**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-QSB**





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


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      quarterly period ended June 30, 2007





** ̈** **TRANSITION REPORT UNDER SECTION 13 OR SECTION 15(d) OF THE EXCHANGE
      ACT**








*Commission
      file number 000-51968*





**MMC
                ENERGY, INC.**(Exact
                Name of Small Business Issuer in Its
                Charter)




Delaware
            26
                Broadway New York NY 10004
            98-0493819(State
                or other jurisdiction of incorporation or organization)
            (Address
                of principal executive offices) (zip code)
            (IRS
                Employer Identification No.)








Issuer's
      telephone number: (212) 977-0900





________________________________


(Former
      Name, Former Address and Former Fiscal Year,


if
      Changed Since Last Report)





Check
      whether the issuer (1) filed all reports to be filed by Section 13 or 15(d)
      of
      the Exchange Act during the past 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 shell company (as defined in Rule
      12b-2 of the Exchange Act) Yes o No x





**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





As
      of
      August 14, 2007 the registrant had 13,907,348 shares of Common Stock
      outstanding.





Transitional
      Small Business Disclosure Format (Check one): Yes࿠ No
x










TABLE
                OF CONTENTSPART
                I
            FINANCIAL
                INFORMATIONITEM
                1
            Financial
                StatementsCondensed
                Consolidated Balance Sheets as of June 30, 2007 (unaudited) and December
                31, 2006
            3Condensed
                Consolidated Statements of Operations (unaudited) for the three and
                six
                month periods ended June 30, 2007 and 2006
            4Condensed
                Consolidated Statement of Stockholders' Equity (unaudited) for the
                period from January 1, 2007 through June 30, 2007
            5Condensed
                Consolidated Statements of Cash Flows (unaudited) for the three and
                six
                month periods ended June 30, 2007 and 2006
            6Notes
                to Condensed Consolidated Financial Statements (unaudited)
            7ITEM
                2
            Management's
                Discussion and Analysis of Financial Condition and Results of Operations
            19ITEM
                3
            Controls
                and Procedures
            25PART
                II
            OTHER
                INFORMATIONITEM
                1
            Legal
                Proceedings
            27ITEM
                2
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            27ITEM
                3
            Defaults
                Upon Senior Securities
            27ITEM
                4
            Submission
                of Matters to a Vote of Security Holders
            27ITEM
                5
            Other
                Information
            27ITEM
                6
            Exhibits
            27SIGNATURES
            28







**EXPLANATORY
      NOTE**





On
      April
      19, 2007 we effected a one-for-ten reverse stock split of our capital stock.
      The
      reverse stock split was previously approved by our Board of Directors and by
      our
      stockholders. Pursuant to the reverse stock split, each holder of our common
      stock on the date of effectiveness of the reverse stock split became entitled
      to
      receive one new share of common stock in exchange for every ten shares of old
      common stock held by such stockholder. No fractional shares of common stock
      will
      be issued as a result of the reverse stock split. Holders of our common stock
      otherwise entitled to fractional shares as a result of the reverse stock split
      became entitled to receive a cash payment in lieu of such fractional shares.
      Pursuant to the effectiveness of the reverse stock split, all share figures
      contained in this report have been restated to give effect to the reverse stock
      split, unless explicitly stated otherwise.





-2-




**PART
      I. FINANCIAL INFORMATION**


**ITEM
      1. FINANCIAL STATEMENTS**




MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED BALANCE SHEETS


**June
                  30,**
              
              **December
                  31,****Assets**
              
              **2007**
              
              **2006**Current
                  assets:
              
              (unaudited)Cash
                  and equivalents
              
              $
              2,160,943
              
              $
              4,923,063Unbilled
                  receivables (Note 3)
              
              
              277,995
              
              
              157,131Prepaids
                  and other current assets (Note 3)
              
              
              76,102
              
              
              261,901Total
                  current assets
              
              
              2,515,040
              
              
              5,342,095Property,
                  plant and equipment, net (Note 4)
              
              
              7,177,546
              
              
              7,355,576Deferred
                  costs (Note 5)
              
              
              1,977,555
              
              
              749,760Long-term
                  deposits
              
              
              75,000
              
              
              75,000Total
                  assets
              
              $
              11,745,141
              
              $
              13,522,431**Liabilities
                  & Stockholders' equity**Current
                  Liabilities:Current
                  maturities of long-term debt (Note 6)
              
              $
              444,456
              
              $
              444,456Accounts
                  payable
              
              
              1,489,851
              
              
              540,992Deferred
                  revenue
              
              
              242,650
              
              
              212,290Other
                  accrued expenses
              
              
              974,275
              
              
              1,291,642Total
                  current liabilities
              
              
              3,151,232
              
              
              2,489,380Long-term
                  debt (Note 6)
              
              
              2,185,164
              
              
              2,407,392Commitments
                  & contingencies (Note 7)Stockholders'
                  Equity (Note 9)Preferred
                  Stock; 10,000,000 shares authorized; none issued and outstanding;
                  $.001
                  par value
              
              
              -
              
              
              -Common
                  stock; 300,000,000 shares authorized with 4,816,437 issued and
                  outstanding
                  as of June 30, 2007 and 4,768,876 outstanding as of December 31,
                  2006;
                  $.001 par value
              
              
              4,817
              
              
              4,769Additional
                  paid-in capital
              
              
              15,377,425
              
              
              15,227,586Accumulated
                  deficit
              
              
              (8,973,497
              )
              
              (6,606,696
              )Total
                  stockholders' equity
              
              
              6,408,745
              
              
              8,625,659Total
                  liabilities and stockholders' equity
              
              $
              11,745,141
              
              $
              13,522,431





the
      accompanying footnotes are an integral part of these unaudited condensed
      consolidated financial statements




-3-


MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)




**Three
                  Months**
                **Ended
                  June 30,**
              
              **Three
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006****Operating
                  revenues:**Resource
                  adequacy capacity
              
              $
              791,250
              
              $
              -
              
              $
              1,483,500
              
              $
              -Ancillary
                  services
              
              
              612,846
              
              
              252,272
              
              
              1,004,387
              
              
              252,272Energy
                  production
              
              
              100,867
              
              
              18,675
              
              
              118,194
              
              
              18,675Total
                  operating revenues
              
              
              1,504,963
              
              
              270,947
              
              
              2,606,081
              
              
              270,947**Costs
                  of sales:**Costs
                  of resource adequacy capacity
              
              
              63,300
              
              
              -
              
              
              118,680
              
              
              -Costs
                  of ancillary services
              
              
              92,813
              
              
              36,330
              
              
              180,091
              
              
              36,330Costs
                  of energy production
              
              
              81,184
              
              
              14,478
              
              
              102,097
              
              
              14,478Total
                  costs of sales
              
              
              237,297
              
              
              50,808
              
              
              400,868
              
              
              50,808**Gross
                  Profit**
              
              
              1,267,666
              
              
              220,139
              
              
              2,205,213
              
              
              220,139**Operating
                  expenses:**Depreciation
              
              
              279,222
              
              
              158,120
              
              
              516,185
              
              
              306,044Operations
                  and maintenance
              
              
              797,467
              
              
              267,600
              
              
              1,211,625
              
              
              426,628Re-commissioning
                  expenses
              
              
              39,517
              
              
              1,814,213
              
              
              419,135
              
              
              2,143,164General
                  and administrative expenses
              
              
              1,073,000
              
              
              1,948,409
              
              
              2,522,049
              
              
              2,221,279Total
                  operating expenses
              
              
              2,189,206
              
              
              4,188,342
              
              
              4,668,994
              
              
              5,097,115**Loss
                  from operations**
              
              
              (921,540
              )
              
              (3,968,203
              )
              
              (2,463,781
              )
              
              (4,876,976
              )**Other
                  expenses (income)**Interest
                  expense, net
              
              
              2,055
              
              
              37,134
              
              
              39,015
              
              
              62,573Other
                  income
              
              
              (296,117
              )
              
              -
              
              
              (135,995
              )
              
              -Total
                  other expense (income)
              
              
              (294,062
              )
              
              37,134
              
              
              (96,980
              )
              
              62,573**Net
                  loss before provision for income taxes**
              
              
              (627,478
              )
              
              (4,005,337
              )
              
              (2,366,801
              )
              
              (4,939,549
              )Provision
                  for income taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -**Net
                  loss**
              
              $
              (627,478
              )
              $
              (4,005,337
              )
              $
              (2,366,801
              )
              $
              (4,939,549
              )**Basic
                  loss per common share**Net
                  loss per share
              
              $
              (0.13
              )
              $
              (0.96
              )
              $
              (0.49
              )
              $
              (1.27
              )Weighted
                  average shares outstanding
              
              
              4,811,438
              
              
              4,158,154
              
              
              4,807,073
              
              
              3,882,608**Diluted
                  loss per common share**Net
                  loss per share
              
              $
              (0.13
              )
              $
              (0.96
              )
              $
              (0.49
              )
              $
              (1.27
              )Weighted
                  average shares outstanding
              
              
              4,811,438
              
              
              4,158,154
              
              
              4,807,073
              
              
              3,882,608





the
      accompanying footnotes are an integral part of these unaudited condensed
      consolidated financial statements





-4-




MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY


FOR
      THE
      PERIOD FROM JANUARY 1, 2007 THROUGH JUNE 30, 2007


(Unaudited)




**Common**
              
              **Common**
              
              **Additional**
              
              
              
              **Total****Shares**
              
              **Stock**
              
              **Paid-in**
              
              **Accumulated**
              
              **Stockholders'****$.001
                  Par Value**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Equity****Balance
                  at December 31, 2006**
              
              
              4,768,876
              
              $
              4,769
              
              $
              15,227,586
              
              $
              (6,606,696
              )
              $
              8,625,659Stock
                  awards and options, net of cancellations
              
              
              2,561
              
              
              3
              
              
              145,384
              
              
              -
              
              
              145,387Common
                  shares issued for cash
              
              
              45,000
              
              
              45
              
              
              4,455
              
              
              -
              
              
              4,500Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,366,801
              )
              
              (2,366,801
              )**Balance
                  at June 30, 2007**
              
              
              4,816,437
              
              $
              4,817
              
              $
              15,377,425
              
              $
              (8,973,497
              )
              $
              6,408,745







the
      accompanying footnotes are an integral part of these unaudited condensed
      consolidated financial statements






-5-


MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)




**Six
                  Months Ended**
                **June
                  30, 2007**
              
              **Six
                  Months Ended**
                **June
                  30, 2006****Operating
                  Activities of Continuing Operations**Net
                  loss
              
