**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-QSB**





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


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      quarterly period ended September 30, 2007





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





For
      the
      transition period from         
to         .




*Commission
      file number 000-51968*





**MMC
                ENERGY, INC.**(Exact
                name of small business issuer in its charter)




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




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







(Former
      name, former address and former fiscal year,


if
      changed since last report)





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





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





**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





As
      of
      November 7, 2007 the registrant had 13,917,347 shares of Common Stock
      outstanding.





Transitional
      Small Business Disclosure Format (Check one): Yes o Nox











TABLE
        OF
        CONTENTS
 
 PART
                  I
              FINANCIAL
                  INFORMATIONITEM
                  1
              Financial
                  StatementsCondensed
                  Consolidated Balance Sheets as of September 30, 2007 (unaudited)
                  and
                  December 31, 2006
              3Condensed
                  Consolidated Statements of Operations (unaudited) for the three
                  and nine
                  month periods ended September 30, 2007 and 2006
              4Condensed
                  Consolidated Statement of Stockholders' Equity (unaudited) for the
                  period from January 1, 2007 through September 30,
                  2007
              5Condensed
                  Consolidated Statements of Cash Flows (unaudited) for the three
                  and nine
                  month periods ended September 30, 2007 and 2006
              6Notes
                  to Condensed Consolidated Financial Statements (unaudited)
              7ITEM
                  2
              Management's
                  Discussion and Analysis of Financial Condition and Results of Operations
              19ITEM
                  3
              Controls
                  and Procedures
              24PART
                  II
              OTHER
                  INFORMATIONITEM
                  1
              Legal
                  Proceedings
              25ITEM
                  2
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              25ITEM
                  3
              Defaults
                  Upon Senior Securities
              25ITEM
                  4
              Submission
                  of Matters to a Vote of Security Holders
              25ITEM
                  5
              Other
                  Information
              25ITEM
                  6
              Exhibits
              26SIGNATURES
              27




**EXPLANATORY
      NOTE**





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




-
          2
          -





**PART
      I. FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS**




MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED BALANCE SHEETS




**September 30,**
                
                **December 31,****2007**
                
                **2006**(unaudited)**Assets**Current
                    assets:Cash
                    and equivalents
                
                $
                43,159,345
                
                $
                4,923,063Accounts
                    receivable (Note 3)
                
                
                62,743
                
                
                -Unbilled
                    receivables (Note 3)
                
                
                330,112
                
                
                157,131Spare
                    parts inventories
                
                
                74,251
                
                
                -Prepaids
                    (Note 3)
                
                
                195,654
                
                
                261,901Securities
                    avaliable for sale (Note 4)
                
                
                4,075,000
                
                
                -Total
                    current assets
                
                
                47,897,105
                
                
                5,342,095Property,
                    plant and equipment, net (Note 5)
                
                
                7,002,625
                
                
                7,355,576Deferred
                    acquisition costs (Note 6)
                
                
                2,109,577
                
                
                749,760Long-term
                    deposits
                
                
                75,000
                
                
                75,000Other
                    assets and deferred charges (Note 7)
                
                
                423,324
                
                
                -Total
                    assets
                
                $
                57,507,631
                
                $
                13,522,431**Liabilities
                    & Stockholders' equity**Current
                    Liabilities:Current
                    maturities of long-term debt (Note 8)
                
                $
                444,456
                
                $
                444,456Accounts
                    payable
                
                
                394,595
                
                
                540,992Deferred
                    revenue
                
                
                242,650
                
                
                212,290Other
                    accrued expenses
                
                
                504,683
                
                
                976,642Accrued
                    compensation
                
                
                615,815
                
                
                315,000Total
                    current liabilities
                
                
                2,202,199
                
                
                2,489,380Long-term
                    debt (Note 8)
                
                
                2,074,050
                
                
                2,407,392Commitments
                    & contingencies (Note 9)Stockholders'
                    Equity (Note 8)Preferred
                    Stock; 10,000,000 shares authorized; none issued and outstanding;
                    $.001
                    par value
                
                
                -
                
                
                -Common
                    stock; 300,000,000 shares authorized with 13,907,347 issued and
                    outstanding as of September 30, 2007 and 4,768,876 outstanding
                    as of
                    December 31, 2006; $.001 par value
                
                
                13,907
                
                
                4,769Additional
                    paid-in capital
                
                
                61,485,958
                
                
                15,227,586Accumulated
                    deficit
                
                
                (8,268,483
                )
                
                (6,606,696
                )Total
                    stockholders' equity (Note 11)
                
                
                53,231,382
                
                
                8,625,659Total
                    liabilities and stockholders' equity
                
                $
                57,507,631
                
                $
                13,522,431


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




-
          3
          -




MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)




