**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-Q**





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


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      quarterly period ended March 31, 2008





or





** ̈** **TRANSITION REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      transition period from to .





*Commission
      file number 000-51968*





**MMC
      ENERGY, INC.**


(Exact
      name of registrant as specified in its charter)




Delaware
            
            98-0493819(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)





26
                Broadway New York NY 10004(Address
                of principal executive offices)(Zip
                Code)





(212)
      977-0900





Registrant’s
      telephone number (including area code)







(Former
      name, former address and former fiscal year,


if
      changed since last report)





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





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





Large
                Accelerated Filer o
            Accelerated
                Filer o





Non-Accelerated
                Filer o (Do
                not check if a smaller reporting
                company)
            Smaller
                reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act) Yeso No
x





As
      of May
      14, 2008 the registrant had 14,144,347 shares of Common Stock
      outstanding.








TABLE
                OF CONTENTSPART
                I
            FINANCIAL
                INFORMATIONITEM
                1
            Financial
                StatementsCondensed
                Consolidated Balance Sheets as of March 31, 2008 (unaudited) and
                December
                31, 2007
            2Condensed
                Consolidated Statements of Operations (unaudited) for the three month
                periods ended March 31, 2008 and 2007
            3Condensed
                Consolidated Statement of Stockholders' Equity (unaudited) for the
                period from January 1, 2008 through March 31, 2008
            4Condensed
                Consolidated Statements of Cash Flows (unaudited) for the three month
                periods ended March 31, 2008 and 2007
            5Notes
                to Condensed Consolidated Financial Statements (unaudited)
            6ITEM
                2
            Management's
                Discussion and Analysis of Financial Condition and Results of Operations
            17ITEM
                3
            Quantitative
                and Qualitative Disclosures about Market Risk
            22ITEM
                4T
            Controls
                and Procedures
            22PART
                II
            OTHER
                INFORMATIONITEM
                1
            Legal
                Proceedings
            23ITEM
                1A
            Risk
                Factors
            23ITEM
                2
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            23ITEM
                3
            Defaults
                Upon Senior Securities
            23ITEM
                4
            Submission
                of Matters to a Vote of Security Holders
            23ITEM
                5
            Other
                Information
            23ITEM
                6
            Exhibits
            24SIGNATURES
            25











**FORWARD-LOOKING
      STATEMENTS**





Some
      of
      the statements under ‘‘business,’’ ‘‘Risk Factors,’’ ‘‘Management’s Discussion
      and Analysis of Financial Condition and Results of Operations,’’ and elsewhere
      in this Quarterly Report on Form 10-Q constitute forward-looking statements.
      These statements relate to future events or our strategy, future operations,
      future financial position, future revenues, projected costs, prospects, and
      the
      plans and objectives of management and involve known and unknown risks,
      uncertainties and other factors that may cause our or our industry’s actual
      results, levels of activity, performance or achievements to be materially
      different from any future results, levels of activity, performance or
      achievements expressed, implied or inferred by these forward-looking statements.
      Such factors include, among other things, those listed under ‘‘Risk Factors’’
and elsewhere in this Quarterly Report. In some cases, you can identify
      forward-looking statements by terminology such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’
‘‘could,’’ ‘‘would,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘intends,’’ ‘‘anticipates,’’
‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’ ‘‘potential’’ or ‘‘continue’’ or the
      negative of such terms and other comparable terminology.





Although
      we believe that the expectations reflected in the forward-looking statements
      are
      reasonable, we do not know whether we can achieve positive future results,
      levels of activity, performance, or goals. Actual events or results may differ
      materially. We undertake no obligation to update any of the forward-looking
      statements after the date of this Annual Report to conform those statements
      to
      reflect the occurrence of unanticipated events, except as required by applicable
      law.




-
          1
          -




**PART
      I. FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS**




MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED BALANCE SHEETS





**March
                31,**
            
            **December
                31,****2008**
            
            **2007**(unaudited)**Assets**Current
                assets:Cash
                and equivalents
            
            $
            33,547,696
            
            $
            42,582,697Accounts
                receivable (Note 3)
            
            
            107,010
            
            
            62,855Unbilled
                receivables (Note 3)
            
            
            46,875
            
            
            -Spare
                parts inventories
            
            
            90,918
            
            
            94,089Prepaids
                and deposits (Note 3)
            
            
            314,050
            
            
            215,254Securities
                avaliable for sale (Note 4)
            
            
            -
            
            
            4,075,000Total
                current assets
            
            
            34,106,549
            
            
            47,029,895Property,
                plant and equipment, net (Note 5)
            
            
            6,648,779
            
            
            6,721,153Other
                assets:Deferred
                development costs (Note 6)
            
            
            2,796,581
            
            
            2,488,756Long-term
                deposits (Note 7)
            
            
            9,627,743
            
            
            98,630Other
                assets and deferred charges (Note 8)
            
            
            358,200
            
            
            390,762Total
                other assets
            
            
            12,782,524
            
            
            2,978,148Total
                assets
            
            $
            53,537,852
            
            $
            56,729,196**Liabilities
                & Stockholders' equity**Current
                Liabilities:Current
                maturities of long-term debt (Note 9)
            
            $
            444,456
            
            $
            444,456Accounts
                payable
            
            
            346,866
            
            
            453,654Deferred
                revenue
            
            
            -
            
            
            65,713Other
                accrued expenses
            
            
            809,070
            
            
            769,164Accrued
                compensation
            
            
            339,456
            
            
            1,740,077Total
                current liabilities
            
            
            1,939,848
            
            
            3,473,064Long-term
                debt (Note 9)
            
            
            1,851,822
            
            
            1,962,936Commitments
                & contingencies (Note 10)Stockholders'
                Equity (Note 12)Preferred
                Stock; 10,000,000 shares authorized; none issued and outstanding;
                $.001
                par value
            
            
            -
            
            
            -Common
                stock; 300,000,000 shares authorized with 14,144,347 issued and
                outstanding as of March 31, 2008 and 13,917,347 outstanding as of
                December
                31, 2007; $.001 par value
            
            
            14,144
            
            
            13,917Additional
                paid-in capital
            
            
            61,736,754
            
            
            61,658,887Accumulated
                deficit
            
            
            (12,004,716
            )
            
            (10,379,608
            )Total
                stockholders' equity
            
            
            49,746,182
            
            
            51,293,196Total
                liabilities and stockholders' equity
            
            $
            53,537,852
            
            $
            56,729,196





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





-
          2
          -


MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)





