acquisition and for which the stated revenues were based, include engineering
design and design/build mechanical and electrical engineering projects,
primarily focused on fee-for-service engineering.

Unregulated Engineering Services Expenses

         For the quarter ended June 30, 2004, unregulated engineering services
operation and maintenance expenses are as follows (in thousands):

                                                          Three Months
                                                         Ended June 30,
                                                               2004
                                                        ----------------

Cost of Sales                                                       $447
Other Expenses                                                       406
                                                        ----------------
Total Unregulated Engineering Services Operation and
  Maintenance Expenses                                              $853
                                                        ================


         Gross profit on the Eastcan and M&R Divisions of Maricor Ltd and The
Maricor Group's subsidiary RES Engineering contracts totaled $188,000, or 30% of
revenue. Other expenses noted above are expenses incurred by The Maricor Group
and its subsidiaries RES Engineering Inc. and Maricor Ltd, which include
corporate allocations, internal labor expenses associated with the acquisitions
of RES and M&R, labor costs associated with The Maricor Group's business
development group, and labor costs associated with The Maricor Group's and
Maricor Ltd's corporate staff. The largest expense for The Maricor Group and
Maricor Ltd was labor expense, which totaled $289,000, consistent with the first
quarter.

Other Operating Results

         This section details the operating results of MAM, the holding company,
Maricor Properties Ltd and its subsidiary Mecel Properties Limited, the
unregulated real estate groups. MAM was established June 30, 2003, and incurred
a loss for that quarter of $367,000, due to the cost of creating the holding
company. Maricor Properties Ltd and Mecel Properties Limited were created on
June 1, 2004 as a result of the acquisition of the M&R Division of Maricor Ltd.
Maricor Properties Ltd acquired Mecel Properties Limited, whose sole real estate
holding is the building occupied by the M&R Division of Maricor Ltd.


<PAGE>

         Net loss from this operating segment for the three months ended June
30, 2004, was $140,000, or a loss of $0.09 per share. Of this total, MAM
incurred a loss of $0.09 per share, while Maricor Properties had a loss of
$6,000, which did not materially impact earnings.

         No revenue was recognized by either MAM or Maricor Properties.
Operating expenses at MAM consist primarily of labor, legal and consulting
expenses. Operating expenses for Mecel Holdings Ltd, a subsidiary of Maricor
Properties, included the cost of maintaining the building and the cost of
utilities. Management is currently evaluating the appropriate future and
allowable allocation of all or certain of MAM's corporate expenses among its
subsidiaries.

Operating Capital and Liquidity

         Net cash flows from operating activities for the first six months of
2004 were $4,712,000 with net income of $1,242,000. The deferral of $3,025,000
of deferred regulatory and debt issuance costs, principally Wheelabrator-Sherman
costs in accordance with MPS's stranded cost recovery accounted for the biggest
reduction in operating cash flows. For the six months ended June 30, 2004, the
increase in cash from financing activities of $173,000 was due to scheduled
dividend payments of $1,212,000 and $2,090,000 of additional short-term
borrowings. The cash outflow from financing activities was for the repayment of
long-term debt of $705,000. Net cash outflows for investing activities were
$7,682,000. During the first six months of 2004, MPS invested $3,818,000 in
electric plant. Construction work-in-progress, reported in the Utility Plant
section of the Company's June 30, 2004, Consolidated Balance Sheet, increased by
$1,835,000 from the balance as of December 31, 2003, due to the timing of
expenditures for the Automated Meter Reading project and conversion of the
Caribou substation to a higher voltage. In addition, MPS received $200,000 for
the partial redemption of its Maine Yankee Common Stock. The Maricor Group and
Maricor Ltd spent $3,529,000 net cash to acquire RES and M&R.

         For the first six months of 2003, net cash flows from operating
activities were $3,054,000, with net income of $1,704,000. The deferral of
$2,224,000 of current Wheelabrator-Sherman costs associated with MPS's stranded
cost recovery, previously approved by the MPUC, accounted for most of the
decrease in operating cash flows. During the first six months of 2003, scheduled
sinking fund payments reduced long-term debt by $2,425,000 and short-term debt
payments totaled $1,050,000. As of June 30, 2003, MPS invested $2,772,000 in
electric plant with $1,482,000 withdrawn from the trust account for the
tax-exempt bonds. In addition, MPS received $224,000 for the partial redemption
of its Maine Yankee Common Stock, and MPS paid its stockholders $1,165,000 in
dividends.

         Effective January 1, 2004, the Board of Directors increased the
quarterly dividend by $0.01 per share from $0.37 per share to $0.38 per share,
for an annual dividend of $1.52 per share.