**Three Months Ended**
                **September 30,**
              
              **Three Months**
                **Ended September**
                **30,**
              
              **Nine Months Ended**
                **September 30,**
              
              **Nine Months Ended**
                **September 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006****Operating
                  revenues:**Resource
                  adequacy capacity
              
              $
              791,250
              
              $
              380,000
              
              $
              2,274,750
              
              $
              380,000Ancillary
                  services
              
              
              1,496,289
              
              
              1,441,581
              
              
              2,500,676
              
              
              1,693,853Energy
                  production
              
              
              462,224
              
              
              693,645
              
              
              580,417
              
              
              712,320Total
                  operating revenues
              
              
              2,749,763
              
              
              2,515,226
              
              
              5,355,843
              
              
              2,786,173**Costs
                  of sales:**Costs
                  of resource adequacy capacity
              
              
              63,300
              
              
              25,000
              
              
              181,980
              
              
              25,000Costs
                  of ancillary services
              
              
              201,550
              
              
              316,720
              
              
              381,641
              
              
              353,051Costs
                  of energy production
              
              
              147,897
              
              
              330,789
              
              
              249,994
              
              
              345,266Total
                  costs of sales
              
              
              412,747
              
              
              672,509
              
              
              813,615
              
              
              723,317**Gross
                  Profit**
              
              
              2,337,016
              
              
              1,842,717
              
              
              4,542,228
              
              
              2,062,856**Operating
                  expenses:**Depreciation
              
              
              284,814
              
              
              158,244
              
              
              800,999
              
              
              464,288Operations
                  and maintenance
              
              
              652,576
              
              
              551,585
              
              
              1,864,201
              
              
              978,213Re-commissioning
                  expenses
              
              
              (5,231
              )
              
              12,632
              
              
              413,904
              
              
              2,155,796General
                  and administrative expenses
              
              
              1,146,620
              
              
              888,708
              
              
              3,668,669
              
              
              3,109,987Total
                  operating expenses
              
              
              2,078,779
              
              
              1,611,169
              
              
              6,747,773
              
              
              6,708,284**Income
                  (loss) from operations**
              
              
              258,237
              
              
              231,548
              
              
              (2,205,545
              )
              
              (4,645,428
              )**Other
                  expenses (income)**Interest
                  expense, net
              
              
              (446,778
              )
              
              (67,150
              )
              
              (407,763
              )
              
              (4,577
              )Other
                  expenses, net
              
              
              -
              
              
              136,000
              
              
              (135,995
              )
              
              136,000Total
                  other expenses
              
              
              (446,778
              )
              
              68,850
              
              
              (543,758
              )
              
              131,423**Net
                  income (loss) before provision for income taxes**
              
              
              705,015
              
              
              162,698
              
              
              (1,661,787
              )
              
              (4,776,851
              )Provision
                  for income taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -**Net
                  income (loss)**
              
              $
              705,015
              
              $
              162,698
              
              $
              (1,661,787
              )
              $
              (4,776,851
              )**Basic
                  earnings (loss) per common share**Net
                  income (loss) per share
              
              $
              0.05
              
              $
              0.03
              
              $
              (0.22
              )
              $
              (1.15
              )Weighted
                  average shares outstanding
              
              
              13,408,277
              
              
              4,762,597
              
              
              7,705,647
              
              
              4,139,381**Diluted
                  earnings (loss) per common share**Net
                  income (loss) per share
              
              $
              0.05
              
              $
              0.03
              
              $
              (0.22
              )
              $
              (1.15
              )Weighted
                  average shares outstanding
              
              
              13,408,277
              
              
              4,846,460
              
              
              7,705,647
              
              
              4,139,381Weighted
                  average shares outstanding - basic
              
              
              13,408,277
              
              
              4,762,597
              
              
              7,705,647
              
              
              4,139,381Dilutive
                  effect of assumed exercise of employee stock options, warrants
                  and
                  immediate vesting of unvested stock awards
              
              
              -
              
              
              83,863
              
              
              -
              
              
              -Weighted
                  average shares outstanding - diluted
              
              
              13,408,277
              
              
              4,846,460
              
              
              7,705,647
              
              
              4,139,381Anti-dilutive
                  shares excluded from diluted EPS computations
              
              
              227,547
              
              
              -
              
              
              211,858
              
              
              -




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




-
          4
          -




MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY


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


(Unaudited)




**Common**
              
              **Common**
              
              **Additional**
              
              
              
              **Total****Shares**
              
              **Stock**
              
              **Paid-in**
              
              **Accumulated**
              
              **Stockholders'****$.001 Par Value**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Equity****Balance
                  at December 31, 2006**
              
              
              4,768,876
              
              $
              4,769
              
              $
              15,227,586
              
              $
              (6,606,696
              )
              $
              8,625,659Stock
                  awards and options, net of cancellations
              