              $
              (2,366,801
              )
              $
              (4,939,549
              )Adjustments
                  to reconcile net loss to cash used in operating activitiesDepreciation
              
              
              516,185
              
              
              306,044Stock-based
                  compensation
              
              
              145,387
              
              
              26,750Acquisition
                  costs
              
              
              -
              
              
              11,750Changes
                  in current assets & liabilitiesDecrease
                  (Increase) in current assets
              
              
              64,935
              
              
              (1,143,559
              )Increase
                  in current liabilities
              
              
              159,964
              
              
              1,289,297**Net
                  cash used in operations**
              
              
              (1,480,330
              )
              
              (4,449,267
              )**Investing
                  Activities of Continuing Operations**Purchases
                  of property, plant and equipment
              
              
              (338,155
              )
              
              (3,311,228
              )Deferred
                  acquisition costs
              
              
              (378,179
              )
              
              -**Net
                  cash used in investing activities**
              
              
              (716,334
              )
              
              (3,311,228
              )**Financing
                  Activities of Continuing Operations**Proceeds
                  from issuance of long-term debt
              
              
              -
              
              
              3,000,000Repayment
                  of long-term debt
              
              
              (222,228
              )
              
              -Deferred
                  offering costs
              
              
              (347,728
              )
              
              -Member
                  interest issued, net
              
              
              -
              
              
              175,000Proceeds
                  from issuance of stock, net
              
              
              4,500
              
              
              11,648,316**Net
                  cash (used) provided by financing activities**
              
              
              (565,456
              )
              
              14,823,316**Net
                  decrease in cash and cash equivalents**
              
              
              (2,762,120
              )
              
              7,062,821Beginning
                  cash and cash equivalents at beginning of period
              
              
              4,923,063
              
              
              3,009,010Cash
                  and cash equivalents at end of period
              
              $
              2,160,943
              
              $
              10,071,831**Supplemental
                  disclosures:**Cash
                  paid for taxes
              
              $
              8,870
              
              $
              -Cash
                  paid for interest
              
              
              109,770
              
              
              83,270**Non-cash
                  investing and financing activities**Subscription
                  agreements for member interests that were subscribed and paid up
                  in 2005
                  but not accepted by the company until January 3, 2006
              
              $
              -
              
              $
              2,998,361Deferred
                  costs of public stock offering
              
              
              314,161
              
              
              -Stock-based
                  compensation
              
              
              145,387
              
              
              26,750Acquisition
                  costs in reverse merger with High Tide Ventures, Inc.
              
              
              -
              
              
              11,750





the
      accompanying footnotes are an integral part of these unaudited condensed
      consolidated financial statements


-6-


**MMC
      ENERGY, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2007**


**(Unaudited)**




**NOTE
      1 - ORGANIZATION AND LINE OF BUSINESS**




**General**




The
      accompanying unaudited condensed 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-QSB. Accordingly, they do not include all of the
      information and footnotes required by generally accepted accounting principles
      for complete financial statements.





In
      the
      opinion of management, all adjustments (consisting of normal recurring accruals)
      considered necessary for a fair presentation have been included. Accordingly,
      the results from operations for the three month period ended June 30, 2007,
      are
      not necessarily indicative of the results that may be expected for the year
      ended December 31, 2007. The unaudited condensed consolidated financial
      statements should be read in conjunction with the consolidated December 31,
      2006
      financial statements and footnotes thereto included in the Company's SEC Form
      10-KSB.





**Organization
      and Line of Business**




The
      Company is an energy management company that acquires and actively manages
      a
      portfolio of small to mid size, or below 250 megawatt, power generation assets.
      In January 2006 we acquired two power generation facilities located in Chula
      Vista and Escondido, California, and in November 2006, we acquired a facility
      in
      Bakersfield, California (“Mid-Sun”). The Company is pursuing additional
      acquisitions of small to medium-sized power generating facilities primarily
      in
      California, Texas, the Mid-Atlantic and the Northeastern United States. The
      Company has also begun the process of upgrading the Chula Vista and Escondido
      facilities. On
      July
      6, 2007 the Company announced that it had successfully closed a public offering
      of 9,090,910 shares at $5.50 per share which resulted in net proceeds of
      approximately $46,000,000 to be used primarily for the upgrades as well as
      new
      acquisitions.





MMC
      Energy, Inc. was originally incorporated in Nevada under the name High Tide
      Ventures, Inc. on February 13, 2003. On May 3, 2006, High Tide Ventures changed
      its name to MMC Energy, Inc. On May 15, 2006, a wholly-owned subsidiary of
      MMC
      Energy, Inc. merged with and into MMC Energy North America LLC, a Delaware
      limited liability company. Prior to this merger, MMC North America LLC acquired
      the power generating facilities located in Chula Vista and Escondido, California
      and otherwise conducted our current business as described throughout this
      Quarterly Report. Prior to this merger, MMC Energy, Inc. did not conduct
      meaningful operations. As a result of the merger, MMC Energy, Inc. thus acquired
      the  business
      of MMC Energy North America LLC, including the power generating facilities,
      and
      the former members of MMC Energy North America LLC received shares of common
      stock of MMC Energy, Inc. On September 22, 2006, we reincorporated as a Delaware
      corporation by means of a merger of the existing Nevada corporation with and
      into MMC Energy, Inc., a newly-formed Delaware corporation. On September 22,
      2006, the Company was reincorporated as a Delaware corporation by means of
      a
      merger of the existing Nevada corporation with and into MMC Energy, Inc., a
      newly-formed Delaware corporation. Pursuant to the reincorporation merger,
      the
      Delaware corporation succeeded to the business of the Nevada corporation and
      the
      separate existence of the Nevada corporation ceased.







**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**Basis
      of Consolidation**





These
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries: MMC Energy North America LLC, MMC Escondido LLC,
      MMC
      Chula Vista LLC and MMC Mid-Sun LLC. All intercompany accounts and transactions
      have been eliminated.





**Revenue
      Recognition**





For
      revenue from products and services, the Company recognizes revenue in accordance
      with SEC Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial
      Statements” (“SAB 101”). SAB 101 requires that four basic criteria must be met
      before ** revenue
      can be recognized: (1) persuasive evidence of an arrangement exists; (2)
      delivery has occurred or services have been rendered; (3) the selling price
      is
      fixed and determinable; and (4) collectibility is reasonably assured.
      Determination of criteria (3) and (4) are based on management’s judgments
      regarding the fixed nature of the selling prices of the products
      delivered/services rendered and the collectibility of those amounts. Provisions
      for discounts and rebates to customers, estimated returns and allowances, and
      other adjustments are provided for in the same period the related sales are
      recorded. The Company defers any revenue for which the product has not been
      delivered or services have not been rendered or is subject to refund until
      such
      time that the Company and the customer jointly determine that the product has
      been delivered or services have been rendered or no refund will be
      required.





-7-


On
      December 17, 2003, the SEC staff released Staff Accounting Bulletin (SAB)
      No. 104, Revenue Recognition.  The staff updated and revised the existing
      revenue recognition in Topic 13, Revenue Recognition, to make its interpretive
      guidance consistent with current accounting guidance, principally EITF Issue
      No.
      00-21, “Revenue Arrangements with Multiple Deliverables.”  Also, SAB 104
      incorporates portions of the Revenue Recognition in Financial Statements -
      Frequently Asked Questions and Answers document that the SEC staff considered
      relevant and rescinds the remainder. The Company’s revenue recognition policies
      are consistent with this guidance; therefore, this guidance will not have an
      immediate impact on the Company’s financial statements.





The
      Company records revenues in connection with delivering electric power and
      ancillary services, generally being on call to provide power on ten minutes
      notice, to the California Independent System Operator (“CAISO”), or such other
      first parties as it may contract with directly from time to time. The Company
      commenced earning revenues during June 2006. In the event that the Company
      is
      compensated for services before they are rendered, the Company will record
      deferred revenue in the liability section of its balance sheet.




The
      Company’s electricity generating facilities are generally referred to as
“peaker” plants. Peaker plants are used to balance unexpected short term surges
      in demand, making them critical to the reliability, or “insurance,” of the power
      grids they serve. Our revenues to date have been earned by providing resource
      adequacy capacity, ancillary services and energy production.





·
            Resource
                Adequacy Capacity - Regulatory capacity payments for generators of
                any
                type are based strictly on total installed capacity measured in MW.
                In the
                CAISO market where the Company currently operates exclusively,
                market-based capacity revenues are earned through resource adequacy
                contracts, whereby the counterparty can point to the Company’s facilities'
                capacity as a source to supply its peak demand plus a mandatory safety
                margin for regulatory purposes only. The contract does not create
                an
                obligation to supply electricity to the counterparty, but does obligate
                the Company to bid its energy into the CAISO markets on a daily basis
                such
                that the Company’s capacity is available to the CAISO, if needed, at the
                Company’s price. The resource adequacy capacity amount cannot exceed the
                qualified capacity amount for the resource. Qualified capacity is
                certified by CAISO and the California Public Utility Commission (the
                “CPUC”). For 2006, the MMC Escondido and MMC Chula Vista facilities were
                certified by CAISO and the CPUC for 40 MW each, and for 2007, 35.5
                MW each
                and MMC Mid-Sun for 22 MW.





·
            Ancillary
                Services - Although there are several types of ancillary services,
                the
                Company primarily provides “spin” and “non-spin” services which call for
                the facilities to be delivering the awarded capacity within 10 minutes
                of
                dispatch whether already connected to the grid (spin) or not (non-spin).
                Spin services typically offer higher
                rates.





·
            Energy
                  Production - The Company provides physical electricity to a local
                  power
                  grid through day ahead and real time markets managed by the CAISO
                  or
                  through bilateral agreements with a utility or other direct counterparty.
                  As the Company has no outstanding fuel supply and electricity offtake
                  agreements or other contracted energy production, all of our energy
                  production revenues are earned in the physical day ahead and real
                  time
                  markets. The Company currently does not take fixed price fuel risk
                  and
                  passes its fuel cost through the price the Company charges to produce
                  energy.








**Income
      Taxes**





In
      accordance with Statement of Financial Accounting Standards ("SFAS") No. 109,
      deferred income taxes are the result of the expected future tax consequences
      of
      temporary differences between the financial statement and tax bases of assets
      and liabilities. Generally, deferred income taxes are classified as current
      or
      non-current in accordance with the classification of the related asset or
      liability. Those items not related to an asset or liability are classified
      as
      current or non-current depending on the periods in which the temporary
      differences are expected to reverse. A valuation allowance is provided against
      deferred income tax assets in circumstances where management believes the
      recoverability of a portion of the assets is not reasonably assured. Losses
      incurred will be carried forward as applicable per SFAS 109 and the Internal
      Revenue Code and potentially may be used to offset taxable net income generated
      in the future. The Company has no history of generating taxable net income
      and
      may not recognize any tax benefit on losses incurred currently.