Credit Facilities

         On May 27, 2004, and June 14, 2004, The Maricor Group executed a bridge
loan totaling $2.2 million to finance the purchases of M&R and RES. The Maricor
Group also executed a $1.0 million working capital line of credit to provide
initial operating funds to the newly acquired subsidiaries. These facilities are
expected to be made permanent in August 2004.

         On March 29, 2004, MPS's $6 million revolving credit agreement with two
participating banks was extended until June 8, 2006. The agreement contains
certain restrictive covenants including interest coverage tests and
debt-to-equity ratios. As of June 30, 2004, MPS was in compliance with these
covenants.

         The Maine Public Utility Financing Bank ("MPUFB") has issued its
tax-exempt bonds on behalf of MPS for the construction of qualifying
distribution property. Originally issued for $15 million and reduced with
generating asset sale proceeds, the 1996 Refunding Series had $13.6 million
outstanding at March 31, 2004, and is due in 2021. On October 19, 2000, the 2000
Series of bonds were issued in the amount of $9 million with these bonds due in
2025. The proceeds of the 2000 Series were placed in trust and drawn down for
the reimbursement of issuance costs and for the construction of qualifying
distribution property. For both tax-exempt bond series, a long-term note was
issued under a loan agreement between MPS and the MPUFB with MPS agreeing to
make payments to the MPUFB for the principal and interest on the bonds.
Concurrently, pursuant to a letter of credit and reimbursement agreement, the
Bank of New York separately issued its direct pay letters of credit ("LC's") for
the benefit of the holders of each series of bonds. Both LC's were due to expire
in June 2004, and were extended to June 8, 2006. In addition, MPS issued $14.4
million in Second Mortgage Bonds due 2021, to secure its obligations under the
letter of credit and reimbursement agreement for the 1996 Refunding Series,
replacing $15.875 million of second mortgage bonds issued in 1996 that were due
in June 2002.


<PAGE>

         On October 1, 2003, MPS executed an additional $3 million line of
credit with the Bank of New York. This unsecured facility was renewed on March
29, 2004, and will expire on December 31, 2004. Interest rates on this facility
are comparable to the rates on the existing revolving credit agreement. The
additional facility provides an additional source of short-term borrowings in
the event required borrowings exceed the existing revolving credit agreement.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

         (a) Until September 9, 2003, MPS had interest rate risk with three
variable rate debt issues, for purposes other than trading. These issues are
discussed in detail in MAM's 2003 Form 10-K. The discussion occurs in Note 11,
SFAS No. 133, of the Notes to Consolidated Financial Statements. On September 9,
2003, MPS executed swap agreements for the three variable rate issues, locking
in the rates over the remaining terms of the issues.

         (b) MPS, as a regulated electric transmission and distribution utility,
has risks that include, but are not limited to the following: regulatory and
legislative risks; systemic risks impacting meter reading, billing and other
factors; economic and general service area market risks, such as currency risk,
out-migration of population or a plant closing; failure of physical
infrastructure; and retaining/attracting personnel with necessary skills.

         (c) The Company's unregulated energy marketing subsidiary, Energy
Atlantic, LLC was engaged in retail and wholesale energy transactions for
purposes other than trading. This activity exposed EA to a number of risks such
as counter-party, market liquidity, forecasting, deliverability, transmission,
volumetric, market-based cost and credit risk. EA has discontinued operations
and is now inactive, thus eliminating these specific risks.

         (d) The Company's unregulated engineering services subsidiaries are
engaged in design/build and fee-for-service engineering services. Associated
with these services are design, operating, performance, market, economic and
personnel risks associated with the management of design/build projects; errors
and/or emissions in the firm's designs; systemic risks; customer default and
credit risks; talent retention and recruitment risks; proposal development
errors; changes in government policies and regulations; general economic and
market conditions risks, including currency risk; and other potential risks.

         (e) The Company's unregulated real estate development and investment
subsidiary, Maricor Properties Ltd and its subsidiary, Mecel Properties Ltd, are
subject to certain risks and uncertainties including, but not necessarily
limited to interest rate risks associated with variable interest rates, shifts
in local real estate market conditions; market-based competition; the inability
to fully lease rental properties; facility performance related to unforeseen or
unknown structural, mechanical and/or electrical systems failures; unexpected
increases in property rehabilitation costs; new government regulations; and
tenant credit and default risks.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

None.

