UNITED
      STATES SECURITIES AND EXCHANGE
      COMMISSION


**Washington,
      D.C. 20549**





**FORM
      10 - Q**





**QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934.**




**For
      the quarterly period ended June 30, 2008**





**000-52470**


*(Commission
      File Number)*





**Knight
      Energy Corp.**


*(Exact
      name of registrant as specified in its charter)*




**Maryland**
            
            **87-0583192***(State
                or other jurisdiction of*
              *incorporation)*
            
            *(IRS
                Employer Identification*
              *Number)*




**909
      Lake Carolyn Parkway, Suite 850, Irving, TX 75039**


*(Address
      of principal executive offices including zip code)*





**(972)
      401-1133**


( *Registrant’s
      telephone number, including area code)*




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
o





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


Large
                  accelerated filer o
              
              Accelerated
                  filer oNon-accelerated
                  filer o
              
              Smaller
                  reporting company x


(Do
      not check if a smaller reporting company)





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes oNo x





As
      of
      August 1, 2008, the Registrant had 25,497,855 shares outstanding of its $0.001
      par value common stock.







Knight
      Energy Corp.


Form
      10-Q
      Index


June
      30,
      2008




PagePart
                I-Financial InformationItem
                1.
            Financial
                Statements
            3Consolidated
                Balance Sheets at June 30, 2008 (Unaudited) and December 31, 2007
                (Audited)
            4Consolidated
                Statements of Operations for the Three and Six Months Ended June
                30, 2008
                and 2007 (Unaudited)
            5Consolidated
                Statements of Cash Flows for the Six Months Ended June 30, 2008 and
                2007
                (Unaudited)
            6Notes
                to Consolidated Financial Statements (Unaudited)
            7Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            13Item
                4T.
            Controls
                and Procedures
            18Part
                II-Other InformationItem
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            20Item
                6.
            Exhibits
            20Signatures
            23




2


PART
      I


FINANCIAL
      INFORMATION





Item
      1-Consolidated Financial Statements (Unaudited)


3


**Knight
      Energy Corp. and Subsidiary**


**Consolidated
      Balance Sheets**





**June
                30,**
            
            **December
                31,****2008**
            
            **2007****(unaudited)**
            
            **(audited)****ASSETS****Current
                assets:**Cash
                and cash equivalents
            
            $
            314,566
            
            $
            11,915Trade
                receivables
            
            
            149,961
            
            
            123,831Prepaid,
                related party
            
            
            -
            
            
            9,215Inventory
            
            
            3,853
            
            
            7,634Other
                current assets
            
            
            66,973
            
            
            33,091**Total
                current assets**
            
            
            535,353
            
            
            185,686**Land,
                property and equipment:**Land
            
            
            24,596
            
            
            24,596Oil
                and gas properties, successful efforts method
            
            
            4,195,240
            
            
            3,784,459Other
                property and equipment
            
            
            2,817,131
            
            
            2,619,506Accumulated
                depreciation and depletion
            
            
            (2,212,939
            )
            
            (1,831,120
            )**Land,
                property and equipment, net**
            
            
            4,824,028
            
            
            4,597,441**Other
                assets:**Debt
                issue costs, net
            
            
            131,909
            
            
            -**Total
                other assets**
            
            
            131,909
            
            
            -**Total
                assets**
            
            $
            5,491,290
            
            $
            4,783,127**LIABILITIES****Current
                liabilities:**Accounts
                payable
            
            $
            587,327
            
            $
            753,555Advanced
                from related party
            
            
            40,497
            
            
            -Accrued
                expenses
            
            
            460,011
            
            
            608,756Notes
                payable
            
            
            -
            
            
            200,000Current
                portion of asset retirement obligation
            
            
            192,210
            
            
            192,210**Total
                current liabilities**
            
            
            1,280,045
            
            
            1,754,521**Long-term
                debt**
            
            
            1,400,000
            
            
            -**Long-term
                portion asset retirement obligation**
            
            
            69,626
            
            
            57,746**Total
                liabilities**
            
            
            2,749,671
            
            
            1,812,267**Commitments
                and contingencies****STOCKHOLDERS'
                EQUITY**Preferred
                stock, $0.0001 par value, 50,000,000 shares authorized, zero shares
                issued
                and outstanding
            
            
            -
            
            
            -Common
                stock, $0.0001 par value, 500,000,000 shares authorized 25,497,855
                shares
                issued and outstanding at June 30, 2008 and December 31, 2007,
                respectively
            
            
            2,550
            
            
            2,550Common
                stock issuable, $0.0001 par value 5,647,930 and 4,415,030 shares
                issuable
                at June 30, 2008 and December 31, 2007, respectively
            
            
            565
            
            
            442Additional
                paid-in capital
            
            
            10,749,350
            
            
            8,441,334Accumulated
                deficit
            
            
            (8,009,596
            )
            
            (5,472,216
            )Less:
                Stock subscription receivable
            
            
            (1,250
            )
            
            (1,250
            )**Total
                stockholders' equity**
            
            
            2,741,619
            
            
            2,970,860**Total
                liabilities and stockholders' equity**
            
            $
            5,491,290
            
            $
            4,783,127





See
      accompanying notes to unaudited consolidated financial
      statements.


4


**Knight
      Energy Corp. and Subsidiary**


**Consolidated
      Statements of Operations**


**(Unaudited)**




**Three Months Ended**
            
            **Six Months Ended****June 30,**
            
            **June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Revenues,
                net
            
            $
            435,401
            
            $
            445,128
            
            $
            829,528
            
            $
            504,481**Operating
                expenses:**Lease
                operating costs
            
            
            109,340
            
            
            105,358
            
            
            186,911
            
            
            116,010Repairs
                and maintenance
            
            
            35,733
            
            
            90,543
            
            
            74,214
            
            
            110,702General
                and administrative
            
            
            514,261
            
            
            481,387
            
            
            952,176
            
            
            625,444Rent
            
            
            25,147
            
            
            2,268
            
            
            27,190
            
            
            3,752Consulting
            
            
            251,183
            
            
            86,547
            
            
            1,473,267
            
            
            122,797Professional
            
            
            109,665
            
            
            104,037
            
            
            172,077
            
            
            155,359Depreciation,
                depletion, and accretion
            
            
            192,966
            
            
            153,172
            
            
            393,698
            
            
            282,294**Total
                operating expenses**
            
            
            1,238,295
            
            
            1,023,312
            
            
            3,279,533
            
            
            1,416,358**Operating
                loss**
            
            
            (802,894
            )
            
            (578,184
            )
            
            (2,450,005
            )
            
            (911,877
            )**Other
                income (expense):**Interest
                income
            
            
            24
            
            
            116
            
            
            47
            
            
            116Interest
                expense
            
            
            (36,919
            )
            
            (18,712
            )
            
            (87,422
            )
            
            (21,046
            )**Total
                other income (expense)**
            
            
            (36,895
            )
            
            (18,596
            )
            
            (87,375
            )
            
            (20,930
            )**Net
                loss**
            
            **$**
            **(839,789**
            **)**
            **$**
            **(596,780**
            **)**
            **$**
            **(2,537,380**
            **)**
            **$**
            **(932,807**
            **)****Net
                loss per share - basic and diluted**
            
