**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**








**FORM
      10-K**




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





**For
      the fiscal year ended December 31, 2007**





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





**For
      the transition period from ______ to ______.**




**Commission
      file number: 000-51553**




**PLATINUM
      ENERGY RESOURCES, INC.** ****


(Exact
      name of registrant as specified in its charter)




**Delaware**
            
            **14-1928384**(State
                of incorporation)
            
            (I.R.S.
                Employer Identification No.)




**25
      Phillips Parkway**


**Montvale,
      New Jersey 07645**


(Address
      of principal executive offices, including zip code)




**(845)
      323-0434**


(Registrant’s
      telephone number, including area code)




**Securities
      registered pursuant to Section 12(b) of the Act:**




**None**




**Securities
      registered pursuant to Section 12(g) of the Act:**




**Units,
      each consisting of one share of common stock, par value**


**$0.0001
      per share, and one warrant**




**Common
      Stock, par value $0.0001 per share**




**Warrants**





**Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.** **Yes
      o** **No
      x**





**Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Securities Exchange Act of 1934.** **Yes
      o** **No
      x**





**Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.**


**Yes
      x** **No
      o**


**Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. o**





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





**Large
      accelerated filer o** **Accelerated
      filer x** **Non-accelerated
      filer 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**





**As
      of June 29, 2007, the aggregate market value of the registrant’s common stock
      held by non-affiliates of the registrant was $93,756,525 based on the closing
      price as reported on the OTC Bulletin Board.**





**Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.**





**Class**
            
            **Outstanding
                at March 31, 2008****Common
                Stock, $0.0001 par value per share**
            
            **22,070,762****shares**





**DOCUMENTS
      INCORPORATED BY REFERENCE**





**List
      hereunder the following documents if incorporated by reference and the Part
      of
      the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
      incorporated: (1) Any annual report to security holders; (2) Any proxy or
      information statement; and (3) Any prospectus filed pursuant to Rule 424(b)
      or
      (c) under the Securities Act of 1933. The listed documents should be clearly
      described for identification purposes (e.g., annual report to security holders
      for fiscal year ended December 24, 1980).**





**None**









**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





This
      report, including the sections entitled “Risk Factors,” “Management’s Discussion
      and Analysis of Financial Condition and Results of Operations” and “Business,”
contains forward-looking statements within the meaning of Section 27A of the
      Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
      Act of 1934, as amended. These statements relate to future events or our future
      financial performance and involve known and unknown risks, uncertainties and
      other factors that may cause our, or our industry’s actual results, levels
      of activity, performance or achievements to be materially different from any
      future results, levels of activity, performance or achievements expressed or
      implied by the forward-looking statements. These risks and other factors include
      those listed under “Risk Factors” and elsewhere in this report. In some cases,
      you can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential,” “continue” or the negative of these terms
      or other comparable terminology. These statements are only predictions. Actual
      events or results may differ materially. In evaluating these statements, you
      should specifically consider various factors, including the risks outlined
      under
“Risk Factors.” These factors may cause our actual results to differ materially
      from any forward-looking statement.





Although
      we believe that the expectations reflected in the forward-looking statements
      are
      reasonable, we cannot guarantee future results, levels of activity, performance
      or achievements. Moreover, neither we nor any other person assumes
      responsibility for the accuracy and completeness of these forward-looking
      statements. We are under no duty to update any of the forward-looking statements
      after the date of this prospectus to conform our prior statements to actual
      results.





**PART
      I**





**Item
      1.**   **Business.**




Platinum
      Energy Resources, Inc. (which we refer to in this report as “we,” “us”, 
“Platinum” or the “Company”) is an independent oil and gas exploration and
      production company. We have approximately 37,000 acres under lease in relatively
      long-lived fields with well-established production histories, 21,000 of which
      were acquired as part of the acquisition described below. Our properties are
      concentrated primarily in the Gulf Coast region in Texas, the Permian Basin
      in
      Texas and New Mexico and the Fort Worth Basin in Texas.





Our
      primary business strategy is to provide long-term growth in stockholder value
      by
      drilling, developing and exploiting our oil and gas properties. We are currently
      engaged in active drilling and workover programs in order to achieve this goal.
      Through a number of identifiable synergies, we believe that we are in a unique
      position to exploit our inventory of identified prospects more effectively
      and
      efficiently than many other small independent oil and gas exploration and
      production companies.





In
      addition to our exploitation strategy, we are continually evaluating potential
      low risk strategic acquisitions that we believe will complement our business
      plan. We believe there exists significant opportunities to exploit mature fields
      that may have substantial remaining reserves. As the major and large independent
      oil and gas companies continue to focus on more costly and risky international
      and offshore prospects, the smaller independents have a tremendous opportunity
      to take advantage of the significant reserves left behind. For a discussion
      of
      recent acquisitions, see “Growth Strategy” on page 5.




2





Our
      strategy also calls for the use of hedge financing to maximize profit and reduce
      risk resulting from volatile energy markets. We believe that there is a gap
      in
      value between oil and gas reserves and the price of energy commodities and
      that
      profit can be captured by buying oil and gas companies or reserves, and selling
      the underlying oil and gas commodity.





**History
      of Platinum**





Platinum
      was organized as a corporation under the laws of the State of Delaware on April
      25, 2005. At that time, we were a blank check company formed with the purpose
      of
      effecting a business combination with an unidentified operating business in
      the
      global oil and gas exploration and production ("E&P") industry. Prior to the
      acquisition of all of the assets and assumption of substantially all of the
      liabilities of Tandem Energy Corporation, a Colorado Corporation (which we
      refer
      to in this report as “TEC”), we did not have any operations, other than
      conducting an initial public offering and seeking a business combination. From
      and after the consummation of the TEC acquisition on October 26, 2007, our
      operations have consisted of the acquired operations of TEC and the
      identification, acquisition and operation of other oil and gas properties and
      related businesses. See “Growth Strategy” on page 5 for a description of
      our recent acquisitions.





On
      October 28, 2005, we consummated an IPO of our equity securities, from which
      we
      received net proceeds of approximately $106,472,000. Of the net proceeds of
      the
      IPO, $105,408,000 were placed in a trust account. Under the terms of the IPO,
      we
      were required to complete a business combination in the E&P industry by
      October 28, 2007, or we would have been required to liquidate and return to
      our
      public shareholders a pro rata portion of the trust account into which the
      IPO
      proceeds were placed. The Platinum common stock, warrants to purchase common
      stock and units (each unit consisting of one share of common stock and one
      warrant to purchase one share of common stock) sold in the IPO are quoted on
      the
      OTCBB under the symbols PGRI for the common stock, PGRIW for the warrants and
      PGRIU for the units.




On
      October 4, 2006, Platinum, its wholly-owned subsidiary, Tandem Energy
      Corporation, a Delaware Corporation (formerly PER Acquisition Corp.) (which
      we
      refer to in this report as “New TEC”), and TEC entered into an acquisition
      agreement pursuant to which New TEC would acquire all of the assets
      and assume substantially all of the liabilities of TEC, including approximately
      $42 million of TEC’s debt, in exchange for the issuance of approximately 8
      million shares of Platinum common stock. The TEC assets consisted primarily
      of
      leases covering approximately 21,000 acres in relatively long-lived oil fields
      with well-established production histories in the Gulf Coast region in Texas,
      the Permian Basin in Texas and New Mexico, and the Fort Worth Basin in
      Texas.





On
      October 26, 2007, Platinum consummated the TEC acquisition pursuant to the
      acquisition agreement. At the closing, our  wholly-owned
      subsidiary, New TEC, acquired all of the assets and assumed substantially all
      of
      the liabilities of TEC, including approximately $41.7 million of TEC’s debt, in
      exchange for the issuance of 7,692,308 shares of Platinum common stock. In
      addition, at the closing, Mark Nordlicht resigned as Chairman of the Board
      and
      as director and Tim G. Culp, formerly President and CEO of TEC, became our
      Chairman of the Board and a director on our board.




At
      the closing of the acquisition, the net proceeds of the IPO that were placed
      in
      the trust account, including the interest thereon, were released to us and
      we used these funds to (i) retire approximately $41.7 million in indebtedness
      of
      TEC assumed in connection with the TEC acquisition, (ii) make payments in the
      aggregate amount of $14,057,199 to Platinum stockholders owning 1,802,205 shares
      of common stock who voted against the acquisition and exercised their rights
      to
      convert their shares into a pro rata portion of the trust account and (iii)
      pay
      the finder’s fee of $3.0 million to Mr. Lance Duncan, as well as other
      transaction-related expenses. We received approximately $50,650,000 at the
      time
      of closing. Subsequent to the closing, we repurchased 1,997,913 shares of
      Platinum common stock for a total purchase price of $15,661,464 (including
      commissions) pursuant to our previously announced share repurchase program
      and we have utilized an additional approximately $20,750,000 for
      certain acquisitions (See “Growth Strategy” on page 5). Our remaining funds are
      being, and will be, used for, among other things, additional acquisitions,
      working capital, capital expenditures associated with our assets and further
      repurchases of shares of our common stock.




3





TEC was dissolved
      by a merger with and into its sole shareholder, Tandem Energy Holdings, Inc.,
      a
      Nevada corporation (which we refer to in this report as “Tandem”), effective
      March 11, 2008. Tandem was the surviving corporation in the merger
      and, as such, received the assets of TEC, consisting of the 7,692,308 shares
      of
      Platinum common stock received in the acquisition. Tandem will dissolve and
      distribute the 7,692,308 shares of Platinum common stock (its assets) to the
      Tandem shareholders in accordance with Nevada laws of corporate dissolution.
      We
      filed a registration statement on Form S-1 with the SEC on February 14, 2008
      relating to the distribution of such shares by Tandem to its
      shareholders.





**Business
      Strategy**





Our
      primary business strategy is to provide long-term growth in stockholder value
      by
      drilling, developing and exploiting our acquired oil and gas properties. We
      are
      currently engaged in an active drilling and workover program in order to achieve
      this goal. Additionally, we have and will continue to identify strategic
      acquisitions that fit our current business model, which is directed toward
      the
      development of long lived reserves.





Through
      a
      number of identifiable synergies, we believe that we are in a unique position
      to
      exploit our inventory of identified prospects more effectively and efficiently
      than many other small independents.





·
            Most
                of the value of our oil and gas leases is associated with properties
                that
                we operate. Having operations is key to our ability to execute a
                flexible
                business plan.





·
            We
                have approximately 37,000 acres currently under lease. The vast majority
                of this acreage is held by production. As a result, these leases
                will
                remain in effect, by contract, until production
                ceases.




·
            Our
                properties should afford us with numerous, as yet untapped, drilling
                opportunities such as infill drilling locations on most of our
                properties.





·
            One
                of the major concerns in companies of our size is the availability
                of
                drilling rigs in the continental United States. To mitigate that
                concern,
                we own two drilling rigs capable of drilling in all of our operating
                areas, except for the Tomball Field in southeast Texas. We also own,
                as of
                December 2007, a well servicing company, Red Iron Tool, Inc., which
                operates three well servicing rigs. We can use these rigs to service
                our
                oil and gas properties, or we can lease the rigs to third party operators
                at competitive rates, thereby providing an additional source of cash
                flow
                for us.





·
            In
                addition to the drilling opportunities, there appears to
                be significant upside in upgrading two existing fields currently
                under waterflood, by providing additional infrastructure and higher
                water
                injection capabilities. Waterflood
                refers to the injection of water into an oil reservoir to “push additional
                oil out of the reservoir rock and into the wellbores of producing
                wells.
                This is commonly referred to as secondary recovery
                process.





·
            Our
                properties are located primarily in Texas and southeast New Mexico
                and are
                not confined to one geographic area. Therefore, catastrophic weather
                conditions in one area, such as the 2005 hurricanes along the Gulf
                Coast, are not likely to have a significant impact on our overall
                operating or financial condition.




4





·
            We
                have assembled a talented team of technical and operationally adept
                professionals who are capable of executing our business
                plan.





**Growth
      Strategy**





In
      addition to our exploitation strategy, we are continually evaluating potential
      low risk strategic acquisitions that we believe will complement our business
      plan. We believe there exists significant opportunities to exploit mature fields
      that may have substantial remaining reserves. As the major, large
      independent oil and gas companies continue to focus on more costly and risky
      international and offshore prospects, the smaller independents have an
      opportunity to take advantage of the significant reserves left
      behind.





***Recent
      Acquisitions***





The
      following acquisitions made in 2007-2008 will impact our growth strategy during
      2008:


· In
          November 2007, we acquired a 12% working interest in the North Minnie Bock
          Field, a producing field in Nueces County, Texas for approximately $1.1
          million.
  · In
          December 2007, we acquired a 50% working interest in the La Rosa field
          for
          approximately $5.3 million. The La Rosa Field is a non-producing field
          of
          approximately 3,800 acres in Refugio County, Texas. The field contains
          previously drilled and abandoned wells. We believe, based on our due diligence,
          that the La Rosa field can yield substantial production through recompletions
          and new drilling.
  · In
          December 2007, we acquired, out of bankruptcy court, oil and gas properties,
          including approximately 200 producing wells, located in Chavez, Lea and
          Eddy
          counties, New Mexico previously owned by Lothian Oil, Inc. for $6.9 million.
          These assets include over one million barrels
          of
          oil equivalent ("boe")
          of proved reserves. Approximately 55% of the reserves are proved developed.
          On
          the closing date, the production was approximately 140 boe per day,
          and one of the primary fields is adjacent to our Ballard Field in Eddy
          County.
 
 · In
          December 2007 we acquired an additional 50% working interest in the Barnett
          Shale acreage within our Ball Field for approximately $920,000. This acquisition
          increased our net acreage position by 2,300 net acres and gave us a 100%
          working
          interest in the Barnett Shale. We plan to begin a horizontal development
          program
          in the Barnett Shale during 2008, which may include a 3-D seismic
          program.
 
 · In
          December 2007, as part of a strategic attempt to secure readily available well
          servicing equipment, we purchased, for approximately $2.2 million, the
          outstanding stock of Red Iron Tool, Inc. ( Red Iron). As a result, Red
          Iron is
          now a wholly owned subsidiary of Platinum. Red Iron owns three pulling
          units and
          other service equipment near our Ira field in Scurry County, Texas. One
          of its
          rigs has been continuously servicing that field for the last six months.
          The
          other two have been used by other operators. Additionally, the former president
          of Red Iron, who is experienced in operations, drilling and well servicing
          in
          that area, will assist us in providing oversight of the Ira Field. We may
          continue to contract the rigs to third party operators when not in use
          on our
          properties.
  5
  · In
            January 2008, we acquired a 70% working interest in the Pleasanton field
            for
            approximately $5 million. The Pleasanton Field is a non-producing field
            of
            approximately 4,200 acres in Atascosa County, Texas. The field contains
            previously drilled and abandoned wells. We believe, based on our due
            diligence,
            that the Pleasanton field can yield substantial production through recompletions
            and new drilling.
 
 · On March
            18, 2008, Platinum, a wholly owned subsidiary of Platinum, PERMSub, Inc.,
            Maverick Engineering, Inc. (“Maverick”) and Robert L. Kovar Services, LLC
            entered into an Agreement and Plan of Merger pursuant to which we will
            acquire
            Maverick, a provider of project management, engineering, procurement, and
            construction management services to both the public and private sectors,
            for a
            gross purchase price of $11 million, subject to a working capital purchase
            price
            adjustment, with $6 million paid at closing and the remaining $5 million
            to be
            paid over the next 6 years pursuant to non-interest bearing cash flow
            notes. The
            agreement requires us to repay the cash flow notes quarterly by paying
            to the
            noteholders pro rata 50% of the pre-tax net income, as defined in the
            merger
            agreement, generated by the Maverick business on a stand alone basis
            in the
            prior quarter. In the event the cash flow notes are not repaid in full
            after 5
            years, or under certain other circumstances prior to such time, the cash
            flow
            notes will convert into one year fixed rate term notes bearing interest
            at
“prime rate” as published in the Wall Street Journal plus 2% per annum on the
            date of such conversion. Established in 1993, Maverick has grown into
            a
            full-service engineering service company with 270 employees including
            a staff of
            70 engineers, consultants, surveyors, scientists and planners. Maverick
            is based
            in South Texas with offices in Corpus Christi, Victoria, Harlingen and
            Houston.
            Upon consummation of an agreement to acquire Maverick, we intend to move
            our
            corporate headquarters to Maverick’s Houston office. Maverick’s organization is
            divided into four operational units: Oil & Gas, Industrial, Infrastructure
            and Surveying. Maverick’s services include consulting, project management,
            engineering, procurement, and construction management. Upon consummation
            of the
            transaction, Robert Kovar, the founder and CEO of Maverick, will join
            Platinum
            as Chief Operating Officer in addition to continuing as CEO of Maverick.
            Mr.
            Kovar’s responsibilities will include oversight of all operations, including
            engineering, drilling, and production. Mr. Kovar has considerable
            experience in managing drilling and development programs, midstream operations,
            compression, gas storage and optimization of mature fields. He has over
            20 years
            of experience, including field management positions with the former Mobil
            Oil
            Corporation and operating oil field services and engineering
            companies. The acquisition is conditioned upon the receipt of Maverick
            stockholder approval and other customary closing conditions. The acquisition
            is
            expected to close at the beginning of April, but there can be no assurance
            that
            the acquisition will be consummated on the terms described. For additional
            information on the terms of the transaction, see “Management’s Discussion and
            Analysis of Financial Condition and Results of Operations - Liquidity
            and
            Capital Resources” beginning on page 31.


