ASSETS

Current Assets:
Cash	$	52,547
Accounts receivable, net of allowance for doubtful accounts of $35,564		440,125
Costs and estimated earnings in excess of billings on uncompleted contracts		1,517
Inventory		279,378
Prepaid Expenses		11,521

Total Current Assets		785,088

Property and equipment, net of $107,916 accumulated depreciation		120,972

Total Assets	$	906,060

LIABILITIES AND STOCKHOLER'S EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts Payable	$	472,575
Accrued Expenses		55,480
Accrued Salaries - Officers		344,592
Advances - Shareholder		201,644
Notes Payable - Related Parties		373,190
Factor Payable		170,214
Current Portion of LTD		9,480
Billings in excess of costs and estimated earnings on uncompleted contracts		35,905

Total Current Liabilities		1,663,080

Notes Payable, net of current maturities		28,364

Total Liabilities		1,691,444

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S EQUITY (DEFICIT):
Series A preferred stock, $.001 par value, 500,000,000 shares designated
9,750,000 shares issued and outstanding	$	9,750
Series B preferred stock, $.001 par value, 30,000,000 shares designated
30,000,000 shares issued and outstanding		30,000
Common stock, $.001 par value, 50,000,000,000 shares authorized,
14,069,990 shares issued and outstanding		14,070
Additonal paid-in capital		10,720,166
Deficit accumulated during the development stage		(11,559,370	)

Total Stockholder's Equity (Deficit)		(785,384	)

Total Liabilities and Stockholder'a Equity (Deficit)	$	906,060

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005

REVENUES	$	597,809		$	948,549		$	1,036,747		$	1,449,944

COSTS OF SALES		471,656			794,659			755,076			1,099,304

GROSS MARGIN		126,153			153,890			281,671			350,640

COSTS AND EXPENSES:
Salaries and employee benefits		148,805			80,826			309,219			202,934
General and administrative		142,695			94,136			295,821			170,367
Equity Based Compensation Expense		293,072			35,178			557,848			318,952
Depreciation and amortization		5,616			7,890			11,135			15,739

TOTAL COSTS AND EXPENSE		590,188			218,030			1,174,043			707,992

LOSS FROM OPERATIONS		(464,035	)		(64,140	)		(892,372	)		(357,352	)

OTHER INCOME ( EXPENSE):
Interest Expense		(4,268	)		(5,194	)		(8,346	)		(10,153	)
Interest Expense - equity based		(4,050,000	)					(4,546,415	)
Other Income		268			203			403			218
Total Other		(4,054,000	)		(4,991	)		(4,554,358	)		(9,935	)

NET LOSS	$	(4,518,035	)	$	(69,131	)	$	(5,446,730	)	$	(367,287	)

Net loss per share:
Basic and diluted net loss per share	$	(0.43	)	$	(0.98	)	$	(0.69	)	$	(8.50	)

Weighted average shares outstanding:
Basic and diluted		10,578,740			70,240			7,947,053			43,194

MARMION INDUSTRIES CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

SIX MONTHS ENDING JUNE 30, 2006 AND 2005

(UNAUDITED)

	2006			2005

OPERATING ACTIVITIES:
Net Loss	$	(5,446,730	)	$	(357,352	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Deprecation and amortization		11,135			15,739
Common Stock issued for services		622,273			306,310
Other equity based compensation		4,546,415
Preferred Stock issued for services		-			6,000
Changes in assets and liabilities:					22,077
Accounts Receivable		(98,676	)		(90,901	)
Inventory		(18,398	)		(20,947	)
Prepaid expenses		9,958			-
Costs and estimated earnings in excess of billings		(1,517	)		11,348
Accounts payable		185,332			(43,182	)
Accrued Expenses		1,913			22,254
Billings in excess of costs and estimated earnings		35,905			-

Net cash used in operation activities		(152,390	)		(128,654	)

INVESTING ACTIVITIES:
Purchase of property and equipment		(7,413	)		(3,500	)

Net cash used in investing activities		(7,413	)		(3,500	)