            **$**
            **(0.03**
            **)**
            **$**
            **(0.02**
            **)**
            **$**
            **(0.08**
            **)**
            **$**
            **(0.04**
            **)****Weighted
                average shares - basic and diluted**
            
            
            **31,145,785**
            
            
            **27,091,604**
            
            
            **30,649,437**
            
            
            **26,106,544**




See
      accompanying notes to unaudited consolidated financial
      statements


5


**Knight
      Energy Corp. and Subsidiary**


**Consolidated
      Statements of Cash Flows**


**(Unaudited)**




**Six
                Months Ended****June
                30,****2008**
            
            **2007****Cash
                Flows From Operating Activities:**Net
                loss
            
            $
            (2,537,380
            )
            $
            (932,807
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and depletion expense
            
            
            381,818
            
            
            280,492Accretion
                expense
            
            
            11,880
            
            
            1,802Non-cash
                interest expense
            
            
            8,091
            
            
            -Stock
                issued for employee bonus
            
            
            -
            
            
            20,000Warrant
                issued for consulting
            
            
            1,148,529
            
            
            -Changes
                in operating assets and liabilities:Trade
                receivables
            
            
            (26,130
            )
            
            (101,447
            )Prepaid,
                related party
            
            
            9,215
            
            
            (59,866
            )Inventory
            
            
            3,781Other
                current assets
            
            
            (33,882
            )
            
            8,295Accounts
                payable
            
            
            (326,857
            )
            
            87,634Accrued
                expenses
            
            
            (148,745
            )
            
            116,477**Net
                Cash Used In Operating Activities**
            
            
            (1,509,680
            )
            
            (579,420
            )**Cash
                Flows From Investing Activities:**Investment
                in oil and gas properties
            
            
            (258,439
            )
            
            (1,323,976
            )Purchase
                of property and equipment
            
            
            (189,337
            )
            
            (390,180
            )**Net
                Cash Used In Investing Activities**
            
            
            (447,776
            )
            
            (1,714,156
            )**Cash
                Flows From Financing Activities:**Repayment
                of note payable - related party
            
            
            -
            
            
            (100,000
            )Debt
                issue costs
            
            
            (140,000
            )
            
            -Advances
                from related party
            
            
            40,497
            
            
            -Proceeds
                from issuance of note payable
            
            
            1,630,000
            
            
            210,000Repayment
                of note payable
            
            
            (430,000
            )
            
            (210,000
            )Proceeds
                from sale of common stock
            
            
            1,159,610
            
            
            2,560,879**Net
                Cash Provided By Financing Activities**
            
            
            2,260,107
            
            
            2,460,879**Net
                Increase in Cash**
            
            
            302,651
            
            
            167,303**Cash
                at Beginning of Period**
            
            
            11,915
            
            
            15,544**Cash
                at End of Period**
            
            $
            314,566
            
            $
            182,847**Supplemental
                Disclosure of Cash Flow Information:**Cash
                paid during the period for:Interest
            
            $
            87,422
            
            $
            21,047Taxes
            
            $
            -
            
            $
            -**Supplemental
                Disclosure of Non-Cash Investing and Financing
                Transactions:**Accrued
                and unpaid property additions
            
            
            160,629
            
            
            -Capitalized
                asset retirement obligation
            
            
            -
            
            
            54,413





See
      accompanying notes to unaudited consolidated financial
      statements


6


**Knight
      Energy Corp. and Subsidiary**


**Notes
      to Consolidated Financial Statements**


**June
      30, 2008**


**(Unaudited)**




**1.**  **BASIS
      OF PRESENTATION**




The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America for interim financial information and with the instructions to Form
      10-Q
      of Regulation S-K. They do not include all information and footnotes required
      by
      accounting principles generally accepted in the United States of America for
      complete financial statements. However, except as disclosed herein, there has
      been no material change in the information disclosed in the notes to the
      consolidated financial statements for the year ended December 31, 2007 included
      in the Company’s Form 10-KSB/A filed with the Securities and Exchange Commission
      on April 3, 2008. The interim unaudited consolidated financial statements should
      be read in conjunction with those consolidated financial statements included
      in
      the Form 10-KSB/A. In the opinion of management, all adjustments considered
      necessary for a fair presentation, consisting solely of normal recurring
      adjustments, have been made. Operating results for the three and six months
      ended June 30, 2008 are not necessarily indicative of the results that may
      be
      expected for the year ending December 31, 2008.




**2.** **HISTORY
      AND NATURE OF BUSINESS**




Knight
      Energy Corp. (“Knight”, “we”, “us”, “our”, or the “Company”) is a Maryland
      corporation formed in March 2006. The Company’s business plan is to acquire,
      develop, own, operate and otherwise be involved and invest in energy-related
      businesses, assets and investments, including, without limitation, the
      acquisition, exploration and development of natural gas and crude oil, the
      acquisition and operation of drilling rigs and/or gathering systems and/or
      pipelines for natural gas and/or crude oil, and other related businesses, assets
      and investments.




Commencing
      March 16, 2006 and finalized on May 31, 2006, Knight acquired a 100% interest
      in
      Charles Hill Drilling, Inc. (“Hill”), an independent oil and gas services
      company that owned an executed lease agreement and a drilling rig, among other
      assets, in Stephens County, Texas. Hill is now a wholly-owned subsidiary of
      Knight, and is operating as an oil and gas services company dedicated at this
      time to activities on behalf of the Company.




In
      June
      2006, the Company executed a stock exchange agreement with Integrated Technology
      Group, Inc. (ITGI), which, upon closing in November 2006, resulted in the former
      stockholders of Knight owning approximately 84 percent of the issued and
      outstanding common stock of ITG.
      In
      connection with this transaction, ITG changed
      its name to ‘‘Knight Energy Corp . ” The
      transaction was treated as a recapitalization of the Company.




To
      continue with our business plan, we will require additional capital .
      We do not
      anticipate that we will generate sufficient cash from our oil and gas operations
      to fund our operations for the next twelve months. However, on March 28, 2008,
      the Company received a firm commitment from a third party for up to $5,000,000
      of capital to be received during the fiscal year ended December 31, 2008.
      Additionally from May through July 2008, the Company obtained $1,500,000 of
      gross proceeds from the issuance of notes payable and in August 2008, the
      Company obtained $2,500,000 of gross proceeds from the issuance of notes payable
      (See Note 4 - Notes Payable and Note 7 - Subsequent Events). The
      $2,500,000 is required to be used for the purchase, repair and maintenance
      of
      two drilling rigs and related equipment. The funds are held in escrow until
      required for these purposes. The Company will utilize the majority
      of the funds for the purchase of oil and gas equipment, the development of
      existing leases and wells and as a result, an increase oil and gas revenue.
      Based upon these conditions any substantial doubt about the Company’s ability to
      continue as a going concern has been alleviated for a reasonable period of
      time.




7


**Knight
      Energy Corp. and Subsidiary**


**Notes
      to Consolidated Financial Statements**


**June
      30, 2008**


**(Unaudited)**




**3.** **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES**




*Principles
      of Consolidation*





The
      accompanying consolidated financial statements include the general accounts
      of
      Knight and its wholly-owned subsidiary Hill, and all significant intercompany
      transactions, accounts and balances have been eliminated.