**Hedging
      Strategy**





We
      believe that there is a gap in value between oil and gas reserves and the price
      of energy commodities and that profit can be captured by buying oil and gas
      companies or reserves, and selling the underlying oil and gas commodity.
      Following our consummation of the acquisition of the TEC assets, including
      its
      oil and gas reserves, our board of directors authorized our Chief Executive
      Officer to enter into hedging transactions in an attempt to capitalize on that
      gap. We believe that by using this strategy, we may be able to preserve profits
      and reduce risk. Specifically, we intend to hedge a significant portion of
      our
      proved reserves utilizing a mixture of calls, puts, forward contracts and other
      derivative instruments, in an attempt to lock in profits based on the existing
      gap between spot prices of oil and gas and the prices of various futures
      contracts. In December 2007 and January 2008, we purchased put options on the
      New York Mercantile Exchange (NYMEX) on a total of 410,000 barrels of crude
      oil
      in 2010 and 2011 at an average price of $80 per barrel. This is in addition
      to a
      $71 swap on 120,000 barrels in 2009 and a ceiling price of $67 on 150,000
      barrels in 2008 which were previously executed.




6





Hedging
      is a strategy that can help a company to mitigate the volatility of oil and
      gas
      prices by limiting its losses if oil and gas prices decline; however, this
      strategy may also limit the potential gains that a company could realize if
      oil
      and gas prices increase. While we believe that engaging in such hedging
      transactions can be a successful strategy and is in the best interests of
      Platinum, we may be prevented from realizing the benefits of price increases
      above the levels of the hedges. Additionally, the larger the volume of
      production, the more effective a hedging strategy typically can be. While TEC
      has had a stable production history, our current and future production levels
      may not be sufficient to be able to employ a meaningful hedging
      strategy.





This
      strategy of hedging to lock in profits is a departure from the hedging methods
      used by TEC in the past, prior to our acquisition of the TEC assets. TEC had
      engaged in hedging transactions at the request of its lenders. TEC specifically
      entered into a number of “costless collars” which were used to attempt to
      protect Tandem and its creditors from exposure to lower oil and gas prices.
      In
      conjunction with those hedging transactions, TEC periodically incurred
      settlement losses associated with the ceiling component of such hedges when
      gas
      prices spiked in late 2005 and oil prices spiked in mid 2006. As a result of
      those positions, we have and may continue to periodically incur settlement
      losses associated with the ceiling component of such hedges as oil prices have
      increased during 2007. For the period from October 26, 2007 through December
      31,
      2007, we reported a $1.5 million net loss on derivatives.




**Drilling,
      Exploration and Production Activities**





Our
      exploration efforts are focused on discovering new reserves by drilling and
      completing wells under our existing leases (that is, those we acquired in the
      TEC acquisition and thereafter), as well as leases we may acquire in the future.
      The investment associated with drilling a well and future development of our
      leasehold acreage depends principally upon whether any problems are encountered
      in drilling the wells, whether the wells, in the case of gas wells, can be
      timely connected to existing infrastructure or will require additional
      investment in infrastructure, and, if applicable, the amount of water
      encountered in the wells.





**Title
      to Properties**





We
      believe that the title to our leasehold properties is good and defensible in
      accordance with standards generally acceptable in the oil and gas industry,
      subject to exceptions that are not so material as to detract substantially
      from
      the use of the properties. Our leasehold properties are subject to royalty,
      overriding royalty and other outstanding interests customary in the industry.
      The properties may be subject to burdens such as liens incident to operating
      agreements and taxes, development obligations under oil and gas leases, and
      other encumbrances, easements and restrictions. We do not believe any of these
      burdens will materially interfere with our use of these properties. For
      a
      description of our oil and gas leasehold properties, see “Properties
      - Current oil and Gas Activities”.




As
      is
      customary in the oil and gas industry, only a preliminary title examination
      is
      conducted at the time properties believed to be suitable for drilling operations
      are acquired. We rely upon oil and gas landmen to conduct the title examination.
      We intend to perform necessary curative work with respect to any significant
      defects in title prior to proceeding with drilling operations.




7




**Competition**





The
      oil
      and natural gas business is highly competitive. We compete with private and
      public companies in all facets of the oil and gas business, including suppliers
      of energy and fuel to industrial, commercial and individual customers. Numerous
      independent oil and gas companies, oil and gas syndicates and major oil and
      gas
      companies actively seek out and bid for oil and gas prospects and properties
      as
      well as for the services of third-party providers, such as drilling companies,
      upon which we rely. Many of these companies not only explore for, produce and
      market oil and gas, but also carry out refining operations and market the
      resultant products on a worldwide basis. A substantial number of our competitors
      have longer operating histories and substantially greater financial and
      personnel resources than us.





Competitive
      conditions may be substantially affected by various forms of energy legislation
      and regulation considered from time to time by the government of the United
      States and the states in which we have operations, as well as factors that
      we
      cannot control, including international political conditions, overall levels
      of
      supply and demand for oil and gas, and the markets for synthetic fuels and
      alternative energy sources. Intense competition occurs with respect to
      marketing, particularly of natural gas.





**Regulatory
      Matters**





*General* .
      The
      availability of a ready market for oil and gas production depends upon numerous
      factors beyond our control. These factors include local, state, federal and
      international regulation of oil and gas production and transportation, as well
      as regulations governing environmental quality and pollution control, state
      limits on allowable rates of production by a well or proration unit, the amount
      of oil and gas available for sale, the availability of adequate pipeline and
      other transportation and processing facilities, and the marketing of competitive
      fuels. For example, in the case of gas wells, a productive well may be “shut-in”
because of an over-supply of gas or lack of an available pipeline in the areas
      in which we may conduct operations. State and federal regulations are generally
      intended to prevent waste of oil and gas, protect rights to produce oil and
      gas
      between owners in a common reservoir, and control contamination of the
      environment. Pipelines and gas plants are also subject to the jurisdiction
      of
      various federal, state and local agencies that may affect the rates at which
      they are able to process or transport gas from our properties.





Applicable
      legislation is under constant review for amendment or expansion. These efforts
      frequently result in an increase in the regulatory burden on companies in the
      oil and gas industry and a consequent increase in the cost of doing business
      and
      decrease in profitability. Numerous federal and state departments and agencies
      issue rules and regulations imposing additional burdens on the oil and gas
      industry that are often costly to comply with and carry substantial penalties
      for non-compliance. Our production operations may be affected by changing tax
      and other laws relating to the petroleum industry, constantly changing
      administrative regulations and possible interruptions or termination by
      government authorities.





*Sales
      of Oil and Natural Gas* .
      Sales
      of any oil that we produce will be affected by the availability, terms and
      costs
      of transportation. The rates, terms and conditions applicable to the interstate
      transportation of oil by pipelines are regulated by the Federal Energy
      Regulatory Commission (“FERC”) under the Interstate Commerce Act. FERC has
      implemented a simplified and generally applicable ratemaking methodology for
      interstate oil pipelines to fulfill the requirements of Title VIII of the Energy
      Policy Act of 1992 comprised of an indexing system to establish ceilings on
      interstate oil pipeline rates. FERC has announced several important
      transportation-related policy statements and rule changes, including a statement
      of policy and final rule issued February 25, 2000, concerning alternatives
      to
      its traditional cost-of-serve rate-making methodology to establish the rates
      interstate pipelines may charge for their services. The final rule revises
      FERC’s pricing policy and current regulatory framework to improve the efficiency
      of the market and further enhance competition in natural gas
      markets.




8





Sales
      of
      any natural gas that we produce will be affected by the availability, terms
      and
      costs of transportation. The rates, terms and conditions applicable to the
      interstate transportation of gas by pipelines are regulated by FERC under the
      Natural Gas Acts, as well as under Section 311 of the Natural Gas Policy Act.
      Since 1985, the FERC has implemented regulations intended to increase
      competition within the gas industry by making gas transportation more accessible
      to gas buyers and sellers on an open-access, non-discriminatory
      basis.





*Pipelines* .
      Pipelines that we use to gather and transport our oil and gas are subject to
      regulation by the Department of Transportation (“DOT”) under the Hazardous
      Liquids Pipeline Safety Act of 1979, as amended (“HLPSA”), relating to the
      design, installation, testing, construction, operation, replacement and
      management of pipeline facilities. The HLPSA requires pipeline operators to
      comply with regulations issued pursuant to HLPSA designed to permit access
      to
      and allowing copying of records and to make certain reports and provide
      information as required by the Secretary of Transportation.





*State
      Restrictions* .
      State
      regulatory authorities have established rules and regulations requiring permits
      for drilling operations, drilling bonds and reports concerning operations.
      Many
      states have statutes and regulations governing various environmental and
      conservation matters, including the unitization or pooling of oil and gas
      properties and establishment of maximum rates of production from oil and gas
      wells, and restricting production to the market demand for oil and gas. Such
      statutes and regulations may limit the rate at which oil and gas could otherwise
      be produced from our properties.





Most
      states impose a production or severance tax with respect to the production
      and
      sale of crude oil, natural gas and natural gas liquids within their respective
      jurisdictions. State production taxes are generally applied as a percentage
      of
      production or sales. In addition, in the event we conduct operations on federal
      or state oil and gas leases, such operations must comply with numerous
      regulatory restrictions, including various nondiscrimination statutes, royalty
      and related valuation requirements, and certain of such operations must be
      conducted pursuant to certain on-site security regulations and other appropriate
      permits issued by the Bureau of Land Management or the Minerals Management
      Service or other appropriate federal or state agencies.





*Other* .
      Oil and
      gas rights may be held by individuals and corporations, and, in certain
      circumstances, by governments having jurisdiction over the area in which such
      rights are located. As a general rule, parties holding such rights grant
      licenses or leases to third parties, such as us, to facilitate the exploration
      and development of these rights. The terms of the licenses and leases are
      generally established to require timely development. Notwithstanding the
      ownership of oil and gas rights, the government of the jurisdiction in which
      the
      rights are located generally retains authority over the manner of development
      of
      those rights.




**Environmental
      Matters**





*General* .
      Our
      activities are subject to local, state and federal laws and regulations
      governing environmental quality and pollution control in the United States.
      The
      exploration, drilling and production from wells, natural gas facilities,
      including the operation and construction of pipelines, plants and other
      facilities for transporting, processing, treating or storing natural gas and
      other products, are subject to stringent environmental regulation by state
      and
      federal authorities, including the Environmental Protection Agency (“EPA”). Such
      regulation can increase our cost of planning, designing, installing and
      operating such facilities.




9





Significant
      fines and penalties may be imposed for the failure to comply with environmental
      laws and regulations. Some environmental laws provide for joint and several
      strict liability for remediation of releases of hazardous substances, rendering
      a person liable for environmental damage without regard to negligence or fault
      on the part of such person. In addition, we may be subject to claims alleging
      personal injury or property damage as a result of alleged exposure to hazardous
      substances, such as oil and gas related products.





*Waste
      Disposal* .
      We may
      generate wastes, including hazardous wastes, that are subject to the federal
      Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes.
      The EPA has limited the disposal options for certain wastes that are designated
      as hazardous under RCRA (“Hazardous Wastes”). Furthermore, it is possible that
      certain wastes generated by our oil and gas operations that are currently exempt
      from treatment as Hazardous Wastes may in the future be designated as Hazardous
      Wastes, and therefore be subject to more rigorous and costly operating and
      disposal requirements.





*CERCLA* .
      The
      federal Comprehensive Environmental Response, Compensation and Liability Act
      (“CERCLA”), also known as the “Superfund” law, generally imposes joint and
      several liability for costs of investigation and remediation and for natural
      resource damages, without regard to fault or the legality of the original
      conduct, on certain classes of persons with respect to the release into the
      environment of substances designated under CERCLA as hazardous substances (“
Hazardous Substances”). These classes of persons or so-called potentially
      responsible parties include the current and certain past owners and operators
      of
      a facility where there is or has been a release or threat of release of a
      Hazardous Substance and persons who disposed of or arranged for the disposal
      of
      the Hazardous Substances found at such a facility. CERCLA also authorizes the
      EPA and, in some cases, third parties to take action in response to threats
      to
      the public health or the environment and to seek to recover from the potentially
      responsible parties the costs of such action. Although CERCLA generally exempts
      petroleum from the definition of Hazardous Substances, we may have generated
      and
      may generate wastes that fall within CERCLA’s definition of Hazardous
      Substances.





*Air
      Emissions* .
      Our
      operations may be subject to local, state and federal regulations for the
      control of emissions of air pollution. Major sources of air pollutants are
      subject to more stringent, federally imposed permitting requirements, including
      additional permits. Producing wells may generate volatile organic compounds
      and
      nitrogen oxides. If ozone problems are not resolved by the deadlines imposed
      by
      the federal Clean Air Act, or on schedule to meet the standards, even more
      restrictive requirements may be imposed, including financial penalties based
      upon the quantity of ozone producing emissions. If we fail to comply strictly
      with applicable air pollution regulations or permits, we may be subject to
      monetary fines and be required to correct any identified deficiencies.
      Alternatively, regulatory agencies could require us to forego construction,
      modification or operation of certain air emission sources.





We
      believe that we are in substantial compliance with current applicable
      environmental laws and regulations and that, absent the occurrence of an
      extraordinary event, compliance with existing local, state, federal and
      international laws, rules and regulations governing the release of materials
      in
      the environment or otherwise relating to the protection of the environment
      will
      not have a material effect upon our business, financial condition or results
      of
      operations.





**Employees
      and Consultants**





We
      have
      approximately 50 employees, including Barry Kostiner, our Chief Executive
      Officer, and Tim G. Culp, our Chairman of the Board, William Glass, our
      President, James H. Dorman, our Executive Vice Resident, Jim L. Troxel, our
      Executive Vice President and Michael G. Cunningham, Senior Vice President and
      Chief Financial Officer of our wholly-owned subsidiary, New TEC. We also utilize
      the services of several consultants who provide, among other things, technical
      support and accounting services.




10





**Item
      1A.**  **Risk
      Factors.**





*We
      are subject to a high degree of risk. You should consider the risks described
      below carefully and all of the information contained in this report. If any
      of
      these risks, as well as other risks and uncertainties that are not currently
      known to us or that we currently believe are not material, actually occur,
      our
      business, financial condition and results of operations may suffer
      significantly.*





***Since
      Tandem, TEC’s parent entity, was a publicly-traded shell corporation, our
      acquisition of all of the assets and substantially all liabilities of TEC may
      subject us to successor liability for the shell corporation’s known and unknown
      liabilities.***





On
      October 26, 2007, Platinum, through its wholly owned subsidiary, New TEC,
      acquired substantially all of the assets and assumed substantially all of the
      liabilities of TEC, including approximately $41.7 million of TEC's debt, in
      exchange for the issuance of 7,692,308 shares of Platinum common stock. Prior
      to
      the acquisition, TEC was the wholly owned subsidiary of Tandem.





Tandem
      was originally incorporated in Nevada as Las Vegas Major League Sports, Inc.
      (“LVMS”) on July 22, 1993 with the plan of engaging in certain business
      activities associated with the Canadian Football League. In April 1994, it
      completed an initial public offering and began trading under the symbol LVTD.
      In
      1996, LVMS filed for bankruptcy protection and ceased being a reporting company
      and also ceased operations and was considered to be a “shell” corporation. In
      1998, LVMS changed its name to Pacific Medical Group, Inc. (“Pacific Medical
      Group”) in connection with a share exchange transaction with a privately-held
      company whose business plan was to engage in the manufacture and sale of medical
      products. To our knowledge, that business was unsuccessful and, again, the
      company ceased operations and was considered to be a “shell” corporation. In
      February, 2005, Pacific Medical Group changed its name to Tandem Energy
      Holdings, Inc. and changed its trading symbol to TDYH.PK. In June, 2005, Tandem
      Energy Corporation became a wholly-owned subsidiary of Tandem Energy Holdings,
      Inc.





The
      risks
      and uncertainties that were involved in the TEC acquisition include that we
      may
      be deemed to be a successor to Tandem, TEC’s parent, and thus subject to the
      existing liabilities, including undisclosed liabilities, of the prior shell
      corporations arising out of the their prior business operations, financial
      activities and equity dealings. These risks and uncertainties
      are generally greater when a corporation is used as a shell vehicle
      more than once, such as Tandem. There is a risk of litigation by third parties
      or governmental investigations or proceedings. Some potential claims against
      Tandem that have been identified to date include the following:





·
            Tandem
                has been informed of a claim of ownership of 2.7 million shares of
                Tandem
                common stock. Such claim could result in a successor liability claim
                against Platinum. These shares are not included in the outstanding
                shares
                of Tandem.





·
            Messrs.
                Jack and Rex Chambers, former members of Tandem management and significant
                shareholders of Tandem, are the subjects of an Order of Permanent
                Injunction resulting from proceedings instituted against them in
                1984 by
                the Securities and Exchange Commission. The Order enjoins Messrs.
                Chambers
                from, directly or indirectly, engaging in the sale or offer for sale
                of
                securities in the form of fractional undivided interests in oil or
                gas
                leases of Chambers Oil and Gas or any other security without a
                registration statement being in effect or an exemption from registration
                otherwise being available. To the extent a court were to conclude
                that the
                TEC acquisition constitutes the sale of securities by Messrs. Chambers
                in
                violation of the Order of Permanent Injunction, Platinum potentially
                could
                be subject to a successor liability claim to the extent that any
                liability
                was imposed upon Tandem as a
                result.




·
            Lance
                Duncan is a former director and officer of Tandem who entered into
                a
                consulting agreement with Platinum in October 2006. Mr. Duncan played
                a
                key role in connection with the acquisition by Tandem of the stock
                of TEC
                and the assets of Shamrock Energy Corporation, a Texas corporation.
                It is
                possible that a court could determine that Mr. Duncan acted as an
                unlicensed broker-dealer in connection with such transactions. In
                that
                event, Platinum potentially could be subject to a successor liability
                claim to the extent that any liability was imposed upon Tandem as
                a
                result.