-8-





**Cash
      Equivalents**





For
      purposes of the Statement of Cash Flows, the Company considers all time deposits
      and highly liquid debt instruments purchased that mature in three months or
      less
      to be cash equivalents.





**Receivables**


Accounts
      receivable are composed substantially of trade accounts receivable that arise
      primarily from the sale of goods or services on account and are stated
      at
      historical cost. Management evaluates accounts receivable to estimate the amount
      of accounts receivable that will not be collected in the future and records
      a
      provision for that amount. The provision for doubtful accounts is recorded
      as a
      charge to operating expense, while the credit is recorded in the allowance
      for
      doubtful accounts, which reduces accounts receivable. The estimated allowance
      for doubtful accounts is based primarily on management's evaluation of the
      aging
      of the accounts receivable balance, the financial condition of its customers,
      historical trends, and time outstanding of specific balances. Actual collections
      of accounts receivable could differ from management's estimates due to changes
      in future economic, industry or customer financial conditions. Unbilled
      receivables are for amounts due to the Company for revenues earned in a given
      period but not yet billed to the customer.





**Property
      and Equipment**





Property
      and equipment are stated at cost. Depreciation is computed principally by the
      straight-line method at rates based on estimated useful lives as
      follows:




Office
                equipment
            
            
            3
                yearsMachinery,
                automobiles and equipment
            
            
            3
                -
                10 yearsSoftware
            
            
            3
                yearsDeferred
                costs
            
            
            3
                -
                10 years





**Long-Lived
      Assets**





In
      accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
      Long-Lived Assets,'' long-lived assets are reviewed for impairment annually
      and
      whenever events or changes in circumstances indicate that the carrying amount
      of
      an asset may not be recoverable. If an indicator of impairment exists for any
      grouping of assets, an estimate of undiscounted future cash flows is produced
      and compared to its carrying value. If the undiscounted cash flows exceed the
      carrying value of the asset that asset is not impaired. If an asset is
      determined to be impaired, the loss is measured by the excess of the carrying
      amount of the asset over its fair value as determined by an estimate of
      discounted future cash flows.





**Concentrations
      of Credit Risk**





Financial
      instruments and related items, which potentially subject the Company to
      concentrations of credit risk, consist primarily of cash and cash equivalents
      and accounts receivable. The Company places its cash and temporary cash
      investments with credit quality institutions. At times, such investments may
      be
      in excess of the FDIC insurance limit for each institution.





Concentration
      of credit risk with respect to accounts receivable is high due to the relatively
      small number of entities comprising the Company's customer base. The Company's
      revenues earned on contracts for the quarter ending June 30, 2007 were comprised
      of 57%, from one customer, Oxy, Inc. The company received the balance of its
      revenues from CAISO. For the six month period ended June 30, 2007 the company
      received 59% of its revenues from one customer, Oxy, Inc. The company received
      the balance of its revenues from CAISO. As rated by Moody's, Oxy, Inc. has
      an
      issuer credit rating of A3.





**Seasonal
      Nature of Business**





The
      Company’s business is seasonal, with a relatively high proportion of revenues
      and operating cash flows generated during the third quarter of the fiscal year,
      which include the peak summer months for energy demand, and a relatively low
      proportion of revenues and operating cash flows generated during the first
      quarter. As the Company derives most of its revenues from selling energy and
      ancillary services at spot market prices, as opposed to under longer term
      fixed-price contracts, its revenues and operating income are highly exposed
      to
      the seasonal fluctuation in commodity pricing, which corresponds to peak
      demand.





-9-




**Geographical
      Concentration Risk**





The
      Company’s Facilities are located in greater Southern California, and generally
      provide power only in that state. Accordingly, the Company’s operations are
      highly regulated by the local Air Permit Control Boards, the CAISO and other
      related state and local agencies, as well as the Federal Energy Regulatory
      Commission. These organizations establish certain rules and limitations on
      operations and require that the Company maintain in good standing several
      required licenses and permits, such as permits for air emissions. These
      organizations may from time to time change the rules under which the Company
      operates and derives its revenues. The Company’s licenses and permits were,
      generally, transferred with the Facilities from the Seller, and the Company
      believes it has all such required licenses and permits to conduct its
      operations.





**Comprehensive
      Income**





SFAS
      No.
      130, “Reporting Comprehensive Income,” (“SFAS 130”) establishes standards for
      reporting and displaying of comprehensive income, its components and accumulated
      balances. Comprehensive income is defined to include all changes in equity
      except those resulting from investments by owners and distributions to owners.
      Among other disclosures, SFAS 130 requires that all items that are required
      to
      be recognized under current accounting standards as components of comprehensive
      income be reported in a financial statement that is displayed with the same
      prominence as other financial statements. The Company does not have any items
      of
      comprehensive income in the period presented nor has it since
      inception.





**Segment
      Information**




The
      Company adopted SFAS No. 131, “Disclosures about Segments of an Enterprise and
      Related Information” ("SFAS 131"). SFAS 131 establishes standards for reporting
      information regarding operating segments in annual financial statements and
      requires selected information for those segments to be presented in interim
      financial reports issued to stockholders. SFAS 131 also establishes standards
      for related disclosures about products and services and geographic areas.
      Operating segments are identified as components of an enterprise about which
      separate discrete financial information is available for evaluation by the
      chief
      operating decision maker, or decision making group, in making decisions
      concerning how to allocate resources and assess performance. The Company
      currently has only one operating segment.





**Use
      of Estimates**





In
      the
      normal course of preparing financial statements in conformity with accounting
      principles generally accepted in the United States of America, management is
      required to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. Significant estimates made by management
      include the collectibility of accounts receivable, the useful life of
      depreciable assets, the amounts due under accounts payable and the valuation
      allowance of deferred tax assets. Actual results could differ from those
      estimates.





**Basic
      and Diluted Income (Loss) Per Share**





Basic
      and
      diluted income or loss per common share is based upon the weighted average
      number of common shares outstanding during the three and six month periods
      ended
      June 30, 2007 and 2006 under the provisions of SFAS No. 128, “Earnings Per
      Share” and as amended/superseded in SFAS No. 123(R), “Share-Based Payment”(“SFAS
      123(R)”). As the Company incurred a net loss for the three and
      six
      month periods ended June 30, 2007 and 2006 dilutive shares presented for that
      period are the same as basic shares outstanding. Below is a reconciliation
      of
      basic to diluted shares outstanding for the applicable periods as well as
      anti-dilutive shares excluded from calculations for:  ****




-10-


**Three
                  Months**
                **Ended
                  June 30,**
              
              **Three
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Weighted
                  average shares outstanding - basic
              
              
              4,811,438
              
              
              4,158,154
              
              
              4,807,073
              
              
              3,882,608Dilutive
                  effect of assumed exercise of employee stock options, warrants
                  and
                  immediate vesting of unvested stock awards
              
              
              -
              
              
              -
              
              
              -
              
              
              -Weighted
                  average shares outstanding - diluted
              
              
              4,811,438
              
              
              4,158,154
              
              
              4,807,073
              
              
              3,882,608


**Stock-Based
      Compensation**





As
      of the
      merger described in Note 10 below, MMC adopted SFAS 123(R) which no longer
      permits the use of the intrinsic value method under Accounting Principles Board
      Opinion No. 25 “Accounting for Stock Issued to Employees” (“APB 25”). The
      Company uses the modified prospective method to adopt SFAS 123(R), which
      requires compensation expense to be recorded for all stock-based compensation
      granted on or after January 1, 2006, as well the unvested portion of previously
      granted options. The Company is recording the compensation expense on a
      straight-line basis, generally over the explicit service period of three years
      (except for retirement eligible employees and retirees). The Company has no
      retirement eligible employees and retirees at this time. The Company made no
      stock-based compensation grants before January 1, 2006 and therefore has no
      unrecognized stock compensation related liabilities or expense unvested or
      vested prior to 2006.





The
      following table illustrates the effect that adoption of SFAS No. 123(R) had
      on
      the Company’s three months ending June 30, 2007 results and cash flows.





Under
                  Pre-SFAS 123 (R) Accounting
              
              SFAS
                  123(R)
                Impact
              
              Six
                  Months Ended
                June
                  30, 2007Losses
                  before taxes
              
              $
              (2,309,681
              )
              $
              (57,120
              )
              $
              (2,366,801
              )Net
                  loss
              
              
              (2,309,681
              )
              
              (57,120
              )
              
              (2,366,801
              )**Net
                  Loss**Basic
                  EPS
              
              $
              (0.48
              )
              $
              (0.01
              )
              $
              (0.49
              )Diluted
                  EPS
              
              
              (0.48
              )
              
              (0.01
              )
              
              (0.49
              )**Cash
                  Flows**Operating
                  activities
              
              $
              (1,480,330
              )
              $
              -
              
              $
              (1,480,330
              )Financing
                  activities
              
              
              (565,456
              )
              
              -
              
              
              (565,456
              )





The
      following table summarizes common stock options outstanding and the related
      exercise prices under the Company’s 2006 Equity Incentive Plan.


**Options
                  Outstanding**
              
              **Options
                  Exercisable****Grant
                  Year**
              
              **Exercise
                  Prices**
              
              **Number**
                **Outstanding**
              
              **Weighted
                  Average**
                **Remaining**
                **Contractual
                  Life**
                **(Years)**
              
              **Weighted
                  Average**
                **Exercise
                  Price**
              
              **Number**
                **Exercisable**
              
              **Weighted
                  Average**
                **Exercise
                  Price**2006
              
              $10.00
              
              82,000
              
              8.88
              
              $10.00
              
              23,333
              
              $10.002007
              
              $6.50
              
              21,000
              
              9.83
              
              $6.50
              
              -
              
              $6.50**Totals**
              
              
              
              103,000
              
              9.07
              
              $9.29
              
              23,333
              
              $10.00




-11-








Transactions
      during 2007 involving stock options issued to employees are summarized as
      follows:


**Number
                  of Shares**
              
              **Weighted
                  Average**
                **Price
                  Per Share****Outstanding
                  at December 31, 2006**
              
              
              107,000
              
              $
              10.00Granted
              
              
              21,000
              
              
              6.50Exercised
              
              
              -
              
              
              -Cancelled
                  or expired
              
              
              (25,000
              )
              
              10.00**Outstanding
                  at June 30, 2007**
              
              
              **103,000**
              
              **$**
              **9.29**





Based
      on
      the Company’s closing stock price of $5.49 at June 29, 2007, all stock options
      currently outstanding have no aggregate intrinsic value, and there were no
      in-the-money options exercisable. As of June 30, 2007, all exercisable options
      had a weighted-average remaining contractual life of 8.88 years and
      weighted-average exercise price of $10.00 per share.