*Oil
      and Gas Properties*




The
      Company uses the successful efforts method of accounting for its oil and gas
      properties. Costs incurred by the Company related to the acquisition of oil
      and
      gas properties and the cost of drilling successful wells are capitalized. Costs
      to maintain wells and related equipment and lease and well operating costs
      are
      charged to expense as incurred. Gains and losses arising from sales of
      properties are included in income. Unproved properties are assessed periodically
      for possible impairment.




*Property
      and Equipment*





The
      Company’s oil and gas rig is depreciated over its estimated useful life of ten
      years, using the straight line method. Vehicles are depreciated over their
      estimated useful life of three years, using the straight line method.
      Maintenance, repairs and minor replacements are charged to operations in the
      year incurred.





*Stock-Based
      Compensation*




Effective
      March 2, 2006 (Inception Date), the Company adopted the fair value recognition
      provisions of SFAS No. 123(R), *Share-Based
      Payments* ,
      and
      recognizes compensation expense for all stock-based payments based on the
      grant-date fair value.





The
      Company accounts for stock options or warrants issued to non-employees for
      goods
      or services in accordance with the fair value method of SFAS 123(R) and Emerging
      Issues Task Force 96-18, *Accounting
      for Equity Instruments that are issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* .
      Under
      this method, the Company records an expense equal to the fair value of the
      options or warrants issued. The fair value is computed using an options pricing
      model. See Note 5 - Stockholders’ Equity for further discussion of
      warrants.




*Net
      Loss per Common Share*




Basic
      earnings per share are computed only on the weighted average number of common
      shares outstanding during the respective periods.




There
      were 5,300,000 outstanding warrants that could potentially dilute earnings
      per
      share in the future, but were not included in the computation of diluted
      earnings per share for the periods presented because their impact was
      anti-dilutive for the periods presented.




**4.** **NOTES
      PAYABLE**




Significant
      current period changes in notes payable during the six months ended June 30,
      2008 consisted of the following:


8


**Knight
      Energy Corp. and Subsidiary**


**Notes
      to Consolidated Financial Statements**


**June
      30, 2008**


**(Unaudited)**





In
      November 2007, a third party loaned the Company $200,000, for working capital
      purposes. Repayment of the loan was due in
      60 days or in January 2008 with a 15% fee, resulting in a total $230,000
      payback. At December 31, 2007, the outstanding principal balance was $200,000.
      On January 10, 2008, the Company paid the $30,000 fee on the note payable and
      renewed the original note for an additional two months for an additional 15%
      fee
      or $230,000 payback, for working capital purposes. In March 2008, the Company
      repaid the loan and the payment was $200,000 principal and a $30,000 charge
      for
      interest and fees.




On
      May
      20, 2008, the Company entered into a Note Purchase Agreement (the “Agreement”)
      with an unrelated third party (the “Lender”). Pursuant to the Agreement, the
      Company will issue the Lender an aggregate of up to $1,500,000 in principal
      amount of the Company’s 15% Senior Secured Promissory Notes (each a “Note,” and
      collectively, the “Notes”). $1,000,000 of the Notes were issued in an initial
      closing on May 20, 2008 and, upon the satisfaction of certain conditions set
      forth in the Agreement, $400,000 of the Notes were issued in a closing on June
      20, 2008. The remaining $100,000 of Notes were issued and closed in July 2008
      (see Note 7- Subsequent Events). The Company has secured its obligations under
      the Notes with a first-priority security interest in all existing and later
      acquired assets owned by the Company. In addition, as additional security for
      the Company’s obligations under the Notes, contemporaneously with the execution
      of the Agreement, Hill, a wholly-owned subsidiary of the Company, executed
      and
      delivered to the Lender a Subsidiary Guaranty, a Security Agreement and a Deed
      of Trust in the forms attached to the Agreement. Hill agreed to secure its
      obligations pursuant to these agreements with a first-priority security interest
      in all existing and later acquired assets owned by Hill.




The
      Notes
      will be due and payable on May 20, 2010, provided, however, that if an Event
      of
      Default occurs (as described below), fifty percent of the Company’s and its
      subsidiaries’ EBITDA (minus interest, mutually agreed-upon capital expenditures,
      cash taxes and principal payments made during such month to the Lender under
      the
      Notes) each month will be used to repay the outstanding principal amount of
      the
      Notes pursuant to the Agreement until (i) cure or waiver of the Event of Default
      or (ii) all principal with respect to the Notes is paid in full. During any
      period that an Event of Default exists and has not been cured or waived, the
      interest rate on the Notes will automatically increase to 19%.




Under
      the
      terms of the Note, an “Event of Default” includes, but is not limited to: (i)
      failure of the Company or Hill to make a payment within three (3) business
      days
      of the due date; (ii) Charles L. Hill ceasing to provide full-time services
      to
      Hill in an executive capacity; and/or (iii) the Company’s failure to timely file
      any filing required to be made with the Securities and Exchange Commission.
      During any period that an Event of Default exists and has not been cured or
      waived, the interest rate on the Notes will automatically increase to
      19%.




As
      of
      June 30, 2008, $1,400,000 of the Notes had been sold and the Company obtained
      $1,260,000 of proceeds, net of $140,000 of debt issue costs. Of the $140,000
      of
      debt issue costs, $70,000 was paid to the Lender for fees related to the
      transaction, $22,500 was paid to a third party for a financial advisory fee
      related to the transaction and $47,500 was for the Lender's legal fees.




The
      $140,000 of debt issue costs were recorded as an other asset and are being
      amortized over the remaining life of the debt through May 2010. During the
      six
      months ended June 30, 2008, the Company amortized to interest expense $8,091
      of
      the debt issue costs resulting in debt issue costs of $131,909 as of June 30,
      2008.


9


**Knight
      Energy Corp. and Subsidiary**


**Notes
      to Consolidated Financial Statements**


**June
      30, 2008**


**(Unaudited)**





**5.** **STOCKHOLDERS’
      EQUITY**




*Capital
      Structure*




The
      Company is authorized to issue up to 500,000,000 shares of common stock, $0.0001
      par value per share, of which 25,497,855 shares were issued and outstanding
      at
      June 30, 2008. The holders of the common stock do not have any preemptive right
      to subscribe for, or purchase, any shares of any class of stock. Additionally,
      the Company has 5,647,930 shares that are issuable as of June 30, 2008.
      Including issuable shares, as if they were outstanding, the Company has
      31,145,785 shares outstanding as of June 30, 2008.




The
      Company is also authorized to issue 50,000,000 shares of Series A preferred
      stock, of which none are issued and outstanding as of June 30,
      2008.




Significant
      current period changes in stockholders’ equity during the six months ended June
      30, 2008 consisted of the following:




*Common
      Stock Issuable*




In
      May
      2007, the Company commenced a private placement offering of the Company’s common
      stock. For the six months ended June 30, 2008, the Company sold 1,232,900 shares
      of common stock at $1.00 per share and raised $1,232,900 in gross proceeds
      ($1,159,610 of net proceeds after $73,290 of equity consulting fees related
      to
      the private placement offering). As of June 30, 2008, the Company had 4,847,930
      shares of common stock recorded as common stock issuable from this $1.00 per
      share private placement offering. These sales were made based on exemptions
      from
      registration under the Securities Act of 1933, as amended (the “Securities
      Act”), and applicable state laws pursuant to Section 4(2) of the Securities Act
      and Rule 506 of Regulation D. These issuances qualified for this exemption
      from
      registration because, among other matters, (i) the Company did not engage in
      any
      general solicitation or advertising to market the securities; (ii) all the
      Company's reports filed under the Securities Exchange Act of 1934 were made
      available to the buyers; (iii) each buyer was provided the opportunity to ask
      questions and receive answers from the Company regarding the offering; (iv)
      the
      securities were issued to persons with knowledge and experience in financial
      and
      business matters so that he or she was capable of evaluating the merits and
      risks of an investment in the Company; and (v) the buyers received “restricted
      securities” that include a restrictive legend on the certificate.