**Three Months Ended
                March 31,**
            
            **Three Months Ended
                March 31,****2008**
            
            **2007****Operating
                revenues:**Resource
                adequacy capacity
            
            $
            581,750
            
            $
            692,250Ancillary
                services
            
            
            5,138
            
            
            391,541Energy
                production
            
            
            143,497
            
            
            17,327Total
                operating revenues
            
            
            730,385
            
            
            1,101,118**Costs
                of sales:**Costs
                of resource adequacy capacity
            
            
            42,177
            
            
            55,380Costs
                of ancillary services
            
            
            4,316
            
            
            87,278Costs
                of energy production
            
            
            75,045
            
            
            20,912Total
                costs of sales
            
            
            121,538
            
            
            163,570**Gross
                Profit**
            
            
            608,847
            
            
            937,548**Operating
                expenses:**Depreciation
            
            
            294,322
            
            
            236,963Operations
                and maintenance
            
            
            730,123
            
            
            414,158Re-commissioning
                expenses
            
            
            -
            
            
            379,617General
                and administrative expenses
            
            
            1,517,587
            
            
            1,481,542Total
                operating expenses
            
            
            2,542,032
            
            
            2,512,281**Loss
                from operations**
            
            
            (1,933,185
            )
            
            (1,574,733
            )**Interest
                and other expenses**Interest
                expense
            
            
            65,021
            
            
            55,874Interest
                income
            
            
            373,098
            
            
            51,407Interest
                income (expense), net
            
            
            308,077
            
            
            (4,467
            )Other
                (income) expense, net
            
            
            -
            
            
            160,122Total
                interest and other income (expense)
            
            
            308,077
            
            
            (164,589
            )**Net
                loss before provision for income taxes**
            
            
            (1,625,108
            )
            
            (1,739,322
            )Provision
                for income taxes
            
            
            -
            
            
            -**Net
                loss**
            
            $
            (1,625,108
            )
            $
            (1,739,322
            )**Basic
                loss per common share**Net
                loss per share
            
            $
            (0.12
            )
            $
            (0.36
            )Weighted
                average shares outstanding
            
            
            13,970,315
            
            
            4,802,659**Diluted
                loss per common share**Net
                loss per share
            
            $
            (0.12
            )
            $
            (0.36
            )Weighted
                average shares outstanding
            
            
            13,970,315
            
            
            4,802,659Weighted
                average shares outstanding - basic
            
            
            13,970,315
            
            
            4,802,659Dilutive
                effect of assumed exercise of employee stock options, warrants and
                immediate vesting of unvested stock awards
            
            
            -
            
            
            -Weighted
                average shares outstanding - diluted
            
            
            13,970,315
            
            
            4,802,659Anti-dilutive
                shares excluded from diluted EPS computations
            
            
            418,297
            
            
            78,887





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





-
          3
          -





MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY


FOR
      THE
      PERIOD FROM JANUARY 1, 2008 THROUGH MARCH 31, 2008


(Unaudited)





**Common**
            
            **Common**
            
            **Additional**
            
            
            
            **Total****Shares**
            
            **Stock**
            
            **Paid-in**
            
            **Accumulated**
            
            **Stockholders'****$.001 Par Value**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Equity****Balance
                at December 31, 2007**
            
            
            13,917,347
            
            $
            13,917
            
            $
            61,658,887
            
            $
            (10,379,608
            )
            $
            51,293,196Stock
                awards and options, net of cancellations
            
            
            227,000
            
            
            227
            
            
            77,867
            
            
            
            
            
            78,094Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            (1,625,108
            )
            
            (1,625,108
            )**Balance
                at March 31, 2008**
            
            
            14,144,347
            
            $
            14,144
            
            $
            61,736,754
            
            $
            (12,004,716
            )
            $
            49,746,182





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




-
          4
          -


MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)




**Three Months Ended
                March 31, 2008**
            
            **Three Months Ended
                March 31, 2007****Operating
                Activities of Continuing Operations**Net
                loss
            
            $
            (1,625,108
            )
            $
            (1,739,322
            )Adjustments
                to reconcile net loss to cash used in operating activitiesDepreciation
            
            
            294,322
            
            
            236,963Stock-based
                compensation
            
            
            78,094
            
            
            67,807Changes
                in current assets & liabilities(Increase)
                Decrease in receivables
            
            
            (91,030
            )
            
            33,622Decrease
                in spare parts inventories
            
            
            3,171
            
            
            -(Increase)
                Decrease in prepaids and deposits
            
            
            (98,796
            )
            
            80,528(Decrease)
                Increase in accounts payable
            
            
            (153,552
            )
            
            453,881(Decrease)
                Increase in deferred revenues
            
            
            (65,713
            )
            
            30,360Increase
                (Decrease) in other accrued expenses
            
            
            39,906
            
            
            (141,034
            )(Decrease)
                in accrued compensation
            
            
            (1,400,621
            )
            
            (352,244
            )Decrease
                in other assets and deferred charges
            
            
            32,562
            
            
            -Other
                non-current, net
            
            
            10,130
            
            
            -**Net
                cash used in operations**
            
            
            (2,976,635
            )
            
            (1,329,439
            )**Investing
                Activities of Continuing Operations**Purchases
                of property, plant and equipment
            
            
            (175,184
            )
            
            (28,988
            )Equipment
                deposits paid
            
            
            (9,539,243
            )
            
            -Proceeds
                from sale of securities available for sale, net
            
            
            4,075,000
            
            
            -Deferred
                acquisition costs
            
            
            (307,825
            )
            
            (436,898
            )**Net
                cash used in investing activities**
            
            
            (5,947,252
            )
            
            (465,886
            )**Financing
                Activities of Continuing Operations**Repayment
                of long-term debt
            
            
            (111,114
            )
            
            (111,114
            )Proceeds
                from issuance of stock, net
            
            
            -
            
            
            4,000**Net
                cash provided by financing activities**
            
            
            (111,114
            )
            
            (107,114
            )**Net
                decrease in cash and cash equivalents**
            
            
            (9,035,001
            )
            
            (1,902,439
            )Cash
                and cash equivalents at beginning of period
            
            
            42,582,697
            
            
            4,923,063Cash
                and cash equivalents at end of period
            
            $
            33,547,696
            
            $
            3,020,624**Supplemental
                disclosures:**Cash
                paid for income taxes
            
            $
            -
            
            $
            -Cash
                paid for interest
            
            
            45,495
            
            
            57,333**Non-cash
                investing and financing activities**Stock-based
                compensation
            
            
            78,094
            
            
            67,807





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




-
          5
          -


**MMC
      ENERGY, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2008**


**(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-Q. 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. However, the
      results from operations for the three month period ended March 31, 2008, are
      not
      necessarily indicative of the results that may be expected for the year ended
      December 31, 2008. These unaudited condensed consolidated financial statements
      should be read in conjunction with the consolidated December 31, 2007 financial
      statements and footnotes thereto included in the Company's SEC Form
      10-K.