For
      the
      three months ended June 30, 2007 and 2006 there were 21,000 and zero options
      granted respectively.





The
      weighted-average fair value of stock options and warrants granted to employees
      during the six months ended June 30, 2007 and the weighted average significant
      assumptions used to determine those fair values, using a Black-Scholes option
      pricing model are as follows:




**2007****Grants
                  through June 30, 2007**
              
              **Stock
                  Option**
                **Grants**Risk-free
                  interest rate
              
              
              4.98
              %Dividend
                  yield
              
              
              0.00
              %Expected
                  life
              
              
              6Volatility
              
              
              108
              %Weighted
                  average option grant price
              
              $
              6.50Weighted
                  average fair value of options granted
              
              $
              5.46





In
      accordance with SFAS 123(R), the company uses the simplified expected term
      midpoint method to estimate the expected life of its option grants.





**Derivative
      Instruments**





The
      Company accounts for freestanding derivative financial instruments potentially
      settled in its own common stock under Emerging Issues Task Force ("EITF") Issue
      No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and
      Potentially Settled in, a Company's Own Stock.” Pursuant to EITF Issue No.
      00-19, the Company is required to recognize the initial fair value of the
      applicable contracts (consisting primarily of non-employee stock warrants and
      options to purchase common stock) as an asset or liability, and subsequently
      measure the change in the fair value (based on a Black-Scholes computation),
      with gains and losses included in a statement of operations. No
      such
      instruments were issued for the three and six months periods ended June 30,
      2007
      and 2006.





**Fair
      Value of Financial Instruments**




The
      carrying amounts of the Company's cash, trade payables, accrued expenses, and
      notes payable approximate their estimated fair value due to the short-term
      nature of those financial instruments. In June 2006, the Company issued warrants
      to purchase 45,000 shares of common stock at an exercise price of $0.10 per
      share. These warrants were issued in lieu of cash as payment for professional
      services rendered to the Company. The warrants were valued at the fair value
      of
      the professional services received as determined by usual and customary fees
      associated with such services in transactions between unrelated parties.





-12-


**Recent
      Accounting Pronouncements**





SFAS
      No.
      159. In February 2007, the Financial Accounting Standards Board (the “FASB”)
      issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
      Liabilities.” SFAS 159 permits entities to choose to measure many financial
      instruments, and certain other items, at fair value. SFAS 159 applies to
      reporting periods beginning after November 15, 2007. The adoption of SFAS 159
      is
      not expected to have a material impact on the Company’s financial condition or
      results of operations.





FSP
      EITF
      00-19-2. In December 2006, the FASB issued FASB Staff Position (“FSP”) EITF
      00-19-2, “Accounting for Registration Payment Arrangements” (" FSP
      00-19 -2")
      which addresses accounting for registration payment arrangements. FSP
      00-19 -2
      specifies that the contingent obligation to make future payments or otherwise
      transfer consideration under a registration payment arrangement, whether issued
      as a separate agreement or included as a provision of a financial instrument
      or
      other agreement, should be separately recognized and measured in accordance
      with
      FASB Statement No. 5, Accounting for Contingencies. FSP
      00-19 -2
      further clarifies that a financial instrument subject to a registration payment
      arrangement should be accounted for in accordance with other applicable
      generally accepted accounting principles without regard to the contingent
      obligation to transfer consideration pursuant to the registration payment
      arrangement. For registration payment arrangements and financial instruments
      subject to those arrangements that were entered into prior to the issuance
      of
      EITF 00-19-2, this guidance shall be effective for financial statements issued
      for fiscal years beginning after December 15, 2006 and interim periods within
      those fiscal years. The Company does not expect adoption of this FSP will have
      a
      material impact on its financial position, operations or cash flows.





SFAS
      No.
      158. In September 2006 the FASB issued its SFAS No. 158 “Employers’ Accounting
      for Defined Benefit Pension and Other Postretirement Plans”(“SFAS 158”). This
      Statement improves
      financial reporting by requiring an employer to recognize the overfunded or
      underfunded status of a defined benefit postretirement plan (other than a
      multiemployer plan) as an asset or liability in its statement of financial
      position and to recognize changes in that funded status in the year in which
      the
      changes occur through comprehensive income of a business entity or changes
      in
      unrestricted net assets of a not-for-profit organization. This Statement also
      improves financial reporting by requiring an employer to measure the funded
      status of a plan as of the date of its year-end statement of financial position,
      with limited exceptions. At this time the company has no defined benefit
      postretirement plan in place. The effective date for an employer with publicly
      traded equity securities is as of the end of the fiscal year ending after
      December 15, 2006. The Company does not expect that the adoption of this
      standard will have a material impact on its financial position, operations
      or
      cash flows.





SFAS
      No.
      157. In September 2006 the Financial Account Standards Board (the “FASB”) issued
      its Statement of Financial Accounting Standards 157, Fair Value Measurements.
      This Statement defines fair value, establishes a framework for measuring fair
      value in generally accepted accounting principles (GAAP), and expands
      disclosures about fair value measurements. This Statement applies under other
      accounting pronouncements that require or permit fair value measurements, the
      Board having previously concluded in those accounting pronouncements that fair
      value is the relevant measurement attribute. Accordingly, this Statement does
      not require any new fair value measurements. However, for some entities, the
      application of this Statement will change current practice. FAS 157 effective
      date is for fiscal years beginning after November 15, 2007. The Company does
      not
      expect adoption of this standard will have a material impact on its financial
      position, operations or cash flows.





FSP
      No
      AUG AIR-1. In September 2006 the FASB issued FSP No. AUG AIR-1 “Accounting for
      Planned Major Maintenance Activities” regarding routine maintenance and Planned
      Major Maintenance Activities (“PMMA”), which effectively disallowed the
      advance-in-accrual method that had been the industry standard but has been
      disallowed effective the first fiscal year beginning after December 15, 2006
      for
      all companies. In accordance with the early adoption provisions of this standard
      the Company has chosen to adopt this standard early, in particular adopting
      the
      deferral method for planned major maintenance items. There were no major
      maintenance expenditures incurred in 2007. Minor routine maintenance and
      unplanned repairs are expensed as incurred.








**Reclassifications**





Certain
      reclassifications have been made to conform prior periods' data to the current
      presentation. These reclassifications had no effect on reported
      losses.


-13-




**NOTE
      3 - RECEIVABLES AND PREPAID ITEMS**




At
      June
      30, 2007 and December 31, 2006 trade accounts receivable and prepaid items
      consisted of the following:




**June
                  30,**
              
              **December
                  31,****2007**
              
              **2006**Unbilled
                  receivables
              
              $
              277,995
              
              $
              157,131Allowance
                  for doubtful accounts
              
              
              -
              
              
              -Total
              
              $
              277,995
              
              $
              157,131Prepaid
                  insurance
              
              $
              27,389
              
              $
              51,046Prepaid
                  expenses
              
              
              48,213
              
              
              93,710Short-term
                  deposits
              
              
              500
              
              
              117,145Total
                  prepaid items
              
              $
              76,102
              
              $
              261,901





**NOTE
      4 - PROPERTY, PLANT AND EQUIPMENT**





At
      June
      30, 2007 and December 31, 2006 property, plant and equipment consisted of the
      following:




**June
                  30,**
              
              **December
                  31,****2007**
              
              **2006**Land
              
              $
              375,000
              
              $
              375,000Automobile
              
              
              44,440
              
              
              20,427Office
                  equipment
              
              
              65,395
              
              
              55,608Machinery,
                  equipment & other
              
              
              7,835,194
              
              
              7,530,8398,320,029
              
              
              7,981,874Accumulated
                  depreciation
              
              
              (1,142,483
              )
              
              (626,298
              )**Total**
              
              $
              7,177,546
              
              $
              7,355,576




Depreciation
      for the three months ended June 30, 2007 and 2006 was $279,222
      and $158,120 respectively. Depreciation for the six months ended June 30, 2007 and 2006
      was
      $516,185 and $306,044 respectively.





**NOTE
      5 - DEFERRED COSTS**





Deferred
      costs in connection with acquisitions and capital raises are accounted for
      based
      upon their stage in the acquisition/financing process. Costs of acquisitions
      and
      or financings can be broadly classified in four categories: exploratory,
      pre-acquisition, in-process and in-service. Typically, exploratory costs are
      expenses as incurred. When a financing or acquisition is determined to be
      probable as per management’s assessment all costs in connection with such
      transaction are eligible to be capitalized as well as throughout the actual
      implementation. When the acquisition is completed, related deferred costs are
      capitalized as a component of the asset cost basis and depreciated over the
      useful life of the asset. Deferred costs related to the Company’s recently
      completed public stock offering will be offset against gross proceeds received
      in July 2007. Deferred costs consisted of the following:




**June
                  30,**
              
              **December
                  31,****Deferred
                  Costs**
              
              **2007**
              
              **2006**Deferred
                  acquisition costs - Chula Vista
              
              $
              1,305,233
              
              $
              749,760Deferred
                  acquisition costs - Escondido
              
              
              10,433
              
              
              -Deferred
                  offering costs
              
              
              661,889
              
              
              -Total
              
              $
              1,977,555
              
              $
              749,760





-14-





**NOTE 6
      - LONG-TERM DEBT**





On
      January 31, 2006, MMC North America entered into a Loan and Security Agreement
      (the “Loan Agreement”) with TD Banknorth (the “Bank”), for a $3.5 million senior
      debt facility, including a $3.0 million term loan (the “Term Loan”) and a
      $500,000 revolving loan (the “Revolver,” together with the Term Loan, the
“Loans”). The Term Loan provides for interest payments only for the first six
      months, and 81 monthly principal payments in the amount of $37,038 each
      thereafter, with a final maturity date of May 3, 2013. The Term Loan bears
      interest at a fixed rate equal to 7.58%. Approximately $2.1 million of the
      Term
      Loan proceeds were funded into an escrow account under control of the Bank
      and
      restricted in use to valid repair and re-commissioning costs in accordance
      with
      a re-commissioning plan agreed to between MMC North America and the Bank. The
      remaining proceeds, net of related transaction costs, were used for general
      working capital purposes. All escrowed funds for repair and re-commissioning
      were expended for the intended use.