FINANCING ACTIVITIES:
Proceeds from exercise of common stock warrants		-			164,687
Advance, shareholder (net)		234,190			13,000
Proceeds from notes payable - related party		24,263			-
Repayment from notes payable - related party		(24,263	)		(57,000	)
Proceeds from factor payable		(35,639	)		-
Repayments of notes payable		(8,975	)		(3,270	)

Net cash used in financing activities		189,576			117,417

NET CHANGE IN CASH		29,773			(14,737	)
CASH, beginning of period		22,774			25,592

CASH, end of period	$	52,547		$	10,855

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	4,268		$	10,853

Income taxes paid	$	-		$	-

The accompanying unaudited financial statements of Marmion Industries Corp., (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B. 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 considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. The preparation of financial statements in conformity with generally accepted accounting principles requires management 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. Actual results could differ from those estimates. Operating results expected for the six months ended June 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2005.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered from recurring losses from operations, and has a negative working capital and shareholder deficiency as of December 31, 2005 and June 30, 2006. These factors raise substantial doubt as to the Company's ability to continue as a going concern. Management expects to incur additional losses in the foreseeable future and recognizes the need to raise debt or capital to achieve their business plans. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

We previously accounted for stock-based compensation issued to our employees under Accounting Principles Board Opinion 25, (APB 25). Accordingly, no compensation costs for stock options issued to employees, which was measured as the excess, if any, of the fair value of our common stock at the date of grant over the exercise price of the options. The pro forma net earnings per share amounts as if the fair value method had been used are presented below for the three months ended June 30, 2005, in accordance with the Company’s adoption of SFAS 123(R).

For purposes of the following disclosures during the transition period of the adoption of SFAS 123(R), the weighted average fair value of options has been estimated on the date of grant using the Black-Scholes options pricing model. Marmion Air did not grant options to purchase common stock to employees in the three months ending June 30, 2006.


	Three months ended			Six months ended
	June 30, 2005			June 30, 2005

Net income (loss) available to common stockholders, as reported	$	( 69,131	)	$	(357,352	)
Add: stock based compensation determined under intrinsic value based method		0			22,077
Less: stock based compensation determined under fair value based method		( 0	)		( 193,748	)

Pro forma net loss	$	( 69,131	)	$	( 529,023	)

Basic and diluted net income (loss) per share:
As reported	$	( 0.98	)	$	( 8.50	)
Pro forma	$	( 0.98	)	$	(12.25	)

On March 28, 2006, $24,263 of the related party note plus accrued interest approximating $3,315 was sold to an unrelated third party. The Company reconfirmed this note and issued a guarantee for the payment of such note and accrued interest. The Company did not receive any new monies as a result of this transaction. The note and accrued interest is convertible at will by the holder into common stock at the rate of $.005 per share. As of March 31, 2006, $14,000 of the debt was converted to 2.8 million shares. The Company recorded a $496,415 charge recorded as a form of compensation expense for such debt due on demand, based on the conversion of such debt into 6,000,000 shares of common stock. The expense recorded relates to the intrinsic value of the conversion price of $.005 per share as compared to the then market price of $.095 per share. During the second quarter, the remainder of the convertible debt of was converted into 3.2 million shares of common stock.

On May 2, 2006, $90,000 of the related party note including accrued interest approximating $8,000 was sold to an unrelated third party. The Company reconfirmed this note and issued a guarantee for the payment of such note and accrued interest. The Company did not receive any new monies as a result of this transaction. The note and accrued interest is convertible at will by the holder into common stock at the rate of $.005 per share. As of June 30, 2006, none of the debt was converted. The Company recorded a $4,050,000 charge recorded as a form of compensation expense for such debt due on demand, based on the conversion of such debt into 18,000,000 shares of common stock. The expense recorded relates to the intrinsic value of the conversion price of $.005 per share as compared to the then market price of $.23 per share. A portion of the $90,000 has been converted into shares during July and August.

The accounting for these two convertible debt securities with beneficial conversion features was provided for under the interpretative guidance of EITF 98-5, EITF 00-27 and SFAS No. 133 as the effective dilution to the common shareholders as of June 30, 2006, including the pro-forma effects providing for second re-issuance of debt to have been fully converted, would be to have issued 75% of the outstanding shares of common stock to these debt holders for the conversion of $120,000 in debt, at the option of the holder of such debt.