*Warrants*




In
      March
      2008, the Company agreed to extend the expiration date of fully vested warrants
      held by Nortia Capital Partners, Inc. and Lake Capital AG, both related parties
      and founding shareholders, to purchase in total, 2,500,000 shares of Knight
      common stock at an exercise price of $.50 and 2,500,000 shares of Knight common
      stock at an exercise price of $1.00. For all of the warrants, the exercise
      period was extended two years through March 2010.




The
      Company evaluated the warrant revision in accordance with SFAS 123R and utilized
      the Black Scholes method to determine valuation. Since they are compensatory
      warrants, under SFAS 123R, we calculated the change in fair value on the
      modification date by measuring the original warrants on the modification date
      as
      though they were not being modified but using the modification date assumptions
      and then we re-measured the value of the new warrants on the modification date.
      As a result of our analysis, the total value for the warrant revision was
      $1,148,529 and recorded as consulting expense.




The
      Company used the following in the calculation:





Stock
                Price (modification date)
            
            $
            1.01Expected
                Life (between vesting period and term of warrants)
            
            
            1.00Volatility
            
            
            98
            %Annual
                Rate of Quarterly Dividends
            
            
            0.00
            %Risk
                Free Interest Rate (T-bill rate)
            
            
            2.24
            %




10


**Knight
      Energy Corp. and Subsidiary**


**Notes
      to Consolidated Financial Statements**


**June
      30, 2008**


**(Unaudited)**




**6.** **RELATED
      PARTY TRANSACTIONS**




Effective
      March 1, 2008, the Company renewed a consulting contract with Nortia Capital
      Partners, Inc. (“Nortia”), a related party. Pursuant
      to the consulting contract , Nortia provides financial consulting services to the Company for a consulting fee of $20,000
      monthly with a
      term of one year through March 2009 .
      For the six
      months ended June 30, 2008, Nortia invoiced the Company $120,000, and the
      Company paid Nortia, for consulting services. The
      Company’s chief executive officer and chief financial officer are officers,
      directors and large stockholders of Nortia (See Note 5 - Stockholders’ Equity
      for other related party transactions).




As
      of
      June 30, 2008, the Company has received $40,497 of advances from Nortia for
      working capital purposes and is classified as an advance from related party
      in
      the accompanying unaudited consolidated financial statements as of June 30,
      2008. Management anticipates that the advances will be repaid on or before
      December 31, 2008.




**7.** **SUBSEQUENT
      EVENTS**




On
      July
      2, 2008, the Company received the final $100,000 of gross proceeds related
      to
      the $1,500,000 in principal amount of the Company’s 15% Senior Secured
      Promissory Notes (See Note 4 - Notes Payable).




On
      July
      3, 2008 the Company entered into a Note Purchase Agreement (the “$2,500,000
      Agreement”) with HD Special-Situations, LP (the “Lender”). Pursuant to the
      $2,500,000 Agreement, the Company issued the Lender a 15% Senior Secured
      Promissory Note (the “Note”), face amount $2,500,000, for $2,500,000. Under the
      terms of the $2,500,000 Agreement, the proceeds from the issue of the Note
      were
      placed directly into escrow, and the Company is permitted to use the net
      proceeds from the Note only for the purchase and subsequent refurbishment of
      two
      oil drilling rigs and related equipment. The Company must obtain the Lender’s
      consent before drawing funds from the escrow to purchase and refurbish the
      two
      oil drilling rigs.




The
      Lender secured the Company’s obligations under the Note with a first-priority
      security interest in all existing and later acquired assets owned by the Company
      by amending the Security Agreement that the Company and the Lender executed
      on
      May 20, 2008 in connection with the Company’s previously-reported issuance of an
      aggregate of $1,500,000 in principal amount of the Company’s 15% Senior Secured
      Promissory Notes (the “May Notes”). In addition, as additional security for the
      Company’s obligations under the Note, contemporaneously with the execution of
      the Agreement, Hill, a wholly-owned subsidiary of the Company, executed and
      delivered to the Lender an amendment to the Subsidiary Guaranty and Deed of
      Trust that Hill and the Lender executed in connection with the May Notes. The
      Lender secured Hill’s obligations with a first-priority security interest in all
      existing and later acquired assets owned by Hill.




The
      Note
      is due and payable on May 20, 2010, provided, however, that if an Event of
      Default occurs (as described below), fifty percent of the Company’s and its
      subsidiaries’ EBITDA (minus interest, mutually agreed-upon capital expenditures,
      cash taxes and principal payments made during such month to the Lender under
      the
      Notes) each month will be used to repay the outstanding principal amount of
      the
      Note and all other 15% Senior Secured Promissory Notes issued by the Company
      to
      the Lender on a parri passu basis until (i) cure or waiver of the Event of
      Default, or (ii) all principal with respect to the Note is paid in full.




11


**Knight
      Energy Corp. and Subsidiary**


**Notes
      to Consolidated Financial Statements**


**June
      30, 2008**


**(Unaudited)**




Under
      the
      terms of the Note, an “Event of Default” includes, but is not limited to: (i)
      failure of the Company or Hill to make a payment within three (3) business
      days
      of the due date; (ii) Charles L. Hill ceasing to provide full-time services
      to
      Hill in an executive capacity; and/or (iii) the Company’s failure to timely file
      any filing required to be made with the Securities and Exchange Commission.
      During any period that an Event of Default exists and has not been cured or
      waived, the interest rate on the Notes will automatically increase to
      19%.




On
      July
      8, 2008 Hill, a wholly-owned subsidiary of the Company, purchased two oil
      drilling rigs and related equipment (the “Rigs”) from an unrelated third party
      for $1,500,000. The Rigs were purchased with proceeds from the
      recently-completed, previously reported, $2,500,000 debt financing through
      HD
      Special-Situations, LP.




12


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




**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




The
      following is a discussion of our financial condition, results of operations,
      liquidity and capital resources. This
      discussion should be read in conjunction with our unaudited financial statements
      and the notes thereto included elsewhere in this Form 10-Q and with our report
      on Form 10-KSB/A filed with the SEC on April 3, 2008.




Some
      of
      the statements under “Description of Business,” “Risk Factors,” “Management’s
      Discussion and Analysis or Plan of Operation,” and elsewhere in this Report and
      in our periodic filings with the Securities and Exchange Commission constitute
      forward-looking statements. These statements involve known and unknown risks,
      significant uncertainties and other factors what may cause actual results,
      levels of activity, performance or achievements to be materially different
      from
      any future results, levels of activity, performance or achievements expressed
      or
      implied by such forward- looking statements. Such factors include, among other
      things, those listed under “Risk Factors” and elsewhere in this Report.