11




·
            Tandem
                has been unsuccessful in its efforts to locate corporate records
                and other
                material agreements and documents relating to itself and its predecessors
                in name for periods prior to mid-March 2005. As a result, no assurance
                can
                be given that certain actions taken with respect to Tandem were authorized
                by the necessary corporate action on the part of Tandem’s board of
                directors and its shareholders. Further, no assurance can be given
                that
                additional shares had not been issued by Tandem’s predecessors in name and
                that therefore Tandem’s current capitalization is accurate. If
                theoretically all of the 50,000,000 authorized shares of common stock
                of
                Pacific Medical Group (Tandem’s immediate predecessor in name) were issued
                and outstanding, there would be an additional 83,678 shares (post
                1:500
                stock split) of Tandem common stock currently outstanding and Platinum
                could be subject to a successor liability claim for up to approximately
                $212,000 to the extent that the holders of the additional shares
                do not
                receive their full proportion of the Platinum common stock distributed
                to
                shareholders upon the liquidation and dissolution of Tandem. Platinum
                potentially also could be subject to substantially higher successor
                liability claims for other actions of the predecessors to Tandem’s current
                management that were not properly authorized and implemented, including
                any shares that Messrs. Ronald G. Williams or Lyle Mortensen may
                claim to
                have acquired in connection with the acquisition of Pacific Medical
                Group
                that were not disclosed to Tandem and thus not presently reflected
                in the
                shares currently outstanding.





·
            Prior
                to its acquisition of TEC, Mr. Williams claims to have acquired control
                of
                Pacific Medical Group from Mr. John Karlsson. Tandem has also been
                unsuccessful in its efforts to obtain documentation relating to such
                acquisition and, as such, has not been able to determine the amount
                or
                percentage of the outstanding shares of Pacific Medical Group that
                Mr.
                Williams acquired. Platinum could be subject to potential successor
                liability claims to the extent that Mr. Williams did not properly
                acquire
                control of Pacific Medical Group and did not have proper authority
                to
                enter into the transactions with
                TEC.




We
      did
      not receive a legal opinion relating to Tandem’s capitalization or corporate
      actions in connection with the closing of the TEC acquisition. Given the
      uncertainty regarding Tandem’ s prior corporate history, the lack of corporate
      documentation, claims of share ownership and other related concerns, Tandem’s
      legal counsel was unwilling to render such an opinion. Accordingly, we did
      not
      have a legal opinion to support the representation and warranties of Tandem
      contained in the TEC acquisition agreement regarding these matters.




12





***The
      volatility of oil and natural gas prices due to factors beyond our control
      greatly affects our profitability.***




Our
      revenues, operating results, profitability, future rate of growth and the
      carrying value of our oil and natural gas properties depend primarily upon
      the
      prevailing prices for oil and natural gas. Historically, oil and natural gas
      prices have been volatile and are subject to fluctuations in response to changes
      in supply and demand, market uncertainty and a variety of additional factors
      that are beyond our control. Any significant decline in the price of oil and
      natural gas or any other unfavorable market conditions could have a material
      adverse effect on our operations, financial condition and level of expenditures
      for the development of our oil and natural gas reserves, and may result in
      write
      downs of our investments as a result of our use of the full cost accounting
      method.





Prices
      for natural gas and crude oil fluctuate widely. These fluctuations in oil and
      natural gas prices may result from relatively minor changes in the supply of
      and
      demand for oil and natural gas, market uncertainty and other factors that are
      beyond our control, including:





·
            worldwide
                and domestic supplies of oil and natural
                gas;





·
            weather
                conditions;





·
            the
                level of consumer demand;





·
            the
                price and availability of alternative
                fuels;





·
            the
                availability of drilling rigs and completion
                equipment;





·
            the
                proximity to, and capacity of transportation
                facilities;





·
            the
                price and level of foreign imports;





·
            the
                nature and extent of domestic and foreign governmental regulation
                and
                taxation;





·
            the
                ability of the members of the Organization of Petroleum Exporting
                Countries to agree to and maintain oil price and production
                controls;




·
            worldwide
                economic and political conditions;





·
            the
                effect of worldwide energy conservation
                measures;





·
            political
                instability or armed conflict in oil-producing regions;
                and





·
            the
                overall economic environment.





These
      factors and the volatility of the energy markets make it extremely difficult
      to
      predict future oil and natural gas price movements with any certainty. Declines
      in oil and natural gas prices would not only reduce revenue, but could reduce
      the amount of oil and natural gas that we can produce economically and, as
      a
      result, could have a material adverse effect on our financial condition, results
      of operations and reserves.




13





***Hedging
      activities may prevent us from benefiting from price increases and may expose
      us
      to other risks.***





Hedging
      is a strategy that can help a company to mitigate the volatility of oil and
      gas
      prices by limiting its losses if oil and gas prices decline; however, this
      strategy may also limit the potential gains that a company could realize if
      oil
      and gas prices increase. From time to time, we use derivative instruments
      (primarily collars and price swaps) to hedge the impact of market fluctuations
      on natural gas and crude oil prices and net income and cash flow. To the extent
      that we engage in hedging activities, we may be prevented from realizing the
      benefits of price increases above the levels of the hedges. Hedging activities
      are subject to risks associated with differences in prices at different
      locations, particularly where transportation constraints restrict a producer’s
      ability to deliver oil and gas volumes to the delivery point to which the
      hedging transaction is indexed. Additionally, hedging strategies are normally
      more effective with companies with a certain volume of production, and our
      current oil production levels may not be sufficient to be able to employ a
      meaningful hedging strategy. When we acquired the TEC assets, there were some
      open commodity derivatives. In its financial statements, Tandem did not
      designate any of its currently open commodity derivatives as cash flow hedges;
      therefore, all changes in the fair value of these contracts prior to maturity,
      plus any realized gains or losses at maturity, are recorded as other income
      (expense) in Tandem’s statements of operations. Certain “costless collars”
executed in June 2005 were employed to protect Tandem and its creditors from
      exposure to lower oil and gas prices. However, in conjunction with that
      protection, Tandem periodically incurred settlement losses associated with
      the
      ceiling component of such hedges when gas prices spiked in late 2005 and oil
      prices spiked in mid 2006. As a result of those positions, we have and may
      continue to periodically incur settlement losses associated with the ceiling
      component of such hedges as oil prices have increased during 2007. For the
      period from October 26, 2007 through December 31, 2007, we reported a $1.5
      million net loss on derivatives.





***Our
      ability to sell crude oil and natural gas production could be materially harmed
      by failure to obtain adequate services such as transportation and
      processing.***





The
      sale
      of crude oil and natural gas production depends on a number of factors beyond
      our control, including the availability, proximity and capacity of pipelines,
      natural gas gathering systems and processing facilities. Any significant change
      in market factors affecting these infrastructure facilities or our failure
      to
      obtain these services on acceptable terms could materially harm our business.
      We
      deliver crude oil and natural gas through gathering systems and pipelines that
      we do not own. These facilities may be temporarily unavailable due to market
      conditions or mechanical reasons or may become unavailable in the
      future.




***Our
      proved reserves will generally decline as reserves are produced and as such,
      success will depend on acquiring or finding additional
      reserves.***





Our
      future success depends upon our ability to find, develop or acquire additional
      oil and natural gas reserves that are economically recoverable. According to
      reports of proved reserves prepared as of December 31, 2007 by Williamson
      Petroleum Consultants, independent petroleum engineers, and by our own
      engineers, our proved reserves will decline at a rate of 18% per year as
      reserves are produced and, except to the extent that we conduct successful
      exploration or development activities or acquire properties containing proved
      reserves, or both, such reserves will continue to decline. To increase reserves
      and production, we must commence drilling, workover or acquisition activities.
      There can be no assurance, however, that we will have sufficient resources
      to
      undertake these actions, that our drilling and workover projects or other
      replacement activities will result in significant additional reserves or that
      we
      will have success drilling productive wells at low finding and development
      costs. Furthermore, although our revenues may increase if prevailing oil and
      natural gas prices increase significantly, our finding costs for additional
      reserves may also increase.




14




***Approximately
      63% of our proved reserves are classified as proved
      undeveloped.***





Approximately
      63% of our reserves are classified as proved undeveloped reserves. The future
      development of these undeveloped reserves into proved developed reserves is
      highly dependent upon our ability to fund estimated total capital development
      cost of approximately $54.7 million, of which $19.4, $24.7 million and $10.6
      million are expected to be incurred in 2008, 2009 and 2010, respectively. If
      such development costs are not incurred or are substantially reduced, our proved
      undeveloped and total proved reserves could be substantially reduced. The
      reduction in such reserves could have a materially negative impact on our
      ability to produce profitable future operations. The successful conversion
      of
      these proved undeveloped reserves into proved developed reserves is dependent
      upon the following:





·
            The
                funding of the estimated proved undeveloped capital development costs
                is
                highly dependent upon our ability to generate sufficient working
                capital
                through operating cash flows, and our ability to borrow funds and/or
                raise
                equity capital.





·
            Our
                ability to generate sufficient operating cash flows is highly dependent
                upon successful and profitable future operations and cash flows which
                could be negatively impacted by fluctuating oil and gas prices and
                increased operating costs. No assurance can be given that we will
                have
                successful and profitable future operations and positive future cash
                flows.





·
            Our
                ability to borrow funds in the future is dependent upon the terms
                of
                future loan agreements, borrowing base calculations and other lending
                and
                operating conditions. No assurance can be given that we will be able
                to
                secure future borrowings at competitive borrowing rates and conditions,
                if
                at all.




·
            Our
                ability to secure equity funding is dependent upon a number of factors,
                including our profitable operations and cash flows, capital market
                conditions and general economic conditions. No assurance can be given
                that
                we will be able to secure adequate equity
                funding.





·
            Our
                ability to secure related oilfield equipment and services on a timely
                and
                competitive basis. Presently, there is great demand for and often
                extensive delays in securing oilfield equipment and services at any
                price.
                No assurance can be given that the requisite oilfield equipment and
                services can be secured in a timely and competitive
                manner.





·
            Projections
                for proved undeveloped reserves are largely based on their analogy
                to
                similar producing properties and to volumetric calculations. Reserves
                projections based on analogy are subject to change due to subsequent
                changes in the analogous properties. Volumetric calculations are
                often
                based upon limited log and/or core analysis data and incomplete reservoir
                fluid and formation rock data. Since these limited data must frequently
                be
                extrapolated over an assumed drainage area, subsequent production
                performance trends or material balance calculations may cause the
                need for
                significant revisions to the estimates of
                reserves.





***Estimates
      of oil and natural gas depend on many assumptions that may vary substantially
      from actual production.***





There
      are
      numerous uncertainties inherent in estimating quantities of proved reserves
      and
      in projecting future rates of production and timing of expenditures, including
      many factors beyond our control. The reserve information relating to proved
      reserves set forth in this report represents only estimates based on reports
      of
      proved reserves prepared as of December 31, 2007 by Williamson Petroleum
      Consultants, independent petroleum engineers, and by our own engineers.
      Williamson Petroleum Consultants was not engaged to evaluate and prepare reports
      relating to the probable reserves on our properties and interests as these
      are
      more uncertain than evaluations of proved reserves. Petroleum engineering is
      not
      an exact science. Information relating to our proved oil and natural gas
      reserves is based upon engineering estimates. Estimating quantities of proved
      crude oil and natural gas reserves is a complex process. It requires
      interpretations of available technical data and various assumptions, including
      assumptions relating to economic factors. Any significant inaccuracies in these
      interpretations or assumptions or changes of conditions could cause the
      quantities of our reserves to be overstated.




15





To
      prepare estimates of economically recoverable crude oil and natural gas reserves
      and future net cash flows, engineers analyze many variable factors, such as
      historical production from the area compared with production rates from other
      producing areas. It is also necessary to analyze available geological,
      geophysical, production and engineering data, and the extent, quality and
      reliability of this data can vary. The process also involves economic
      assumptions relating to commodity prices, production costs, severance and excise
      taxes, capital expenditures and workover and remedial costs. For these reasons,
      estimates of the economically recoverable quantities of oil and natural gas
      attributable to any particular group of properties, classifications of such
      reserves based on risk of recovery and estimates of the future net cash flows
      expected therefrom prepared by different engineers or by the same engineers
      at
      different times may vary substantially. Actual production, revenues and
      expenditures with respect to our reserves will likely vary from estimates,
      and
      such variations may be material.




***Our
      operations entail inherent casualty risks which may not be covered by adequate
      insurance.***





We
      must
      continually acquire, explore and develop new oil and natural gas reserves to
      replace those produced and sold. Our hydrocarbon reserves and revenues will
      decline if we are not successful in our drilling, acquisition or exploration
      activities. We hope to maintain our reserve base primarily through successful
      exploration and production operations, but we may not be successful in this
      regard. Casualty risks and other operating risks could cause reserves and
      revenues to decline.





Our
      operations are subject to inherent casualty risks such as fires, blowouts,
      cratering and explosions. Other risks include pollution, the uncontrollable
      flows of oil, natural gas, brine or well fluids. These risks may result in
      injury or loss of life, suspension of operations, environmental damage or
      property and equipment damage, all of which would cause us to experience
      substantial financial loss.





Our
      drilling operations involve risks from high pressures and from mechanical
      difficulties such as stuck pipes, collapsed casings and separated cables. In
      accordance with customary industry practice, we maintain insurance against
      some,
      but not all, of these risks. There can be no assurance that any insurance will
      be adequate to cover any losses or liabilities. We cannot predict the continued
      availability of insurance, or its availability at premium levels that justify
      its purchase. In addition, we may be liable for environmental damages caused
      by
      previous owners of properties that we purchased, which liabilities would not
      be
      covered by our insurance. We are currently unaware of any material liability
      we
      may have for environmental damages caused by previous owners of properties
      purchased by us.





**Many
      of our wells produce at very low production rates while producing waste water
      many times that rate.**





Many
      of
      our wells produce at production rates as low as one Boe per day and produce
      waste water at many times the rate of production. Even a modest decrease in
      oil
      and gas prices may render these wells uneconomic to produce, when compared
      to
      wells which produce at higher rates. Consequently, these uneconomic wells could
      cause a downward revision in our oil and gas reserves.





***Our
      operations also entail significant operating risks.***





Our
      drilling activities involve risks, such as drilling non-productive wells or
      dry
      holes, which are beyond our control. The cost of drilling and operating wells
      and of installing production facilities and pipelines is uncertain. Cost
      overruns are common risks that often make a project uneconomical. The decision
      to purchase and to exploit a property depends on the evaluations made by reserve
      engineers, the results of which are often inconclusive or subject to multiple
      interpretations. We may also decide to reduce or cease its drilling operations
      due to title problems, weather conditions, noncompliance with governmental
      requirements or shortages and delays in the delivery or availability of
      equipment or fabrication yards.




16





***Our
      future operating results could be negatively impacted by increases in costs
      from
      third party service providers.***




Our
      future operating results are dependent upon our ability to secure competitive
      and timely third party oilfield services. Generally, the demand for and cost
      of
      oilfield services is directly related to oil and gas commodity prices and the
      number of skilled oilfield laborers in the area. Presently, in our area of
      operations, there are a limited number of third party services providers, a
      limited amount of oilfield service equipment, and a limited number of skilled
      oilfield laborers. In addition, many third party service providers are committed
      to providing oilfield services to entities that have much greater financial
      resources and oilfield demand than our company. These conditions could
      significantly increase our cost of third party services and have a negative
      impact on our ability to secure oilfield services on a timely basis. No
      assurance can be given that our future operations will not be further negatively
      impacted by our inability to secure third party services at competitive
      prices.





***Our
      operations are subject to various governmental regulations that require
      compliance that can be burdensome and expensive.***





Our
      oil
      and natural gas operations are subject to extensive federal, state and local
      governmental regulations that may be changed from time to time in response
      to
      economic and political conditions. Matters subject to regulation relate to
      the
      general population’s health and safety and are associated with compliance and
      permitting obligations including regulations related to discharge from drilling
      operations, use, storage, handling, emission and disposal, drilling bonds,
      reports concerning operations, the spacing of wells, unitization and pooling
      of
      properties and taxation. From time to time, regulatory agencies have imposed
      price controls and limitations on production by restricting the rate of flow
      of
      oil and natural gas wells below actual production capacity to conserve supplies
      of oil and natural gas. In addition, the production, handling, storage,
      transportation and disposal of oil and natural gas, by-products thereof and
      other substances and materials produced or used in connection with oil and
      natural gas operations are subject to regulation under federal, state and local
      laws and regulations primarily relating to protection of human health and the
      environment. These laws and regulations have continually imposed increasingly
      strict requirements for water and air pollution control and solid waste
      management, and compliance with these laws may cause delays in the additional
      drilling and development of our properties. Significant expenditures may be
      required to comply with governmental laws and regulations applicable to us.
      We
      believe the trend of more expansive and stricter environmental legislation
      and
      regulations will continue. While, historically, TEC did not experience any
      material adverse effect from regulatory delays, there can be no assurance that
      such delays will not occur for us in the future.





***Our*** ** ***method
      of accounting for investments in oil and natural gas properties may result
      in
      impairment of asset value, which could affect our stockholder equity and net
      profit or loss.***




17





We
      follow
      the full cost method of accounting for our crude oil and natural gas properties.
      Under this method, all direct costs and certain directly related internal costs
      associated with acquisition of properties and successful, as well as
      unsuccessful, exploration and development activities are capitalized.
      Depreciation, depletion and amortization of capitalized crude oil and natural
      gas properties and estimated future development costs, excluding unproved
      properties, are based on the unit-of-production method based on proved developed
      reserves. Net capitalized costs of crude and natural gas properties, as adjusted
      for asset retirement obligations, net of salvage value, are limited, by country,
      to the lower of unamortized cost or the cost ceiling, defined as the sum of
      the
      present value of estimated future net revenues from proved reserves based on
      unescalated prices discounted at 10%, plus the cost of properties not being
      amortized, if any, plus the lower of cost or estimated fair value of unproved
      properties included in the costs being amortized, if any, less related income
      taxes. Excess costs are charged to proved property impairment expense. No gain
      or loss is recognized upon sale or disposition of crude oil and natural gas
      properties, except in unusual circumstances.