Marmion Air has received net advances from its Series A preferred stockholder of $139,847 during the quarter ended June 30, 2006 to increase such advances outstanding to such stockholder to be $435,834 as of June 30, 2006. The advances are unsecured and are due upon demand. Interest on these new advances is being accrued at 6% per annum. Accrued interest as of June 30, 2006 for the stockholder advances is $20,452.

Much of the discussion in this Item is “forward looking” as that term is used in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. Actual operations and results may materially differ from present plans and projections due to changes in economic conditions, new business opportunities, changed business conditions, and other developments. Other factors that could cause results to differ materially are described in our filings with the Securities and Exchange Commission.

There are several factors that could cause actual results or events to differ materially from those anticipated, and include, but are not limited to general economic, financial and business conditions, changes in and compliance with governmental laws and regulations, including various state and federal environmental regulations, our ability to obtain additional financing from outside investors and/or bank and mezzanine lenders and our ability to generate sufficient revenues to cover operating losses and position us to achieve positive cash flow.

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-QSB to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of its public disclosure practices.

Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes contained in Item 1 of Part I of this Form 10-QSB, as well as the financial statements in Item 7 of Part II of our Form 10-KSB for the fiscal year ended December 31, 2005.

Beginning in the second quarter of 2004, we have entered the business of manufacturing and marketing of the explosion proof air conditioners, refrigeration systems, chemical filtration systems and building pressurizers. This entry was effected by Mr. Wilbert H. Marmion’s, our key officer and director, contribution to us of his controlling interest in Marmion Investments, Inc.,(d/b/a Marmion Air Service), a Texas corporation. The explosion-proof market encompasses industries including: oil and gas exploration and production, chemical plants, granaries and fuel storage depots. We believe there is significant demand for these systems in any area where sensitive computer systems and analysis equipment is located. We also provide residential and commercial HVAC service in Texas, as well as specialty service to Fortune 500 clients.

With the demand for oil and the price constantly in today's market, our position in this industry is poised to take advantage of the increasing boom in petroleum expansion taking place both here in the national market as well as the international markets emerging in Mexico, the Middle East and South America. We foresee the next cycle of renovation and new construction in the commercial market, and population expansion currently taking place in the gulf-coast area to continue long into the future.

In November of 2004 our State of Texas Air Conditioning Contractor’s License for Marmion Air Service (TACLA019367C) was upgraded to ”A” status allows us to sell air conditioners to unlimited tonnages, as opposed to the “B” license which limited us to sell equipment up to 20 tons. In October 2005, we received our Mechanical and Sheet Metal Contractor License in the State of Louisiana (Lic. No. 44001) allowing us to perform projects in that State.

Marmion Industries Corp. began seven years ago as a HVAC company in Beaumont, Texas. We then moved to Houston to take advantage of the accessibility to a larger market in and around the Houston area. Marmion Industries Corp. has always been owned and operated by W. H. Marmion and Ellen Raidl Marmion, who are husband and wife. In the first few years we acquired an agreement with Nextel Corporation to provide service and replacement of HVAC machines across southern Texas. This enabled Marmion to grow at a rapid pace as we completed Nextel's 3-G upgrade in 2000 and generated $1.1 million in gross revenues. In early 2001 Marmion began building industrial grade machines and providing them to petrochemical customers in the Houston area. At that time Nextel began tightening their services budgets due to the low price of their stock and approached us to reduce our pricing to a rate below our cost factor. As a result, we terminated our contract with Nextel and made a strategic decision to concentrate on the Industrial markets and develop our line of explosion-proof machines as our core business. We developed and refined our product line and continued to market to a growing list of customers primarily in the Houston area. Our alliance with a major wall mount air conditioner manufacturer Marvair, a subsidiary of AHI Hodling, Inc., allowed us to gain a substantial market share in the industrial market as a reseller of Marvair products to two large national building manufacturers.