              
              2,561
              
              
              3
              
              
              198,024
              
              
              -
              
              
              198,027Common
                  shares issued for cash
              
              
              9,135,910
              
              
              9,135
              
              
              46,060,348
              
              
              -
              
              
              46,069,483Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,661,787
              )
              
              (1,661,787
              )**Balance
                  at September 30, 2007**
              
              
              13,907,347
              
              $
              13,907
              
              $
              61,485,958
              
              $
              (8,268,483
              )
              $
              53,231,382




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




-
          5
          -




MMC
      ENERGY, INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)




**Nine Months Ended**
                **September 30,  2007**
              
              **Nine Months Ended**
                **September 30,  2006****Operating
                  Activities of Continuing Operations**Net
                  income (loss)
              
              $
              (1,661,787
              )
              $
              (4,776,851
              )Adjustments
                  to reconcile net loss to cash used in operating activitiesDepreciation
              
              
              800,999
              
              
              464,288Stock-based
                  compensation
              
              
              198,027
              
              
              89,625Acquisition
                  costs
              
              
              
              
              
              11,750Changes
                  in current assets & liabilitiesDecrease
                  (Increase) in current assets
              
              
              (243,728
              )
              
              (555,180
              )(Decrease)
                  Increase in current liabilities
              
              
              (429,821
              )
              
              1,178,034Other
                  non-current, net
              
              
              (423,324
              )
              
              (75,000
              )**Net
                  cash used in operations**
              
              
              (1,759,634
              )
              
              (3,663,334
              )**Investing
                  Activities of Continuing Operations**Purchases
                  of property, plant and equipment
              
              
              (441,466
              )
              
              (3,537,633
              )Purchases
                  of securities available for sale, net
              
              
              (4,075,000
              )
              
              -Deferred
                  acquisition costs
              
              
              (1,223,759
              )
              
              (227,208
              )**Net
                  cash used in investing activities**
              
              
              (5,740,225
              )
              
              (3,764,841
              )**Financing
                  Activities of Continuing Operations**Proceeds
                  from issuance of long-term debt
              
              
              -
              
              
              3,000,000Repayment
                  of long-term debt
              
              
              (333,342
              )
              
              (74,076
              )Member
                  interest issued, net
              
              
              -
              
              
              165,028Proceeds
                  from issuance of stock, net
              
              
              46,069,483
              
              
              11,637,897**Net
                  cash provided by financing activities**
              
              
              45,736,141
              
              
              14,728,849**Net
                  increase in cash and cash equivalents**
              
              
              38,236,282
              
              
              7,300,674Beginning
                  cash and cash equivalents at beginning of period
              
              
              4,923,063
              
              
              3,009,010Cash
                  and cash equivalents at end of period
              
              $
              43,159,345
              
              $
              10,309,684**Supplemental
                  disclosures:**Cash
                  paid for taxes
              
              $
              -
              
              $
              -Cash
                  paid for interest
              
              
              156,139
              
              
              131,915**Non-cash
                  investing and financing activities**Subscription
                  agreements for member interests that were subscribed and paid up
                  in 2005
                  but not accepted by the company until January 3, 2006
              
              $
              -
              
              $
              3,008,333Stock-based
                  compensation
              
              
              198,027
              
              
              89,625Acquisition
                  costs in reverse merger with High Tide Ventures, Inc.
              
              
              -
              
              
              11,750




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




-
          6
          -




**MMC
      ENERGY, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2007**


**(Unaudited)**




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




**General**




The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial information and with the
      instructions to Form 10-QSB. Accordingly, they do not include all of the
      information and footnotes required by generally accepted accounting principles
      for complete financial statements.





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





**Organization
      and Line of Business**




The
      Company is an energy management company that acquires and actively manages
      a
      portfolio of small to mid size, or below 250 megawatt, power generation assets.
      In January 2006 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, Texas, the Mid-Atlantic and the Northeastern
      United States. The Company has also begun the process of upgrading the Chula
      Vista and Escondido facilities.





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




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





**Basis
      of Consolidation**





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





**Revenue
      Recognition**





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





-
          7
          -




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





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





The
      Company’s electricity generating facilities are generally referred to as
“peaker” plants. Peaker plants are used to balance unexpected short term surges
      in demand, making them critical to the reliability, or “insurance,” of the power
      grids they serve. 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 2006,
                the MMC
                Escondido and MMC Chula Vista facilities were certified by CAISO
                and the
                CPUC for 40 MW each, and for 2007, 35.5 MW each and MMC Mid-Sun for
                22
                MW.





·
            Ancillary
                Services – Although there are several types of ancillary services, the
                Company primarily provides “spin” and “non-spin” services which call for
                the facilities to be delivering the awarded capacity within 10 minutes
                of
                dispatch whether already 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. Please see Footnote 14
                “Subsequent Events” below for more information.





·
            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 financial 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.