In
      some
      cases, you can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “could,” “intends,” “expects,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential” or “continue” or the negative
      of such terms or other comparable terminology.




The
      forward-looking statements herein are based on current expectations that involve
      a number of risks and uncertainties. Such forward-looking statements are based
      on assumptions that we will obtain or have access to adequate financing for
      each
      successive phase of our growth, that there will be no material adverse
      competitive or technological change in condition of our business, that our
      Chief
      Executive Officer, Chief Financial Officer, and other significant employees
      will
      remain employed as such by us, and that there will be no material adverse change
      in the Company’s operations, business or governmental regulation affecting us.
      The foregoing assumptions are based on judgments with respect to, among other
      things, further economic, competitive and market conditions, and future business
      decisions, all of which are difficult or impossible to predict accurately and
      many of which are beyond our control.




Although
      our management believes that the expectations reflected in the forward-looking
      statements are reasonable, management cannot guarantee future results, levels
      of
      activity, performance or achievements. Moreover, neither management nor any
      other persons assumes responsibility for the accuracy and completeness of such
      statements.




**GENERAL**




Knight
      Energy Corp. (“Knight”, “we”, “us”, “our”, or the “Company”) is a Maryland
      company formed in March 2006. Our business plan is to acquire, develop, own,
      operate and otherwise be involved and invest in energy-related businesses,
      assets and investments, including, without limitation, the acquisition,
      exploration and development of natural gas and crude oil, the acquisition and
      operation of drilling rigs and/or gathering systems and/or pipelines for natural
      gas and/or crude oil, and other related businesses, assets and investments.




We
      are a
      reporting company pursuant to Section 12 (g) of the Securities Exchange Act
      of
      1934, as amended, and our shares of common stock are publicly traded on the
      Pink
      Sheets under the symbol “KNEC”.




**RECENT
      DEVELOPMENTS**




On
      July
      2, 2008, the Company received the final $100,000 of gross proceeds related
      to
      $1,500,000 in principal amount of the Company’s 15% Senior Secured Promissory
      Notes that were issued in May 2008.




13




On
      July
      3, 2008 the Company entered into a Note Purchase Agreement (the “$2,500,000
      Agreement”) with HD Special-Situations, LP (the “Lender”). Pursuant to the
      $2,500,000 Agreement, the Company issued the Lender a 15% Senior Secured
      Promissory Note (the “Note”), face amount $2,500,000, for $2,500,000. Under the
      terms of the $2,500,000 Agreement, the proceeds from the issue of the Note
      were
      placed directly into escrow, and the Company is permitted to use the net
      proceeds from the Note only for the purchase and subsequent refurbishment of
      two
      oil drilling rigs and related equipment. The Company must obtain the Lender’s
      consent before drawing funds from the escrow to purchase and refurbish the
      two
      oil drilling rigs.




The
      Lender secured the Company’s obligations under the Note with a first-priority
      security interest in all existing and later acquired assets owned by the Company
      by amending the Security Agreement that the Company and the Lender executed
      on
      May 20, 2008 in connection with the Company’s previously-reported issuance of an
      aggregate of $1,500,000 in principal amount of the Company’s 15% Senior Secured
      Promissory Notes (the “May Notes”). In addition, as additional security for the
      Company’s obligations under the Note, contemporaneously with the execution of
      the Agreement, Hill, a wholly-owned subsidiary of the Company, executed and
      delivered to the Lender an amendment to the Subsidiary Guaranty and Deed of
      Trust that Hill and the Lender executed in connection with the May Notes. The
      Lender secured Hill’s obligations with a first-priority security interest in all
      existing and later acquired assets owned by Hill.




The
      Note
      is due and payable on May 20, 2010, provided, however, that if an Event of
      Default occurs (as described below), fifty percent of the Company’s and its
      subsidiaries’ EBITDA (minus interest, mutually agreed-upon capital expenditures,
      cash taxes and principal payments made during such month to the Lender under
      the
      Notes) each month will be used to repay the outstanding principal amount of
      the
      Note and all other 15% Senior Secured Promissory Notes issued by the Company
      to
      the Lender on a parri passu basis until (i) cure or waiver of the Event of
      Default, or (ii) all principal with respect to the Note is paid in full.




Under
      the
      terms of the Note, an “Event of Default” includes, but is not limited to: (i)
      failure of the Company or Hill to make a payment within three (3) business
      days
      of the due date; (ii) Charles L. Hill ceasing to provide full-time services
      to
      Hill in an executive capacity; and/or (iii) the Company’s failure to timely file
      any filing required to be made with the Securities and Exchange Commission.
      During any period that an Event of Default exists and has not been cured or
      waived, the interest rate on the Notes will automatically increase to
      19%.




On
      July
      8, 2008 Hill, a wholly-owned subsidiary of the Company, purchased two oil
      drilling rigs and related equipment (the “Rigs”) from an unrelated third party
      for $1,500,000. The Rigs were purchased with proceeds from the
      recently-completed, previously reported, $2,500,000 debt financing through
      HD
      Special-Situations, LP.




14


**RESULTS
      OF OPERATIONS**




**Three Months Ended**
            
            **Six Months Ended****June 30,**
            
            **June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Revenues,
                net
            
            $
            435,401
            
            $
            445,128
            
            $
            829,528
            
            $
            504,481**Operating
                expenses:**Lease
                operating costs
            
            
            109,340
            
            
            105,358
            
            
            186,911
            
            
            116,010Repairs
                and maintenance
            
            
            35,733
            
            
            90,543
            
            
            74,214
            
            
            110,702General
                and administrative
            
            
            514,261
            
            
            481,387
            
            
            952,176
            
            
            625,444Rent
            
            
            25,147
            
            
            2,268
            
            
            27,190
            
            
            3,752Consulting
            
            
            251,183
            
            
            86,547
            
            
            1,473,267
            
            
            122,797Professional
            
            
            109,665
            
            
            104,037
            
            
            172,077
            
            
            155,359Depreciation,
                depletion, and accretion
            
            
            192,966
            
            
            153,172
            
            
            393,698
            
            
            282,294**Total
                operating expenses**
            
            
            1,238,295
            
            
            1,023,312
            
            
            3,279,533
            
            
            1,416,358**Operating
                loss**
            
            
            (802,894
            )
            
            (578,184
            )
            
            (2,450,005
            )
            
            (911,877
            )**Other
                income (expense):**Interest
                income
            
            
            24
            
            
            116
            
            
            47
            
            
            116Interest
                expense
            
            
            (36,919
            )
            
            (18,712
            )
            
            (87,422
            )
            
            (21,046
            )**Total
                other income (expense)**
            
            
            (36,895
            )
            
            (18,596
            )
            
            (87,375
            )
            
            (20,930
            )**Net
                loss**
            
            **$**
            **(839,789**
            **)**
            **$**
            **(596,780**
            **)**
            **$**
            **(2,537,380**
            **)**
            **$**
            **(932,807**
            **)**




***Three
      Months Ended June 30, 2008 compared to 2007***




*Revenues* *:*




Revenues
      decreased $9,727, or 2%, to $435,401 for 2008, from $ 445,128 for
      2007. Revenues
      for 2008 were comprised of $224,283 of natural gas sales less $38,910 of gas
      royalties (18,599 MCF of natural gas) and $302,491 of oil sales less $52,463
      of
      oil royalties (2,301 barrels of oil).  Revenues
      for 2007 were comprised of $199,817 of natural gas sales less $37,658 of gas
      royalties (28,065 MCF of natural gas) and $342,344 of oil sales less $59,375
      of
      oil royalties (5,432 barrels of oil). Although production volume was
      significantly down for 2008 from 2007, market pricing for oil and gas products
      in 2008 compared to 2007 primarily offset the production volume
      decrease.