We believe that diversification is a key factor to maintain market share in the industrial and commercial markets. Accordingly, in 2004 we began making plans to open a commercial division and hired personnel to bid and supervise commercial projects. We have opened our commercial division and have completed our first project for the Houston Independent School District. As of the end of the 1^st quarter of 2006, we have been awarded additional school projects as well as other commercial projects. Until 2003 we operated as an S corporation and in 2003 converted to C corp. in anticipation of accessing the public markets to enable us to raise capital to grow our business. Today Marmion has ten full time employees and depending on the commercial projects undertaken as many or more subcontractors to accomplish our business objectives.

One of our challenges continues to be our ability to attract and keep excellent employees to accomplish our business objectives. This challenge is highlighted due to the fact that we do not offer any type of benefits program to our employees. Cash flow has and remains a major challenge due to the fact that we are outgrowing our receivables and increasing our growth rate beyond 30 percent annually. Our customers normally pay on 45 to 60 day intervals and our suppliers bill us on 30 day terms. We need larger facilities and equipment to increase profitability and meet increasing demand. We have generally outsourced [5]% of our manufacturing. We have recently acquired several pieces metal manufacturing equipment in November 2005 which has allowed us to reduce our outsourcing needs, which should allow us to recognize increased profitability in the months ahead. Additionally, new equipment would allow us to take on a diversified work load, which could also add to our profitability.

Our long-term plans for growth include expanding our industrial base into Louisiana and abroad through new licensing and business contacts from ongoing marketing. We have recently started servicing the commercial market in the Houston area and have obtained the necessary licenses in Louisiana and have begun bidding on commercial projects in that area as well. We believe that, with right personnel and growth capital, we can grow our industrial and commercial division over the next two years.

We have acquired third party certification (ETL Certification) for the wallmount line for our products and have begun the process of getting our hazardous location package units as well as our pressurizers certified as well. These third parties certify our hazardous location equipment, saying it is indeed explosion-proof on our industrial line of equipment which will enable us to bid on new jobs and we believe the certification will allow us to be successful on our bids\. Because of third party certification, we will now be able to be listed as an “approved supplier/provider” for large multi-national petrochemical company’s specifications, as some large oil companies will spec in the company A/C’s they want. Normally they will require a UL/CSA listing or another third party certification from their suppliers/providers This will allow us to increase our profit margin on the certified equipment. We are currently educating engineering companies in Houston of the options now available to them and their customers.

On August 7, 2006, we filed certificate of amendments to our certificate of designation of our class A Preferred Stock and our Series B Preferred Stock with the Nevada Secretary of State (the “Amendments”) to delete Section 3(b)(i) “Adjustment of Conversion Rate upon Subdivision or Combination of the Common Stock.” In addition, the holders of our Class A Preferred Stock and Series B Preferred Stock waived all prior adjustments to Conversion Rate for previous subdivisions and combinations of the Common Stock. Pursuant to the Amendments and giving effect to the waivers, each share of Class A Preferred Stock will convert into 40 shares of our common stock and each share of Series B Preferred Stock will convert into 100 shares of our common stock. Prior to the Amendments (and giving effect to the adjustments), each share of Class A Preferred Stock was convertible into 2,000,000,000 shares of our common stock and each share of Series B Preferred Stock was convertible into 10,000,000 shares of our common stock. The Amendments were unanimously approved by our board of directors and all holders of Class A and Series B Preferred Stock.

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Revenues	$	597,809		$	948,549		$	1,036,747		$	1,449,944

Cost of Sales		471,656			794,659			755,076			1,099,304

Gross Margin		126,153			153,890			281,761			350,640

Salaries and employee benefits		148,805			80,826			309,219			202,934
General and administrative		142,695			94,136			295,821			170,367
Equity Based Compensation Expense		293,072			35,178			557,848			318,952
Depreciation and amortization		5,616			7,890			11,135			15,739

Loss from Operations	$	(464,035	)	$	(64,140	)		($892,372	)	$	(357,352	)

Revenues. Our revenues decreased to $597,809, or a decrease of approximately 37%, for the three months ended March 31, 2006, from $948,549 for the three months ended June 30, 2005. We significantly completed and billed a large commercial job in the three months ended June 30, 2005. However, we did not complete any large commercial jobs in the three months ended June 30, 2006 which accounts for the decrease in revenues for the three months ended June 30, 2006 as compared to June 30, 2005.