(b) Changes in Internal Control over Financial Reporting

         There have been two material changes to the Company's internal control
over financial reporting during the most recent fiscal quarter. First, the
Company implemented a new Oracle-based accounting system that was put in service
April 1, 2004. This new fully integrated financial reporting system provides the
ability to track costs by project and accommodate growth. The internal controls
over financial reporting that are external to the system have not changed
significantly since the prior quarter. Additional compensating controls have
been implemented to mitigate the risk of material misstatement due to the
implementation of the new system. Second, the Company has acquired two
unregulated energy service companies which are currently operating with their
own accounting systems and internal control programs. The Company has performed
due diligence procedures over the opening balance sheets and the activity since
the time of the acquisitions. Management believes that these compensating
controls are adequate to prevent material misstatement in financial reporting as
a result of these changes. There were no significant deficiencies or material
weaknesses identified.


<PAGE>

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings


MPS Rate Cases:

(a)      Maine Public Utilities Commission, Request ("MPUC") for Approval of
         Alternative Rate Plan, MPUC Docket 2003-85.

         On April 15, 2004, MPS filed a Memorandum Of Understanding ("MOU")
entered into between MPS and the parties to this proceeding and supported by the
MPUC's advisory staff. Under the terms of the MOU, MPS agreed that as part of
its annual OATT Information Filing to be made with FERC in June 2004 (the "June
Filing"), MPS will incorporate the Transmission Rate Recognition Proposal
("TRRP") as agreed to in the MOU. The parties agree that they will not contest
those portions of MPS's June Filing (and subsequent FERC filings, as applicable)
that are consistent with the TRRP. On April 30, 2004, the MPUC issued its order
approving the final disposition of the matter and closing the docket. A copy of
the Stipulation, Supplemental Stipulation and the final orders approving the
increase and resolving all issues in the docket may be viewed on the MPUC
website at http://www.state.me.us/mpuc/. For the purposes of future rate
proceedings MPS will continue to evaluate if an ARP is in the best interest of
MPS, its shareholders and consumers or if it should continue to proceed with
cost-of-service rate filings as it has done in the past.

(b)  Federal Energy Regulatory Commission 2003 Open Access Transmission Tariff
     Formula Rate filing, FERC Docket ER00-1053-009

         Pursuant to Section 2.4 of the Settlement Agreement filed on September
30, 2000, in Docket No. ER00-1053-009 (the "2003 OATT"), and accepted by the
FERC on September 15, 2000, MPS provided parties and FERC staff on June 10,
2003, the 2003 OATT Formula Rate charges that MPS proposed to apply on June 1,
2003, together with back-up materials. On June 1, 2003, the Formula Rate charges
became effective subject to a refund that may occur in connection with a
settlement stipulation negotiated by the parties to the proceeding. In general,
MPS sought a slight modification to its rate formula under its transmission
tariff, including, among others, changes in certain depreciation rates for
transmission property, and allocations of certain operating expenses and
revenues. The return on common equity used in determining the rate of return on
transmission rate base remained at 11% under the 2003 OATT. MPS entered into a
settlement agreement in the matter with the parties and FERC staff resolving all
outstanding issues in the filing. In February 2004, the parties executed a
settlement which was filed with the FRC on February 11, 2004. An Order approving
the 2003 informational filings stipulation and 2003 OATT revisions was issued by
the FERC on April 1, 2004. The details of the settlement and order were reported
in the Company's previous 10Q and are incorporated into this filing by
reference. MPS filed its informational filing in connection with the 2003 OATT
changed tariff charges, effective June 1, 2004, on June 15, 2004.

(c)  Federal Energy Regulatory Commission 2004 Open Access Transmission Tariff
     Formula Rate filing, FERC Docket ER04-894-001

         On May 28, 2004, pursuant to Section 205 of the Federal Power Act, 16
U.S.C. Section 824d, and Title 18 CFR Sections 35.11 and 35.13 of the
regulations of the FERC, MPS submitted for filing its proposed revisions to its
FERC Open Access Transmission Tariff in Docket No. ER 04-894-001 (the "2004
OATT") to modify its transmission rates. Under the proposed 2004 OATT, the new
transmission rate for wholesale customers became effective on June 1, 2004,
subject to a customer refund that may, or may not, occur as a result of the
proceeding or potential settlement negotiations. The transmission revenue
requirement was increased by $429,336 on June 1, 2004, under the 2004 OATT. This
represents an increase of 13.5% to the transmission component of delivery rates
or an overall increase to total delivery rates of 1.1%. The primary reason for
the increase was the final elimination of the 2002 revenue credit related to
wheeling revenues associated with Boralex-Fort Fairfield. MPS has received and
is responding to data requests from interveners in the proceeding. The new
transmission rate for retail customers also became effective on July 1, 2004,
and is also subject to a customer refund that may, or may not, occur as a result
of the 2004 OATT proceeding or potential settlement negotiations. MPS's related
state compliance filing for the retail transmission rates which became effective
on July 1, 2004, was approved by the MPUC on June 17, 2004. MPS cannot predict
with certainty the outcome of the 2004 OATT proceeding, potential settlement
discussions that may, or may not occur, or the likelihood of any customer
refunds that may, or may not, occur.