*Operating
      Expenses* *:*




Operating
      expenses increased $214,983 or 21%, to $1,238,295 for 2008 from $1,023,312
      for
      2007. The
      increase was primarily the result of a $164,636 increase in consulting expense
      and a $39,794 increase in depreciation, depletion, and accretion expense. The
      increased consulting expense was primarily from $174,955 of consulting fees
      for
      investor services. The increased depreciation, depletion, and accretion expense
      was directly attributable to a significant increase in oil and gas properties
      from 2007 to 2008 and the related increase in depletion expense.




15




*Other
      Income (Expense)* *:*




Other
      income (expense) increased $18,299 of expense or 98%, to $36,895 of expense
      for
      2008 from $18,596 of expense for 2007. The increase in expense was primarily
      from interest expense increasing $18,207 to $36,919 for 2008 from $18,712 for
      2007. The
      increased interest expense resulted from increased borrowings.




***Six
      Months Ended June 30, 2008 compared to 2007***




*Revenues* *:*




Revenues
      increased $325,047, or 64%, to $829,528 for 2008, from $504,481 for 2007.
      Revenues for 2008 were comprised of $475,867 of natural gas sales less $82,657
      of gas royalties (48,002 MCF of natural gas) and $527,870 of oil sales less
      $91,552 of oil royalties (4,640 barrels of oil). Revenues for 2007 were
      comprised of $263,851 of natural gas sales less $49,664 of gas royalties (38,412
      MCF of natural gas) and $351,796 of oil sales less $61,502 of oil royalties
      (5,597 barrels of oil). The combination of an increase in natural gas production
      volume along with increased market pricing for oil and gas products in 2008
      compared to 2007 resulted in the increased revenue.





*Operating
      Expenses* *:*




Operating
      expenses increased $1,863,175 or 132%, to $3,279,533 for 2008 from $1,416,358
      for 2007. The increase was primarily the result of a $1,350,470 increase in
      consulting expense. The increase in consulting expense was primarily comprised
      of one-time non-cash $1,148,529 expense for the revision of warrant terms and
      a
      $174,955 expense for consulting services for investor services. The remaining
      increase was primarily $326,732 of increased general and administration expense
      and $111,404 of increased depreciation, depletion, and accretion expense. The
      increase in general and administration expense was comprised primarily of
      increased compensation expense. The increased depreciation, depletion, and
      accretion expense was directly attributable to a significant increase in oil
      and
      gas properties from 2007 to 2008 and the related increase in depletion expense.




*Other
      Income (Expense)* *:*




Other
      income (expense) increased $66,445 of expense or 317%, to $87,375 of expense
      for
      2008 from $20,930 of expense for 2007. The increase was primarily from interest
      expense increasing $66,376 to $87,422 for 2008 from $21,046 for 2007. The
      increased interest expense resulted from increased borrowings.




**Liquidity
      and Capital Resources**




Cash
      and
      cash equivalents were $314,566 at June 30, 2008 as compared to $11,915 at
      December 31, 2007.




Although
      we believe that our oil and gas operations and the sale of our common stock
      or
      issuance of indebtedness will be sufficient for our capital requirements, we
      cannot provide assurance that this will occur. The consolidated financial
      statements do not include any adjustments to reflect the possible effects on
      recoverability and classification of assets or the amounts and classification
      of
      liabilities, which may result from our inability to continue as a going
      concern.




Operating
      Activities: Net cash used in operating activities was $1,509,680 for 2008
      compared to $579,420 for 2007. The increase in cash used was primarily from
      an
      increase in net loss of $1,604,573 and a decrease in accounts payable of
      $326,857 and accrued expenses of $148,745, offset by a one-time non-cash
      consulting expense of $1,148,529 for the revision of warrant terms and an
      increase in depreciation, depletion and accretion expense of $111,404.




16




Investing
      Activities: Net cash used in investing activities was $447,776 for 2008 compared
      to $1,714,156 for 2007. The decrease from 2007 was primarily from a reduction
      in
      the purchase of oil and gas properties and property and equipment.




Financing
      Activities: Net cash provided by financing activities was $2,260,107 for 2008
      compared to $2,460,879 for 2007. The increase from 2007 was primarily from
      an
      increase in proceeds from the sale of common stock, advances from a related
      party and the issuance of notes payable, partially offset by the repayment
      of a
      note payable.




**Notes
      payable**




Significant
      current period changes in note payable during the six months ended June 30,
      2008
      consisted of the following:




In
      November 2007, a third party loaned the Company $200,000, for working capital
      purposes. Repayment of the loan was due in
      60 days or in January 2008 with a 15% fee, resulting in a total $230,000
      payback. At December 31, 2007, the outstanding principal balance was $200,000.
      On January 10, 2008, the Company paid the $30,000 fee on the note payable and
      renewed the original note for an additional two months for an additional 15%
      fee
      or $230,000 payback, for working capital purposes. In March 2008, the Company
      repaid the loan and the payment was $200,000 principal and a $30,000 charge
      for
      interest and fees.




On
      May
      20, 2008, the Company entered into a Note Purchase Agreement (the “Agreement”)
      with an unrelated third party (the “Lender”). Pursuant to the Agreement, the
      Company will issue the Lender an aggregate of up to $1,500,000 in principal
      amount of the Company’s 15% Senior Secured Promissory Notes (each a “Note,” and
      collectively, the “Notes”). $1,000,000 million of the Notes were issued in an
      initial closing on May 20, 2008 and, upon the satisfaction of certain conditions
      set forth in the Agreement, $400,000 of the Notes were issued in a closing
      on
      June 20, 2008. The remaining $100,000 of Notes were issued and closed in July
      2008. The Company has secured its obligations under the Notes with a
      first-priority security interest in all existing and later acquired assets
      owned
      by the Company. In addition, as additional security for the Company’s
      obligations under the Notes, contemporaneously with the execution of the
      Agreement, Hill, a wholly-owned subsidiary of the Company, executed and
      delivered to the Lender a Subsidiary Guaranty, a Security Agreement and a Deed
      of Trust in the forms attached to the Agreement. Hill agreed to secure its
      obligations pursuant to these agreements with a first-priority security interest
      in all existing and later acquired assets owned by Hill.




The
      Notes
      will be due and payable on May 20, 2010, provided, however, that if an Event
      of
      Default occurs (as described below), fifty percent of the Company’s and its
      subsidiaries’ EBITDA (minus interest, mutually agreed-upon capital expenditures,
      cash taxes and principal payments made during such month to the Lender under
      the
      Notes) each month will be used to repay the outstanding principal amount of
      the
      Notes pursuant to the Agreement until (i) cure or waiver of the Event of Default
      or (ii) all principal with respect to the Notes is paid in full. During any
      period that an Event of Default exists and has not been cured or waived, the
      interest rate on the Notes will automatically increase to 19%.