**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, electricity generating
      assets. In January 2006 the Company acquired two power generation facilities
      located in Chula Vista and Escondido, California, and in November 2006, the
      Company 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, the Mid-Atlantic and the Northeastern United
      States. The Company has also begun the process of upgrading the Chula Vista
      and
      Escondido facilities.





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





**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 valuation of stock options expense, the amounts due
      under accounts payable and the valuation allowance of deferred tax assets.
      Actual results could differ from those estimates.





**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, MMC Mid-Sun LLC, MMC Chula Vista II LLC and MMC Escondido
      II
      LLC. All intercompany accounts and transactions have been eliminated.





**Revenue
      Recognition**





The
      Company recognizes revenue from products and services, 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.





-
          6
          -


The
      Company records revenues in connection with delivering electricity 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. In the event that the Company
      is compensated for services before they are rendered, the Company records
      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. The Company’s revenues to date have been earned by providing
      resource adequacy capacity, ancillary services and energy production in the
      State of California.





·
            Resource
                Adequacy Capacity - Regulatory capacity payments for generators of
                any
                type are based strictly on total installed capacity measured in megawatts
                (“MW”). In the California 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' installed capacity as a source to supply its peak demand
                plus
                a mandatory safety margin as dictated by the California Public Utilities
                Commission (“CPUC”). 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.
                For
                2007, the MMC Escondido and MMC Chula Vista facilities were certified
                by
                CAISO and the CPUC for 35.5 MW each and Mid-Sun for 22 MW, and for
                2008,
                35.5 MW each for the Escondido and Chula Vista facilities and MMC
                Mid-Sun
                for 21.8 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 synchronized to the grid (spin) or not
                (non-spin). Spin services typically offer higher rates. As of October
                9,
                2007 Bear Energy L.P. (“Bear”), the Company’s scheduling coordinator,
                advised the Company that it would no longer bid the Company’s facilities
                into the spin services market due to regulatory uncertainty concerning
                the
                Company’s spin qualification with CAISO. See Note 10 “Commitments and
                Contingent Liabilities” regarding our response to the CAISO’s position.





·
            Energy
                Production - The Company provides electricity to a local power grid
                through day ahead and real time auctions managed by the CAISO, the
                “merchant market” or through financially settled bilateral agreements with
                a utility or other direct counterparty. As the Company has no outstanding
                electricity purchase agreements or other contracted energy production,
                all
                of its energy production revenues are earned in the daily merchant
                market.





**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 nor has it in
      prior periods.




**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.





-
          7
          -


**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.





**Inventories**





Inventories
      are stated at cost based on the specific identification method. Inventories
      consist of spare parts to be used in general operations and maintenance.





**Securities
      Available for Sale**





S ecurities
      Available-for-sale are accounted for under SFAS No. 115 “Accounting for Certain
      Investments in Debt and Equity Securities.” Securities available for sale are
      carried at fair value with the unrealized gains or losses, net of tax, included
      as a component of accumulated other comprehensive income (loss) in stockholders'
      equity. Realized gains and losses and declines in value judged to be
      other-than-temporary on available-for-sale securities are included in other
      income, net. The fair values for marketable debt and equity securities are
      based
      on quoted market prices. Although the Company has carried
      securities-available-for-sale in prior periods these securities did not generate
      unrealized gains or losses; as such to date the company has never recognized
      other comprehensive income (loss) as a component of stockholders’ equity.





**Property,
      Plant 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
                - 20 yearsSoftware
            
            
            3
                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 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 high 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 and revenues are high due
      to
      the small number of entities comprising the Company's customer base. For the
      three months ending March 31, 2008 and 2007, 80% and 63%, respectively, of
      the
      Company’s revenues were derived from one customer, Oxy, Inc; a company which
      carries a senior debt rating of A3 as per Moody’s Rating Service. The Company
      received the balance of its revenues from CAISO.





-
          8
          -


**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 generally corresponds
      to
      peak electricity demand. In addition, commencing in 2008, a portion of the
      Company’s resource adequacy capacity revenues are seasonal as well, with a
      significantly greater portion paid during the summer.





**Geographical
      and Regulatory Risk**





All
      of
      the Company’s facilities are located in Southern California, and generally
      provide electricity only in that state. The facilities maintain exempt wholesale
      generator (“EWG”) status and market based rate (“MBR”) authority as approved by
      the Federal Energy Regulatory Commission. Accordingly, the Company’s operations
      are 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 believes it has all such required
      licenses and permits to conduct its operations and believes that it is
      conducting those operations in compliance with said licenses and permits.





**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. In the past the Company held
      securities-available-for-sale that could have generated other comprehensive
      income (losses) but traded at par for the duration they were held. As such,
      the
      Company does not have any items of comprehensive income in the periods presented
      nor has it since its 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, to the extent that multiple discrete
      segments exist, 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. As per the evaluation of management the Company, at this
      stage, does not contain multiple discrete segments.





**Basic
      and Diluted Earnings (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 month periods ended March
      31, 2008 and 2007, 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 losses for the three month periods ending
      March 31, 2008 and 2007 dilutive shares presented for those periods are
      identical with 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 the
      relevant periods:  ****





-
          9
          -





**Three Months**
              **Ended March 31,**
            
            **Three Months**
              **Ended March 31,****Basic,
                diluted and anti-dilutive shares**
            
            **2008**
            
            **2007**Weighted
                average shares outstanding - basic
            
            
            13,970,315
            
            
            4,802,659Dilutive
                effect of assumed exercise of employee stock options, warrants and
                immediate vesting of unvested stock awards
            
            
            -
            
            
            -Weighted
                average shares outstanding - diluted
            
            
            13,970,315
            
            
            4,802,659Anti-dilutive
                shares excluded from diluted EPS computations
            
            
            418,297
            
            
            78,887





**Stock-Based
      Compensation**





As
      of the
      merger described in Note 10 below, the Company 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 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 March 31, 2008 results and cash flows.