<PAGE>

Other MPS Matters:

(a)  Maine Public Utility Commission Dockets Directed at All Maine Transmission
     and Distribution Utilities.

During the second quarter of 2004, MPS has been engaged in several dockets
involving notices of inquiry by the MPUC directed at all Maine transmission and
distribution ("T&D") utilities. In MPUC Docket No. 2003-516, "Rates Related to
Conservation Expenses" the MPUC is investigating the accounting by T&D Utilities
for future conservation assessments. The MPUC staff, Office of Public Advocate
("OPA"), and other interveners accepted MPS's proposal on how to adjust its
distribution rates to reflect future conservation assessments on February 26,
2004. MPS will change its distribution rates on July 1, 2004, along with the
scheduled change to transmission rates. The joint stipulation in this Docket was
approved by the Commission on June 10, 2004. The combination of the transmission
rate increase discussed above, and conservation increase is approximately
$550,000 or 1.37% on delivery rates.

On March 17, 2004, the MPUC issued a Notice of Inquiry in Docket No. 2004-147,
"MPUC Inquiry into Standard Offer Service Procurement for Residential and Small
Commercial Customers," in which it requested comments from all Maine T&D
utilities regarding whether the residential and small commercial classes of
customers should be disaggregated further in order to hedge against price
volatility during standard offer bidding. While these customer classes are large
for other T&D utilities in Maine, MPS's customer classes are relatively small
and further disaggregating may result in customer segments that are too small to
attract competitive standard offer service provider bids. MPS filed its comments
regarding its position on April 6, 2004. Also, on April 29, 2004, the MPUC
issued a Notice of Inquiry in Docket No. 2004-248, "MPUC Inquiry into the Status
of the Reliability and Security of the Electric Grid." The NOI and subsequent
data requests by the MPUC Staff requested T&D utilities to provide information
concerning the system security and reliability of their respective delivery
systems. On July 24, 2004, MPS responded to various data requests in connection
with this Docket.

(b)  Special Rate Contract.

On July 22, 2004, in Docket No. 2004-88, the Maine Public Utilities Commission
approved a three year special rate contract with Irving Forest Products, Inc.
Pinkham Sawmill pursuant to 35-A M.R.S.A. Section 703. Irving is MPS's third
largest customer. Under the terms of the contract, Irving has agreed that it
will not self generate or otherwise bypass the MPS system. Irving agrees that it
will continue to pay for delivery service in accordance with the MPUC rate
schedule except that the stranded cost component of the Rate S-T will be
discounted by 75%. The Commission further authorized MPS to account for the
difference between the revenue it receives from Irving pursuant to the special
rate contract and the revenue it was assumed to have received in MPS's rate case
in Docket No. 2003-666 (reported in detail in the Company's previous 10-Q
report) as a regulatory asset for later recovery in rates.

(c)  Anticipated Certificate of Public Convenience and Necessity in Connection
     With the Construction of a Proposed Transmission Line.

On July 26, 2004, MPS wrote to the MPUC notifying the Commission that MPS may
file a request for a Certificate of Public Convenience and Necessity pursuant to
35-A M.R.S.A. Section 3132 to construct a 138 kV transmission line originating
at an existing substation in Limestone, Maine and extending to the Canadian
Border near Hamlin, Maine. MPS anticipates filing by September 1, 2004.

The purpose of the project is to ensure that the reliability and integrity of
the MPS transmission grid are maintained under scenarios of reduced on-system
generator availability and peak load growth. The available firm transfer
capability of the transmission system when added to the remaining on-system
hydro generation is not sufficient to meet peak load conditions, should wood
fired generation become unavailable. The proposed line would address this and
other reliability concerns by significantly increasing the load serving
capability of the northern Maine region and would serve to reinforce the vital
transmission ties between northern Maine and the New Brunswick transmission
grid, and thereby potentially prevent voltage collapse under certain contingency
events.