***Properties
      that we acquire may not produce as projected, and we may be unable to identify
      liabilities associated with the properties or obtain protection from sellers
      against them.***





As
      part
      of our business strategy, we continually seek acquisitions of oil and gas
      properties. The successful acquisition of oil and natural gas properties
      requires assessment of many factors, which are inherently inexact and may be
      inaccurate, including the following:








·
            future
                oil and natural gas prices;





·
            the
                amount of recoverable reserves;





·
            future
                operating costs;





·
            future
                development costs;





·
            failure
                of titles to properties;





·
            costs
                and timing of plugging and abandoning wells;
                and





·
            potential
                environmental and other
                liabilities.





Our
      assessment will not necessarily reveal all existing or potential problems,
      nor
      will it permit us to become familiar enough with the properties to assess fully
      their capabilities and deficiencies. With respect to properties on which there
      is current production, we may not inspect every well location, every potential
      well location, or pipeline in the course of our due diligence. Inspections
      may
      not reveal structural and environmental problems such as pipeline corrosion
      or
      groundwater contamination. We may not be able to obtain or recover on
      contractual indemnities from the seller for liabilities that it created. We
      may
      be required to assume the risk of the physical condition of the properties
      in
      addition to the risk that the properties may not perform in accordance with
      our
      expectations.




** ***Changes
      in technology may render our products or services
      obsolete.***





The
      oil
      and gas E&P industry is substantially affected by rapid and significant
      changes in technology. These changes may render certain existing energy sources,
      such as oil and gas, and certain services and technologies currently used
      obsolete. We cannot assure you that the technologies we use or rely upon will
      not be subject to such obsolescence. While we may attempt to adapt and apply
      the
      services we provide to newer technologies, we cannot assure you that we will
      have sufficient resources to fund these changes or that these changes will
      ultimately prove successful.




18





***Oil
      and gas drilling and producing operations can be hazardous and may expose us
      to
      environmental liabilities.***





Our
      oil
      and gas operations will subject us to many risks, including well blowouts,
      cratering and explosions, pipe failure, fires, formations with abnormal
      pressures, uncontrollable flows of oil, natural gas, brine or well fluids,
      and
      other environmental hazards and risks. If any of these risks occur, we could
      sustain substantial losses as a result of:





·
            injury
                or loss of life;





·
            severe
                damage to or destruction of property, natural resources and
                equipment;




·
            pollution
                or other environmental damage;





·
            clean-up
                responsibilities;





·
            regulatory
                investigations and penalties; and





·
            suspension
                of operations.





Our
      liability for environmental hazards could include those created either by the
      previous owners of properties that we purchase or lease or by acquired companies
      prior to the date we acquire them. We expect to maintain insurance against
      some,
      but not all, of the risks described above. Our insurance may not be adequate
      to
      cover casualty losses or liabilities. Also, we may not be able to obtain
      insurance at premium levels that justify its purchase.





***We
      depend on key personnel to execute our*** ** ***business
      plans.***





The
      loss
      of any key executives or any other key personnel could have a material adverse
      effect on our operations. We depend on the efforts and skill of our key
      executives and personnel. Moreover, as we continue to grow our asset base and
      the scope of our operations, future profitability will depend on our ability
      to
      attract and retain qualified personnel. Mr. Tim Culp, our new Chairman of the
      Board, was TEC’s President and Chief Executive Officer prior to the consummation
      of the acquisition. Upon consummation of our recent agreement to acquire
      Maverick (of which there can be no assurance), Maverick’s founder and Chief
      Executive Officer will join us as our Chief Operating Officer. We cannot predict
      the effect that any change in management might have on our
      operations.





***Terrorist
      activities and military and other actions could adversely affect our
      business.***





Terrorist
      attacks and the threat of terrorist attacks, whether domestic or foreign, as
      well as the military or other actions taken in response to these acts, cause
      instability in the global financial and energy markets. The United States
      government has issued public warnings that indicate that energy assets might
      be
      specific targets of terrorist organizations. These actions could adversely
      affect us, in unpredictable ways, including the disruption of fuel supplies
      and
      markets, increased volatility in crude oil and natural gas prices, or the
      possibility that the infrastructure on which we rely could be a direct target
      or
      an indirect casualty of an act of terror.


19




***Our
      officers and directors are now and may in the future become affiliated with
      entities engaged in business activities similar to ours and, accordingly, may
      have conflicts of interest in determining to which entity a particular business
      opportunity should be presented.***





Our
      Chief
      Executive Officer and certain of our directors are engaged in other business
      endeavors and certain members of management are, and will likely in the future
      become, affiliated with entities engaged in the oil and gas E&P industry or
      other business activities similar to those of Platinum. For example, Mr. Barry
      Kostiner, our Chief Executive Officer and a director of Platinum, and Mr. Jim
      Dorman, our executive vice president, have equity interests in KD Resources,
      LLC, a privately-owned Delaware limited liability company that purchased certain
      oil and gas properties in Texas in May 2007. Mr. Dorman’s son, Mr. James T.
      Dorman is the chief executive officer of KD Resouces, LLC. In addition, Mr.
      Kostiner is a 28% owner of Braesridge Energy LLC, which invests in energy
      companies, including ours. Mr. Kostiner was the manager of Braesridge Energy
      LLC
      until his resignation from such position on February 14, 2008. As of the date
      of
      this report, Braesridge owns approximately 3.5 million shares, or about
      15.6%, of our outstanding common stock, plus presently exercisable warrants
      to
      purchase an additional approximately 5.0 million shares of common
      stock.




In
      the
      course of their current and/or future activities, our officers and directors
      may
      become aware of business or investment opportunities which may be appropriate
      for presentation to us as well as the other entities with which they are or
      may
      become affiliated. Accordingly, they may have conflicts of interest in
      determining to which entity a particular business opportunity should be
      presented. In general, officers and directors of a corporation incorporated
      under the laws of the State of Delaware are required to present business
      opportunities to a corporation if:





·
            the
                corporation could financially undertake the
                opportunity;





·
            the
                opportunity is within the corporation’s line of business;
                and





·
            it
                would not be fair to the corporation and its stockholders for the
                opportunity not to be brought to the attention of the
                corporation.





As
      a
      result of multiple business affiliations, our Chief Executive Officer and
      directors may have similar legal obligations relating to presenting business
      opportunities meeting the above-listed criteria to multiple entities. In
      addition, conflicts of interest may arise when our board of directors evaluates
      a particular business opportunity with respect to the above-listed criteria.
      We
      cannot assure you that any of the above mentioned conflicts will be resolved
      in
      our favor. For a description of management’s current affiliations, see “Certain
      Relationships and Related Transactions and Director Independence.”




**Item
      1B.**  **Unresolved
      Staff Comments.**





Not
      applicable.





**Item
      2.**   **Properties.**




The
      properties in which we have an interest consist of: our principal executive
      offices; the principal executive office of our wholly-owned subsidiary, New
      TEC,
      through which our business operations are presently conducted; and our oil
      and
      gas properties on which we conduct, through New TEC, our exploration,
      development and production activities.





**Principal
      Executive Offices**





Platinum’s
      principal executive offices are located at 25 Philips Parkway, Montvale, New
      Jersey 07645. We rent this space for $825 per month. Following consummation
      of
      our acquisition of Maverick (of which no assurance can be given), we intend
      to move our corporate headquarters to Maverick’s Houston office. New TEC’s
      principal executive offices are located at 200 N. Loraine, Suite 400, Midland,
      Texas. We rent this office space for approximately $11,000 per month. We believe
      those offices will be adequate to support our operations for the foreseeable
      future.




20





**Current
      Oil and Gas Activities**





*Tomball
      Field* .
      We own
      an interest in, and are operator of, oil and natural gas properties in the
      Tomball Field, which is located in Harris County, Texas, and is approximately
      30
      miles northwest of Houston, Texas. The Tomball Field contains multiple
      productive formations ranging in depth from 1,000 to 9,000 feet, including
      the
      Yegua, Cockfield, and Wilcox. Current operations consist of 18 producing wells
      and 6 water disposal wells. At December 31, 2007, we held 7,000 acres and had
      an
      inventory of 3 proved undeveloped locations in the Tomball Field. We own a
      100%
      working interest and net revenue interests ranging from 84.5% to 87.5%. TEC
      began operating the Tomball field in 1996, but it has been producing
      continuously since 1930. The daily net production from the field for the nine
      months ended September 30, 2007 averaged 221 Bbls of oil and 742 Mcf of gas
      per
      day. The field is also producing approximately 19,000 Bbls of water per
      day.




*Ira
      Field* .
      We own
      an interest in, and are operator of, an oil production unit in the Ira Field,
      which is located in Scurry County, Texas, and is approximately 75 miles
      northeast of Midland, Texas. The Ira Field production is from the San Andres
      formation at approximately 1,800 feet. Current operations consist of 150
      producing wells and 75 water injection wells. At December 31, 2007, we held
      3,600 acres and had an inventory of 76 proved undeveloped locations in the
      Ira
      Field. We own an 88% working interest and 72% net revenue interest. TEC, through
      it predecessor in interest, began operating the IRA Field in 2004, but it has
      been producing continuously since 1955. The daily net production from the field
      for the nine months ended September 30, 2007 averaged 126 Bbls of oil per day.
      The field is also producing approximately 3,000 Bbls of water per
      day.




*Ball
      Field* .
      We own
      an interest in, and are operator of, oil and natural gas properties in the
      Ball
      Field, which is located in Palo Pinto County, Texas, and is approximately 75
      miles west of Fort Worth, Texas. The Ball Field contains multiple productive
      formations ranging in depth from 3,000 to 3,800 feet, including the Big Saline,
      Duffer, and Barnett Shale. Current operations consist of 17 producing wells
      and
      1 water disposal well. At December 31, 2007, we held 4,900 acres and had an
      inventory of 29 proved undeveloped locations in the Ball Field. We own working
      interests ranging from 50% to 100%, and net revenue interests ranging from
      40.3%
      to 87.5%. TEC began operating the Ball Field in 1993, but it has been producing
      continuously since 1930. The daily net production from the field for the nine
      months ended September 30, 2007 averaged 1 Bbls of oil and 520 Mcf of gas per
      day. The field is also producing approximately 450 Bbls of water per day.  
On December 28, 2007 we acquired an additional 50% working interest in the
      Barnett Shale acreage for approximately $920,000. This acquisition increased
      our
      net acreage position by 2,300 net acres and gave us a 100% working interest
      in
      the Barnett. We plan to begin a horizontal development program in the Barnett
      Shale during 2008, which may include a 3-D seismic program.




21





*Ballard
      Field* .
      We own
      an interest in, and are operator of, an oil production unit in the Ballard
      Field, which is located in Eddy County, New Mexico, and is approximately 150
      miles northwest of Midland, Texas. The Ballard Field contains multiple
      productive formations ranging in depth from 2,000 to 3,000 feet, including
      the
      Yates, Grayburg, and San Andres. Current operations consist of 40 producing
      wells and 26 water injection wells. At December 31, 2007, we held 3,000 acres
      and had an inventory of 36 proved undeveloped locations in the Ballard Field.
      We
      own an 86% working interest and 78.7% net revenue interest. TEC, through its
      predecessor in interest, began operating the Ballard Field in 2004, but it
      has
      been producing continuously since 1965. The daily net production from the field
      for the nine months ended September 30, 2007 averaged 80 Bbls of oil per day.
      The field is also producing approximately 1,300 Bbls of water per
      day.





*USM
      Field* .
      We own
      an interest in, and are operator of, oil and natural gas properties in the
      USM
      Field, which is located in Pecos County, Texas, and is approximately 120 miles
      southwest of Midland, Texas. The USM Field production is from the Yates and
      Queen formations at approximately 3,200 feet. Current operations consist of
      50
      producing wells and 4 water disposal wells. At December 31, 2007, we held 3,000
      acres and had an inventory of 54 proved development locations in the USM Field.
      We own working interests ranging from 90% to 100%, and net revenue interests
      ranging from 79.3% to 89.6%. TEC, through its predecessor in interest, began
      operating the USM Field in 2004, but it has been producing continuously since
      1985. The daily net production from the field for the nine months ended
      September 30, 2007 averaged 39 Bbls of oil and 76 Mcf per day. The field is
      also
      producing approximately 300 Bbls of water per day.





*Choate
      Field* .
      We own
      an interest in, and are operator of, oil and natural gas properties in the
      Choate Field, which is located in Hardin County, Texas, and is approximately
      35
      miles northwest of Beaumont, Texas. The Choate Field production is from sand
      lenses flanking a salt dome ranging in depth from 1,000 to 2,500 feet. Current
      operations consist of 14 producing wells. At December 31, 2007, we held 50
      acres
      and had an inventory of 9 proved undeveloped locations in the Choate Field.
      We
      own a 75% working interest and 57% net revenue interest. TEC, through its
      predecessor in interest, began operating the Choate Field in 2004, but it has
      been producing continuously since 1960. The daily net production from the field
      for the nine months ended September 30, 2007 averaged 43 Bbls of oil per day.
      The field is also producing approximately 100 Bbls of water per
      day.




*Lothian
      Properties.* In
      December 2007 we purchased, for $6.9 million plus customary closing adjustments,
      approximately 200 producing wells from Lothian Oil and Gas, Inc. The Lothian
      assets acquired consist of oil and gas properties located in Chavez, Lea and
      Eddy counties, New Mexico and are adjacent to or near our Ballard Field. On
      the
      closing date of that acquisition, the net production was approximately 140
      boe
      per day.





*Other* .
      We own
      numerous small mineral, royalty and non-operated working interests in various
      oil and natural gas properties located in Texas, New Mexico, Louisiana, Montana,
      and North Dakota.





Below
      is
      a map indicating the locations of our significant properties in Texas and New
      Mexico.











**Drilling
      Results**





New
      TEC
      drilled or participated in the following number of wells during the period
      from
      October 26, 2007 through December 31, 2007. No exploratory wells were drilled
      during the period.


Gross
              
              
              Net**Development
                  Wells:**Oil
              
              
              -
              
              
              -Gas
              
              
              1
              
              
              1.0Dry
              
              
              -
              
              
              -Total
              
              
              1
              
              
              1.0
  22





Prior
      to
      our acquisition, TEC drilled or participated in the following numbers of wells
      during the periods indicated. No exploratory wells were drilled during the
      presented periods.




Period
                From January 1, 2007  Through October 26, 2007
            
            
            Year
                Ended December 31,2007
            
            
            2006
            
            
            2005Gross
            
            
            Net
            
            
            Gross
            
            
            Net
            
            
            Gross
            
            
            Net(Excludes
                Wells in Progress at the End of any Period)**Development
                Wells:**Oil
            
            
            -
            
            
            -
            
            
            7
            
            
            4.9
            
            
            13
            
            
            9.4Gas
            
            
            -
            
            
            -
            
            
            4
            
            
            3.3
            
            
            5
            
            
            3.0Dry
            
            
            -
            
            
            -
            
            
            2
            
            
            2.0
            
            
            2
            
            
            2.0Total
            
            
            -
            
            
            -
            
            
            13
            
            
            10.2
            
            
            20
            
            
            14.4




The
      information contained in the foregoing table should not be considered indicative
      of our future drilling performance, nor should it be assumed that there is
      necessarily any correlation between the number of productive wells drilled
      and the amount of oil and gas that may ultimately be recovered by
      us.





**Red**  **Iron**  **Tool,
      Inc.**





In
      December 2007, as part of a strategic attempt to secure readily available well
      servicing equipment, we purchased, for approximately $2.2 million, the
      outstanding stock of Red Iron Tool, Inc. (Red Iron). As a result, Red Iron
      is
      now a wholly owned subsidiary of Platinum. Red Iron owns three pulling units
      and
      other service equipment near our Ira field in Scurry County, Texas. One of
      its
      rigs has been continuously servicing that field for the last six months. The
      other two have been used by other operators. Additionally, the former president
      of Red Iron, who is experienced in operations, drilling and well servicing
      in that area, will assist us in providing valuable oversight of the Ira Field.
      We may continue to contract the rigs to third party operators when not in use
      on
      our properties.




**Reserve
      Report Summary**





We
      have
      engaged Williamson Petroleum Consultants, Inc. (“WPC”), as our independent
      petroleum engineers. WPC, along with our own engineers performed an engineering
      evaluation to estimate proved reserves and future net revenues from TEC’s oil
      and gas properties and issued their reports thereon as of December 31, 2007.
      Certain information utilized in the preparation of these reports with respect
      to
      interests, reversionary status, oil and gas prices, gas contract terms,
      operating expenses, investments and current operating conditions, as applicable
      were provided by us. All such data provided to WPC have been reviewed by WPC
      for
      reasonableness and, unless obvious errors were detected, have been accepted
      as
      correct. WPC did not provide any geological mapping, seismic interpretations
      or
      well log analysis in the course of their evaluation but relied upon data and
      analysis provided by previous evaluators. A summary of the reports is as
      follows:




**Proved**
              **Developed
                Producing**
            
            
            **Proved**
              **Developed
                Nonproducing**
            
            
            **Proved**
              **Undeveloped**
            
            
            **Total
                Proved**Crude
                oil (Bbl)
            
            
            2,569,592
            
            
            68,745
            
            
            3,887,413
            
            
            6,525,750Natural
                gas (Mcf)
            
            
            5,709,878
            
            
            787,234
            
            
            15,314,743
            
            
            21,811,855Bbl
                oil equivalent (Boe)
            
            
            3,521,238
            
            
            199,950
            
            
            6,439,870
            
            
            10,161,058Undiscounted
                future net   revenue  (before CapEx)
            
            $
            154,381,219
            
            
            9,505,243
            
            
            392,044,598
            
            $
            555,931,060Estimated
                future capital   expenditures
            
            
            -
            
            
            255,300
            
            
            54,437,137
            
            
            54,692,437Undiscounted
                future net   revenue (net of CapEx)
            
            $
            154,381,219
            
            
            9,249,943
            
            
            337,607,461
            
            $
            501,238,623Discounted
                future net
              revenue (net of CapEx)
            
            $
            86,336,766
            
            
            5,906,856
            
            
            171,876,576
            
            $
            264,120,198




23




As
      of
      December 31, 2007, on an equivalent barrel basis, 63% of New TEC’s proved
      reserves classified as proved undeveloped.