**
            
            Under Pre-SFAS
              123 (R)
              Accounting
            
            SFAS 123(R)
              Impact
            
            Three Months Ended
              March 31, 2008Losses
                before taxes
            
            $
            (1,604,553
            )
            $
            (20,555
            )
            $
            (1,625,108
            )Net
                loss
            
            
            (1,604,553
            )
            
            (20,555
            )
            
            (1,625,108
            )**Net
                Loss**Basic
                EPS
            
            $
            (0.11
            )
            $
            (0.01
            )
            $
            (0.12
            )Diluted
                EPS
            
            
            (0.11
            )
            
            (0.01
            )
            
            (0.12
            )**Cash
                Flows**Operating
                activities
            
            $
            (2,976,635
            )
            $
            -
            
            $
            (2,976,635
            )Financing
                activities
            
            
            (111,114
            )
            
            -
            
            
            (111,114
            )





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
            
            
            72,000
            
            
            8.12
            
            $
            10.00
            
            
            57,334
            
            $
            10.002007
            
            $
            6.50
            
            
            21,000
            
            
            9.08
            
            $
            6.50
            
            
            -
            
            $
            6.50**Totals**
            
            
            
            
            
            93,000
            
            
            8.34
            
            $
            9.21
            
            
            57,334
            
            $
            10.00





-
          10
          -





Transactions
      during 2008 involving stock options issued to employees are summarized as
      follows:





****
            
            **Number of Shares**
            
            **Weighted Average
                Price Per Share****Outstanding
                at December 31, 2007**
            
            
            93,000
            
            $
            9.21Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Cancelled
                or expired
            
            
            -
            
            
            -**Outstanding
                at March 31, 2008**
            
            
            **93,000**
            
            **$**
            **9.21**





Based
      on
      the Company’s closing stock price of $2.15 on March 31, 2008, all stock options
      currently outstanding have no aggregate intrinsic value, and there were no
      in-the-money options exercisable. As of March 31, 2008, all exercisable options
      had a weighted-average remaining contractual life of 8.12 years and
      weighted-average exercise price of $10.00 per share.





For
      the
      three month periods ended March 31, 2008 and 2007 there were zero options
      granted.





**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 month periods ended March 31, 2008 and
      2007.





**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. These
      warrants were exercised in their entirety by the end of the second quarter
      of
      2007 and none remain outstanding.





**Recent
      Accounting Pronouncements**





*SFAS
      No. 161* .
      In
      March 2008, the Financial Accounting Standards Board (the “FASB”) issued
      Statement on Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about
      Derivative Instruments and Hedging Activities - An Amendment of FASB Statement
      No. 133” (“SFAS 161”). SFAS 161 enhances required disclosures regarding
      derivatives and hedging activities, including enhanced disclosures regarding
      how: ( *a* )
      an
      entity uses derivative instruments; ( *b* )
      derivative instruments and related hedged items are accounted for under SFAS
      133 *;* and
      ( *c* )
      derivative instruments and related hedged items affect an entity's financial
      position, financial performance, and cash flows. Specifically, SFAS No. 161
      requires:  disclosure
      of the objectives for using derivative instruments in terms of underlying risk
      and accounting designation;  disclosure
      of the fair values of derivative instruments and their gains and losses in
      a
      tabular format;  disclosure
      of information about credit-risk-related contingent features; and  cross-reference
      from the derivative footnote to other footnotes in which derivative-related
      information is disclosed. SFAS 161 is effective for fiscal years and interim
      periods beginning after November 15, 2008. The Company does not expect that
      the
      adoption of this standard will have a material impact on its financial position,
      results of operations or cash flows.





*SFAS
      No.160.* In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      160, “Noncontrolling Interests in Consolidated Financial Statements — an
      amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires that a non-controlling
      interest in a subsidiary be reported as equity and the amount of consolidated
      net income specifically attributable to the non-controlling interest be
      identified in the consolidated financial statements. It also requires
      consistency in the manner of reporting changes in the parent’s ownership
      interest and requires fair value measurement of any non-controlling equity
      investment retained in a deconsolidation. The Company will apply the provisions
      of this statement prospectively, as required, beginning on January 1, 2009
      and
      does not expect the adoption of SFAS 160 to have a material effect on its
      consolidated financial statements.





-
          11
          -


*SFAS
      141(R)* .
      In
      December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
      Combinations” (“SFAS 141 (R)”). SFAS 141(R) retains the fundamental requirements
      in Statement 141 that the acquisition method of accounting (which Statement
      141
      called the purchase method) be used for all business combinations and for an
      acquirer to be identified for each business combination. In general, the
      statement 1) broadens the guidance of SFAS 141, extending its applicability
      to
      all events where one entity obtains control over one or more other businesses,
      2) broadens the use of fair value measurements used to recognize the assets
      acquired and liabilities assumed, 3) changes the accounting for acquisition
      related fees and restructuring costs incurred in connection with an acquisition
      and 4) increases required disclosures. SFAS 141R applies prospectively to
      business combinations for which the acquisition date is on or after the
      beginning of the first annual reporting period beginning on or after December
      15, 2008. *Earlier
      adoption is prohibited.* The
      Company will apply the provisions of this statement prospectively to business
      combinations for which the acquisition date is on or after January 1, 2009.
      The
      Company believes there will be no impact of adoption of SFAS 141(R) on its
      prior
      period consolidated financial statements.





**Reclassifications**





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





**NOTE
      3 - RECEIVABLES AND PREPAID ITEMS**




At
      March
      31, 2008 and December 31, 2007 accounts receivable and prepaid items consisted
      of the following:





**March
                31,**
            
            **December
                31,****2008**
            
            **2007**Accounts
                receivable
            
            $
            107,010
            
            $
            62,855Allowance
                for doubtful accounts
            
            
            -
            
            
            -Total
            
            $
            107,010
            
            $
            62,855Unbilled
                receivables
            
            $
            46,875
            
            $
            -Total
            
            $
            46,875
            
            $
            -Prepaid
                insurance
            
            $
            146,339
            
            $
            114,785Prepaid
                expenses
            
            
            167,211
            
            
            100,469Short-term
                deposits
            
            
            500
            
            
            -Total
            
            $
            314,050
            
            $
            215,254





**NOTE
      4 - SECURITIES AVAILABLE FOR SALE**





Securities
      Available-for-sale are accounted for under SFAS No. 115 “Accounting for Certain
      Investments in Debt and Equity Securities.” Securities available for sale are
      carried at fair value with the unrealized gains or losses, net of tax, included
      as a component of accumulated other comprehensive income (losses) in
      stockholders' equity. Realized gains and losses and declines in value judged
      to
      be other-than-temporary on available-for-sale securities are included in other
      income, net. The fair values for marketable debt and equity securities are
      based
      on quoted market prices. Securities available for sale, in the past, consisted
      of municipal variable-rate demand notes (“VRDNs”). VRDNs are long-term bonds
      that have an embedded put option. This put is at par (100) and is 7
      days from the point of exercise.  Thus, rolling liquidity is available on
      this position on trade date plus seven days basis. In addition due to the
      presence of the put the VRDNs are generally never subject to a change in market
      value and thus do not generate any mark-to-market adjustments except in
      extraordinary market situations. These VRDNs belong to a broader group known
      as
      Auction Rate Securities. The Company sold these securities at face value in
      the
      current quarter and did not incur any gains or losses on such disposition.
      At
      the report date the Company had no instruments classified as securities
      available for sale.