-
          8
          -




**Cash
      Equivalents**





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





**Receivables**


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





**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.





**Property
      and Equipment**





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




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





**Long-Lived
      Assets**





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





**Concentrations
      of Credit Risk**





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





-
          9
          -




Concentration
      of credit risk with respect to accounts receivable is high due to the relatively
      small number of entities comprising the Company's customer base. For the quarter
      ending September 30, 2007 71% of the Company’s revenues were derived from one
      customer, CAISO. The Company received the balance of its revenues from Oxy,
      Inc.
      For the nine month period ended September 30, 2007 the Company received 58%
      of
      its revenues from one customer, CAISO and received the balance of its revenues
      from Oxy, Inc. As rated by Moody's, Oxy, Inc. has an issuer credit rating of
      A3.





**Seasonal
      Nature of Business**





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





**Geographical
      and Regulatory Risk**





All
      of
      the Company’s facilities are located in Southern California, and generally
      provide power 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.





**Comprehensive
      Income**





SFAS
      No.
      130, “Reporting Comprehensive Income,” (“SFAS 130”) establishes standards for
      reporting and displaying of comprehensive income, its components and accumulated
      balances. Comprehensive income is defined to include all changes in equity
      except those resulting from investments by owners and distributions to owners.
      Among other disclosures, SFAS 130 requires that all items that are required
      to
      be recognized under current accounting standards as components of comprehensive
      income be reported in a financial statement that is displayed with the same
      prominence as other financial statements. The Company currently has no
      comprehensive income items.





**Segment
      Information**




The
      Company adopted SFAS No. 131, “Disclosures about Segments of an Enterprise and
      Related Information” ("SFAS 131"). SFAS 131 establishes standards for reporting
      information regarding operating segments in annual financial statements and
      requires selected information for those segments to be presented in interim
      financial reports issued to stockholders. SFAS 131 also establishes standards
      for related disclosures about products and services and geographic areas.
      Operating segments are identified as components of an enterprise about which
      separate discrete financial information is available for evaluation by the
      chief
      operating decision maker, or decision making group, in making decisions
      concerning how to allocate resources and assess performance. The Company does
      not have any items of comprehensive income in the periods presented nor has
      it
      since inception.





**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.





-
          10
          -




**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 and nine month periods
      ended September 30, 2007 and 2006 under the provisions of SFAS No. 128,
“Earnings Per Share” and as amended/superseded in SFAS No. 123(R), “Share-Based
      Payment”(“SFAS 123(R)”). As the Company incurred losses for the nine month
      periods ending September 30, 2007 and 2006 dilutive shares presented for those
      periods are the same as basic shares outstanding. In addition, for the three
      month period ending September 30, 2007 there were no dilutive securities
      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:  ****





**Three Months Ended
                September 30,**
            
            **Three MonthsEnded September30,**
            
            **Nine Months Ended
                September 30,**
            
            **Nine Months Ended
                September 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006****Basic,
                diluted and anti-dilutive shares**Weighted
                average shares outstanding - basic
            
            
            13,408,277
            
            
            4,762,597
            
            
            7,705,647
            
            
            4,139,381Dilutive
                effect of assumed exercise of employee stock options, warrants and
                immediate vesting of unvested stock awards
            
            
            -
            
            
            83,863
            
            
            -
            
            
            -Weighted
                average shares outstanding - diluted
            
            
            13,408,277
            
            
            4,846,460
            
            
            7,705,647
            
            
            4,139,381Anti-dilutive
                shares excluded from diluted EPS computations
            
            
            227,547
            
            
            -
            
            
            211,858
            
            
            -




**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 has no
      retirement eligible employees and retirees at this time. The Company made no
      stock-based compensation grants before January 1, 2006 and therefore has no
      unrecognized stock compensation related liabilities or expense unvested or
      vested prior to 2006.





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




Under Pre-SFAS
              123 (R)
              Accounting
            
            SFAS 123(R)
              Impact
            
            Nine Months Ended
                September 30, 2007Losses
                before taxes
            
            $
            (1,554,112
            )
            $
            (107,675
            )
            $
            (1,661,787
            )Net
                loss
            
            
            (1,554,112
            )
            
            (107,675
            )
            
            (1,661,787
            )**Net
                Loss**Basic
                EPS
            
            $
            (0.20
            )
            $
            (0.02
            )
            $
            (0.22
            )Diluted
                EPS
            
            
            (0.20
            )
            
            (0.02
            )
            
            (0.22
            )**Cash
                Flows**Operating
                activities
            