A
      summary
      of the total proved reserves of New TEC by major field is as follows:





**Proved
                Producing**
            
            **Proved
                Non Producing**
            
            **Proved
                Undeveloped**
            
            **Total
                Proved Reserves****Oil
                (bbls)**
            
            **Gas
                (mcf)**
            
            **Oil
                (bbls)**
            
            **Gas
                (mcf)**
            
            **Oil
                (bbls)**
            
            **Gas
                (mcf)**
            
            **Oil
                (bbls)**
            
            **Gas
                (mcf)**Tomball
            
            
            967,792
            
            
            931,127
            
            
            28,850
            
            
            —
            
            
            —
            
            
            9,274,074
            
            
            996,642
            
            
            10,205,201Ira
            
            
            396,019
            
            
            —
            
            
            —
            
            
            —
            
            
            1,367,857
            
            
            —
            
            
            1,763,876
            
            
            —Ballard
            
            
            442,093
            
            
            127,598
            
            
            —
            
            
            —
            
            
            632,083
            
            
            —
            
            
            1,074,176
            
            
            127,598USM
            
            
            119,972
            
            
            272,115
            
            
            —
            
            
            —
            
            
            1,148,000
            
            
            2,296,000
            
            
            1,267,972
            
            
            2,568,115Ball
            
            
            409
            
            
            1,392,312
            
            
            —
            
            
            787,234
            
            
            —
            
            
            3,285,129
            
            
            409
            
            
            5,464,674Choate
            
            
            109,265
            
            
            —
            
            
            39,895
            
            
            —
            
            
            153,900
            
            
            —
            
            
            303,060
            
            
            —Lothian
            
            
            405,508
            
            
            538,868
            
            
            —
            
            
            —
            
            
            523,180
            
            
            459,540
            
            
            928,688
            
            
            998,408Other
            
            
            128,534
            
            
            2,447,859
            
            
            —
            
            
            —
            
            
            62,393
            
            
            —
            
            
            190,927
            
            
            2,447,859Total
            
            
            2,569,592
            
            
            5,709,879
            
            
            68,745
            
            
            787,234
            
            
            3,887,413
            
            
            15,314,743
            
            
            6,525,750
            
            
            21,811,855





**Areas
      of Opportunity**





The
      following is a discussion of the specific areas of opportunity that were not
      identified in the Reserve Report dated as of December 31, 2007 that we believe
      are available but not addressed in the proved reserve report
      analysis:





·
            The
                Ira Field has produced 20 million boe to date. We believe that there
                are
                approximately 105 million boe oil in place at such property. Using
                area
                and industry primary and secondary recovery standards for the Ira
                Field
                reservoir, we believe that approximately 28% of the property’s oil in
                place can be recovered. Only a small fraction of the Ira Field lease
                has
                been effectively waterflooded. Based on this recovery rate, if the
                total
                estimated capital cost of the re-instituted waterflood program is
                $12
                million to $15 million, the finding and development cost would be
                under
                $1.75 per boe.





24


·
            We
                believe that the Ball lease has significant Barnett Shale reserves,
                as
                well as shallow sands (behind pipe reserves) that have never been
                completed.




**Item
      3.**   **Legal
      Proceedings.**




On January
      16th, 2008, Exxon Mobil Corporation filed a petition in the 270 th District
      Court of Harris County, Texas, naming us as a defendant along with TEC and
      a
      third party, Merenco Realty, Inc., demanding environmental remediation of
      certain properties in Tomball, Texas. In 1996, pursuant to an assignment
      agreement, Exxon Mobil sold certain oil and gas leasehold interests and real
      estate interests in Tomball, Texas to TEC’s predecessor in interest, Merit
      Energy Corporation. In 1999, TEC assigned its 50% undivided interest in one
      of
      the tracts in the acquired property to Merenco, an affiliate of TEC, owned
      50%
      by our Chairman of the Board, Tim Culp. In October 2007, the Texas Railroad
      Commission notified Exxon Mobil of an environmental site assessment alleging
      soil and groundwater contamination for a site in the area of Tomball, Texas.
      Exxon Mobil believes that the site is one which was sold to TEC and claims
      that
      TEC is obligated to remediate the site under the assignment agreement. Exxon
      Mobil has requested that the court declare the defendants obligated to restore
      and remediate the properties and has requested any actual damages arising from
      breach and attorneys’ fees. We believe that Exxon Mobil’s claim that TEC is
      responsible for any remediation of such site is without merit and we intend
      to
      vigorously defend ourselves against this claim. However, no assurance can be
      given that we will prevail in this matter. We acquired substantially all the
      assets and liabilities of TEC in the TEC acquisition. Merenco was not acquired
      by us in the TEC acquisition and our Chairman, Tim Culp, continues to have
      a 50%
      ownership interest in Merenco.





On
      December 12, 2007, we received a subpoena from the SEC in the Matter of Axium
      Technologies, Inc. We have provided the requested documentation to the SEC
      and
      believe that we have fully complied with the subpoena. We do not recognize
      the
      name Axium Technologies, Inc. and while we do not believe that we, or any of
      our
      officers or directors, are the subject or target of the SEC's investigation,
      no
      assurances can be given to that effect.





**Item
      4.**   **Submission
      of Matters to a Vote of Security Holders.**




A
      special
      meeting of Platinum stockholders was held on October 26, 2007. Holders of record
      of Platinum common stock at the close of business on October 11, 2007 were
      entitled to vote at the special meeting. There were 18,000,000 shares of common
      stock issued and outstanding on October 11, 2007. The holders of 17,098,100
      shares of common stock were present at the meeting in person or by proxy. The
      stockholders voted to approve and authorize three proposals that were
      recommended by our board of directors:







(1)
      the
      TEC acquisition agreement and the transactions contemplated thereby (“Proposal
      1”);




(2)
      the
      amendment and restatement of our certificate of incorporation to delete the
      preamble and sections A through D, inclusive, of Article Sixth from the
      certificate of incorporation from and after the consummation of the asset
      acquisition (“Proposal 2”); and




(3)
      our
      2006 Long-Term Incentive Plan (“Proposal 3”).





These
      proposals are described in our definitive proxy statement filed with the SEC
      on
      October 17, 2007. The proposals were approved as follows:


**Proposal**
              
              **Votes
                  For**
              
              **Votes
                  Against**
              
              **Abstentions****Proposal
                  1**
              
              15,296,594
              
              1,802,205
              
              0**Proposal
                  2**
              
              13,690,914
              
              1,402,305
              
              1,807,000**Proposal
                  3**
              
              13,555,914
              
              1,532,505
              
              1,811,000




25





**PART
      II**




**Item
      5.**   **Market
      For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
      of Equity Securities.**




Platinum
      consummated its IPO on October 28, 2005. In the IPO, we sold 14,400,000 units.
      Each unit consists of one share of Platinum’s common stock and one redeemable
      common stock purchase warrant. Platinum common stock, warrants and units are
      quoted on the OTCBB under the symbols “PGRI”, “PGRIW” and “PGRIU”, respectively.
      Platinum’s units commenced public trading on October 28, 2005 and its common
      stock and warrants commenced separate public trading on December 9, 2005. The
      high and low bid prices of our units, common stock and warrants as reported
      by
      the OTCBB for the quarter indicated are as follows. Such inter-dealer quotations
      do not necessarily represent actual transactions and do not reflect retail
      mark-ups, mark-downs or commissions:





**Units**
            
            **Common
                Stock**
            
            **Warrants****High**
            
            **Low**
            
            **High**
            
            **Low**
            
            **High**
            
            **Low**2008:First
                Quarter (through March 31)
            
            $
            8.40
            
            $
            6.00
            
            $
            6.97
            
            $
            4.60
            
            $
            1.85
            
            $
            1.002007:Fourth
                Quarter
            
            $
            10.00
            
            $
            8.19
            
            $
            7.99
            
            $
            6.60
            
            $
            2.21
            
            $
            0.63Third
                Quarter
            
            $
            8.45
            
            $
            7.85
            
            $
            7.65
            
            $
            7.50
            
            $
            0.81
            
            $
            0.35Second
                Quarter
            
            $
            8.25
            
            $
            7.83
            
            $
            7.60
            
            $
            7.40
            
            $
            0.74
            
            $
            0.31First
                Quarter
            
            $
            7.95
            
            $
            7.60
            
            $
            7.41
            
            $
            7.26
            
            $
            0.57
            
            $
            0.432006:Fourth
                Quarter
            
            $
            8.10
            
            $
            7.60
            
            $
            7.30
            
            $
            7.08
            
            $
            0.85
            
            $
            0.47Third
                Quarter
            
            $
            8.22
            
            $
            7.70
            
            $
            7.30
            
            $
            7.08
            
            $
            1.00
            
            $
            0.55Second
                Quarter
            
            $
            8.88
            
            $
            7.98
            
            $
            7.40
            
            $
            7.07
            
            $
            1.39
            
            $
            0.78First
                Quarter
            
            $
            8.38
            
            $
            7.78
            
            $
            7.24
            
            $
            6.90
            
            $
            1.12
            
            $
            0.84





**Holders**





As
      of
      March 31, 2008, there was one holder of record of the units, eleven holders
      of
      record of the common stock and one holder of record of the warrants. Platinum
      believes that, as of this date, there were approximately 50 beneficial holders
      of the units, 150 beneficial holders of the common stock and 200
      beneficial holders of the warrants.





**Share
      Repurchase Program**





The
      table
      below provides a summary of purchases of Platinum common stock made by Platinum
      and affiliated purchasers during the fourth quarter of 2007.


**Period**
              
              **Total
                  Number of Shares Purchased**
              
              **Average
                  Price Paid per Share**
              
              **Total
                  Number of Shares Purchased as Part of Publicly Announced
                  Program**
              
              **Maximum
                  Dollar Amount that May Yet Be Used Under the
                  Program**October
                  1 - October 31, 2007
              
              
              1,978,005(1
              )
              $
              7.78
              
              
              0
              
              
              0November
                  1 - November 30, 2007
              
              
              1,997,913(2
              )
              $
              7.84
              
              
              1,997,913
              
              $
              64,338,536(2
              )December
                  1 - December 31, 2007
              
              
              0
              
              
              N/A
              
              
              N/A
              
              $
              64,338,536




26


(1)
            1,802,205
                of these shares were purchased by Platinum from stockholders who
                voted
                against the TEC acquisition on October 26, 2007 and exercised their
                conversion rights. 175,800 of these shares were purchased by Braesridge
                Energy LLC, an affiliated purchaser, pursuant to two plans established
                in
                conformity with the provisions of Rules 10b5-1 to purchase Platinum
                common
                stock.





(2)
            In
                November 2006, our board approved a share repurchase program to repurchase
                shares of Platinum common stock in open market transactions in an
                amount
                up to $80 million, following the consummation of a business combination.
                On November 1, 2007, we issued a press release, filed as a Current
                Report
                on Form 8-K dated November 1, 2007, announcing that our board of
                directors
                instituted the initial stage of this share repurchase program and
                established a plan in conformity with the provisions of Rule 10b5-1
                to
                purchase up to 2,000,000 shares of Platinum common stock in open
                market
                transactions during the month of November 2007, subject to the broker,
                volume, price and timing restrictions of Rule 10b-18 under the Securities
                Exchange Act of 1934. Pursuant to the plan, we purchased 1,997,913
                shares
                for an aggregate of $15,661,464 in November 2007 under this stage
                of the
                repurchase program, which we financed with available cash. Our initial
                share repurchase plan expired at the end of November, but we may
                resume
                repurchases in the future, pursuant to our share repurchase
                program.





The
      table
      below provides a summary of purchases of warrants to purchase Platinum common
      stock made by Platinum and affiliated purchasers during the fourth quarter
      of
      2007.


**Period**
              
              **Total
                  Number of Warrants Purchased**
              
              **Average
                  Price Paid per Warrant**
              
              **Total
                  Number of Warrants Purchased as Part of Publicly Announced
                  Program**October
                  1 - October 31, 2007
              
              0
              
              N/A
              
              0November
                  1 - November 30, 2007
              
              
              1,529,000
              (1)
              $
              1.90
              
              
              0December
                  1 - December 31, 2007
              
              
              1,025,500
              (2)
              $
              1.76
              
              
              0





(1)
            These
                warrants to purchase common stock were purchased by Braesridge Energy
                LLC
                in a private block purchase
                transaction.





(2)
            These
                warrants to purchase common stock were purchased by Braesridge Energy
                LLC
                on the open market. 25,500 of these warrants were purchased by Braesridge
                pursuant to a plan established in conformity with the provisions
                of Rules
                10b5-1 to purchase warrants to purchase Platinum common
                stock.





**Dividends**





Platinum
      has not paid any cash dividends on its common stock to date. It is the present
      intention of the board of directors to retain all earnings, if any, for use
      in
      the business operations, and accordingly, the board does not anticipate
      declaring any dividends in the foreseeable future. The payment of any dividends
      will be within the discretion of the board of directors and will be contingent
      upon our financial condition, results of operations, capital requirements and
      other factors our board deems relevant.




27





**Item
      6.**   **Selected
      Financial Data.**


**Platinum
        Selected Historical Financial Information**


The
        following table sets forth certain selected consolidated financial information
        of Platinum. The selected financial information presented below was derived
        from
        Platinum’s audited consolidated financial statements for the period from April
        25, 2005 (inception) to December 31, 2005, for the years ended December 31,
        2006
        and 2007. All of the data should be read together with Platinum’s historical
        financial statements for the period from April 25, 2005 (inception) to December
        31, 2005 and for the years ended December 31, 2006 and 2007 and the related
        notes thereto and Platinum’s Management’s Discussion and Analysis of Financial
        Condition and Results of Operations presented elsewhere
        herein.


**Period
                          From April 25, (Inception) 2005********to
                          31-Dec-05**
                
                
                **Year
                    Ended**
                  **31-Dec-06**
                
                
                **Year
                      Ended**
                    **31-Dec-07**Income
                  Statement Data :Operating
                    revenues
                
                $
                —
                
                $
                —
                
                $
                4,308,184Lease
                    and other operating expenses
                
                $
                —
                
                $
                —
                
                $
                1,776,247Operating
                    Expenses
                
                $
                167,274
                
                $
                786,300
                
                $
                28,015Stock
                    based compensation
                
                $
                —
                
                $
                —
                
                $
                1,250,000Depreciation,
                    depletion and amortization
                
                $
                —
                
                $
                —
                
                $
                1,253,026Other
                    Income - Interest, net
                
                $
                471,102
                
                $
                2,565,979
                
                $
                2,746,187Change
                    in fair value of derivatives - inc (dec)
                
                $
                —
                
                $
                —
                
                $
                (1,472,522
                )Net
                    income (loss)
                
                $
                275,728
                
                $
                1,659,679
                
                $
                (373,032
                )Weighted
                    average common stock and common stock equivalents
                    outstanding:Basic
                
                
                6,549,489
                
                
                15,121,440
                
                
                18,876,347Diluted
                
                
                6,980,246
                
                
                17,479,194
                
                
                18,876,347Net
                    Income Per Common Share -Basic
                
                $
                0.04
                
                $
                0.11
                
                $
                (0.02
                )Diluted
                
                $
                0.04
                
                $
                0.09
                
                $
                (0.02
                )Cash
                    Dividends Declared Per Share
                
                $
                —
                
                $
                —
                
                $
                —**31-Dec-05**
                
                
                **31-Dec-06**
                
                
                **31-Dec-07**Balance
                    Sheet DataWorking
                    Capital (Deficiency) (Excluding Cash held in trust)
                
                $
                888,439
                
                $
                (1,683,186
                )
                $
                14,158,775Cash
                    Held in Trust
                
                $
                105,884,102
                
                $
                109,213,492
                
                $
                —Total
                    Assets
                
                $
                106,905,311
                
                $
                110,955,650
                
                
                198,389,193Long-term
                    debt, less current maturities
                
                $
                —
                
                $
                —Common
                    Stock Subject to Possible Redemption, 2,878,560 Common Shares
                    at
                    Conversion Value
                
                $
                21,071,059
                
                $
                21,831,777
                
                $
                —Total
                    liabilities
                
                $
                21,203,829
                
                $
                23,594,489
                
                $
                57,421,733Total
                    stockholders’ equity
                
                $
                85,701,482
                
                $
                87,361,161
                
                $
                140,967,460Cash
                    flow provided by (used in)Operating
                    activities
                
                $
                289,787
                
                $
                2,111,707
                
                $
                (112,554
                )Investing
                    activities
                
                $
                (105,884,102
                )
                $
                (3,849,923
                )
                $
                45,719,620Financing
                    activities
                
                $
                106,496,813
                
                $
                835,718
                
                $
                (29,177,446
                )Operating
                    Data:Product
                    salesOil
                    (Bbl)
                
                
                —
                
                
                —
                
                
                38,684Gas
                    (Mcf)
                
                
                —
                
                
                —
                
                
                125,849Boe
                
                
                —
                
                
                —
                
                
                59,659Average
                    sales pricesOil
                    ($/Bbl)
                
                $
                —
                
                $
                —
                
                $
                85.24Gas
                    ($/Mcf)
                
                $
                —
                
                $
                —
                
                $
                8.03Average
                    Lifting Cost per Boe of Production:
                
                $
                —
                
                $
                —
                
                $
                29.77Proved
                    reservesOil
                    (Bbls)
                
                
                —
                
                
                —
                
                
                6,525,750Gas
                    (Mcf)
                
                
                —
                
                
                —
                
                
                21,811,856Boe
                
                
                —
                
                
                —
                
                
                10,161,059
  28




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




The
      following information and analysis includes results of operations for Platinum
      for the following periods (i) for the year ended December 31, 2006 as compared
      to the period from April 25, 2005 (Inception) to December 31, 2005 and (ii)
      for
      the year ended December 31, 2007 as compared to the year ended December 31,
      2006. Included within the results of operations for the year ended December
      31,
      2007 are the results of operations of New TEC, our wholly owned subsidiary
      that
      purchased substantially all of the assets of TEC on October 26, 2007, for the
      period from October 26, 2007 through December 31, 2007. The information and
      analyses should be read in conjunction with the financial statements and the
      related notes and schedules thereto and other information relating to Platinum
      included elsewhere in this report. These discussions and analyses may contain
      forward-looking statements based upon current expectations that involve risks
      and uncertainties. Our actual results may differ materially as a result of
      various factors, including those set forth under “Risk Factors” or elsewhere in
      this report.