If MPS files for approval, it would request the Commission approve the project
in a timely manner in order to begin construction in early 2005, after obtaining
all necessary approvals, and should complete the project by the fall of 2005.
The line will use approximately 125 single pole structures with a 450 foot
average span length. Total length of the line is approximately 10.5 miles with
almost 9 miles of the line utilizing the already cleared right-of-way of the
adjacent line 6905, with an additional 50 feet of right-of-way to be obtained
and cleared on the east side of the existing line. This line is to be
constructed in conjunction with NB Power's portion of the line, which is
expected to extend from the border to a tap on Line 1140 of the NB Power
transmission system near the town of Grand Falls, New Brunswick.


<PAGE>

MPS anticipates that MPS and NB Power will be responsible for the construction
and costs of their respective portions of the interconnection. MPS anticipates
that NB Power will require that MPS reserve capacity in order to recover its
share of the costs. The projected cost for the MPS portion of the line is $4.0
million. Costs for the NB Power portion of the line are still being determined,
although early indications are that the cost could approximate $1.5 million. As
a part of its filings in connection with the line, MPS will request regulatory
approval to recover in its rates its costs incurred in the project and request
any necessary line reservation approvals to the extent required.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchase of Equity
        Securities

Sales of Unregistered Securities.

During June 2004, the Company issued 54,332 shares of its common stock in
connection with the acquisition of all of the outstanding shares of two
corporations. No underwriter was used in either transaction. First, the
Company's Canadian subsidiary, Maricor Ltd acquired M&R, a closely held Canadian
limited body corporation. The persons who acquired the securities were four
Canadian citizens. The securities were issued under the exemption provided by
Section 4(6) of the Securities Act of 1933 as a transaction involving sales by
an issuer solely to accredited investors. Second, the Company's subsidiary The
Maricor Group (fka Maine & Maritimes Energy Services) acquired RES, a closely
held Massachusetts corporation. The shares were sold to an individual U.S.
citizen. The securities were issued under the exemption provided by Section 4(2)
of the Securities Act of 1933 as a transaction involving sales by an issuer not
involving a public offering.


Item 3. Defaults upon Senior Securities

None


Item 4. Submission of Matters to a Vote of Security Holders

         At the 2004 Annual Meeting of the Stockholders of Maine & Maritimes
Corporation held on May 11, 2004, two matters were voted upon.

         First was the uncontested election of the following directors for terms
ending in 2007, each of whom received the following votes:

                                      Withheld and      Broker       Total
                            For         Exceptions     Non-Votes  Shares Voted
                     --------------- -------------- ------------ -------------
J. Nicholas Bayne         1,292,030         26,959            0     1,318,989
Richard G. Daigle         1,290,069         28,920            0     1,318,989
David N. Felch            1,290,973         28,016            0     1,318,989

The remaining classes of directors are as follows:

     Class III Directors whose terms expire in 2005: D. James Daigle, Deborah L.
Gallant, G. Melvin Hovey, and Lance A. Smith

     Class I Directors whose terms expire in 2006: Robert E. Anderson, Michael
W. Caron, and Nathan L. Grass

     Second was the approval of the increase in the maximum age of directors to
78. The following vote was recorded:

                                   Increase Maximum Age of
                                       Directors to 78
                                   -------------------------
For                                        1,157,719
Against                                      137,754
Abstentions                                   23,516
Broker Non-Votes                                   0
                                   -------------------------
Total Shares Voted                         1,318,989


<PAGE>

Item 5. Other Information

None


Item 6. Exhibits and Reports on Form 8-K

The following Forms 8-K were filed for Maine & Maritimes Corporation:

     |X|  May 10, 2004 - Press release titled "Maine & Maritimes Corporation
          Announces First Quarter 2004 Results"

     |X|  May 13, 2004 - Amendment to May 10, 2004, Form 8-K for the press
          release titled "Maine & Maritimes Corporation Announces First Quarter
          2004 Results"

     |X|  May 13, 2004 - Reporting on the declaration of a regular quarterly
          dividend by the Board of Directors

     |X|  June 2, 2004 - Reporting on the acquisition by Maricor Ltd of Morris &
          Richard Consulting Engineers, Ltd., a Canada-based engineering firm

     |X|  June 17, 2004 - Reporting on the acquisition by The Maricor Group of
          RES Engineering, Inc., a Massachusetts-based engineering firm

     |X|  July 2, 2004 - Providing mid-year progress report to stockholders,
          dated July 1, 2004


The following exhibits are attached:

     |X|  Exhibit 31 Rule 13a-14(a)/15d-14(a) Certifications

     |X|  Exhibit 32 Certification of Financial Reports Pursuant to 18 USC
          Section 1350


<PAGE>




SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


MAINE & MARITIMES CORPORATION
(Registrant)

Date: August  16, 2004


/s/ Larry E. LaPlante
-----------------------
Larry E. LaPlante
Vice President, Controller and Chief Accounting Officer