Cost of Sales. Cost of sales for continued operations decreased to $471,656, or approximately 42%, for the three months ended June 30, 2006, from $794,659 for the three months ended June 30, 2005. As a percentage of revenues, cost of sales decreased to approximately 79% of revenues for the quarter ended June 30, 2006 versus approximately 84% of revenues for the quarter ended June 30, 2005. The decrease in cost of sales as a percentage of revenues resulted primarily due to a higher margin on the commercial projects being performed this year as opposed to the project in 2005 As a result, the company generated a gross margin of $126,153 with a gross profit margin of approximately 21% for the quarter ended June 30, 2006.

Salaries and employee benefits. Salaries and employee benefits increased to $148,805, or an increase of approximately 84% for the three months ended June 30, 2006 from $80,826 for the three months ended June 30, 2005. This increase is attributable primarily to the hiring of an industrial sales force as well as a new commercial vice president.

General and administrative. General and administrative expenses increased to $142,695, or an increase of approximately 51%, for the three months ended June 30, 2006, from $94,136 for the three months ended June 30, 2005. As a percentage of revenues, general and administrative expenses were approximately 24% for the quarter ended June 30, 2006, as compared to approximately 10% for the comparable period in 2005. The increase in general and administrative expenses primarily results from factoring fees from our factoring agreement, new promotional materials and increase insurance premiums.

Loss from operations. We incurred an operating loss of $464,035 for the three months ended June 30, 2006, compared to an operating loss of $64,140 for the three months ended June 30, 2005. The company had higher operating losses in the three months ended June 30, 2006 compared to the prior year primarily because of general growth within our company.

Revenues. Our revenues decreased to $1,036,747, or a decrease of approximately 28%, for the six months ended June 30, 2006, from $1,449,944 for the six months ended June 30, 2005. We significantly completed and billed a large commercial job in the six months ended June 30, 2005. However, we did not complete any large commercial jobs in the six months ended June 30, 2006 which accounts for the decrease in revenues for the six months ended June 30, 2006 as compared to June 30, 2005.

Cost of Sales. Cost of sales for continued operations decreased to $755,076 or approximately 31%, for the six months ended June 30, 2006, from $1,099,304 for the six months ended June 30, 2005. As a percentage of revneues, cost of sales decreased to approximately 73% of revenues for the six months ended June 30, 2006 versus approximately 76% of revenues for the six months ended June 30, 2005. The decrease in cost of sales as a percentage of revenues resulted primarily from current projects in progress but not yet billed. As a result, the company generated a gross margin of $281,671 with a gross profit margin of approximately 27% for the six months ended March 31, 2006.

Salaries and employee benefits. Salaries and employee benefits increased to $309,219, or an increase of approximately 52% for the six months ended June 30, 2006 from $202,934 for the six months ended June 30, 2005. This increase is attributable primarily to the hiring of an industrial sales force as well as a new commercial vice president.

General and administrative. General and administrative expenses increased to $295,821 for the six months ended June 30, 2006, from $170,367 for the six months ended June 30, 2005. As a percentage of revenues, general and administrative expenses were approximately 28.5% for the six ended June 30, 2006, as compared to approximately 12% for the comparable period in 2005. The increase in general and administrative expenses primarily results from compensation expense associated with the issuance of the convertible note during the first quarter of 2006.

Loss from operations. We incurred an operating loss of $892,372 for the six months ended June 30, 2006, compared to an operating loss of $357,352 for the six months ended June 30, 2005. The company had higher operating losses in the six months ended June 30, 2006 compared to the prior year primarily because of general growth within our company.

We have financed our operations, acquisitions, debt service, and capital requirements through cash flows generated from operations, debt financing, and issuance of securities. Our working capital deficit at June 30, 2006 was $877,992 and at December 31, 2005 it was $613,149. We had cash of $52,547 as of June 30, 2006, compared to having cash of $10,852 at June 30, 2005.

We anticipate that we will need approximately $2 million to finance our proposed growth over the next 12 months. We are currently looking to raise such amount via a private placement of our debt and/or equity securities. There are no assurances that we will be able to raise the requisite funds. If we are unable to secure financing we may need to curtail our growth plans. Our working capital is not sufficient to meet our obligations. These factors raise substantial doubt about our ability to continue as a going concern.