As
      of
      June 30, 2008, $1,400,000 of the Notes had been sold and the Company obtained
      $1,260,000 of proceeds, net of $140,000 of debt issue costs. Of the $140,000
      of
      debt issue costs, $70,000 was paid to the Lender for fees related to the
      transaction, $22,500 was paid to a third party for a financial advisory fee
      related to the transaction and $47,500 was for the Lender's legal fees.




The
      $140,000 of debt issue costs were recorded as an other asset and are being
      amortized over the remaining life of the debt through May 2010. During the
      six
      months ended June 30, 2008, the Company amortized to interest expense $8,091
      of
      the debt issue costs resulting in debt issue costs of $131,909 as of June 30,
      2008.


17




**Liquidity**




To
      continue with our business plan, we will require additional capita l .
      We do not
      anticipate that we will generate sufficient cash from our oil and gas operations
      to fund our operations for the next twelve months.




Our
      ability to continue as a going concern is dependent on our ability to further
      implement our oil and gas business plan, which requires that we obtain
      additional capital, either through equity and/or debt financing, or through
      generating sufficient revenues and cash flows, or through a combination of
      all
      the foregoing. The consolidated financial statements do not include any
      adjustments that might be necessary if we are unable to continue as a going
      concern. If
      required, our ability to obtain additional financing from other sources also
      depends on many factors beyond our control, including the state of the capital
      markets and the prospects for business growth. The
      necessary additional financing may not be available or may be available only
      on
      terms that would result in excessive further dilution to the current owners
      of
      our common stock.




On
      March
      28, 2008, the Company received a firm underwriting commitment from
      a broker-dealer firm to provide up to $5,000,000 of capital to be
      received during the fiscal year ended December 31, 2008. The
      broker-dealer firm is affiliated with an individual that owns approximately
      five
      percent of the outstanding shares of the Company’s common
      stock. As a result of this commitment, for the six months
      ended June 30, 2008, the Company has received $1,232,900 in gross proceeds
      ($1,159,610 of net proceeds after $73,290 of equity consulting fees) from the
      sale of 1,232,900 shares of common stock at $1.00 per share.




From
      May
      through July 2008, the Company obtained $1,500,000 of gross proceeds from the
      issuance of notes payable as discussed above. Additionally, in August 2008,
      the
      Company obtained $2,500,000 of gross proceeds from the issuance of notes payable
      as discussed previously under recent developments. The
      $2,500,000 is restricted for use only for the purchase, repair and maintenance
      of drilling rigs and related equipment. It is held in escrow until requested
      by
      the Company and the Lender agrees that it is for a permitted purpose. As of
      August 10, 2008, approximately $1,000,000 remains in the
      escrow. As a result of the additional capital, the Company
      will utilize the majority of the funds for the purchase of oil and gas
      equipment, the development of existing leases and wells and as a result, and
      increase oil and gas revenue. Based upon these conditions any substantial doubt
      about the Company’s ability to continue as a going concern has been alleviated
      for a reasonable period of time.




**Off-Balance
      Sheet Arrangements**




We
      have
      no off-balance sheet arrangements.




**Item
      4T. Controls and Procedures**




*Evaluation
      of Disclosure Controls and Procedures*




Under the
      supervision and with the participation of our
      senior management, consisting of our chief executive officer and our
      chief financial officer, we conducted an evaluation of
      the
      effectiveness of the design and operation of our disclosure controls and procedures (as
      defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
      of 1934,
      as
      amended, as of the
      end of the period covered by this report (the
      "Evaluation Date" ).
      Based
      on that evaluation, the Company’s
      management, including our chief executive officer and chief financial officer , concluded that as
      of the Evaluation
      Date our disclosure controls and procedures are not effective to
      ensure
      that the information relating
      to us required
      to be disclosed in
      our Securities
      and Exchange Commission ("SEC")
      reports (i) is
      recorded, processed, summarized and reported within the time periods specified
      in SEC
      rules
      and forms, and (ii) is accumulated and communicated to our management, including
      our chief executive officer and chief financial officer, as appropriate to
      allow
      timely decisions regarding required disclosure.




Management's
      Quarterly Report on Internal Control Over Financial Reporting .
      (a) The
      Company's management is responsible for establishing and maintaining an adequate
      system of internal control over financial reporting (as defined in Exchange
      Act
      Rule 13a-15(f)). Our
      management, including our principal executive officer and principal accounting
      officer, conducted an evaluation of the effectiveness of our internal control
      over financial reporting using the criteria set forth by the Committee of
      Sponsoring Organizations of the Treadway Commission (COSO) in Internal
      Control—Integrated Framework. Based on its evaluation, our management concluded
      that there is a material weakness in our internal control over financial
      reporting and that our internal control over financial reporting are not
      effective. A material weakness is a deficiency, or a combination of control
      deficiencies, in internal control over financial reporting such that there
      is a
      reasonable possibility that a material misstatement of the Company’s annual or
      interim financial statements will not be prevented or detected on a timely
      basis.


18





The
      material weakness(s) identified are:





1.
            The
                Company does not have a full-time accounting controller and utilizes
                a
                part-time consultant to perform these critical responsibilities.
                This lack
                of full-time accounting staff results in a lack of segregation of
                duties
                and accounting technical expertise necessary for an effective system
                of
                internal control.2.
            The
                Company does not have the required technical expertise to properly
                calculate complex oil and gas required disclosures including impairment
                of
                properties, depletion and accretion expense, FAS 109 income taxes
                and FAS
                69 supplemental oil and gas disclosures. As a result, during the
                audit of
                the Company’s December 31, 2007 financial statements, the Company’s
                independent registered public accounting firm proposed several material
                adjustments to the financial statements of the
                Company.





Additionally,
      management determined during its internal control assessment the following
      weakness(s), which, while not considered material, are items that should be
      considered by the Board of Directors for resolution in the near
      future:





1.
            The
                Company should take steps to manage its oil and gas leases, including
                creating a schedule of oil and gas lease agreements and related documents
                to ensure that the Company is aware of its oil and gas rights, expiration
                and renewal dates, and contractual payments regarding royalties,
                taxes,
                improvements, etc. This ensures correct oil and gas capital accounts,
                revenues and related expenses are calculated correctly by accounting.
                Additionally, the Chief Financial Officer should review all oil and
                gas
                lease agreements.2.
            The
                Company should take steps to require that oil and gas expenditures
                are
                properly classified into the proper categories such as acquisition
                costs
                and intangible and tangible drilling costs. Without this, the Company
                cannot properly determine the proper recording and disclosure of
                oil and
                gas expenditures.3.
            The
                Company should take steps to ensure that oil and gas inventory is
                calculated and properly recorded and valued in the general ledger
                and
                financial statements. During the audit of the December 31, 2007 financial
                statements, the independent registered public accounting firm determined
                that this had not been performed by the Company and proposed an adjustment
                of approximately $8,000 to the financial statements.4.
            The
                Company should take steps to enhance the security for bank wire transfers.
                Currently, the CFO and CEO provide instruction to the part-time consultant
                to initiate a wire transfer. As a security enhancement, the bank
                should be
                required to obtain approval from the CEO or CFO to make the wire
                transfer.5.
            The
                Company should take steps to implement a policies and procedures
                manual.6.
            The
                Company utilizes an IT remote access server to store of all of the
                Company’s financial data. Although the data has proper firewall and other
                security measures implemented, the information is critical for the
                Company
                and an internal server at the Company headquarters should be
                considered.