**Overview**





On
      October 26, 2007, we acquired substantially all of the assets and assumed
      substantially all of the liabilities of TEC, including approximately $41.7
      million of TEC’s debt which was retired at closing, in exchange for 7,692,308
      shares of our common stock with a cash value of $7.80 per share. Prior to the
      TEC acquisition, we were a blank check company. We were formed on April 25,
      2005, to serve as a vehicle to effect a merger, capital stock exchange, asset
      acquisition or other similar business combination with an unidentified operating
      business in the global oil and gas exploration and production, or E&P,
      industry. On October 28, 2005 we consummated an initial public offering of
      our
      equity securities from which we derived net proceeds of $106,472,000. Of the
      net
      proceeds of the IPO, $105,408,000 were placed in a trust account until the
      closing of the TEC acquisition, at which point the $105,408,000, and the
      interest thereon, was released from the trust. Our initial business combination
      pursuant to which we became an operating company was the TEC acquisition.





We
      are
      now an oil and natural gas exploration, development, acquisition, and production
      company. Our basic business model is to find and develop oil and gas reserves
      through development activities, and sell the production from those reserves
      at a
      profit. To be successful, we must, over time, be able to find oil and gas
      reserves and then sell the resulting production at a price that is sufficient
      to
      cover our finding costs, operating expenses, administrative costs and interest
      expense, plus offer us a return on our capital investment.





From
      time
      to time, we may also make strategic acquisitions if we believe the acquired
      assets offer us the potential for reserve growth through additional
      developmental drilling activities. However, the successful acquisition of oil
      and natural gas properties requires assessment of many factors, which are
      inherently inexact and may be inaccurate, including future oil and natural
      gas
      prices, the amount of recoverable reserves, future operating costs, future
      development costs, failure of titles to properties, costs and timing of plugging
      and abandoning wells and potential environmental and other
      liabilities.




29





We
      believe that the economic climate in the domestic oil and gas industry continues
      to be suitable for our business model. Oil prices are currently at near-record
      levels, and gas prices are well above historic averages. Although oil and gas
      prices are typically volatile and are subject to market fluctuations, we believe
      that supply and demand fundamentals in the energy marketplace continue to
      provide us with the economic incentives necessary for us to assume the risks
      we
      face in our search for oil and gas reserves. While profit margins remain
      currently favorable, we cannot guarantee that rising finding costs, production
      costs, and depletion expense will not affect our future success. Specifically,
      our revenue, cash flow from operations and future growth depend substantially
      on
      many factors, including those beyond our control, such as economic, political
      and regulatory developments and competition from other sources of energy.
      Because of these factors, we continuously seeks ways to reduce exposure to
      the
      volatility in oil and natural gas prices. Our strategy is to hedge a portion
      of
      our expected future oil and natural gas production, using a mixture of calls,
      puts, forward contracts and other derivative instruments, to reduce our exposure
      to fluctuations in commodity price.





Furthermore,
      like all businesses engaged in the exploration and production of oil and natural
      gas, we face the challenge of natural production declines. As initial reservoir
      pressures are depleted, oil and natural gas production from a given well
      decreases. Thus, an oil and natural gas exploration and production company
      depletes part of its asset base with each unit of oil or natural gas it
      produces. Consequently, key to our success is not only finding reserves through
      developmental drilling and strategic acquisitions, but also by exploiting
      opportunities related to our existing production. For example, we have two
      fields, the Ira Unit located in Scurry County, Texas, and the Ballard Unit
      located in Eddy County, New Mexico which we believe contain substantial
      opportunities to expand and enhance their existing waterflood capabilities.
      These projects will require capital in the form of money and expertise.





**Results
      of Operations - Platinum**





*For
      the year ended December 31, 2006 and the period from April 25, 2005 (Inception)
      to December 31, 2005*





For
      the
      year ended December 31, 2006 (“2006”) and the period from April 25, 2005
      (Inception) to December 31, 2005 (“2005”), we had net income of $1,659,579 and
      $275,728, respectively, attributable to net interest income on the proceeds
      of
      our IPO of $2,568,672 and $476,102, respectively (net of interest income in
      the
      amount of $760,718 and $0, respectively, attributable to shares of common stock
      subject to conversion rights), offset by expenses attributable to organization
      and formation expenses, expenses incurred in identifying and qualifying an
      acquisition candidate and legal, accounting and administrative costs. As more
      fully described below, the interest income was earned on funds held in the
      trust
      account. This interest income as well as other operating expenses increased
      in
      2006 as compared to 2005 principally because the funds were invested for a
      full
      year in 2006 as compared to less than three months in 2005. The funds held
      in
      trust and related interest income were only available, subject to certain
      conditions, for use in making a qualified acquisition and not for our normal
      daily operating expenses. Interest income was derived from sources free of
      federal income taxes resulting in a lower than normal provision for income
      taxes.





*For
      the year ended December 31, 2007 and the year ended December 31,
      2006*





For
      the
      years ended December 31, 2007 (“2007”) and December 31, 2006, we had a net loss
      of $373,032 as compared to net income of $1,659,579, respectively. In 2007,
      our
      results of operation included those of the entities acquired on and subsequent
      to October 26, 2007. These included the TEC acquisition and the other
      transactions more specifically described in “Business - Growth Strategy”
beginning on page 5 and in Note 4 to the consolidated financial statements
      beginning on page F1-14. Results of operations for 2007 included net interest
      income of $2,799,229 (substantially all of which was earned on funds held in
      the
      trust account and net of interest income in the amount of $616,217 attributable
      to shares of common stock subject to conversion rights), after tax net loss
      from
      oil and gas operations approximating $729,000 (which included a non-cash loss
      on
      the change in the value of derivatives approximating $1,473,000) and a non-cash
      charge for stock based compensation of $1,250,000 resulting from the Lance
      Duncan consulting agreement described more fully in “Certain Relationships and
      Related Transactions and Director Independence - Related Party Transactions”
beginning on page 62 and in Note 10 to the consolidated financial
      statements beginning on page F1-21. Results of operations for 2006 were
      generated principally by net interest income on the proceeds of our IPO of
      $2,568,672 (net of interest income in the amount of $760,718, attributable
      to
      shares of common stock subject to conversion rights), offset by expenses
      attributable to organization and formation expenses, expenses incurred in
      identifying and qualifying an acquisition candidate and legal, accounting and
      administrative costs.




30





Consolidated
      marketing, general and administrative expense increased to approximately
      $1,491,000 in 2007 as compared to $718,000 in 2006, an increase of $773,000.
      The
      major increase was as a result of $551,000 in marketing, general and
      administrative costs of the oil and gas operations acquired as described above,
      and an increase of $250,000 in costs of Platinum, excluding those of the
      acquired operations. The principal components of these changes were: (i) a
      $267,000 increase in professional fees attributable to greater level of
      activity, more frequent and complex SEC filings and internal accounting demands
      and (ii) officers salaries approximating $55,000 incurred subsequent to October
      26, 2007 offset by a reduction of $83,000 in travel and related
      costs.





The
      funds
      held in trust and related interest income became available to us upon
      consummation of the TEC acquisition. See “Liquidity and Capital Resources”
below. Interest income was derived from sources free of federal income taxes
      resulting in a lower than normal provision for income taxes.





Other
      income and expense decreased to $1,244,000 in 2007 as compared to $2,566,000
      in
      2006, a decrease of $1,322,000. While net interest income increased by $230,000
      to $2,799,000 in 2007 as compared to $2,569,000 in 2006, Platinum incurred
      $1,473,000 in non-cash loss as a result of mark-to-market losses on the fair
      value of its derivatives, resulting entirely from its oil and gas operations.
      We
      will not continue to earn this level of interest in future years because funds
      held in trust were expended for acquisitions, including the TEC acquisition,
      share repurchases, and are now being used in operations.





**Liquidity
      and Capital Resources**





On
      October 28, 2005, we consummated our IPO of 14,400,000 units with each unit
      consisting of one share of our common stock, $0.0001 per share, and one warrant
      to purchase one share of common stock at an exercise price of $6.00 per share.
      The units were sold at an offering price of $8.00 per unit, generating gross
      proceeds of $115,200,000. The total net proceeds to us from the offering were
      approximately $106,472,000, of which $105,408,000 was deposited into a trust
      fund and the remaining proceeds ($1,064,000) were available to be used to
      provide for business, legal and accounting due diligence on prospective business
      combinations and continuing general and administrative expenses. The net
      proceeds deposited into the trust fund remained on deposit in the trust fund,
      earning interest, until the consummation of the TEC acquisition agreement on
      October 26, 2007. We received an additional $1,032,000 from our former Chairman
      of the Board, Mark Nordlicht, in proceeds of notes issued between January 1,
      2007 and October 26, 2007 to fund our working capital needs. The notes bore
      interest at 5% per annum. The principal amount of the notes of $1,107,000 and
      accrued interest of $18,606 was paid on October 26, 2007, the date of
      consummation of the TEC acquisition, with proceeds released from the trust
      account. We describe below the complete disposition of the funds held in the
      trust account upon consummation of the TEC acquisition.




31





In
      connection with the IPO, we sold to the representatives of the underwriters
      a
      five year option to purchase up to a total of 720,000 units in the aggregate
      at
      a per unit price of $10.00. The units issuable upon exercise of this option
      are
      identical to those offered in the IPO except that the warrants included in
      the
      option have an exercise price of $7.50 (125% of the exercise price of the
      warrants included in the units sold in the IPO). The unit purchase option may
      be
      exercised for cash or on a “cashless” basis, at the holder’s option, such that
      the holder may use the appreciated value of the option (the difference between
      the exercise prices of the option and the underlying warrants and the market
      price of the units and underlying securities) to exercise the option without
      the
      payment of any cash. If circumstances warrant and in the event that any holders
      of the unit purchase option choose to exercise all or a portion of the unit
      purchase option on a cashless basis, we will receive no cash proceeds but would
      be required to issue additional units.





Upon
      the
      October 26, 2007 consummation of the TEC acquisition, the cash held in, or
      attributable to, the trust approximated $ 112,300,000 (including approximately
      $290,000 of interest earned on the trust account for October 1 through October
      26, 2007 but received subsequent to consummation), became available to us and
      was applied as follows (i) payment to our stockholders exercising their
      conversion rights; (ii) payment of TEC debt assumed pursuant to the acquisition
      agreement; (iii) payment of certain fees and expenses relating to the
      acquisition; and (iv) the remaining net proceeds became available for operations
      and conduct of the business. This resulted in net proceeds to us approximating
      $50,650,00, as follows:





Distribution
                of cash to shareholders exercising their conversion rights
            
            $
            14,057,199Payment
                of TEC indebtedness, including interest
            
            
            41,704,635Shareholder
                Notes, including interest
            
            
            1,125,606Lance
                Duncan - finders fee
            
            
            3,000,000Transaction
                costs paid at closing (legal, accounting), net of interest from escrow
                agent
            
            
            1,579,805Other
                payments
            
            
            182,50061,649,745Available
                cash to Platinum upon consummation of the TEC acquisition
            
            
            50,650,255Total
            
            $
            112,300,000





In
      connection with the acquisition, TEC assigned to New TEC its rights and
      obligations under TEC’s then existing credit agreement with Guaranty Bank, FSB
      pursuant to an Assignment, Waiver and Third Amendment to the Credit Agreement
      (the “Third Amendment”) made and entered into effective as of October 26, 2007
      among TEC, New TEC and Guaranty Bank. The full balance outstanding as of October
      26, 2007 of approximately $20.6 million was repaid in connection with the
      consummation of the TEC acquisition and is included in payment of indebtedness
      in this table. Pursuant to the Third Amendment, a new borrowing base was set
      at
      $5,000,000, but no indebtedness was incurred at that time. All other material
      terms of the credit agreement were unchanged.





Subsequent
      to the October 26, 2007 consummation of the TEC acquisition we have applied
      a
      substantial portion of the available cash of $50,650,000 as
      follows:





a.
      Effective on November 1, 2007, we announced that our board of directors had
      established a plan in conformity with the provisions of Rules 10b5-1 to purchase
      up to 2,000,000 shares of our common stock in open market transactions during
      the month of November, subject to the broker, volume, price and timing
      restrictions of Rule 10b-18 under the Securities Exchange Act of 1934. We
      financed the share repurchase program with available cash. This plan constituted
      the initial stage of the repurchase program approved by the board in November
      2006 to repurchase shares of common stock in an amount up to $80 million. In
      the
      period from November 1 through November 30, 2007, we purchased 1,997,913 shares
      of our common stock for a total purchase price of $15,601,679 (excluding
      commissions).




32





b.
      As
      part of our overall business strategy, we began our program of strategic
      acquisitions and investment opportunities that complement our existing business.
      In addition to the TEC acquisition, we made various acquisitions of oil and
      gas
      properties and interests and a related operating business, expending a total
      of
      $18.8 million through December 31, 2007, including a $2.522 million advance
      payment and costs on the Pleasanton transaction. We spent an additional $2.5
      million to complete the Pleasanton acquisition in January 2008. For a
      description of these transactions, see “Business - Growth Strategy” beginning on
      page 5 and Note 4 to our consolidated financial statements beginning on
      page F1-14.





On
      March
      18, 2008, Platinum, a wholly owned subsidiary of Platinum, PERMSub, Inc.,
      Maverick Engineering, Inc. and Robert L. Kovar Services, LLC entered into an
      Agreement and Plan of Merger pursuant to which we will acquire Maverick for
      a
      gross purchase price of $11 million, subject to a working capital purchase
      price
      adjustment, with $6 million paid at closing and the remaining $5 million to
      be
      paid over the next 6 years pursuant to non-interest bearing notes (the
“Cashflow Notes”). In addition, we will assume Maverick’s indebtedness under
      certain bank and loan arrangements, which aggregate balances approximated $4.5
      million at January 31, 2008. Maverick’s bank has not consented to continuing its
      bank term loan or to its working capital revolving credit line upon closing.
      Rober L. Kovar has agreed to personally assume the indebtedness under the bank
      term loan, which approximated $1.67 million as of January 31, 2008. Maverick
      shareholders, as represented by Robert L. Kovar Services, LLC, have agreed
      to
      the reduction of the $6 million intended to be paid at closing by the
      outstanding balance on the line of credit on the closing date, which
      approximated $1.97 million on January 31, 2008, in the event that a replacement
      line of credit is not in place on the closing date. These proceeds would be
      used
      to payoff its bank obligation under the revolving line of credit. Upon obtaining
      a replacement line of credit, such withheld amounts would be paid to Robert
      L.
      Kovar Services, LLC for distribution to the selling Maverick shareholders.
      The
      Cashflow Notes will be payable quarterly at the rate of 50% of pre-tax net
      income, as it is defined in the merger agreement, generated by the Maverick
      business on a standalone basis in the preceding quarter. Payment can be
      accelerated by certain events, including change in control. The purchase price
      is also subject to adjustment for any change in working capital as defined
      in
      the agreement, between October 31, 2007 and the closing date, as well as other
      adjustments associated with changes in indebtedness. Any adjustment will be
      treated as a modification of the amount of the Cashflow Notes. The balance
      of
      the Cashflow Notes remaining unpaid upon maturity, if any, will be converted
      into a 12 month self amortizing note bearing interest at the annual rate of
      2%
      over the banks prime rate. Upon closing of the Maverick acquisition, we will
      enter into a five year employment agreement with Robert Kovar, the founder
      and
      CEO of Maverick, pursuant to which he will join Platinum as our Chief Operating
      Officer in addition to continuing as CEO and President of Maverick. In
      connection with his employment agreement Mr. Kovar will receive base annual
      compensation of $200,000 and stock options to purchase 250,000 shares of Company
      common stock over that five year period. Mr. Kovar’s responsibilities will
      include oversight of all operations, including engineering, drilling, and
      production. For a further description of Maverick, see “Business - Growth
      Strategy” beginning on page 5 . There can be no assurance that the
      acquisition will be consummated on the terms described.





On
      March
      14, 2008, two of our operating subsidiaries, Tandem Energy Corporation and
      PER
      Gulf Coast, Inc. (collectively the “Co-borrowers”) entered into a new credit
      facility with the Bank of Texas, establishing a revolving line of credit with
      an
      initial borrowing base of $35 million. The revolving line of credit is secured
      by the Co-borrower’s oil and gas properties and will be used to facilitate the
      execution of the two entities’ drilling and acquisition programs. The line bears
      interest at either the bank’s base rate or LIBOR, plus a margin which varies
      with the ratio of the Co-borrowers’ outstanding borrowings against the defined
      borrowing base, ranging from 1.50% to 2.25%. The Co-borrowers can choose
      periodically to change the interest rate base which applies to outstanding
      borrowings. Under the terms of revolving line of credit agreement, the
      Co-borrowers must maintain certain financial ratios, must repay any amounts
      due
      in excess of the borrowing base, and may not declare any dividends or enter
      into
      any transactions resulting in a change in control, without the bank’s consent.
      As the parent company, we are not a co-borrower or guarantor of the line, and
      transfers from the Co-borrowers to us are limited to (i) $1 million per fiscal
      year for management fees, and (ii) the repayment of up to $2 million per fiscal
      year in subordinate indebtedness owed to us. As of March 18, 2008, there
      was $5.5 million outstanding under the revolving line of credit. In conjunction
      with the execution of the new line of credit, and as required under the terms
      of
      the new credit facility, we novated our existing hedge positions from our
      existing counterparty over to the Bank of Texas under terms satisfactory to
      us.
      In connection with establishing the line of credit, the Bank of Texas received
      a
      commitment fee of $87,500 and a fee for its expenses in connection with the
      aforementioned novation of $60,229. In addition, the Co-borrowers are obligated
      to the bank for a monthly fee for any unused portion of the line of credit
      at
      the rate of 0.25% per annum.