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions 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.

In December 2002, the FASB issued SFAS No. 148 - Accounting for Stock-Based Compensation - Transition and Disclosure. This statement amends SFAS No. 123 - Accounting for Stock-Based Compensation, providing alternative methods of voluntarily transitioning to the fair market value based method of accounting for stock based employee compensation. SFAS 148 also requires disclosure of the method used to account for stock-based employee compensation and the effect of the method in both the annual and interim financial statements. The provisions of this statement related to transition methods are effective for fiscal years ending after December 15, 2002, while provisions related to disclosure requirements are effective in financial reports for interim periods beginning after December 31, 2002.

In December 2004, the FASB issued SFAS No. 123 (Revised 2004) "Share-Based Payment" ("SFAS No. 123R"). SFAS No. 123R addresses all forms of share-based payment ("SBP") awards, including shares issued under certain employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS No. 123R will require the Company to expense SBP awards with compensation cost for SBP transactions measured at fair value. The FASB originally stated a preference for a lattice model because it believed that a lattice model more fully captures the unique characteristics of employee stock options in the estimate of fair value, as compared to the Black-Scholes model which the Company currently uses for its footnote disclosure. The FASB decided to remove its explicit preference for a lattice model and not require a particular valuation methodology. The Company has adopted the accounting provisions of SFAS No. 123R effective January 1, 2006. We do not expect a material impact on our consolidated results of operations as we do not intend to issue employee stock options in the near future.

As part of the process of preparing our financial statements we are required to estimate our income taxes. Management judgment is required in determining our provision of our deferred tax asset. We recorded a valuation for the full deferred tax asset from our net operating losses carried forward due to the Company not demonstrating any consistent profitable operations. In the event that the actual results differ from these estimates or we adjust these estimates in future periods we may need to adjust such valuation recorded.

The financial statements of the Company have been prepared assuming that the Company will continue as a going concern. The Company has had negative working capital for each of the least two years ended December 31, 2005 and 2004. The Company has incurred significant losses for these years and has a negative working capital position. Those conditions raise substantial doubt about the abilities to continue as a going concern. The financial statements of the Company do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

In May 2005, the FASB issued FASB Statement No. 154, which replaces APB Opinion No.20 and FASB No. 3. This Statement provides guidance on the reporting of accounting changes and error corrections. It established, unless impracticable retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements to a newly adopted accounting principle. The Statement also provides guidance when the retrospective application for reporting of a change in accounting principle is impracticable. The reporting of a correction of an error by restating previously issued financial statements is also addressed by this Statement. This Statement is effective for financial statements for fiscal years beginning after December 15, 2005. Earlier application is permitted for accounting changes and corrections of errors made in fiscal years beginning after the date of this Statement is issued. Management believes this Statement will have no impact on the financial statements of the Company once adopted.

In February 2006, the FASB issued FASB Statement No. 155, which is an amendment of FASB Statements No. 133 and 140. This Statement; a) permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, b) clarifies which interest-only strip and principal-only strip are not subject to the requirements of Statement 133, c) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, d) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, e) amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This Statement is effective for financial statements for fiscal years beginning after September 15, 2006. Earlier adoption of this Statement is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued any financial statements for that fiscal year. Management believes this Statement will have no impact on the financial statements of the Company once adopted.

In March 2006, the FASB issued FASB Statement No. 156, which amends FASB Statement No. 140. This Statement establishes, among other things, the accounting for all separately recognized servicing assets and servicing liabilities. This Statement amends Statement 140 to require that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. This Statement permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. An entity that uses derivative instruments to mitigate the risks inherent in servicing assets and servicing liabilities is required to account for those derivative instruments at fair value. Under this Statement, an entity can elect subsequent fair value measurement to account for its separately recognized .