Advances
      against the Revolver are payable on demand and bear interest at the Prime Rate
      plus 1.00%. Beginning in 2007, amounts outstanding under the Revolver must
      be
      repaid in full and a zero balance maintained for at least 30 consecutive days
      at
      any time during the year. MMC North America has not made any borrowings under
      the Revolver.





The
      Loan
      Agreement places certain restrictions on MMC North America’s ability to make
      distributions to the Company and on transactions with affiliates. The Loan
      Agreement further subjects MMC North America to certain financial and other
      covenants, including maintaining a minimum Net Worth and minimum Debt Service
      Coverage ratio. The financial covenants are measured annually. During the last
      measurement of these covenants, for the twelve months ended December 31, 2006,
      the company was in compliance with all covenants .
      The
      Loans are collateralized by substantially all assets of MMC North America and
      are personally guaranteed, jointly and severally, by the two principal officers
      of the Company. Any losses sustained by any officer under such guaranty shall
      be
      indemnified by the Company.





**NOTE 7
      - COMMITMENTS AND CONTINGENT LIABILITIES**





In
      February 2007, we announced that we had learned that one hundred thousand shares
      of our common stock issued as part of a 1.2 million share private placement
      transaction we consummated in May 2006 were purchased by an entity controlled
      by
      Louis Zehil, who at the time of the purchase was a partner of our external
      legal
      counsel for the private placement transaction, McGuireWoods LLP. We also
      announced that we believe that Mr. Zehil improperly caused our former transfer
      agent not to place a required restrictive legend on the certificate for these
      one million shares and that Mr. Zehil then caused the entity he controlled
      to
      resell these shares. We reported Mr. Zehil’s conduct to the Securities and
      Exchange Commission (the “SEC”) and, subsequently, the SEC recently sued Mr.
      Zehil in connection with this matter further alleging that Mr. Zehil engaged
      in
      a similar fraudulent scheme with respect to six additional public companies
      represented at the relevant time by McGuireWoods LLP.





Persons
      who purchased shares directly from Mr. Zehil when he resold his shares may
      have
      a rescission right versus Mr. Zehil, and could make the claim that this
      rescission right somehow extends to us as well. One or more of our investors
      from our May 2006 private placement of 1.2 million shares could also claim
      a
      rescission right. It is also possible that one or more of our stockholders
      could
      claim that they somehow suffered a loss as a result of Mr. Zehil’s conduct and
      attempt to hold us responsible for their losses. The Company is unable to
      predict the extent of its ultimate liability with respect to any and all future
      securities matters. If any such claims are successfully made against us and
      we
      are not adequately indemnified for those claims from available sources of
      indemnification, then such claims could have a material adverse effect on our
      financial condition and operating results. We also may incur significant costs
      resulting from our investigation of this matter, any litigation we may initiate
      as a result and our cooperation with governmental authorities. We may not be
      adequately indemnified for such costs from available sources of
      indemnification.





MMC
      North
      America has arranged for the issuance by the Bank of an irrevocable letter
      of
      credit in the amount of $100,000 (the “Letter of Credit”) to a counterparty
      under an energy services agreement entered into in November 2006 (the “ESA”).
      The counterparty may draw upon the Letter of Credit to recover liquidated
      damages suffered by the counterparty in connection with any energy sales it
      may
      make on behalf of MMC North America and MMC Mid-Sun in the event MMC North
      America or MMC Mid-Sun fails to meet its obligations, or for any other
      unsatisfied obligations under the ESA. The Letter of Credit expires on December
      31, 2007. Availability under the Revolver is reduced from $500,000 to $400,000
      while the Letter of Credit remains outstanding.




Our
      primary office space is currently leased on a month-to-month basis per mutual
      agreement with the lessor while the company searches for suitable replacement
      space.





-15-


We
      have
      consulting agreements with outside contractors to provide various services.
      The
      Agreements are generally for a term of 12 months from inception and renewable
      automatically from year to year unless either the Company or the Consultant
      terminates such engagement by written notice.





We
      are
      subject to legal proceedings and claims which arise in the ordinary course
      of
      its business. Although occasional adverse decisions or settlements may occur,
      the Company believes that the final disposition of such matters should not
      have
      a material adverse effect on its financial position, results of operations
      or
      liquidity. Neither the Company nor any subsidiary has any involvement in any
      legal proceeding as of the report date.





**NOTE 8
      - EQUITY COMPENSATION**





Under
      the
      Company’s 2006 Equity Incentive Plan (the “Plan”), 500,000 shares of common
      stock were reserved for issuance as incentive awards to executive officers,
      key
      employees and directors and outside consultants. As of June 30, 2007, 103,000
      shares have been granted to employees, net of cancellations, in the form of
      stock option grants, with a weighted average exercise price of $9.29 per share,
      the market value of the Company’s common stock at the time of issue.





For
      the
      three months ended June 30, 2007 and 2006 the company had no issuances of
      restricted stock to its directors and employers.


For
      the
      six months ended June 30, 2007 and 2006 the company issued 2,561 and 0 shares
      of
      restricted stock, respectively.





**NOTE
      9 - STOCKHOLDERS' EQUITY**





On
      the closing of the Merger described in Note 10 below (the “Merger”), MMC North
      America’s outstanding equity interests were surrendered
      by the holders thereof for 2,387,500 shares of common stock of the Company,
      par
      value $0.001 per share (“Common Stock”). The existing stockholders of Pubco (as
      defined in Note 10 below) retained the 1,175,000 shares of Common Stock
      outstanding prior to the Merger and concurrently with the Merger, the Company
      issued 1,000,097 additional shares of Common Stock in a private placement for
      total proceeds of $10,000,966. On May 26, 2006, the Company issued an additional
      200,000 shares of Common Stock under the same terms as the first private
      placement for additional proceeds of $2,000,000. The Company realized total
      proceeds of $11,637,897 net of direct financing costs of $813,069, of which
      $450,000 was settled in the form of warrants to purchase 45,000 shares of Common
      Stock at an exercise price of $0.10 per share. On January 23, 2007, a portion
      of
      these warrants were exercised resulting in the issuance of 40,000 shares. The
      5,000 remaining warrants were exercised on May 3, 2007. During the quarter
      ended
      June 30, 2007, the Company issued no shares of restricted stock to its employees
      as compensation. As of the date of this report, the Company had 300,000,000
      shares authorized under its Certificate of Incorporation and had issued and
      outstanding 13,907,348 shares of Common Stock. As of such date, the Company
      also
      had 10,000,000 shares of preferred stock authorized under its Certificate of
      Incorporation, none of which was issued or outstanding.





In
      connection with the issuance of the 1,200,097 shares of Common Stock in the
      private placements described above, the Company was obligated to file a
      registration statement to permit the resale of the shares issued in the private
      placements with the Securities and Exchange Commission (the “SEC”) by September
      12, 2006.  If the registration statement was not filed with the SEC by that
      date or if the SEC did not declare the registration statement effective within
      120 days after filing, the Company is subject to liquidated damages payable
      to the holders of the shares issued in the private placements (the “Holders”) in
      cash equal to 1% per month of the purchase price of the shares issued, or
      $120,000 per month, until 12 months after the date of issue.  From that
      point forward, penalties are limited to only those shares that are not otherwise
      freely tradable under SEC Rule 144, which rule limits the volume of shares
      that
      may be resold by each Holder for a period from 12 to 24 months after date they
      were issued.





On
      October 17, 2006, a majority of Holders approved an extension of the filing
      requirement to December 31, 2006, and agreed to cap aggregate registration
      penalties at 12%. However, the aforementioned penalties accrued up to October
      17, 2006 were not waived. Accordingly, the Company has reserved for such
      penalties for the period from September 13, 2006 through October 17, 2006,
      or 34
      days, at the rate of 1% per month, amounting to $136,000 charged to
      non-operating financing costs. These penalties were paid out to the shareholders
      of record in January 2007. On December 29, 2006 the Company filed a registration
      statement with the SEC thereby complying with the approved extension. The SEC
      declared the registration statement effective on April 5, 2007 thereby avoiding
      any further penalties relating to this registration requirement.





On
      April
      19, 2007 the Company effected a one-for-ten reverse stock split of its
      outstanding shares of common stock, $.001 par value. Total authorized shares
      and
      par value remain unchanged. All references in the financial statements and
      notes
      to financial statements, numbers of shares and share amounts have been
      retroactively restated to reflect the reverse split, unless explicitly stated
      otherwise.





-16-


On
      July
      6, 2007 the Company announced that it had closed a public offering of 9,090,910
      shares of its common stock at $5.50 per share pursuant to a Form SB-2
      Registration Statement under the Securities Act of 1933 filed on April 5, 2007
      that was declared effective by the Securities and Exchange Commission. The
      Company intends to use up to $35 million of the net proceeds of this offering
      to
      implement the upgrade of its facility located at Chula Vista, California and
      the
      remainder for the potential acquisition of, or investments in additional power
      generating assets or companies.





**NOTE
      10 - RELATED PARTY TRANSACTIONS**





The
      Company had no related party transactions for the quarter ended June 30,
      2007.





The
      Company paid management fees of $260,000, inclusive of a $60,000 transaction
      fee, capitalized as a component of the acquisition costs of the Facilities,
      and
      $200,000 in quarterly management fees expensed as incurred, in the six months
      ended June 30, 2006 to MMC Energy Management, LLC, (“MMC Management”), an
      affiliate controlled by the three executive officers of the Company. Effective
      July 1, 2006, the management services agreement between MMC North America and
      MMC Management was terminated, and replaced by a new management services
      agreement between MMC North America and the Company, such that there will be
      no
      future impact on the Company’s consolidated earnings and cash flows from the
      management fee. As required by the Merger Agreement, no further business has
      been transacted between the Company and MMC Management subsequent to the Merger.





MMC
      Management was dissolved on November 8, 2006.