            $
            (1,759,634
            )
            $
            -
            
            $
            (1,759,634
            )Financing
                activities
            
            
            45,736,141
            
            
            -
            
            
            45,736,141




-
          11
          -




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


**Options
                    Outstanding**
                
                **Options
                    Exercisable****Grant
                    Year**
                
                **Exercise Prices**
                
                **Number
                    Outstanding**
                
                **Weighted Average
                    Remaining Contractual Life (Years)**
                
                **Weighted Average**
                  **Exercise Price**
                
                **Number
                    Exercisable**
                
                **Weighted
                    Average**
                  **Exercise Price**2006
                
                $
                10.00
                
                
                82,000
                
                
                8.62
                
                $
                10.00
                
                
                23,333
                
                $
                10.002007
                
                $
                6.50
                
                
                21,000
                
                
                9.58
                
                $
                6.50
                
                
                -
                
                $
                6.50**Totals**
                
                
                
                
                
                103,000
                
                
                8.82
                
                $
                9.29
                
                
                23,333
                
                $
                10.00




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




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




Based
      on
      the Company’s closing stock price of $4.75 on September 28, 2007, all stock
      options currently outstanding have no aggregate intrinsic value, and there
      were
      no in-the-money options exercisable. As of September 30, 2007, all exercisable
      options had a weighted-average remaining contractual life of 8.62 years and
      weighted-average exercise price of $10.00 per share.





For
      the
      three month periods ended September 30, 2007 and 2006 there were zero options
      granted.





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





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




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





**Derivative
      Instruments**





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





-
          12
          -




**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.





**Recent
      Accounting Pronouncements**





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





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





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





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





FSP
      No
      AUG AIR-1. In September 2006 the FASB issued FSP No. AUG AIR-1 “Accounting for
      Planned Major Maintenance Activities” regarding routine maintenance and Planned
      Major Maintenance Activities (“PMMA”), which effectively disallowed the
      advance-in-accrual method that had been the industry standard but has been
      disallowed effective the first fiscal year beginning after December 15, 2006
      for
      all companies. In accordance with the early adoption provisions of this standard
      the Company has chosen to adopt this standard early, in particular adopting
      the
      deferral method for planned major maintenance items. The Company incurred
      $434,178 of planned major maintenance expenditures in 2007. Minor routine
      maintenance and unplanned repairs are expensed as incurred.





-
          13
          -




**Reclassifications**





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





**NOTE
      3 –
      RECEIVABLES AND PREPAID ITEMS**




At
      September 30, 2007 and December 31, 2006 receivables and prepaid items consisted
      of the following:





**September 30,**
            
            **December 31,****2007**
            
            **2006**Accounts
                receivable
            
            $
            62,743
            
            $
            -Allowance
                for doubtful accounts
            
            
            -
            
            
            -Total
            
            $
            62,743
            
            $
            -




Unbilled
                receivables
            
            $
            330,112
            
            $
            157,131Allowance
                for doubtful accounts
            
            
            -
            
            
            -Total
            
            $
            330,112
            
            $
            157,131




Prepaid
                insurance
            
            $
            99,005
            
            $
            51,046Prepaid
                expenses
            
            
            82,649
            
            
            93,710Short-term
                deposits
            
            
            14,000
            
            
            117,145Total
            
            $
            195,654
            
            $
            261,901




**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 (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. At the report date securities available for sale
      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 does not generate any
      mark-to-market adjustments except in extraordinary market situations.





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





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




**September 30,**
            
            **December 31,****2007**
            
            **2006**Land
            
            $
            375,000
            
            $
            375,000Automobile
            
            
            21,927
            
            
            20,427Office
                equipment
            
            
            112,105
            
            
            26,918Machinery,
                equipment & other
            
            
            7,920,890
            
            
            7,559,5298,429,922
            
            
            7,981,874Accumulated
                depreciation
            
            
            (1,427,297
            )
            
            (626,298
            )**Total**
            
            $
            7,002,625
            
            $
            7,355,576




-
          14
          -




Depreciation
      for the three months ended September 30, 2007 and 2006 was $284,814
      and $158,244 respectively. Depreciation for the nine months ended September 30, 2007 and
      2006
      was $800,999 and $464,288 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
      expenses as incurred. When a financing or acquisition is determined to be
      probable as per management’s assessment all costs in connection with such
      transaction are eligible to be capitalized as well as throughout the actual
      implementation. When the acquisition is completed, related deferred costs are
      capitalized as a component of the asset cost basis and depreciated over the
      useful life of the asset. Deferred costs related to the Company’s recently
      completed public stock offering were offset against gross proceeds received
      in
      July 2007. Outstanding deferred costs consisted of the following:





**September 30,**
            
            **December 31,****Deferred
                Costs**
            
            **2007**
            
            **2006**Deferred
                acquisition costs - Chula Vista
            
            $
            1,992,238
            
            $
            749,760Deferred
                acquisition costs - Escondido
            
            
            117,339
            
            
            -Total
            
            $
            2,109,577
            
            $
            749,760




**NOTE
      7 – OTHER ASSETS & DEFERRED CHARGES**





Other
      assts and deferred charges consist of $423,324 of deferred maintenance charges
      in connection with Planned Major Maintenance Activities (“PMMA”) for large
      assets as of September 30, 2007 net of amortization. The cost of these PMMA
      are
      capitalized and then recognized over the earlier of the (i) remaining life
      of
      the asset or (ii) until the next PMMA.