-
          12
          -


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





At
      March
      31, 2008 and December 31, 2007 property, plant and equipment consisted of the
      following:





**March
                31,**
            
            **December
                31,****2008**
            
            **2007**Land
            
            $
            375,000
            
            $
            375,000Automobile
            
            
            21,927
            
            
            21,927Office
                equipment
            
            
            120,321
            
            
            115,825Machinery,
                equipment & other
            
            
            8,143,437
            
            
            7,925,9858,660,685
            
            
            8,438,737Accumulated
                depreciation
            
            
            (2,011,906
            )
            
            (1,717,584
            )**Total**
            
            $
            6,648,779
            
            $
            6,721,153




Depreciation
      for the three months ended March 31, 2008 and 2007 were $294,322
      and $236,963, respectively.





**NOTE
      6 - 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
      expensed 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 at the assessment date 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 public stock offering consummated in July 2007 were offset directly
      against the gross proceeds of said offering. Outstanding deferred costs
      consisted of the costs for our two re-powering projects at Chula Vista and
      Escondido as well as costs capitalized for Project Acadia, a potential
      acquisition.





**March
                31,**
            
            **December
                31,****Deferred
                Costs**
            
            **2008**
            
            **2007**Deferred
                development costs - Chula Vista
            
            $
            2,399,247
            
            $
            2,202,176Deferred
                development costs - Escondido
            
            
            344,798
            
            
            286,580Deferred
                development costs - Project Acadia
            
            
            52,536
            
            
            -Total
            
            $
            2,796,581
            
            $
            2,488,756





**NOTE
      7 - LONG-TERM DEPOSITS**





Long-term
      deposits consist primarily of contractually scheduled prepayments related to
      an
      agreement entered into with GE Packaged Power, Inc. during the first quarter
      for
      the purchase of two LM-6000 turbines for approximately $31 million to be used
      in
      the Chula Vista Upgrade Project. The agreement was disclosed previously in
      a
      Current Report Form 8-K filed January 29, 2008. Long-term deposits also include
      a security deposit for the land lease of the Company’s Chula Vista facility.
      Through the three months ended March 31, 2008 the Company has made approximately
      $9.5 million in scheduled deposit payments.





**NOTE
      8 - OTHER ASSETS & DEFERRED CHARGES**





Other
      assts and deferred charges consist of $358,200 of deferred maintenance charges
      in connection with Planned Major Maintenance Activities (“PMMA”) for large
      assets as of March 31, 2008, net of amortization. The cost of these PMMA are
      accounted for in accordance with the deferral method as described in FSP-AIR.
      As
      such PMMA costs are capitalized and then recognized over the earlier of (i)
      the
      remaining life of the asset or (ii) until the next PMMA for that equipment.
      For
      the three months ending March 31, 2008 and 2007 the company amortized $32,562
      and $0 of deferred maintenance charges, respectively.





-
          13
          -


**NOTE 9
      - 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 eight
      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 2006, 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, 2007,
      the company was in compliance with all covenants .
      The
      loans are collateralized by substantially all assets of MMC North
      America.





**NOTE 10
      - COMMITMENTS AND CONTINGENT LIABILITIES**





In
      February 2007, the Company announced that it had learned that one hundred
      thousand shares of its common stock issued as part of a 1.2 million share
      private placement transaction it consummated in May 2006 were purchased by
      an
      entity controlled by Louis Zehil, who at the time of the purchase was a partner
      of the Company’s external legal counsel for the private placement transaction,
      McGuireWoods LLP. The Company also announced that it believes that Mr. Zehil
      improperly caused the Company’s 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. The Company
      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 the Company as well. One or more of the
      Company’s investors from the Company’s May 2006 private placement of 1.2 million
      shares could also claim a rescission right. It is also possible that one or
      more
      of the Company’s stockholders could claim that they somehow suffered a loss as a
      result of Mr. Zehil’s conduct and attempt to hold the Company 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 the Company and it is not adequately
      indemnified for those claims from available sources of indemnification, then
      such claims could have a material adverse effect on the Company’s financial
      condition and operating results. The Company also may incur significant costs
      resulting from its investigation of this matter, any litigation it may initiate
      as a result and the Company’s cooperation with governmental authorities. The
      Company may not be adequately indemnified for such costs from available sources
      of indemnification.





MMC
      North
      America has arranged for the continuation of an irrevocable letter of credit
      in
      the amount of $100,000 (the “Letter of Credit”) to a counterparty with whom it
      originally entered into an energy services agreement 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 February
      28, 2009. Availability under the Revolver is reduced from $500,000 to $400,000
      while the Letter of Credit remains outstanding.





On
      January 29, 2008, the Company entered into an agreement to purchase two LM-6000
      turbines from GE Packaged Power, Inc. The total cost of these turbines is
      approximately $31 million. The Company will make scheduled deposit payments
      for
      the purchase price of the turbines through March 2009, the expected delivery
      date of the turbines. Through the date of this report, the Company has made
      approximately $11.2 million in scheduled payments.





-
          14
          -


As
      the
      Company’s facilities are located in California, they are exposed to the risk of
      potential damage from a catastrophic event such as an earthquake.  In
      addition, the Chula Vista facility lies within a designated flood plane and
      is
      therefore potentially at risk if subject to a 100 year flood event.  While
      the Company generally insures its facilities at replacement cost, the Company’s
      insurance policy imposes a $1 million limit on claims resulting from an
      earthquake or flood.  Supplemental coverage for these risks is cost
      prohibitive and therefore the Company has foregone purchasing such coverage
      and,
      effectively self insures for these risks.  Accordingly, should any of the
      Company’s facilities be damaged by such an event, the insurance proceeds to the
      Company may not be sufficient to cover the costs required to restore such
      facilities to operating condition.  Furthermore, should such a catastrophic
      event result in the permanent loss of any of its three facilities, the Company
      believes the insurance proceeds would not be sufficient to recover the loss
      of
      future cash flows, or expected market value, of the facility.





The
      Company filed a complaint with the Federal Energy Regulatory Commission
      (‘‘FERC’’) on March 13, 2008 seeking an order directing the CAISO to allow the
      Company to participate in the spinning reserve market. The CAISO filed a
      counterclaim on April 14, 2008 disputing the Company’s position. The Company
      reiterated its position in a response to the counterclaim filed April 29, 2008.
      The CAISO has the option of responding to our most recently filed response
      up to
      15 days after the date its filing, but has not done so through the date of
      this
      quarterly report. Customarily the FERC will issue a binding ruling within 20
      days of final submissions by the complaining parties. The FERC may extend its
      time of issue a ruling at its discretion.