**NOTE
      11 - MERGER AND CORPORATE RESTRUCTURING**





MMC
      Energy, Inc. was originally incorporated in Nevada under the name High Tide
      Ventures, Inc. (“Pubco”). On
      May 3,
      2006, Pubco changed its name to MMC Energy, Inc. On May 15, 2006, MMC Energy
      Acquisition Corp., a wholly-owned subsidiary of Pubco (“Acquisition Sub”),
      merged (the “Merger”) with and into MMC Energy North America. As described in
      Note 1 above, prior to the Merger, MMC North America owned the Facilities and
      conducted the Company’s current business and Pubco did not conduct meaningful
      operations. Pursuant to the Merger, Pubco thus acquired the business of MMC
      North America, including the Facilities, and the former members of MMC North
      America received shares of Pubco common stock. Simultaneously with the Merger,
      Pubco consummated a $12 million private placement of shares of common stock.
      This Merger is accounted for as a reverse takeover of Pubco by MMC North
      America. As a
      result of the Merger, there was a change in control of Pubco. In accordance
      with
      SFAS No. 141, “Accounting for Business Combinations” (“SFAS 141”), MMC Energy
      North America was the acquiring entity for accounting purposes. While the
      transaction is accounted for using the purchase method of accounting, in
      substance the transaction was a recapitalization of Pubco’s capital
      structure.





The
      total
      purchase price and carrying value of net assets acquired was $11,750. The
      Company did not recognize goodwill or any intangible assets in connection with
      the transaction. From January 1, 2006 until the date of the transaction, Pubco
      was an inactive corporation with no significant assets and liabilities.
      Effective with the merger, all previously outstanding membership interests
      owned
      by MMC Energy North America’s members were exchanged for an aggregate of
      2,387,500 shares of the Company’s common stock. The value of the stock that was
      issued to MMC North America’s equity holders was the historical cost of the
      Company's net tangible assets, which did not differ materially from its fair
      value.





The
      total
      consideration paid was $11,750 and the significant components of the transaction
      are as follows:





Common
                stock retained
            
            $
            11,750Assets
                acquired
            
            
            (---
            )Liabilities
                assumed
            
            
            ---Cash
                paid
            
            
            ---Total
                consideration paid/organization cost
            
            $
            11,750





In
      accordance with Statement of Position No 98-5 “Reporting on the Costs of
      Start-Up” (“SOP 98-5”), the Company expensed $11,750 as organization
      costs.





-17-


**NOTE
      12 - SUBSEQUENT EVENTS**





On
      July
      5, 2007, we consummated a public offering of 9,090,910 shares of our common
      stock at $5.50 per share pursuant to a registration statement originally
      declared effective by the Securities and Exchange Commission on June 27, 2007.
      This transaction resulted in net proceeds to us of approximately $46.0
      million .
      The
      Company intends to use up to $35 million of the net proceeds of this offering
      to
      implement the upgrade of its facility located at Chula Vista, California and
      the
      remainder for the potential acquisition of, or investments in additional power
      generating assets or companies.




-18-




**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS**






*The
      following discussion should be read in conjunction with the consolidated
      financial statements and notes thereto included in our public filings, including
      this report* **.**





*Information
      contained in this filing contains “forward-looking statements” which can be
      identified by the use of forward-looking terminology such as “believes,”
“expects,” “may,” “will,” “should,” “anticipates” or comparable terminology, or
      by discussions of strategy. We cannot assure you that the future results covered
      by these forward-looking statements will be achieved. Some of the matters
      described in the “Risk Factors” section of our Form 10-KSB and in our other
      public filings constitute cautionary statements which identify factors regarding
      these forward-looking statements, including certain risks and uncertainties
      that
      could cause actual results to vary materially from the future results indicated
      in these forward-looking statements. Other factors could also cause actual
      results to vary materially from the future results indicated in such
      forward-looking statements.*




**Overview**





We
      are an
      energy company that acquires and actively manages electricity generating and
      energy infrastructure-related assets in the United States. Our mission is to
      acquire a portfolio of small to mid size electricity generating assets,
      generally below 250 megawatts, or MW. In addition to electricity, these assets
      can provide capacity and ancillary services. To date, we have acquired three
      electricity generating assets in California, totaling 110 MW of capacity. We
      are
      currently in the process of upgrading two of these assets. We are also pursuing
      additional acquisitions primarily in California, Texas and the Mid-Atlantic
      and
      Northeastern United States.





Our
      strategy is to create long-term value by focusing on five core principles:





*
      Targeting power constrained regions





*
      Acquiring and developing electricity generating and infrastructure related
      assets





*
      Restructuring acquired assets to maximize revenues





*
      Managing risk to optimize profitability





*
      Opportunistically partnering to develop renewable energy generating
      assets





We
      are
      managed by a team of professionals with significant energy sector experience
      and
      knowledge. Our executive officers and Board of Directors have extensive
      experience with industry leaders in the energy and finance sectors, especially
      asset management, commodity pricing and risk management, as well as private
      equity, structured finance and project finance transactional experience. We
      intend to leverage this extensive experience and our relationships within the
      energy and finance sectors to execute on our core strategy and build significant
      long-term value for our stockholders.





We
      launched our acquisition strategy in January 2006 with the acquisition of MMC
      Chula Vista and MMC Escondido, each of which is a 44 MW gas fired generating
      facility in San Diego county. This acquisition provided us entry to the
      California wholesale power and electricity market. We fully re-commissioned
      the
      facilities and began earning revenues in June 2006.





We
      were
      originally incorporated in Nevada under the name High Tide Ventures, Inc. on
      February 13, 2003. As an inactive publicly registered shell corporation with
      no
      significant assets or operations, High Tide's business plan was to seek an
      acquisition candidate. On May 3, 2006, High Tide changed its name to MMC Energy,
      Inc. On May 15, 2006, a wholly-owned subsidiary of MMC Energy, Inc. merged
      with
      and into MMC Energy North America LLC, a Delaware limited liability company,
      pursuant to a reverse acquisition. Prior to this merger, MMC North America
      LLC,
      which began operations in October 2005, acquired the electricity generating
      facilities located in Chula Vista and Escondido, California and otherwise
      conducted our current business as described herein. As a result of the merger,
      MMC Energy, Inc. thus acquired the business of MMC Energy North America LLC,
      including the electricity generating facilities, and the former members of
      MMC
      Energy North America LLC received shares of common stock of MMC Energy, Inc.
      On
      September 22, 2006, we reincorporated as a Delaware corporation by means of
      a
      merger of the existing Nevada corporation with and into MMC Energy, Inc., a
      newly-formed Delaware corporation. On April 19, 2006 we effected a one-for-ten
      reverse split of our common stock. On July 5, 2007, we listed our common stock
      on the Nasdaq Global Market in connection with the closing of the
      offering.





-19-


We
      currently have six full time employees based at our headquarters in New York,
      New York and one additional employee based in California. We have contracted
      for
      third party labor for on-site operations and maintenance of our existing
      facilities, as well as energy management and trading support. We expect to
      manage any future facilities acquired in a similar fashion. To support our
      future growth plans, we expect to hire additional professional staff,
      particularly in our New York office, to support increased acquisition activity
      and asset management responsibilities.





**Critical
      Accounting Policies**





Our
      consolidated financial statements are prepared in accordance with accounting
      principles generally accepted in the United States. The preparation of our
      financial statements in conformity with accounting principles generally accepted
      in the United States requires us to make estimates and assumptions that affect
      the reported amounts of assets, liabilities, revenues, costs and expenses,
      and
      related disclosure. We base our estimates and assumptions on historical
      experience and on various other assumptions that we believe to be reasonable
      under the circumstances. Future events, however, may differ markedly from our
      current expectations and assumptions. While there are a number of significant
      accounting policies affecting our consolidated financial statements, we believe
      the following critical accounting policies involve the most complex, difficult
      and subjective estimates and judgments.





**Revenue
      Recognition**





We
      recognize revenue when all of the following circumstances are satisfied: (1)
      persuasive evidence of an arrangement exists, (2) price is fixed or
      determinable, (3) collectibility is reasonably assured, and (4) delivery has
      occurred. Revenues are recognized upon delivery of energy or services. The
      revenues we collect for ancillary services and energy delivery fluctuate based
      on market prices established by CAISO on a daily, hourly and real-time basis.





We
      recognize energy production revenue when energy has been substantially
      transmitted to the customer. We recognize revenue when electricity is delivered
      to a customer pursuant to contractual commitments that specify volume, price
      and
      delivery requirements. Some sales of energy are based on economic dispatch,
      or
      "as-ordered," by an independent system operator, or "ISO," based on member
      participation agreements, but without an underlying contractual commitment.
      Revenues for sales of energy based on ISO dispatches are recorded on the basis
      of MW-hours delivered, at the applicable wholesale market prices. In addition
      to
      bilateral contracts that we may enter into from time to time, we generally
      offer
      our energy to the ISO daily at its variable cost to produce plus a desired
      minimum profit margin. Our facilities can be dispatched only if the market
      clearing price exceeds our bid price. We may also receive "out of merit"
      dispatches in times when the market price is less than our bid price, but our
      electricity is needed locally due to local transmission constraints, in which
      case we will be paid our bid price for energy provided.





As
      described under "Results of Operations" below, we also recognize revenues from
      the provision of ancillary services and under capacity contracts. Although
      there
      are several types of ancillary services, to date we primarily provide "spin"
      and
      "non spin" services, which call for the facilities to be delivering the awarded
      capacity within 10 minutes of dispatch whether already connected to the grid
      (spin) or not (non-spin). We recognize these revenues at the time of dispatch
      by
      the ISO. Capacity (resource adequacy) contract revenues are recognized based
      on
      the facility's capacity as certified by the California Public Utility
      Commission, or CPUC, and by CAISO.





**Results
      of Operations**





Since
      we
      were considered a development stage enterprise until June 12, 2006, comparisons
      of certain periods in 2006 with corresponding periods in 2007 for our results
      of
      operations may not be meaningful. Additionally, due to the commencement of
      operations in June, our 2006 results do not reflect a full year's run rate
      for
      revenues and most expenses. Our mix of revenues and costs of sales will likely
      change substantially in the future as additional assets are acquired and brought
      on line.





**Revenues**





Our
      electricity generating facilities are generally referred to as “peaker” plants.
      Peaker plants are used to balance unexpected short term surges in demand, making
      them critical to the reliability, or “insurance,” of the power grids they serve.
      Our revenues to date have been earned by providing resource adequacy capacity,
      ancillary services and energy production.