**NOTE 8 –
      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 nine
      months, and 81 monthly principal payments in the amount of $37,038 each
      thereafter, with a final maturity date of May 3, 2013. The Term Loan bears
      interest at a fixed rate equal to 7.58%. Approximately $2.1 million of the
      Term
      Loan proceeds were funded into an escrow account under control of the Bank
      and
      restricted in use to valid repair and re-commissioning costs in accordance
      with
      a re-commissioning plan agreed to between MMC North America and the Bank. The
      remaining proceeds, net of related transaction costs, were used for general
      working capital purposes. All escrowed funds for repair and re-commissioning
      were expended for the intended use.





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





The
      Loan
      Agreement places certain restrictions on MMC North America’s ability to make
      distributions to the Company and on transactions with affiliates. The Loan
      Agreement further subjects MMC North America to certain financial and other
      covenants, including maintaining a minimum Net Worth and minimum Debt Service
      Coverage ratio. The financial covenants are measured annually. During the last
      measurement of these covenants, for the twelve months ended December 31, 2006,
      the company was in compliance with all covenants .
      The
      loans are collateralized by substantially all assets of MMC North America.
      The
      loans were personally guaranteed, jointly and severally, by the two principal
      officers of the Company, and any losses sustained by any officer were subject
      to
      indemnification by the Company. On August 30, 2007 the two officers were
      released from the guaranties by the Bank.





-
          15
          -




**NOTE 9 –
      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 arran ged for the issuance by the Bank of an irrevocable letter
      of
      credit in the amount of $100,000 (the “Letter of Credit”) to a counterparty
      under an energy services agreement entered into in November 2006 (the “ESA”).
      The counterparty may draw upon the Letter of Credit to recover liquidated
      damages suffered by the counterparty in connection with any energy sales it
      may
      make on behalf of MMC North America and MMC Mid-Sun in the event MMC North
      America or MMC Mid-Sun fails to meet its obligations, or for any other
      unsatisfied obligations under the ESA. The Letter of Credit expires on December
      31, 2007. Availability under the Revolver is reduced from $500,000 to $400,000
      while the Letter of Credit remains outstanding.





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.  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’s primary office space is currently leased on a month-to-month basis per
      mutual agreement with the lessor while the company negotiates a fixed-term
      lease
      extension.





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 legal proceeding as of the report date.





**NOTE 10 –
      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 September 30, 2007,
      103,000 shares have been granted to employees, net of cancellations, in the
      form
      of stock option grants, with a weighted average exercise price of $9.29 per
      share, consistent with the market value of the Company’s common stock at the
      time of issuances.





For
      the
      three months ended September 30, 2007 and 2006 the company had no issuances
      of
      restricted stock to its directors and employees. For the nine months ended
      September 30, 2007 and 2006 the company issued 2,561 and 0 shares of restricted
      stock, respectively.





-
          16
          -




**NOTE
      11 – STOCKHOLDERS' EQUITY**





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





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





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





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





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
      12 – RELATED PARTY TRANSACTIONS**





The
      Company had no related party transactions for the three and nine month periods
      ended September 30, 2007.





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





MMC
      Management was dissolved on November 8, 2006.




-
          17
          -


**NOTE
      13 - MERGER AND CORPORATE RESTRUCTURING**





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





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





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





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





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





**NOTE
      14 - SUBSEQUENT EVENTS**





On
      October 9, 2007, the Company was notified by its energy manager that it was
      suspending bidding spinning reserve services into the CAISO system for the
      Company's three facilities, effective October 10, 2007, due to the uncertain
      regulatory environment surrounding the provision by the Company of these
      services. The Facilities are currently certified to provide spinning and
      non-spinning reserves to the CAISO system. Consequently, the Company has begun
      to bid exclusively non-spinning reserves into the CAISO system, a similar but
      lower priced ten minute power ancillary service, critical to the reliability
      of
      the CAISO system Based
      on
      historical pricing reported by the CAISO, non-spinning reserves have priced
      at a
      38% discount to spinning prices for the two year period ended September 30,
      2007. As this general trend can be expected to continue, the Company expects
      that continued suspension of bidding spinning reserve services could have a
      material adverse effect on the Company's results from operations.




-
          18
          -




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




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





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




**Overview**





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





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





*
      Targeting 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





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





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





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




-
          19
          -




**Critical
      Accounting Policies**





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





**Revenue
      Recognition**





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





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





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





**Results
      of Operations**





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





**Revenues**





Our
      electricity generating facilities are generally referred to as “peaker” plants.
      Peaker plants are used to balance unexpected short term surges in 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.