The
      Company is unable to gauge the extent of its ultimate liability with respect
      to
      this and any and all future regulatory matters. The costs and other effects
      of
      any future litigation, regulatory proceedings, legal and administrative cases,
      settlements, judgments, claims and changes in this matter will not have a
      material adverse effect on the Company’s financial condition and liquidity but
      may have a material impact on future operating results.




The
      Company’s primary office space is currently leased through December 31, 2010.
      Additionally, in February 2008, the Company opened an office in San Diego which
      is currently leased through March 2009.





The
      Company has 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.





The
      Company is 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 material legal proceeding as of the report date.





**NOTE 11
      - 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 March 31, 2008, 93,000
      shares have been granted to employees, net of cancellations, in the form of
      stock option grants, with a weighted average exercise price of $9.21 per share,
      consistent with the market value of the Company’s common stock at the time of
      issuances. An additional 245,836 shares of restricted stock have been granted
      to
      employees and directors. As of March 31, 2008, 161,164 shares are available
      for
      issue under the Plan.





For
      the
      three months ended March 31, 2008 and 2007 the company issued 227,000 and 2,561
      shares of restricted stock to its employees, respectively.





**NOTE
      12 - STOCKHOLDERS' EQUITY**





During
      the quarter ended March 31, 2008, the Company issued 227,000 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 14,144,347 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.





On
      April
      19, 2007, the Company effected a one-for-ten reverse stock split of its
      outstanding shares of common stock, $0.001 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.





-
          15
          -


On
      July
      5, 2007, the Company completed 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.





**NOTE
      13 - RELATED PARTY TRANSACTIONS**





The
      Company had no related party transactions for the three month periods ended
      March 31, 2008 and 2007.






-
          16
          -


**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 Annual Report on Form 10-K 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 future
      results indicated in these forward-looking statements. Other factors could
      also
      cause actual results to vary materially from future results indicated in such
      forward-looking statements.*




**Overview**





We
      are an
      energy management company that acquires and actively manages electricity
      generating and energy infrastructure related assets in the United States. Our
      mission is to acquire, directly or through joint ventures, a portfolio of small
      to mid-size electricity generating assets, generally below 250 megawatts, or
      “MW.” To date, we have acquired three electricity generating assets in
      California, totaling 110 MW of capacity and are in the process of upgrading
      two
      of these assets. We are also pursuing additional acquisitions of small to
      medium-sized power generating facilities primarily in California, the
      Mid-Atlantic states and the Northeastern portion of the United States. Our
      natural gas fueled electricity generating facilities are commonly referred
      to as
“peaker” plants. Our 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 assets generate revenue from providing capacity and
      ancillary reliability services to transmission grids that distribute electricity
      to industrial and retail electricity providers. During peak electricity usage
      times, such as the summer, we also sell our electricity in the daily merchant
      market.





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





*
      Targeting transmission and electricity constrained regions





*
      Acquiring, developing and operating 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




In
          January 2008, we ordered two GE LM-6000 turbines for our Chula Vista Energy
          Upgrade Project, a 100 MW natural gas-fired peaking power plant in place
          of our
          existing 44 MW facility. We expect the turbines to be delivered in March
          2009,
          which we believe will help ensure that our upgrade projects remain on schedule
          to commence commercial operation in the Summer of 2009. The turbines are
          the
          primary equipment to be used in the Chula Vista Energy Upgrade Project,
          and we
          expect to utilize similar but single turbine at our 50 MW Escondido Energy
          Upgrade Project. We expect the new turbines and related ancillary equipment
          to
          allow us to increase the each project’s capacity as well as to greatly improve
          their efficiency and reduce their emissions generated per MW-hour. In developing
          the new projects, we plan to decommission and remove the existing 44.5
          MW power
          plants located on each project site.
 Also
          in
          January 2008, the Escondido City Council approved our application for a
          conditional use permit to construct our Escondido Project. Upon receipt
          of an
          air permit from the San Diego Air Pollution Control District, the permitting
          process will be complete for the Escondido Project. In April 2008, we received
          a
          Preliminary Staff Assessment (PSA) from the California Energy Commission
          (CEC)
          relating to the licensing of our Chula Vista Project. The PSA concludes
          that the
          proposed project could be constructed and operated without causing significant
          environmental impacts if certain mitigation measures are implemented. We
          expect
          to complete the CEC permitting process in the Fourth Quarter.
 
 In
        February, 2008 we filed a complaint with the Federal Energy Regulatory
        Commission to allow us to participate in the spinning reserve market. The
        CAISO
        has informed us that because we filed the complaint it may seek rescission
        of
        all spinning reserve revenues paid to date. We believe we are entitled to
        retain
        these revenues and intend to vigorously oppose any such action by the
        CAISO.
 
 In
        March
        2008, we announced the engagement of Merriman Curhan Ford as an exclusive
        financial advisor to assist the Company with evaluating potential joint venture
        partnerships, strategic alliances, asset sales, or other strategic transactions
        that may serve to increase shareholder value beyond pursuing the above strategy
        independently. Also in March 2008, we announced a $2.5 million share buy
        back
        program effective until September 30, 2008, due to the belief that our stock
        is
        currently undervalued and that the program offers a compelling investment
        value
        at such prices


-
            17
            -


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, 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 two
      44
      MW natural gas fired electricity generating facilities in San Diego County,
      one
      in Chula Vista and the other in Escondido, California. This acquisition provided
      us entry to the California wholesale electricity market. We fully
      re-commissioned the facilities and began earning revenues in June 2006. We
      acquired the formerly idle facilities for what we believe to be a discounted
      value to market, and believe the facilities appreciated substantially in value
      following their repair and re-commissioning. In November 2006, we acquired
      MMC
      Mid-Sun, a 22 MW facility near Bakersfield, California, which we also
      successfully re-commissioned and began operating in January 2007.




On
      July
      5, 2007, we listed our common stock on the Nasdaq Global Market in connection
      with the closing of a $50 million underwritten public offering of our common
      stock.





We
      currently have seven full time employees. 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.





**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**





**Revenues**





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





-
          18
          -


·
            Resource
                Adequacy Capacity - Regulatory capacity payments for generators of
                any
                type are based strictly on total installed capacity measured in megawatts
                (“MW”). In the California market where we currently operates exclusively,
                market-based capacity revenues are earned through resource adequacy
                contracts, whereby the counterparty can point to the our facilities'
                installed capacity as a source to supply its peak demand plus a mandatory
                safety margin as dictated by the California Public Utilities Commission
                (“CPUC”). The contract does not create an obligation to supply electricity
                to the counterparty, but does obligate us to bid its energy into
                the CAISO
                markets on a daily basis such that our capacity is available to the
                CAISO,
                if needed, at our price. The resource adequacy capacity amount cannot
                exceed the qualified capacity amount for the resource. Qualified
                capacity
                is certified by CAISO. For 2007, the MMC Escondido and MMC Chula
                Vista
                facilities were certified by CAISO and the CPUC for 35.5 MW each,
                and MMC
                Mid-Sun for 22 MW, and for 2008, 35.5 MW each for the Escondido and
                Chula
                Vista facilities and MMC Mid-Sun for 21.8
                MW.