-20-




·
            Resource
                Adequacy Capacity - Regulatory capacity payments for generators of
                any
                type are based strictly on total installed capacity measured in MW.
                In the
                CAISO market where we currently operate exclusively, market-based
                capacity
                revenues are earned through resource adequacy contracts, whereby
                the
                counterparty can point to our facilities' capacity as a source to
                supply
                its peak demand plus a mandatory safety margin for regulatory purposes
                only. The contract does not create an obligation to supply electricity
                to
                the counterparty, but does obligate us to bid our energy into the
                CAISO
                markets on a daily basis such that our capacity is available to the
                CAISO,
                if needed, at our offer price. The resource adequacy capacity amount
                cannot exceed the qualified capacity amount for the resource. Qualified
                capacity is certified by CAISO and the CPUC. For 2006, the MMC Escondido
                and MMC Chula Vista facilities were certified by CAISO and the CPUC
                for 40
                MW (estimated) each, and for 2007, 35.5 MW (actual) each and MMC
                Mid-Sun
                for 22 MW.





·
            Ancillary
                Services - Although there are several types of ancillary services,
                to date
                we primarily provide “spin” and “non-spin” services which call for the
                facilities to be delivering the awarded capacity within 10 minutes
                of
                dispatch whether already connected to the grid (spin) or not (non-spin).
                Spin services typically offer higher ratesThe
                Mid-Sun facility was qualified for spin services during June 2007. 
                Accordingly, ancillary service revenues from this plant for the quarter
                were significantly lower than our other two facilities on a per-MW
                basis,
                but are expected to be in-line with them going
                forward.





·
            Energy
                  Production - The Company provides physical electricity to a local
                  power
                  grid through day ahead and real time markets managed by the CAISO
                  or
                  through bilateral agreements with a utility or other direct counterparty.
                  As the Company has no outstanding fuel supply and electricity offtake
                  agreements or other contracted energy production, all of our energy
                  production revenues are earned in the physical day ahead and real
                  time
                  markets. The Company currently does not take fixed price fuel risk
                  and
                  passes its fuel cost through the price the Company charges to produce
                  energy.





Revenues
      for the three and six month periods ended June 30, 2007 and 2006 were
      distributed as follows:





**Periods
                  ended June 30,**
              
              **Three
                  Months**
                **Ended
                  June 30,**
              
              **Three
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,****Operating
                  revenues:**
              
              **2007**
              
              **2006**
              
              **2007**
              
              **2006**Resource
                  adequacy capacity
              
              $
              791,250
              
              $
              -
              
              $
              1,483,500
              
              $
              -Ancillary
                  services
              
              
              612,846
              
              
              252,272
              
              
              1,004,387
              
              
              252,272Energy
                  production
              
              
              100,867
              
              
              18,675
              
              
              118,194
              
              
              18,675**Total
                  operating revenues**
              
              $
              1,504,963
              
              $
              270,947
              
              $
              2,606,081
              
              $
              270,947




**Cost
      of Sales**





Cost
      of
      sales for the three months ended June 30, 2007 and 2006 were $237,297 and
      $50,808, yielding gross profits of $1,267,666 and $220,139 and gross margin
      of
      84% and 81%, respectively. Costs of sales for the six months ended June 30,
      2007
      and 2006 were $400,868 and $50,808 yielding gross profits of $2,205,213 and
      $220,139 and gross margins of 85% and 81%, respectively. Our gross margin has
      been relatively high due to a favorable mix of high margin resource adequacy
      capacity and ancillary services constituting the largest portion of our
      revenues. We expect our gross margin to decrease significantly as a percentage
      of our revenues as we acquire additional facilities and as our energy production
      revenues increase.




-21-




Costs
      of
      sales and gross margins were distributed as follows:




**Periods
                  ended June 30,**
              
              **Three
                  Months**
                **Ended
                  June 30,**
              
              **Three
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,****Costs
                  of sales:**
              
              **2007**
              
              **2006**
              
              **2007**
              
              **2006**Costs
                  of resource adequacy capacity
              
              $
              63,300
              
              $
              -
              
              $
              118,680
              
              $
              -Costs
                  of ancillary services
              
              
              92,813
              
              
              36,330
              
              
              180,091
              
              
              36,330Costs
                  of energy production
              
              
              81,184
              
              
              14,478
              
              
              102,097
              
              
              14,478**Total
                  costs of sales**
              
              $
              237,297
              
              $
              50,808
              
              $
              400,868
              
              $
              50,808
   **Periods
                  ended June 30,**
              
              **Three
                  Months**
                **Ended
                  June 30,**
              
              **Three
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,**
              
              **Six
                  Months**
                **Ended
                  June 30,****Gross
                  Margin %**
              
              **2007**
              
              **2006**
              
              **2007**
              
              **2006**Resource
                  adequacy capacity
              
              
              92.0
              %
              
              0.0
              %
              
              92.0
              %
              
              0.0
              %Ancillary
                  services
              
              
              84.9
              %
              
              85.6
              %
              
              82.1
              %
              
              85.6
              %Energy
                  production
              
              
              19.5
              %
              
              22.5
              %
              
              13.6
              %
              
              22.5
              %**Total
                  operating revenues**
              
              
              84.2
              %
              
              81.2
              %
              
              84.6
              %
              
              81.2
              %




Costs
      of
      sales include these major expenses:





·
            Resource
                Adequacy Capacity - Includes primarily commissions paid to electricity
                marketers. We expect this revenue stream to remain at a very high
                margin.





·
            Ancillary
                Services — Includes primarily grid management charges, or costs incurred
                by the ISO directly related to the installation and maintenance of
                the
                electrical power grid necessary to permit the provision of energy
                and
                ancillary services. These costs are passed through to generators
                as
                mandated by regulatory and governing bodies. Costs also include variable
                incentive fees paid to our energy manager for exceeding revenue targets.
                This is typically a high margin
                service.





·
            Energy
                Production - Includes costs for fuel, primarily natural gas, used
                in the
                production of energy as well as pipeline fees for fuel transportation,
                grid management charges, variable incentive fees, and other direct
                charges
                associated with the provision of energy production.
                As
                the Company has no outstanding fuel supply and electricity offtake
                agreements or other contracted energy production, all of our energy
                production revenues are earned in the merchant market. The Company
                currently does not take fixed price fuel risk and passes its fuel
                cost
                through the price the Company charges to produce energy.We
                expect energy production gross margins to normalize in future
                periods.





**Operations
      and Maintenance**





Operations
      and maintenance expenses consist of the direct overhead expenses for operating
      and maintaining our electricity generating facilities. For the three months
      ended June 30, 2007 and 2006, operations and maintenance expenses were $797,467
      and $267,600 respectively. These expenses consisted primarily of fixed charges
      such as contracted labor, interconnection, costs and other period costs. The
      second quarter of the year is typically the quarter when the company transacts
      the bulk of its routine annual maintenance and repairs. For the three months
      ended June 30, 2007, we incurred $180,000 of routine maintenance and repairs
      which is included in the total cost of operations and maintenance for the
      period. As we had not yet commenced commercial operation of our Chula Vista
      and
      Escondido facilities until June 12, 2006 and had not yet purchased our Mid-Sun
      facility as of June 30, 2006 operations and maintenance expense for the three
      and six month periods ending June 30, 2006 do not include major items such
      as
      contracted labor.





For
      the
      six months ended June 30, 2007 and 2006, we incurred operations and maintenance
      expenses of $1,211,625 and $426,628 respectively.





**Re-commissioning
      Expenses**





Re-commissioning
      expenses consist of the non-recurring initial planned repairs and
      re-commissioning costs required to restore electricity generating facilities
      and
      all related equipment to operating condition, including fuel and other costs
      relating to initial test runs of the facilities. We expect to incur such costs
      with respect to future acquisitions, as they may be in mothball states and
      may
      have received little or no maintenance for significant periods of time. Such
      expenditures are expensed for financial accounting purposes as they represent
      basic repairs and maintenance and do not otherwise extend the life of the
      assets. However, as such expenses are non-recurring on an asset by asset basis
      and pre-funded with the acquisition of the asset, management considers them
      part
      of its investment cost for evaluating returns on individual assets.





-22-


For
      the
      three months ended June 30, 2007 and 2006, re-commissioning costs were $39,517
      and $1,814,213, respectively. The 2007 period expense reflects the final costs
      of re-commissioning our Mid-Sun facility in 2007 and the 2006 period expense
      reflects the costs of re-commissioning our MMC Chula Vista and MMC Escondido
      facilities, which we completed in June of 2006.





For
      the
      six months ended June 30, 2007 and 2006, re-commissioning costs were $419,135
      and $2,143,164, respectively. The 2007 re-commissioning costs related to
      completing the re-commissioning of the Mid-Sun facility, which we purchased
      at a
      total cost of $4,400,000. Re-commissioning costs of $2,143,164 incurred during
      the six months ended June 30, 2006 were entirely for the re-commissioning of
      the
      Chula Vista and Escondido facilities that commenced operations on June 12,
      2006.





**General
      and Administrative Expenses**





For
      the
      three months ended June 30, 2007 and 2006, general and administrative expenses
      were $1,073,000 and $1,948,409, respectively. General and administrative
      expenses for the three months ended June 30, 2007 were driven primarily by
      compensation and professional fees. General and administrative expenses incurred
      during the three months ended June 30, 2006 were primarily driven by
      professional fees, and non-recurring charges of approximately $1,413,000
      incurred in connection with our May 2006 merger and private placements. While
      our recurring general and administrative expenses may increase on an absolute
      basis, we expect they will decrease as a percentage of total revenue as we
      continue to implement our growth strategy.





For
      the
      six months ended June 30, 2007 and 2006, general and administrative expenses
      were $2,522,049 and $2,221,279, respectively. General and administrative
      expenses in 2007 were driven by compensation, professional fees and a
      non-recurring charge of approximately $400,000 related to the separation from
      the company of one of our former officers. General and administrative expenses
      in 2006 were driven primarily by merger transaction related costs of
      approximately $1,748,000, compensation and professional fees.





**Interest
      and Other expenses**





Other
      income of $296,117 reflects a recovery of legal and professional fees incurred
      in prior periods primarily relating to unsuccessful financing activities prior
      to pursuing the recently completed public offering, of which $135,995 relates
      to
      expenses incurred in 2006.





Interest
      expense for the three months ended June 30, 2007 reflects a re-classification
      of
      $30,930 of interest income previously included in general and administrative
      expense in the first quarter of 2007.





**Liquidity
      and Capital Resources**





As
      of
      June 30, 2007, we had $2.2 million in cash and equivalents.