·
            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 operate exclusively, market-based capacity
                revenues are earned through resource adequacy contracts, whereby
                the
                counterparty can point to 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 our 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 2006, the MMC Escondido
                and
                MMC Chula Vista facilities were certified by CAISO and the CPUC for
                40 MW
                each, and for 2007, 35.5 MW each and MMC Mid-Sun for 22
                MW.




-
          20
          -





·
            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.





·
            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 financial 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 and nine month periods ended September 30, 2007 and 2006 were
      distributed as follows:


**Periods
                  ended September 30,**
              
              **Three MonthsEnded September30,**
              
              **Three MonthsEnded September30,**
              
              **Nine Months EndedSeptember 30,**
              
              **Nine Months EndedSeptember 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006****Operating
                  revenues:**Resource
                  adequacy capacity
              
              $
              791,250
              
              $
              380,000
              
              $
              2,274,750
              
              $
              380,000Ancillary
                  services
              
              
              1,496,289
              
              
              1,441,581
              
              
              2,500,676
              
              
              1,693,853Energy
                  production
              
              
              462,224
              
              
              693,645
              
              
              580,417
              
              
              712,320**Total
                  operating revenues**
              
              $
              2,749,763
              
              $
              2,515,226
              
              $
              5,355,843
              
              $
              2,786,173




**Cost
      of Sales**





Cost
      of
      sales for the three months ended September 30, 2007 and 2006 were $412,747
      and
      $672,509, yielding gross profits of $2,337,016 and $1,842,717 and gross margin
      of 85% and 73%, respectively. Costs of sales for the nine months ended September
      30, 2007 and 2006 were $813,615 and $723,317 yielding gross profits of
      $4,542,228 and $2,062,856 and gross margins of 85% and 74%, respectively. Our
      gross margin has been relatively high due to a favorable mix of high margin
      resource adequacy capacity and ancillary services constituting the largest
      portion of our revenues. We expect our gross margin to decrease significantly
      as
      a percentage of our revenues as we upgrade existing facilities and acquire
      additional facilities, which are expect to increase our gross energy production.





Costs
      of
      sales and gross margins were distributed as follows:


**Periods
                  ended September 30,**
              
              **Three MonthsEnded September30,**
              
              **Three MonthsEnded September30,**
              
              **Nine Months EndedSeptember 30,**
              
              **Nine Months EndedSeptember 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006****Costs
                  of sales:**Costs
                  of resource adequacy capacity
              
              $
              63,300
              
              $
              25,000
              
              
              181,980
              
              
              25,000Costs
                  of ancillary services
              
              
              201,550
              
              
              316,720
              
              
              381,641
              
              
              353,051Costs
                  of energy production
              
              
              147,897
              
              
              330,789
              
              
              249,994
              
              
              345,266**Total
                  costs of sales**
              
              $
              412,747
              
              $
              672,509
              
              $
              813,615
              
              $
              723,317
 
 **Periods
                  ended September 30,**
              
              **Three MonthsEnded September30,**
              
              **Three MonthsEnded September30,**
              
              **Nine Months EndedSeptember 30,**
              
              **Nine Months EndedSeptember 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006****Gross
                  Margin %**Resource
                  adequacy capacity
              
              
              92.0
              %
              
              93.4
              %
              
              92.0
              %
              
              93.4
              %Ancillary
                  services
              
              
              86.5
              %
              
              78.0
              %
              
              84.7
              %
              
              79.2
              %Energy
                  production
              
              
              68.0
              %
              
              52.3
              %
              
              56.9
              %
              
              51.5
              %**Total
                  operating revenues**
              
              
              85.0
              %
              
              73.3
              %
              
              84.8
              %
              
              74.0
              %


-
          21
          -




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 September 30, 2007 and 2006, operations and maintenance expenses were
      $652,576 and $551,585 respectively. These expenses consisted primarily of fixed
      charges such as contracted labor, interconnection, costs and other period costs.





For
      the
      nine months ended September 30, 2007 and 2006, we incurred operations and
      maintenance expenses of $1,864,201 and $978,213 respectively. As we had not
      yet
      commenced commercial operation of our Chula Vista and Escondido facilities
      until
      June 12, 2006 and had not yet purchased our Mid-Sun facility as of September
      30,
      2006 operations and maintenance expense for the nine month periods ending
      September 30, 2006 do not reflect a full run rate for most costs.





**Re-commissioning
      Expenses**





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





For
      the
      three months ended September 30, 2007 and 2006, re-commissioning costs were
      a
      credit of $5,231 and an expense of $12,632, respectively. The 2007 period credit
      reflects a final adjustment with respect to the re-commissioning our Mid-Sun
      facility in 2007 and the 2006 period expense reflects the final costs of
      re-commissioning our MMC Chula Vista and MMC Escondido facilities, which were
      completed in June of 2006.