33





In
      conjunction with and simultaneous to the establishment of the new credit
      facility referred to in the previous paragraph, the previously existing $5
      million credit agreement between New TEC and Guaranty Bank was terminated.
      No
      outstanding borrowings existed at the time of the termination.





**Supplemental
      Oil and Gas Information**





The
      following information is intended to supplement the consolidated financial
      statements included in this report with data that is not readily available
      from
      those statements.


**Period
                  from October 26 to****December
                  31, 2007**Oil
              
              Gas
              
              Boe(Mbls)
              
              (MMcf)
              
              (Mbls)Production
              
              
              38.7
              
              
              125.8
              
              
              59.7
 Oil
              
              Gas
              
              Boe($/Bbl)
              
              
              ($/Mcf)
              
              
              ($/Boe)Average
                  Prices
              
              $
              85.24
              
              $
              8.03
              
              $
              72.21
 Boe($/Boe)Average
                  Lifting CostPer
                  Boe
              
              $
              29.77




**Capital
      Expenditures**





The
      reserve report prepared as of December 31, 2007 assumes that Platinum will
      expend approximately $19.4 million in expenditures in 2008 to drill a number
      of
      existing proved undeveloped locations, with the intent of converting them into
      proved developed producing locations, thereby, generating new cash flows. The
      execution of the drilling program is dependent on rig availability, the
      availability of technical and field staff, and product pricing.




34




**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of
      Regulation S-K promulgated under the Securities Exchange Act of
      1934.





**Contractual
      Obligations**





a.
      We
      have contractual obligations and commitments that may affect our financial
      position. The following table sets forth our significant contractual obligations
      as of December 31, 2007:




**2008**
            
            **2009-2011**
            
            **2012-2014**
            
            **Thereafter**
            
            **Total**(in
                thousands)Operating
                leases
            
            $
            119.3
            
            
            327.6
            
            
            —
            
            
            —
            
            $
            446.9Asset
                Retirement Obligations
            
            $
            0.0
            
            
            678.4
            
            
            211.2
            
            
            2,673.2
            
            $
            3,562.8Derivative
                Obligations
            
            $
            3,116.0
            
            
            (73.0
            )
            
            —
            
            
            —
            
            $
            3,043.0




b.
      Consulting Agreement





We
      entered into a finder’s fee arrangement with Mr. Lance Duncan, a director and
      officer of Tandem for the period from March 2005 through June 1, 2005, which
      resulted in the TEC acquisition agreement. In addition to other matters more
      fully described in Note 6 to the consolidated financial statements, we also
      entered into a consulting agreement with Mr. Duncan, which commenced upon the
      consummation of the TEC acquisition, for consulting services, including
      investigation and evaluation of possible future Platinum acquisitions. Under
      the
      terms of the consulting agreement, Mr. Duncan’s services were valued at $5
      million. Under the terms of the consulting agreement, we agreed to issue to
      Mr.
      Duncan a total of 714,286 shares of our restricted common stock, 25% to be
      issued upon commencement of services and the remainder in semi-annual
      installments of 25% each over the eighteen month term of the agreement. The
      initial installment of 178,572 shares was issued on October 26, 2007 and was
      recorded as stock compensation expense in our results of operations in 2007.
      Each installment will be paid in with 178,572 shares of our common stock, based
      on payments of $1,250,000 valued at a fixed price of $7.00 per
      share.





**Critical
      Accounting Policies**





*Use
      of Estimates* .
      The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America 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.




**Full
      Cost and Impairment of Assets**





We
      account for our oil and natural gas exploration and development activities
      using
      the full cost method of accounting. Under this method, all costs incurred in
      the
      acquisition, exploration and development of oil and natural gas properties
      are
      capitalized. Costs of non-producing properties, wells in the process of being
      drilled and significant development projects are excluded from depletion until
      such time as the related project is developed and proved reserves are
      established or impairment is determined. At the end of each quarter, the net
      capitalized costs of our oil and natural gas properties, as adjusted for asset
      retirement obligations, is limited to the lower of unamortized cost or a
      ceiling, based on the present value of estimated future net revenues, net of
      income tax effects, discounted at 10%, plus the lower of cost or fair market
      value of our unproved properties. Revenues are measured at unescalated oil
      and
      natural gas prices at the end of each quarter, with effect given to cash flow
      hedge positions. If the net capitalized costs of oil and natural gas properties
      exceed the ceiling, we are subject to a ceiling test write-down to the extent
      of
      the excess. A ceiling test write-down is a non-cash charge to earnings. It
      reduces earnings and impacts stockholders’ equity in the period of occurrence
      and results in lower DD&A expense in future periods.




35





There
      is
      a risk that we will be required to write down the carrying value of our oil
      and
      natural gas properties when oil and natural gas prices decline. If commodity
      prices deteriorate, it is possible that we could incur an impairment in future
      periods.




**Depletion**





Provision
      for depletion of oil and natural gas properties under the full cost method
      is
      calculated using the unit of production method based upon estimates of proved
      developed oil and natural gas reserves with oil and natural gas production
      being
      converted to a common unit of measure based upon their relative energy content.
      Investments in unproved properties and major development projects are not
      amortized until proved reserves associated with the projects can be determined
      or until impairment occurs. The cost of any impaired property is transferred
      to
      the balance of oil and natural gas properties being depleted.





**Significant
      Estimates and Assumptions**





**Oil
      and Gas Reserves**





(1)
      Reserve engineering is a subjective process of estimating underground
      accumulations of oil and gas that cannot be measured in an exact manner. The
      accuracy of a reserve estimate depends on the quality of available geological
      and engineering data, the precision of the interpretation of that data, and
      judgment based on experience and training. We have historically engaged an
      independent petroleum engineering firm to evaluate our oil and gas reserves.
      As
      a part of this process, our internal reservoir engineer and the independent
      engineers exchange information and attempt to reconcile any material differences
      in estimates and assumptions.





(2)
      Reserves which can be produced economically through application of improved
      recovery techniques (such as fluid injection) are included in the proved
      classification when successful testing by a pilot project, or the operation
      of
      an installed program in the reservoir, provides support for the engineering
      analysis on which the project or program was based.





(3)
      Estimates of proved reserves do not include the following: (A) oil that may
      become available from known reservoirs but is classified separately as indicated
      additional reserves; (B) crude oil, natural gas, and natural gas liquids, the
      recovery of which is subject to reasonable doubt because of uncertainty as
      to
      geology, reservoir characteristics, or economic factors; (C) crude oil, natural
      gas, and natural gas liquids, that may occur in undrilled prospects; and (D)
      crude oil, natural gas, and natural gas liquids, that may be recovered from
      oil
      shales, coal, gilsonite and other such sources.




**Valuation
      of proved undeveloped properties**





Placing
      a
      fair market value on proved undeveloped properties, commonly referred to as
      “PUDs” is very subjective since there is no quoted market for them. The
      negotiated price of any PUD between a willing seller and willing buyer depends
      on the specific facts regarding the PUD, including:


·
            the
                location of the PUD in relation to known fields and reservoirs, available
                markets and transportation systems for oil and gas production in
                the
                vicinity, and other critical
                services;





36


·
            the
                nature and extent of geological and geophysical data on the
                PUD;





·
            the
                terms of the leases holding the acreage in the area, such as ownership
                interests, expiration terms, delay rental obligations, depth limitations,
                drilling and marketing restrictions, and similar
                terms;





·
            the
                PUDs risk-adjusted potential for return on investment, giving effect
                to
                such factors as potential reserves to be discovered, drilling and
                completion costs, prevailing commodity prices, and other economic
                factors;
                and





·
            the
                results of drilling activity in close proximity to the PUD that could
                either enhance or condemn the prospect ’s chances of
                success.




**Provision
      for DD&A**





We
      have
      computed our provision for DD&A on a unit-of-production method. Each
      quarter, we use the following formulas to compute the provision for
      DD&A.





·
            DD&A
                Rate = Current period production, divided by beginning proved
                reserves





·
            Provision
                for DD&A = DD&A Rate, times the un-depleted full cost pool of oil
                and gas properties





Reserve
      estimates have a significant impact on the DD&A rate. If reserve estimates
      for our properties are revised downward in future periods, the DD&A rate
      will increase as a result of the revision. Alternatively, if reserve estimates
      are revised upward, the DD&A rate will decrease.





**Hedging
      Activities**





From
      time
      to time, we utilize derivative instruments, consisting of swaps, floors and
      collars, to attempt to reduce our exposure to changes in commodity prices and
      interest rates. We account for our derivatives in accordance with SFAS No.
      133,
      Accounting for Derivative Instruments and Hedging Activities, as amended. SFAS
      No. 133 requires that all derivative instruments be recognized as assets or
      liabilities in the balance sheet, measured at fair value. The accounting for
      changes in the fair value of a derivative depends on both the intended purpose
      and the formal designation of the derivative. Designation is established at
      the
      inception of a derivative, but subsequent changes to the designation are
      permitted. We have elected not to designate any of our derivative financial
      contracts as accounting hedges and, accordingly, account for these derivative
      financial contracts using mark-to-market accounting. Changes in fair value
      of
      derivative instruments which are not designated as cash flow hedges are recorded
      in other income (expense) as changes in fair value of derivatives. Hedging
      is a
      strategy that can help a company to mitigate the volatility of oil and gas
      prices by limiting its losses if oil and gas prices decline; however, this
      strategy may also limit the potential gains that a company could realize if
      oil
      and gas prices increase. Historically, certain “costless collars” executed in
      June 2005 and swaps executed in mid 2006 by TEC were employed to protect TEC
      and
      its creditors from exposure to lower oil and gas prices. However, as a result
      of
      those positions, we have and may continue to periodically incur settlement
      losses associated with the ceiling component of such hedges as oil prices have
      increased during 2007. For the period from October 26, 2007 to December 31,
      2007, we reported a $1.5 million net loss on derivatives.




37





**Asset
      Retirement Obligation**





We
      follow
      the provisions of SFAS No. 143, Accounting for Asset Retirement Obligations.
      SFAS No. 143 requires us to recognize a liability for the present value of
      all
      legal obligations associated with the retirement of tangible, long-lived assets
      and capitalize an equal amount as a cost of the asset. The cost of the
      abandonment obligations, less estimated salvage values, is included in the
      computation of depreciation, depletion and amortization.





**Recent
      Accounting Pronouncements**





In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 157, *Fair
      Value Measurements* .
      SFAS
      157 defines fair value as used in numerous accounting pronouncements,
      establishes a framework for measuring fair value in accordance with generally
      accepted accounting principles and expands disclosure requirements related
      to
      the use of fair value measures in financial statements. SFAS 157 will be
      effective for the Platinum’s financial statements for the fiscal year beginning
      January 1, 2008.




In
      February 2007, the FASB issued SFAS 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities, Including
      an
      Amendment of FASB Statement No. 115,* which
      will become effective on January 1, 2008. SFAS 159 permits entities to
      measure eligible financial assets, financial liabilities and firm commitments
      at
      fair value, on an instrument-by-instrument basis, that are otherwise not
      permitted to be accounted for at fair value under other generally accepted
      accounting principles. The fair value measurement election is irrevocable and
      subsequent changes in fair value must be recorded in earnings.





In
      April 2007, the FASB issued FASB Staff Position FIN 39-1, *Amendment
      of FASB Interpretation No. 39* .
      FSP FIN
      39-1 clarifies that a reporting entity that is party to a master netting
      arrangement can offset fair value amounts recognized for the right to reclaim
      cash collateral (a receivable) or the obligation to return cash collateral
      (a
      payable) against fair value amounts recognized for derivative instruments that
      have been offset under the same master netting arrangement. FSP FIN 39-1 is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007.





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), *Business
      Combinations* (“SFAS
      141(R)”), which replaces FASB Statement No. 141. SFAS 141(R) establishes
      principles and requirements for how an acquirer recognizes and measures in
      its
      financial statements the identifiable assets acquired, the liabilities assumed,
      any non- controlling interest in the acquiree and the goodwill acquired. The
      Statement also establishes disclosure requirements that will enable users to
      evaluate the nature and financial effects of the business combination. SFAS
      141(R) is effective for acquisitions that occur in an entity’s fiscal year that
      begins after December 15, 2008.





In
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling
      Interests in Consolidated Financial Statements—an amendment of ARB
      No. 51* .
      SFAS
      160 requires that accounting and reporting for minority interests will be
      recharacterized as noncontrolling interests and classified as a component of
      equity. SFAS 160 also establishes reporting requirements that provide sufficient
      disclosures that clearly identify and distinguish between the interests of
      the
      parent and the interests of the noncontrolling owners. SFAS 160 applies to
      all
      entities that prepare consolidated financial statements, except not-for-profit
      organizations, but will affect only those entities that have an outstanding
      noncontrolling interest in one or more subsidiaries or that deconsolidate a
      subsidiary. This statement is effective as of the beginning of an entity’s first
      fiscal year beginning after December 15, 2008.




38




**Item 7A.**  **Quantitative
      and Qualitative Disclosures About Market Risk.**





**Quantitative
      and Qualitative Disclosures About Market Risk**





The
      primary objective of the following information is to provide forward-looking
      quantitative and qualitative information about our potential exposure to market
      risks. Market risk is the sensitivity of income to changes in interest rates,
      foreign exchanges, commodity prices, equity prices, and other market-driven
      rates or prices. The disclosures are not meant to be precise indicators of
      expected future losses, but rather indicators of reasonably possible losses.
      This forward-looking information provides indicators of how we view and manage
      our ongoing market risk exposures.





**Interest
      Rate Risk**





At
      December 31, 2007, we had no outstanding long-term debt. We have entered into
      a
      $35 million credit facility as of March 14, 2008. To the extent we have debt
      outstanding in the future pursuant to our credit facility, we would be subject
      to risk of interest rate changes that would impact our future results of
      operations and cash flows.





**Price
      Risks**





We
      engage
      in price risk management activities from time to time. These activities are
      intended to manage our exposure to fluctuations in commodity prices for natural
      gas and crude oil. We utilizes derivative financial instruments, primarily
      price
      collars, puts and calls, as the means to manage this price risk. In addition
      to
      these financial transactions, we are a party to various physical commodity
      contracts for the sale of hydrocarbons that cover varying periods of time and
      have varying pricing provisions. Under SFAS No. 133, Accounting for Derivative
      Instruments and Hedging Activities, as amended by SFAS Nos. 137, 138 and 149,
      these various physical commodity contracts qualify for the normal purchases
      and
      normal sales exception and therefore, are not subject to hedge accounting or
      mark-to-market accounting. The financial impact of these various physical
      commodity contracts is included in revenues at the time of settlement, which
      in
      turn affects average realized hydrocarbon prices.







For
      the period from October 26, 2007 through December 31, 2007, we recognized a
      net
      loss on our hedging activities of $1.5 million. Presented below is a summary
      of
      our crude oil and natural gas derivative financial contracts at December 31,
      2007, with crude oil prices expressed in dollars per barrels of crude oil and
      notional crude oil volumes in barrels of crude oil per year; and natural gas
      prices expressed in dollars per million British thermal units ($/MMBtu) and
      notional natural gas volumes in million British thermal units per year (MMBtu).
      As indicated, we do not have any financial derivative contracts that extend
      beyond December 2011.





The
      total
      fair value of the crude oil and natural gas financial derivative contracts
      at
      December 31, 2007, was a liability of approximately $3.0 million as
      follows:





**Period
                Ended December, 31**
            
            **Instrument
                Type**
            
            **Total
                Volumes (MMBTU/BBL)**
            
            **Weighted
                Average (Floor/Ceiling)**
            
            **Fair
                Value Asset/(Liability) (Stated in Thousands)**2008
            
            
            Gas
                Collar
            
            $
            64,615
            
            $
            5.00/11.02
            
            $
            (25
            )Gas
                Call Option Sold
            
            
            64,615
            
            
            9.10
            
            
            (128
            )Gas
                Call Option Purchased
            
            
            64,615
            
            
            12.00
            
            
            36Gas
                Put Option Sold
            
            
            64,615
            
            
            5.00
            
            
            (11
            )Gas
                Put Option Purchased
            
            
            64,615
            
            
            6.00
            
            
            46Oil
                Collar
            
            
            113,502
            
            
            40.00/72.10
            
            
            (2,455
            )Oil
                Call Option Sold
            
            
            125,000
            
            
            67.00
            
            
            (3,282
            )Oil
                Call Option Purchased
            
            
            125,000
            
            
            72.10
            
            
            2,7032009
            
            
            Oil
                Swaps
            
            
            120,000
            
            
            71.00
            
            
            (1,928
            )2010
            
            
            Oil
                Put Option Purchased
            
            
            120,000
            
            
            75.00
            
            
            1,0152011
            
            
            Oil
                Put Option Purchased
            
            
            120,000
            
            
            80.00
            
            
            986Total
                fair value liability
            
            
            
            
            
            
            
            $
            (3,043
            )




39


The
      fair
      value of our financial derivative contracts at December 31, 2007 are shown
      in
      the accompanying financial statements as follows (in thousands):





Fair
                value of commodity derivative:Current
                portion
            
            $
            (3,116
            )Long-term
                portion
            
            
            73Total
                fair value liability
            
            $
            (3,043
            )








The
      natural gas and crude oil prices shown in the above table are based on the
      corresponding NYMEX index and have been valued using actively quoted prices
      and
      quotes obtained from the counterparties to the derivative agreements. The above
      prices represent a weighted average of several contracts entered into and are
      on
      a per MMBtu or per barrel basis for gas and oil derivatives, respectively.
      Total
      volumes shown for the crude oil collar reflect net volumetric positions with
      a
      single counterparty under which contracts provide for netting of all settlement
      amounts.