·
            Ancillary
                Services - Although there are several types of ancillary services,
                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 synchronized to the grid (spin) or not
                (non-spin). Spin services typically offer higher rates. As of October
                9,
                2007, Bear Energy L.P. (“Bear”) our scheduling coordinator advised us that
                it would no longer bid our facilities into the spin services market
                due to
                regulatory uncertainty concerning our spin qualification with CAISO.
                Furthermore, pricing for non-spin reserves has been negligible since
                October, 2007. While we expect pricing to recover somewhat during
                the peak
                Summer period, our ancillary service revenues will likely not be
                as large
                a percentage of our total revenues as they have been
                historically.





·
            Energy
                Production - We provide electricity to a local power grid through
                day
                ahead and real time auctions managed by the CAISO, the “merchant market”
                or through financially settled bilateral agreements with a utility
                or
                other direct counterparty. As we have no outstanding electricity
                purchase
                agreements or other contracted energy production, all of our energy
                production revenues are earned in the daily merchant market.





Revenues
      for the three month periods ended March 31, 2008 and 2007 were distributed
      as
      follows:





**Three
                months ended March 31,****Operating
                revenues:**
            
            **2008**
            
            **2007**Resource
                adequacy capacity
            
            $
            581,750
            
            $
            692,250Ancillary
                services
            
            
            5,138
            
            
            391,541Energy
                production
            
            
            143,497
            
            
            17,327**Total
                operating revenues**
            
            $
            730,385
            
            $
            1,101,118




Revenues
      decreased 34% to $730,385 driven primarily by the drop in ancillary services
      due
      to the suspension of our spinning reserve services qualification by the CAISO. Non-spinning
      reserve service has historically priced lower than spinning reserve service
      and
      this trend has been accentuated during the past two quarters, and can be
      expected to continue during off peak periods. Historically, non-spinning reserve
      pricing has spiked in the summer months consistent with spinning reserves,
      however, there can be no assurances that trend will continue this summer.
      Accordingly, we expect that continued suspension of bidding spinning reserve
      services could have a material adverse effect on our results from operations. We
      continue to dispute the CAISO’s ruling on its spin qualification and have filed
      a complaint with the Federal Energy Regulatory Commission (the “FERC”) with a
      view toward restoring our spin qualifications. These proceedings are currently
      in process. The decrease in ancillary services was partially offset by higher
      energy revenues due to more frequent dispatches. Capacity revenues decreased
      due
      to our Escondido facility being paid in a shaped contract which reflects the
      seasonal demand for energy such that the vast majority of Escondido’s capacity
      revenues are earned during the summer.





**Cost
      of Sales**





Cost
      of
      sales for the three months ended March 31, 2008 and 2007 were $121,538 and
      $163,570 respectively, yielding gross profits of $608,847 and $937,548 and
      gross
      margin of 83% and 85%, respectively.





Our
      gross
      margin has been relatively high due to high margin resource adequacy capacity
      constituting the largest portion of our revenues. In addition, gross margins
      for
      energy production revenue remain high as we generally produce energy only during
      peak demand times which result in the highest prices for energy. We expect
      our
      gross margin to decrease significantly as a percentage of our revenues as we
      upgrade existing facilities and acquire additional facilities, which are
      expected to increase our gross energy production.





Costs
      of
      sales and gross margins were distributed as follows:





**Three
                months ended March 31,****Costs
                of sales:**
            
            **2008**
            
            **2007**Costs
                of resource adequacy capacity
            
            
            42,177
            
            
            55,380Costs
                of ancillary services
            
            
            4,316
            
            
            87,278Costs
                of energy production
            
            
            75,045
            
            
            20,912**Total
                costs of sales**
            
            $
            121,538
            
            $
            163,570




**Gross
        Margin %**




**Three
                months ended March 31,****Costs
                of sales:**
            
            **2008**
            
            **2007**Costs
                of resource adequacy capacity
            
            
            92.7
            %
            
            92.0
            %Costs
                of ancillary services
            
            
            16.0
            %
            
            77.7
            %Costs
                of energy production
            
            
            47.7
            %
            
            -20.7
            %**Total
                costs of sales**
            
            
            83.4
            %
            
            85.1
            %





-
          19
          -





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 variable 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.We
                expect energy production gross margins to decrease in future periods
                upon
                re-powering Chula Vista and Escondido or acquiring additional facilities.





**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 March 31, 2008 and 2007, operations and maintenance expenses were $730,123
      and $414,158 respectively. These expenses consisted primarily of contracted
      labor, interconnection costs, repairs and maintenance, environmental consulting,
      environmental compliance and other semi-variable costs. The increase in expenses
      was driven primarily by higher labor costs and repairs and maintenance related
      to scheduled outages in the first quarter that are typically executed in the
      second quarter of the year. In addition the first quarter of 2007 does not
      reflect a full three months of operations for Mid-Sun as re-commissioning was
      completed during the quarter.





**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. 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. We have completed the
      re-commissioning for our current assets, but 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.





-
          20
          -


For
      the
      three months ended March 31, 2008 and 2007, re-commissioning costs were $0
      and
      $379,617, respectively. In 2008 the company had no re-commissioning projects
      in
      process. The 2007 period expense reflects the final costs of re-commissioning
      our Mid-Sun facility, which was completed in January 2007.





**General
      and Administrative Expenses**





For
      the
      three months ended March 31, 2008 and 2007, general and administrative expenses
      were $1,517,587 and $1,481,542, respectively. General and administrative
      expenses for the three months ended March 31, 2008 and 2007 were primarily
      driven by compensation and professional fees. The 2007 period expense includes
      a
      non-recurring charge of approximately $400,000 related to severance in
      connection with the departure of a former officer. 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.





**Interest
      and Other Expenses**





Interest
      income for the three months ended March 31, 2008 reflects investment of the
      proceeds of the recently completed public offering in high-yield investment
      grade money market funds and debt securities partially offset by senior debt
      interest expense. We expect to continue to earn net interest income until the
      proceeds from the offering are utilized to acquire additional assets, which
      we
      expect to include debt financing, which will result in a material increase
      in
      interest expenses.





Other
      expense of $160,122 for the three months ended March 31, 2007 reflects legal
      and
      professional fees primarily related to unsuccessful financing activities prior
      to the public offering successfully completed July 2007. In subsequent periods
      in 2007 there was a full recovery of these costs.