For
      the
      nine months ended September 30, 2007 and 2006, re-commissioning costs were
      $413,904 and $2,155,796, respectively. The 2007 re-commissioning costs related
      to completing the re-commissioning of the Mid-Sun facility, which we purchased
      at a total cost of $4,400,000. Re-commissioning costs of $2,155,796 incurred
      during the nine months ended September 30, 2006 were entirely for the
      re-commissioning of the Chula Vista and Escondido facilities that commenced
      operations on June 12, 2006.





**General
      and Administrative Expenses**





For
      the
      three months ended September 30, 2007 and 2006, general and administrative
      expenses were $1,146,620 and $888,708, respectively. General and administrative
      expenses for the three months ended September 30, 2007 and the three months
      ended September 30, 2006 were primarily driven by compensation and professional
      fees. While our recurring general and administrative expenses may increase
      on an
      absolute basis, we expect they will decrease as a percentage of total revenue
      as
      we continue to implement our growth strategy.





For
      the
      nine months ended September 30, 2007 and 2006, general and administrative
      expenses were $3,668,669 and $3,109,987, respectively. General and
      administrative expenses in 2007 were driven by compensation, professional fees
      and a non-recurring charge of approximately $478,000 related to the separation
      from the company of one of our former officers. General and administrative
      expenses in 2006 were driven primarily by merger transaction related costs
      of
      approximately $1,748,000, compensation and professional fees.




-
          22
          -




**Interest
      and Other expenses**





Interest
      income for the three months and nine months ended September 30, 2007 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
      income of $135,995 for the nine months ended September 30, 2007 reflects a
      recovery of legal and professional fees incurred in prior periods primarily
      relating to unsuccessful financing activities prior to pursuing the recently
      completed public offering.





**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 September
      30, 2007, we had $43.2 million in cash and equivalents as well as $4.1 million
      in securities available for sale which can be liquidated as required to fund
      our
      operations.





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 twelve months, and 81 equal principal payments in the amount
      of
      $37,038 thereafter, with a final maturity date of May 3, 2013. The term loan
      bears interest at a fixed rate equal to 7.58%.





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





The
      loan
      agreement places certain restrictions on MMC North America's ability to upstream
      cash to our parent, MMC Energy, Inc., as well as restrictions on transactions
      with affiliates. The loan agreement further subjects MMC North America to
      certain financial and other covenants, including maintaining a minimum net
      worth
      and minimum debt service coverage ratio, as such terms are defined in the loan
      agreement. These covenants are tested on an annual basis. As of the last testing
      for the year ended December 31, 2006 MMC North America was not in violation
      of
      any such covenants. The loans were personally guaranteed, jointly and severally,
      by the two principal officers of the Company, and any losses sustained by any
      officer were subject to indemnification by the Company. On August 30, 2007
      the
      two officers were released from the guaranties by the Bank.





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





-
          23
          -


**Off-Balance
      Sheet Arrangements**





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





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




**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.




-
          24
          -


**PART
      II**


**OTHER
      INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





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




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





None.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None.




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





At
      our annual meeting
      of stockholders held on October 17, 2007, two proposals were voted upon by
      our stockholders. A description of each proposal and a tabulation of the votes
      for each of the proposals follows:





1.    To
      elect seven directors to hold office until the 2008 annual meeting
      of stockholders or until their successors are elected and qualified. All eight
      nominees were elected:





For
                Nominee
            
            Authority
              Withheld from
              NomineeKarl
                W. Miller
            
            
            10,600,127
            
            
            475,792Denis
                G. Gagnon
            
            
            10,600,127
            
            
            475,792Sen.
                Richard Bryan
            
            
            10,598,172
            
            
            477,747Frederick
                W. Buckman
            
            
            10,600,127
            
            
            475,792Michael
                Hamilton
            
            
            10,600,007
            
            
            475,912Dr.
                Peter Likins
            
            
            10,599,927
            
            
            475,992George
                Rountree III
            
            
            10,599,927
            
            
            475,992





2.    Ratification
      of the appointment of RBSM LLP as the our independent auditors for the year
      ending December 31, 2007. The appointment of RBSM LLP was ratified:





For
            
            Against
            
            Abstentions
                and
              Broker
                Non-Votes11,009,522
            
            
            63,885
            
            
            3,142





**ITEM
      5. OTHER INFORMATION**





None


-
          25
          -


**ITEM
      6. EXHIBITS**





(a)
      Exhibits.




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




-
          26
          -


**SIGNATURES**





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




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






By:
            /s/
                Denis GagnonDenis
                GagnonChief
                Financial Officer and Principal Accounting OfficerDATE:November
                8, 2007


-
          27
          -