In
      order
      to mitigate all of the above weaknesses(s), to the fullest extent possible,
      all
      financial reports are reviewed by the Chief Executive Officer as well as the
      Board of Directors for reasonableness. All unexpected results are investigated.
      At any time, if it appears that any control can be implemented to continue
      to
      mitigate such weaknesses, it is immediately implemented. For the Company’s Form
      10-KSB/A filed with the SEC on April 3, 2008, the Company utilized a third-party
      accounting and financial consulting firm to assist with several complex
      technical oil and gas issues. The Company anticipates that as soon as sufficient
      cash flow is obtained, it will hire sufficient accounting staff and implement
      appropriate procedures as described above.


19




This
      quarterly report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial reporting.
      Management's report was not subject to attestation by our registered public
      accounting firm pursuant to temporary rules of the Securities and Exchange
      Commission that permit the Company to provide only management's report in this
      quarterly report.





(b)
      Changes in Internal Control over Financial Reporting. There were no changes
      in
      our internal control over
      financial reporting that
      occurred during
      the last
      fiscal quarter that has materially affected or is
      reasonably likely to materially affect our internal
      control over financial reporting.





***PART
      II – OTHER INFORMATION***




**Item
      2.** **** **Unregistered
      Sales of Equity Securities and Use of Proceeds**


On
        May
        20, 2008, the Company entered into a Note Purchase Agreement (the “Agreement”)
        with HD
        Special-Situations, LP. Pursuant to the Agreement, the Company sold the Lender
        an aggregate of $1,500,000 in principal amount of the Company’s 15% Senior
        Secured Promissory Notes (each a “Note,” and collectively, the “Notes”). $1
        million of the Notes were sold in an initial closing on May 20, 2008, $400,000
        of the Notes were sold in a closing on June 20, 2008, and the remaining $100,000
        of Notes were sold and closed on July 2, 2008. These sales were made based
        on
        exemptions from registration under the Securities Act of 1933, as amended
        (the
“Securities Act”), and applicable state laws pursuant to Section 4(2) of the
        Securities Act and Rule 506 of Regulation D. These issuances qualified for
        this
        exemption from registration because, among other matters, (i) the Company
        did
        not engage in any general solicitation or advertising to market the notes;
        (ii)
        all the Company's reports filed under the Securities Exchange Act of 1934
        were
        made available to the buyers; (iii) each buyer was provided the opportunity
        to
        ask questions and receive answers from the Company regarding the offering;
        and
        (iv) the notes were issued to persons with knowledge and experience in financial
        and business matters so that he or she was capable of evaluating the merits
        and
        risks of an investment in the Company.





**Item
      6.** **Exhibits** ****




**Exhibit
                No.**
            
            **Exhibit
                Description**2.1
            
            Agreement
                and Plan of Merger between Knight Energy Corp., a Nevada corporation,
                and
                Knight Energy Corp., a Maryland corporation, dated April 25, 2007.
                (2)2.2
            
            Stock
                Exchange Agreement by and among Integrated Technology Group, a Nevada
                Corporation, and Knight Energy Corp., a Delaware corporation, effective
                as
                of June 26, 2006. (1)2.3
            
            Stock
                Purchase Agreement between Knight Energy Corp. and the Shareholders
                of
                Charles Hill Drilling Inc. dated March 16, 2006.
                (1)2.4
            
            April
                24, 2006 Waiver and Release amending certain payment terms of the
                March 16, 2006 Stock Purchase Agreement between Knight Energy Corp.
                and Charles Hill Drilling Inc. (4)3.1
            
            Articles
                of Incorporation of Knight Energy Corp. filed with the Maryland Secretary
                of State on April 25, 2007. (2)3.2
            
            Bylaws
                for Knight Energy Corp., formerly known as Integrated Technology
                Group,
                filed with the Maryland Secretary of State on April 25, 2007.
                (2)




20





4.1
            
            Specimen
                common stock certificate. (1)10.1
            
            Employment
                Agreement by and between Knight Energy Corp. and William J. Bosso
                effective October 1, 2006. (1)10.2
            
            Employment
                Agreement by and between Knight Energy Corp. and Bruce A. Hall
                effective October 1, 2006. (1)10.3
            
            Consulting
                Service Agreement by and between Knight Energy Corp. and Nortia Capital
                Partners, Inc. dated March 3, 2006. (1)10.4
            
            Consulting
                Agreement by and between Knight Energy Corp. and Crescent Fund, LLC
                dated
                September 24, 2006. (1)10.5
            
            Consulting
                Agreement by and between Knight Energy Corp. and Crescent Fund, LLC
                dated
                September 24, 2006. (1)10.6
            
            Consulting
                Agreement by and between Knight Energy Corp. and Lake Capital AG,
                effective as of March 3, 2006. (3)10.7
            
            Consulting
                Agreement by and between Knight Energy Corp. and Com-Advice AG, dated
                October 2, 2007. (4)10.8
            
            Consulting
                Service Agreement by and between Knight Energy Corp. and Nortia Capital
                Partners, Inc. dated March 3, 2007. *10.9
            
            Consulting
                Service Agreement by and between Knight Energy Corp. and Nortia Capital
                Partners, Inc. dated March 3, 2008. *31.1
            
            Certification
                of the Chief Executive Officer of Knight Energy Corp. pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
            
            Certification
                of the Chief Financial Officer of Knight Energy Corp. pursuant to
                Section 302 of the Sarbanes-Act of 2002.*32.1
            
            Certification
                of the Chief Executive Officer of Knight Energy Corp. pursuant to
                Section 906 of the Sarbanes- Act of 2002.*32.2
            
            Certification
                of the Chief Financial Officer of Knight Energy Corp. pursuant to
                Section 906 of the Sarbanes-Act of
                2002.*





*
            Filed
                herewith





(1)
            Incorporated
                by reference to the Registrant's registration statement on Form 10-SB
                filed with the Commission on February 12,
                2007.





(2)
            Incorporated
                by reference to the Registrant's 8-K filed with the Commission on
                May 1,
                2007.





(3)
            Incorporated
                by reference to the Registrant's Amendment No. 1 to its registration
                statement on Form 10-SB filed with the Commission on May 11,
                2007.


21




(4)
            Incorporated
                by reference to the Registrant's Amendment No. 2 to its registration
                statement on Form 10-SB filed with the Commission on July 13,
                2007.





(5)
            Incorporated
                by reference to the Registrant's Amendment No. 3 to its registration
                statement on Form 10-SB filed with the Commission on August 20, 2007.





(6)
            Incorporated
                by reference to the Registrant's 10-KSB/A filed with the Commission
                on
                April 3, 2008.


22


***SIGNATURES***





Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, this
      report has been signed by the following persons on behalf of Knight Energy
      Corp., in the capacities and on the dates indicated.




**Signature**
            
            **Title**
            
            **Date**/s/
                William J. Bosso
            
            Chief
                Executive Officer, Principal Executive
            
            August
                13, 2008William
                J. Bosso
            
            Officer
              and Director/s/
                Bruce A. Hall
            
            Chief
                Financial Officer, Principal Financial
            
            August
                13, 2008Bruce
                A. Hall
            
            Officer
              and Director




23