**Liquidity
      and Capital Resources**





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. This transaction
      resulted in net proceeds to us of approximately $46.1 million. As of March
      31,
      2008, we had $33.5 million in cash and equivalents. The majority of cash
      utilized during the quarter was attributable to approximately $9.5 million
      of
      deposits on turbines for our planned Chula Vista upgrade project and
      approximately a $1.2 million severance payment and related costs to our former
      chief executive officer.





We
      believe that our existing cash resources will be sufficient to satisfy our
      cash
      requirements for at least the next twelve months. However, our existing cash
      resources may not be sufficient to fully fund our acquisition growth strategy.
      Such acquisitions may require us to obtain additional debt financing or other
      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 eight months, and 81 equal monthly 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%.





Advances
      against the revolver are payable on demand and bear interest at the prime rate
      plus 1.00%. Beginning in 2006, 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 make
      distributions to us 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. These financial covenants are measured annually. During the last
      measurement of these covenants, for the twelve months ended December 31, 2007,
      we were in compliance with all covenants .
      The
      loans are collateralized by substantially all assets of MMC North
      America.





-
          21
          -


MMC
      North
      America has arranged for the continuation of an irrevocable letter of credit
      in
      the amount of $100,000 (the “Letter of Credit”) to a counterparty with whom we
      originally entered into an energy services agreement 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 February
      28, 2009. Availability under the Revolver is reduced from $500,000 to $400,000
      while the Letter of Credit remains outstanding.





On
      January 29, 2008 the Company entered into an agreement with GE Packaged Power,
      Inc. for the purchase of two LM-6000 turbines to be used in the Chula Vista
      Upgrade Project for approximately $31 million. Through the date of this report
      the Company has made payments of approximately $11.2 million. These payments
      are
      classified as long-term deposits on our condensed consolidated balance sheet.





**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 planned Chula Vista and Escondido upgrades and possible
      future acquisition of "mid-merit" electricity generation 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 and we would expect to enter into intermediate term
      financially settled 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 spot
      market prices, as opposed to under longer term fixed-price contracts, our
      revenues and operating income are highly exposed to the seasonal fluctuations
      in
      natural gas and electricity, which corresponds to peak summer demand. The effect
      of inflation on our revenue and operating results was not
      significant.





**Recent
      Accounting Pronouncements**





See
      Note
      2 of the Notes to Condensed Consolidated Financial Statements for recent
      accounting pronouncements.





**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





Not
      Applicable





**ITEM
      4T. 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 March 31, 2008, 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. Disclosure controls and procedures include, without
      limitation, controls and procedures designed to ensure that information required
      to be disclosed in our reports filed or submitted under the Exchange Act is
      accumulated and communicated to management, including our chief executive
      officer and treasurer, as appropriate to allow timely decisions regarding
      disclosure.


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**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.





**PART
      II**


**OTHER
      INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**


On
        April 21, 2008 we filed an arbitration claim against Karl W. Miller,
        our former CEO, with the American Arbitration Association in the Borough
        of
        Manhattan, New York, New York, alleging, among other things, that he
        fraudulently induced MMC to enter into a Separation Agreement in connection
        with
        his removal as CEO, that Mr. Miller breached his obligations under the
        Separation Agreement and that he has tortuously interfered with MMC’s business
        relations. In
        December 2007, our Board of Directors removed Mr. Miller as CEO and in February
        2008 paid him in excess of $1.1 million as severance and entered into a
        Separation Agreement with Mr. Miller. Under the Separation Agreement, Mr.
        Miller
        agreed, among other things, not to interfere with our business operations
        or
        disparage us, our Board of Directors or our management, and to abide by the
        non-competition and non-solicitation provisions of his Employment Agreement.
        As
        alleged in the Statement of Claim, less than one month after accepting the
        severance payment, Mr. Miller began issuing a series of disparaging press
        releases and announced his intention to launch a proxy contest. On April
        16,
        2008, Mr. Miller filed a preliminary proxy statement with the Securities
        and
        Exchange Commission which, as alleged in the Statement of Claim, is replete
        with
        disparaging statements concerning us and confirms that Mr. Miller is openly
        competing with us. In the arbitration, we are seeking an award requiring
        Mr.
        Miller to return the $1.1 million severance payment, punitive damages in
        an
        amount to be determined at trial and reasonable costs and attorney’s
        fees.
 
 On
        May 6, 2008, Mr. Miller filed with the Supreme Court of the State of
        New York a petition to stay the arbitration on the grounds that at least
        some of
        the claims asserted in the arbitration were not subject to arbitration under
        the
        arbitration clause of Mr. Miller’s Employment Agreement. On May 8,
        2008, we commenced a lawsuit against Mr. Miller in the United States
        District Court for the Southern District of New York asserting the same claims
        arising from the Separation Agreement that we previously asserted in the
        arbitration proceeding.


From
      time
      to time we may become a party to other litigation or legal proceedings that
      are
      part of the ordinary course of our business, involving routine litigation that
      is incidental to our business. Management and legal counsel periodically review the probable outcome of such
      proceedings, the costs and expenses reasonably expected to be incurred, the
      availability and extent of insurance coverage, and established
      reserves.





While
      it
      is not possible at this time to predict the outcome of these legal actions
      or
      any need for additional reserves, in the opinion of management, based on these
      reviews, it is remote that the disposition of any lawsuits will have a material
      adverse effect on the Company's financial position, results of operations,
      cash
      flows or competitive position.





**ITEM
      1A. RISK FACTORS**





Not
      Applicable




**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





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          23
          -


**ITEM
      6. EXHIBITS**





(a)
      Exhibits.




10.20
            Equipment
                and Services Agreement, dated January 25, 2008, by and between MMC
                Energy,
                Inc. and GE Packaged Power, Inc.10.21
            Separation
                Agreement and Release, dated February 7, 2008, by and between MMC
                Energy,
                Inc. and Karl W. Miller10.22
            Second
                Amendment to the Energy Management Agreement between Bear Energy
                LP and
                MMC Mid-Sun LLC *10.23
            Third
                Amendment to the Energy Management Agreement between Bear Energy
                LP and
                MMC Energy North America, LLC; MMC Chula Vista, LLC; and MMC Escondido,
                LLC *


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





*
        Portions of this Exhibit were omitted and have been filed separately with
        the
        Secretary of the Commission pursuant to the Company’s Application requesting
        Confidential Treatment under Rule 24b-2 of the Securities Exchange Act of
        1934.


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          24
          -


**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/
                Michael J. HamiltonMichael
                J. HamiltonChief
                Executive Officer





By:
            /s/
                Denis GagnonDenis
                GagnonChief
                Financial Officer and Principal Accounting OfficerDATE:May
                14, 2008





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