Disclosure controls and procedures are controls and other procedures that are designed 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 Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure and Controls and Procedures. As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) of the Exchange Act). Based on this evaluation, our chief executive officer and treasurer, the sole officers and directors of the Company, concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

In May 2006, our wholly owned subsidiary, Marmion Investments, Inc. amended and restated a promissory note in the amount of $72,288 held by an accredited investor. The amended and restated note is convertible into our common stock at a rate of $.005 per share and is guaranteed by us. This note has been partially converted as of the date of this report. The amendment and restatement of the note and the conversion of the note into common stock were exempt pursuant to Section 3 (a)(9) and 4 (2) of the Securities Act.

EXHIBIT
NO.		IDENTIFICATION OF EXHIBIT
3.1*		Articles of Incorporation.
3.2*		Articles of Amendment to the Articles of Incorporation, filed effective June 3, 2004.
3.3*		Certificate of Designation establishing Series A Preferred Stock, filed effective May 25, 2004.
3.4*		Articles of Merger
3.5*		Certificate of Amendment to the Certificate of Designation for the Series A preferred stock, filed effective July 15, 2004.
3.6*		Certificate of Amendment to the Articles of Incorporation, filed effective November 16, 2004.
3.7*		Certificate of Designation establishing Series B Preferred Stock, filed effective January 26, 2005.
3.8*		Certificate of Amendment to the Articles of Incorporation, filed effective January 25, 2006
3.9*		By-laws.
4.1*		International Trust & Financial Services, Inc. Employee Stock Option Plan for the Year 2004
4.2*		International Trust & Financial Services, Inc. Non-Employee Directors & Consultants Retainer Stock Plan for the Year 2004
4.3*		International Trust & Financial Services, Inc. Employee Stock Option Plan for the Year 2004 No.2
4.4*		International Trust & Financial Services, Inc. Non-Employee Directors & Consultants Retainer Stock Plan for the Year 2004 No. 2
4.5*		Marmion Industries Corp. Amended Employee Stock Incentive Plan for the Year 2004 No. 2
4.6*		Marmion Industries Corp. Non-Employee Directors & Consultants Retainer Stock Plan for the Year 2004 No. 2
4.7*		Marmion Industries Corp. Amended Employee Stock Incentive Plan for the Year 2004 No. 3
4.8*		Marmion Industries Corp. Non-Employee Directors & Consultants Retainer Stock Plan for the Year 2004 No. 3
4.9*		Marmion Industries Corp. Amended Employee Stock Incentive Plan for the Year 2004 No. 4

4.10*		Marmion Industries Corp. Non-Employee Directors & Consultants Retainer Stock Plan for the Year 2004 No. 4
4.11*		Marmion Industries Corp. Amended Employee Stock Incentive Plan for the Year 2004 No. 5
4.12*		Marmion Industries Corp. Non-Employee Directors & Consultants Retainer Stock Plan for the Year 2004 No. 5
4.13*		Marmion Industries Corp. Amended Employee Stock Incentive Plan for the Year 2005
4.14*		Marmion Industries Corp. Non-Employee Directors & Consultants Retainer Stock Plan for the Year 2005
4.15*		Marmion Industries Corp. Amended Employee Stock Incentive Plan for the Year 2005 No. 2
4.16*		Marmion Industries Corp. Non-Employee Directors & Consultants Retainer Stock Plan for the Year 2005 No. 2
10.1*		Plan and Agreement of Merger.
10.2*		Purchase and Escrow Agreement.
10.3*		M/S Al Dunia Contract
10.4*		DT Construction Contract
31.1 **		Certification of Wilbert H. Marmion, President and Chief Executive Officer of Marmion Industries Corp., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act of 2002.
31.2 **		Certification of Ellen Raidl, Treasurer of Marmion Industries Corp., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act of 2002.
32.1 **		Certification of Wilbert H. Marmion, President and Chief Executive Officer of Marmion Industries Corp., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of 2002.
32.2 **		Certification of Ellen Raidl, Treasurer of Marmion Industries Corp., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of 2002.

Nevada (State or other jurisdiction of incorporation or organization)	06-1588136 (I.R.S. Employer Identification No.)

9103 Emmott Road, Building 6, Suite A Houston, Texas 77040 (Address of principal executive offices)	77040 (Zip Code)


	MARMION INDUSTRIES CORP.

Dated August 17, 2006	By:	/s/ Wilbert H. Marmion
		Wilbert H. Marmion President and Chief Executive Officer