On
      July
      5, 2007, we consummated a public offering of 9,090,910 shares of our common
      stock at $5.50 per share pursuant to a registration statement originally
      declared effective by the Securities and Exchange Commission on June 27, 2007.
      This transaction resulted in net proceeds to us of approximately $46.0 million.
      We believe that this new infusion of cash along with our existing balances
      will
      be sufficient to satisfy our cash requirements for at least the next twelve
      months. However, our existing cash balance may not be sufficient to fund our
      acquisition growth strategy. Such acquisitions may require us to obtain
      additional funding in a short period of time. The extent and timing of the
      capital requirements will be contingent on the specific acquisition targets
      we
      are able to source. If we fail
      to
      obtain sufficient capital resources on terms acceptable to us, it would have
      a
      material adverse effect on our plans to make additional acquisitions, cover
      unplanned repairs, required capital expenditures and/or our current business,
      results of operations, liquidity and financial condition. If we issue additional
      equity and/or debt securities to meet our future capital requirements, the
      terms
      of any future equity financings may be dilutive to our stockholders and the
      terms of any debt financings may contain restrictive covenants that may also
      negatively affect our stockholders. Our ability to effect future financings
      will
      depend on the status of our business prospects as well as conditions prevailing
      in the capital markets.





On
      January 31, 2006, MMC North America, one of our wholly owned subsidiaries
      entered into a Loan and Security Agreement with TD Banknorth providing for
      a
      $3.5 million senior debt facility including a $3.0 million term loan and a
      $500,000 revolving loan. The term loan provides for interest-only payments
      during the first twelve months, and 81 equal principal payments in the amount
      of
      $37,038 thereafter, with a final maturity date of May 3, 2013. The term loan
      bears interest at a fixed rate equal to 7.58%.





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Advances
      against the revolver are payable on demand and bear interest at the prime rate
      plus 1.00%. Beginning in 2007, amounts outstanding under the revolver must
      be
      repaid in full and a zero balance maintained for at least 30 consecutive days
      at
      any time during the year. We have not borrowed under the revolver.





The
      loan
      agreement places certain restrictions on MMC North America's ability to upstream
      cash to our parent, MMC Energy, Inc., as well as restrictions on transactions
      with affiliates. The loan agreement further subjects MMC North America to
      certain financial and other covenants, including maintaining a minimum net
      worth
      and minimum debt service coverage ratio, as such terms are defined in the loan
      agreement. These covenants are tested on annual basis. As of the last testing
      for the year ended December 31, 2006 MMC North America was not in violation
      of
      any such covenants. The loans are collateralized by substantially all assets
      of
      MMC North America and are personally guaranteed, jointly and severally, by
      two
      of our executive officers. Any losses sustained by any officer under such
      guaranty will be indemnified by us.





MMC
      North
      America has arranged for the issuance by TD Banknorth of an irrevocable letter
      of credit in the amount of $100,000 to a counterparty under an energy services
      agreement entered into during November 2006. The counterparty may draw upon
      the
      letter of credit to recover liquidated damages suffered by the counterparty
      in
      connection with any energy sales it may make on behalf of MMC North America
      in
      the event MMC North America fails to meet its obligations, or for any other
      unsatisfied obligations under the energy services agreement. The letter of
      credit expires on December 31, 2007. Availability under the revolver is reduced
      from $500,000 to $400,000 while the letter of credit remains
      outstanding





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements that are reasonably likely to have
      a
      current or future effect on our financial condition, revenues, results of
      operations, liquidity or capital expenditures, nor do we participate in
      non-exchange traded contracts requiring fair value accounting treatment.





In
      connection with the possible future acquisition of "mid-merit" facilities,
      which
      are neither true baseload nor true peaking facilities, but somewhere in between,
      we may engage in certain hedging transactions. Such facilities would be more
      expensive to purchase but would be expected to generate substantially more
      energy production revenues. For such assets, hedging the commodity price risk
      becomes more critical. We expect to enter into intermediate term financial
      hedge
      contracts that would serve the purpose of shifting the price risk of fuel cost
      and electricity pricing onto the counterparty, in effect swapping commodity
      price risk for credit risk. Management's experience in this area will become
      more critical with the purchase of such assets.





**Seasonality
      and Inflation**





Our
      business is seasonal, with a relatively high proportion of revenues and
      operating cash flows generated during the third quarter of the fiscal year,
      which includes the peak summer months for energy demand. As we derive most
      of
      our revenues from selling energy and ancillary services at then-current market
      prices, as opposed to under longer term fixed-price contracts, our revenues
      and
      operating income are highly exposed to the seasonal fluctuations in commodity
      pricing, which corresponds to peak demand. The effect of inflation on our
      revenue and operating results was not significant.





**Recent
      Accounting Pronouncements**





SFAS
      No.
      159. In February 2007, the Financial Accounting Standards Board, or FASB, issued
      Statement of Financial Accounting Standards No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
      to measure many financial instruments, and certain other items, at fair value.
      SFAS 159 applies to reporting periods beginning after November 15, 2007. The
      adoption of SFAS 159 is not expected to have a material impact on the Company’s
      financial condition or results of operations.





EITF
      00-19-2. In December 2006, the FASB issued EITF 00-19-2, “Accounting for
      Registration Payment Arrangements.” EITF 00-19-2 specifies that the contingent
      obligation to make future payments or otherwise transfer consideration under
      a
      registration payment arrangement, whether issued as a separate agreement or
      included as a provision of a financial instrument or other agreement, should
      be
      separately recognized and measured in accordance with SFAS No. 5, “Accounting
      for Contingencies.” EITF
      00-19 -2
      further clarifies that a financial instrument subject to a registration payment
      arrangement should be accounted for in accordance with other applicable
      generally accepted accounting principles without regard to the contingent
      obligation to transfer consideration pursuant to the registration payment
      arrangement. For registration payment arrangements and financial instruments
      subject to those arrangements that were entered into prior to the issuance
      of
      EITF 00-19-2, this guidance shall be effective for financial statements issued
      for fiscal years beginning after December 15, 2006 and interim periods within
      those fiscal years. We do not expect that the adoption of EITF 00-19-2 will
      have
      a material impact on our financial position, operations or cash flows.





-24-


SFAS
      158.
      In September 2006 the FASB issued SFAS No. 158, “Employers’ Accounting for
      Defined Benefit Pension and Other Postretirement Plans.” This
      Statement requires an
      employer to recognize the overfunded or underfunded status of a defined benefit
      postretirement plan (other than a multiemployer plan) as an asset or liability
      in its statement of financial position and to recognize changes in that funded
      status in the year in which the changes occur through comprehensive income
      of a
      business entity or changes in unrestricted net assets of a not-for-profit
      organization. This Statement also requires an employer to measure the funded
      status of a plan as of the date of its year-end statement of financial position,
      with limited exceptions. The effective date for an employer with publicly traded
      equity securities is as of the end of the fiscal year ending after December
      15,
      2006. We do not expect that the adoption of this standard will have a material
      impact on our financial position, operations or cash flows.





SFAS
      157.
      In September 2006 the FASB issued SFAS No. 157, “Fair Value Measurements.” This
      Statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles (GAAP), and expands disclosures
      about fair value measurements. SFAS 157 applies under other accounting
      pronouncements that already require or permit fair value measurements.
      Accordingly, SFAS 157 does not require any new fair value measurements. The
      effective date for SFAS 157 is for fiscal years beginning after November 15,
      2007. We do not expect that adoption of this standard will have a material
      impact on our financial position, operations or cash flows.





FSP
      AUG
      AIR No. 1. In September 2006 the FASB issued FASB Staff Position AUG AIR No.
      1
      regarding routine maintenance and Planned Major Maintenance Activities, which
      effectively disallowed the advance-in-accrual method that had been the industry
      standard but has been disallowed effective the first fiscal year beginning
      after
      December 15, 2006 for all companies. In accordance with the early adoption
      provisions of this standard we have chosen to adopt this Statement early, in
      particular adopting the deferral method for planned major maintenance items.
      There were no major maintenance expenditures incurred in 2006. Minor routine
      maintenance and unplanned repairs are expensed as incurred.





FIN
      48.
      In June 2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting
      for Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty
      in income taxes recognized in an enterprise’s financial statements in accordance
      with SFAS No. 109, “Accounting for Income Taxes.” This Interpretation prescribes
      a recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. This Interpretation also provides guidance on de-recognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. We do not expect the adoption of this Interpretation
      to have a material impact on our consolidated financial position, results of
      operations or cash flows.




**ITEM
      3. CONTROLS AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**




We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our reports filed or submitted pursuant
      to the Securities Exchange Act of 1934 is recorded, processed, summarized and
      reported within the time periods specified in the SEC’s rules and forms, and
      that information required to be disclosed in our Exchange Act reports is
      accumulated and communicated to our Chief Executive Officer and Chief Financial
      Officer, to allow timely decisions regarding required disclosure.





Under
      the
      supervision and with the participation of our Chief Executive Officer and Chief
      Financial Officer as of June 30, 2007, we conducted an evaluation of
      effectiveness of the design and operation of our disclosure controls and
      procedures, (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange
      Act). Based upon that evaluation, our Chief Executive Officer and Chief
      Financial Officer concluded that our disclosure controls and procedures are
      effective as of such date to ensure that information required to be disclosed
      by
      us in the reports that we file or submit under the Exchange Act is recorded,
      processed, summarized and reported, within the time periods specified in the
      SEC’s rules and forms.




-25-


**Changes
      in Internal Control Over Financial Reporting**





There
      were no changes in our internal controls over financial reporting identified
      in
      connection with the evaluation required by paragraph (d) of Exchange Act Rules
      13a-15 or 15d-15 that occurred during our last fiscal quarter that have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting.




-26-





**PART
      II**


**OTHER
      INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





From
      time
      to time we may become a party to litigation or other legal proceedings that
      are
      part of the ordinary course of our business, involving routine litigation that
      is incidental to our business. Currently, no legal claims or proceedings are
      pending against us. To our knowledge, no proceeding against us is currently
      contemplated by any governmental authority.




**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





None.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None.




**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**




None.





**ITEM
      5. OTHER INFORMATION**





None





**ITEM
      6. EXHIBITS**





(a)
      Exhibits.


31.1
            Certification
                pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities
                Exchange Act of 1934, as amended31.2
            Certification
                pursuant Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange
                Act of 1934, as amended32.1
            Certification
                pursuant to 18 U.S. C.Section
                135032.2
            Certification
                pursuant to 18 U.S. C.Section
                1350




-27-


**SIGNATURES**





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.


**MMC
                ENERGY, INC.**By:
            /s/
                Karl W. MillerKarl
                W. MillerChief
                Executive Officer








By:
            /s/
                Denis GagnonDenis
                GagnonChief
                Financial Officer and Principal Accounting OfficerDATE:August
                14, 2007





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