We
      have
      incurred cash settlement losses during the period October 26, 2007 through
      December 31, 2007 of $540,292. These losses were associated with the hedge
      positions executed in 2005, as required under the terms of TEC’s then existing
      credit facility, and assumed by us in the TEC acquisition agreement. In
      conjunction with that protection, we periodically incurred actual settlement
      losses associated with the ceiling component of such hedges when oil prices
      spiked in late 2007.




The
      following table summarizes the estimated fair value of financial instruments
      and
      related transactions at December 31, 2007 as follows (in millions):





**Carrying**
            
            **Estimated
                Fair****Amount**
            
            **Value****(1)**NYMEX-related
                commodity derivative Market positions(1)
            
            **$**
            3.0
            
            
            3.0




(1)
            Estimated
                fair values have been determined by using available market data and
                valuation methodologies. Judgment is required in interpreting market
                data
                and the use of different market assumptions or estimation methodologies
                may affect the estimated fair value
                amounts.





**Item
      8.**   **Financial
      Statements and Supplementary Data.**




Our
      Consolidated Financial Statements and supplementary financial data are included
      in this annual report on Form 10-K beginning on page F-1.




40




**Item
      9.** **Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure.**




None.




**Item 9A.**  **Controls
      and Procedures.**





**Conclusion
      Regarding the Effectiveness of Disclosure Controls and Procedures**





The
      Company maintains disclosure controls and procedures that are designed to ensure
      that information required to be disclosed in our reports filed pursuant to
      the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported within the time periods specified in the SEC’s rules, regulations
      and related forms, and that such information is accumulated and communicated
      to
      our principal executive officer and principal financial officer, as appropriate,
      to allow timely decisions regarding required disclosure.




The
      Company, under the supervision of our principal
      executive officer and principal financial officer, carried
      out an evaluation of the effectiveness of the design and operation of its
      disclosure controls and procedures as of December 31, 2007. Based upon that
      evaluation, management, including our principal executive officer and principal
      financial officer, concluded that the Company’s disclosure controls and
      procedures were effective in alerting it in a timely manner to information
      relating to the Company required to be disclosed in this report.





**Management’s
      Annual Report on Internal Control over Financial Reporting**





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting. As defined in Exchange Act Rule 13a-15(f),
      internal control over financial reporting is a process designed by, or under
      the
      supervision of, our principal executive officer and principal financial officer
      and effected by our board of directors, management and other personnel, to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles.





Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we carried out
      an
      evaluation of the effectiveness of our internal control over financial
      reporting, excluding the recent TEC acquisition, as of December 31,
      2007 based on the criteria in “Internal Control - Integrated Framework” issued
      by the Committee of Sponsoring Organizations of the Treadway Commission
      (“COSO”). Based upon this evaluation, our management concluded that our internal
      control over financial reporting was effective as of December 31,
      2007.




Prior
        to
        the consummation of the TEC acquisition on October 26, 2007, we were a blank
        check company. Our wholly-owned subsidiary, New TEC, acquired all of the
        assets
        and assumed substantially all of the liabilities of TEC. Management has excluded
        New TEC from its evaluation of the effectiveness of our internal control
        over
        financial reporting as of December 31, 2007. The net revenues attributable
        to
        New TEC accounted for all of our consolidated revenues for the year ended
        December 31, 2007, and their aggregate total assets represented approximately
        87% of our consolidated total assets as of December 31, 2007.


Marcum
      & Kleigman LLP, the independent registered public accounting firm that
      audited our consolidated financial statements included in this Annual Report
      on
      Form 10-K, has also audited the effectiveness of the Company’s internal control
      over financial reporting as of December 31, 2007 as stated in their report
      included herein.





**Changes
      in Internal Control over Financial Reporting.**





At
      the
      closing of the TEC acquisition, on October 26,2007, Mark Nordlicht resigned
      from
      his positions as our Chairman and as a director. Mr. Nordlicht had previously
      been our principal executive officer and principal financial officer. In
      connection with Mr. Nordlicht’s resignation, our Chief Executive Officer, Barry
      Kostiner, has become our principal executive officer and principal financial
      officer. Mr. Kostiner continues to perform the same duties previously performed
      by Mr. Nordlicht in such capacity. There were no changes in internal control
      over financial reporting that occurred during the fourth quarter that have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting.




41





**Item 9B.**  **Other
      Information.**




Not
      applicable.


42


**PART
      III**




**Item
      10.**  **Directors
      and Executive Officers of the Registrant and Corporate
      Governance.**




The
      board
      of directors and executive officers of Platinum and New TEC are as
      follows:





Name
            
            Age
            
            PositionTim
                Culp
            
            49
            
            Chairman
                of the Board and DirectorBarry
                Kostiner
            
            35
            
            Chief
                Executive Officer, Secretary and DirectorWilliam
                C. Glass
            
            35
            
            President
                and DirectorRichard
                Geyser
            
            38
            
            Vice
                PresidentJames
                H. Dorman
            
            73
            
            Executive
                Vice PresidentJim
                L. Troxel
            
            53
            
            Executive
                Vice PresidentMichael
                G. Cunningham
            
            51
            
            Sr.
                Vice President and CFO - New TEC





***Tim
      G. Culp*** has been
      our Chairman of the Board and a director since October 26, 2007. Prior to this,
      Mr. Culp joined Tandem in June 2005 as President and Chief Executive Officer
      and, in connection with the acquisition, became Chairman of the Board and a
      director of Platinum, as well as President and Chief Executive Officer of New
      TEC. Mr. Culp was a co-founder, senior officer and principal stockholder of
      TEC
      and Shamrock Energy Corporation and its operating affiliate, Arrowhead
      Operating, Inc. Prior to forming TEC, Mr. Culp was a Vice President with Adobe
      Resources Corporation. During Mr. Culp’s tenure, Adobe, TEC and Shamrock
      acquired over $140 million in oil and gas properties. Mr. Culp has over
      twenty-five years of oil and gas industry experience with over twenty years
      of
      experience in property acquisitions and development. Prior to joining Adobe,
      Mr.
      Culp was a manager for the public accounting firm of KPMG Peat Marwick. Mr.
      Culp
      received his Bachelor of Business Administration degree in Accounting from
      Texas
      Tech University in 1981.





***Barry
      Kostiner*** has been
      our Chief Executive Officer, secretary and a member of our board of directors
      since inception. Mr. Kostiner has been involved in energy trading and
      structuring since 1992. Mr. Kostiner has negotiated structured transactions
      and
      built trading desks in electricity, natural gas options and physical gas. Mr.
      Kostiner was formerly a manager and principal of KD Resources, LLC, a
      privately-owned Delaware limited liability company engaged in the oil and gas
      exploration and production industry, which Mr. Kostiner founded with James
      H.
      Dorman, our Executive Vice President. Mr. Kostiner was the manager of Braesridge
      Energy LLC, which invests in energy companies, including ours, from its
      inception on July 19, 2007 through February 14, 2008. From March
      2003 through 2005, he was a principal of Ellipse Energy LLC, a
      consulting and private equity firm. From March 2001 to January 2003, he was
      a
      managing director at Allegheny Energy, an energy trading and generation asset
      management company. At Allegheny, as a managing director, he was responsible
      for
      the physical gas trading desk that controlled fuel supply and risk management
      for 2,800 MW of natural gas fired generation, with an acquisition value of
      over
      $2 billion. He also was involved in initiating the coal trading group, the
      E&P asset acquisition and European trading businesses. From January 1999
      until March 2001, he was a vice president at Merrill Lynch in its energy trading
      group which was subsequently sold to Allegheny Energy. From October 1995 until
      January 1999, he was an associate at Goldman Sachs in its energy origination
      group. Mr. Kostiner was a founding employee involved in business development,
      strategy and management for the joint venture between Goldman Sachs and
      Constellation Energy. He received a BS in Electrical Engineering and MS in
      applied mathematics from MIT. His master’s thesis jointly supervised by
      Harvard’s Kennedy School of Government was on mathematics applied to deregulated
      electricity markets.




***William
      C. Glass*** has been
      President and a member of our board of directors since inception. Mr. Glass
      has
      worked in the energy industry and energy financial derivatives markets since
      1996. Mr. Glass has been an independent energy trader and consultant since
      December 2003. From July 2000 to December 2003, Mr. Glass was Vice president
      of
      Marubeni Energy Incorporated’s North American Natural gas division. He was
      responsible for all natural gas transactions, transportation, marketing,
      trading, and operations. From February 1997 to July 2000, Mr. Glass was a senior
      trader at Southern Company Energy marketing. His responsibilities included
      managing the financial gas daily desk as well as trading gulf coast, northeast,
      and mid west financial products. From October 1995 to February 1997, Mr. Glass
      worked at Enron as part of the risk management team. Mr. Glass holds a
      bachelor’s in Finance and Accounting from Texas A&M University.




43





***Richard
      Geyser*** has been
      our Vice President since inception. Mr. Geyser has over 10 years of alternative
      investment-related experience. Since February 2004, Mr. Geyser has been a
      Managing Director of Platinum Partners Value Arbitrage Fund, a private
      investment partnership. From March 2003 to October 2003, he was a Director
      of
      Capital Introduction at Paravane Partners, a division of Leeb Brokerage
      Services. From February 2002 to February 2003, he co-founded two hedge funds:
      Voyager Partners (options volatility and equity statistical arbitrage) and
      Entropy Partners (equity statistical arbitrage). From 1996 through 2001, Mr.
      Geyser was a Senior VP at BlueStone Capital Corp during which time his clients
      financed dozens of publicly traded companies, including several energy-related
      companies. Mr. Geyser received an MBA with High Honors from Thunderbird, the
      American Graduate School of International Management and an A.B. cum laude
      from
      Harvard College.





***James
      H. Dorman*** has been
      our Executive Vice President since inception. He brings with him 46 years of
      global experience in E&P. Since 2001, Mr. Dorman has been involved in
      various advisory projects. He has been a member of the board of directors for
      Transmeridian Exploration Inc., a public E&P company listed on the American
      Stock Exchange, for the past three years. Since May 2007, Mr. Dorman has been
      a
      manager and principal of KD Resources, LLC, a privately-owned Delaware limited
      liability company engaged in the oil and gas exploration and production
      industry, which Mr. Dorman founded with Barry Kostiner, our Chief Executive
      Officer and a director. From 1996 through 2001, Mr. Dorman formed a public
      Canadian exploration company, Doreal Energy, and with his partners developed
      successful exploration projects in England, Columbia and Portugal. From 1990
      through 1995, Mr. Dorman advised Garnet Resources and American International
      Petroleum on the development of South American E&P assets, including the
      development of 1.5 mm acres in Columbia. From 1964 through 1989, Mr. Dorman
      held
      various positions at Tenneco. As Vice President of Exploration for the South
      America Division, Mr. Dorman had responsibility for 28 commercial discoveries,
      including the giant San Francisco - Balcon and Colombina oil fields, prior
      to
      Tenneco’s acquisition by Shell. Mr. Dorman began his career with Chevron in
      Louisiana in 1955. His diverse experience includes service as an Army Medic
      for
      the National Guard in Korea in 1951-2. Mr. Dorman has a BS with honors in
      Petroleum Geology from Mississippi State University and a MS in Geology from
      the
      University of Missouri.





***Jim
      L. Troxel*** has been
      our Executive Vice President since inception. He has had diverse experience
      as a
      senior geologist. Mr. Troxel has held his current position of Vice President
      of
      Exploration at Thorp Petroleum Corporation, an oil and gas E&P company,
      since 1997. He has overseen the drilling of 49 wells, with production of 70
      Bcf
      and 3 mm boe. Mr. Troxel was at Amerada Hess, a public oil and gas E&P
      company listed on the NYSE, from 1987 through 1996, where he held the role
      of
      senior geologist. He was responsible for discovering Hess’ largest field during
      this period, which produced 95 Bcf and 6 mm boe. While at Texas Oil and Gas,
      an
      oil and gas E&P company, from 1980 through 1987, Mr. Troxel was an area
      geologist that managed a team of geologists and geophysicists that directed
      the
      drilling of exploration prospects. For four years, he generated prospects for
      4
      rigs out of a 12 rig drilling program. Mr. Troxel received his BS in Geology
      from the University of Oklahoma.





***Michael
      (Mickey) G. Cunningham*** has been
      New TEC’s Sr. Vice President and Chief Financial Officer since our acquisition
      of TEC. Prior to that, Mr. Cunningham served in the same capacity for Tandem
      since joining Tandem in May 2005. Mr. Cunningham has been a Certified Public
      Accountant since 1988 but, even prior to becoming a CPA, was involved in the
      oil
      and gas industry working as an accountant with Gulf Oil Corporation from 1980
      in
      a wide variety of areas through a special management program developed by Gulf.
      From 1985 through 2005, Mr. Cunningham was Controller of Clayton Williams
      Energy, Inc. He has been a member of the AICPA and TSCPA since
      1988.




44





**Board
      Composition**





Our
      board
      of directors is divided into three classes with only one class of directors
      being elected in each year and each class serving a three-year term. The term
      of
      office of the first class of directors (Class A), currently vacant, will expire
      at our first annual meeting of stockholders. The term of office of the second
      class of directors (Class B), consisting of William C. Glass, will expire at
      the
      second annual meeting. The term of office of the third class of directors (Class
      C), currently consisting of Tim G. Culp and Barry Kostiner, will expire at
      the
      third annual meeting. We currently have three vacancies on our board due to
      the
      resignations of Richard Sherry on November 3, 2006, Albert Helmig on May 11,
      2007 and James E. Bashaw on May 16, 2007. At the consummation of the
      acquisition, Mr. Nordlicht resigned as Chairman and a director and our board
      appointed Mr. Culp as a Class C director to fill the vacancy in the class.
      Pursuant to the terms of the acquisition agreement, Platinum is required to
      appoint an individual recommended by Mr. Culp as a Class A director (which
      individual shall be “independent” within the meaning of the NASDAQ corporate
      governance rules), to fill the existing vacancy in that class. In addition,
      pursuant to the TEC acquisition agreement, Platinum has agreed that, for so
      long
      as Mr. Culp owns at least one percent (1%) of the outstanding shares of
      Platinum, to the extent permitted by applicable law and corporate governance
      rules, it shall: (i) cause Mr. Culp to be nominated to the board as a Class
      C
      director and submitted for election by the shareholders of Platinum; and (ii)
      cause an individual recommended by Mr. Culp to be nominated to the board as
      a
      Class A director (which individual shall be “independent” within the meaning of
      the NASDAQ corporate governance rules) and submitted for election by the
      shareholders of Platinum.




None
      of
      our current directors is independent under the requirements of the Nasdaq
      corporate governance rules. Following the consummation of the acquisition,
      we
      began seeking candidates who would be considered “independent” under the Nasdaq
      corporate governance standards. We expect that these individuals, once
      identified and appointed to current vacancies on the board, will serve on the
      board committees that we will create, namely: audit committee, compensation
      committee and nominating and corporate governance committee.





**Board
      Committees**





**Corporate
      Governance - Audit Committee**





We
      do not
      have an audit committee of our board of directors, nor do we have an audit
      committee financial expert. Furthermore, our equity securities are not listed
      on
      an exchange or automated quotation system that requires its listed companies
      to
      appoint an audit committee. Prior to the TEC acquisition and, thereby, our
      commencement of business operations, we did not believe that the nature of
      our
      business was such that an audit committee or audit committee financial expert
      would be useful or necessary. Following the consummation of the acquisition,
      we
      began seeking candidates who would be considered “independent” under the Nasdaq
      corporate governance standards. These individuals, once identified and appointed
      to fill the current vacancies on our board, will comprise our audit
      committee.





**Code
      of Ethics**





We
      have
      adopted a Code of Conduct and Ethics that applies to our principal executive
      officer or principal financial officer, or persons performing similar functions,
      as well as to all our directors, officers and employees. Our Code of Conduct
      and
      Ethics is posted on our Internet website. Our Internet website is
      www.platenergy.com. We intend to post on our website any amendment to, or waiver
      from, any provision of our Code of Conduct and Ethics that applies to our
      principal executive officer, principal financial officer, principal accounting
      other or persons performing similar functions that relates to any element of
      our
      Code regarding: (1) honest and ethical conduct, including the ethical handling
      of actual or apparent conflicts of interest between personal and professional
      relationships; (2) full, fair, accurate, timely and understandable disclosure
      in
      our reports and other filings with the SEC or our public communications; (3)
      compliance with applicable governmental laws, rules and regulations; (4) prompt
      internal reporting of the violations of our code to an appropriate person
      identified in our code; and (5) accountability for adherence to our
      code.




45





**Compensation
      Committee Interlocks and Insider Participation**





We
      do not
      have a compensation committee. As such, the entire board of directors performs
      the function of a compensation committee. The board of directors made the
      decision that our executive officers would not be compensated until the
      commencement of our operations following consummation of the TEC acquisition.
      Going forward, decisions regarding compensation of our officers and directors
      will be determined by the board until such time as a compensation committee
      is
      formed. Tim Culp (our Chairman of the Board), Barry Kostiner (our CEO and
      Secretary) and William C. Glass (our President) are executive officers and
      comprise our board of directors.





**Compensation**  **of
      Directors**





William
      C. Glass is our only director who is not one of our “named executive officers.”
Mr. Glass did not receive any compensation or fees in connection with his role
      as a member of our board of directors or as a member of any board committees
      in
      2006 or 2007.





**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Securities and Exchange Act of 1934, as amended, requires Platinum
      directors, officers and persons owning more than 10% of Platinum’s common stock
      to file reports of ownership and changes of ownership with the Securities and
      Exchange Commission. Based on its review of the copies of such reports furnished
      to Platinum, or representations from certain reporting persons that no other
      reports were required, Platinum believes that all applicable filing requirements
      were complied with during the fiscal year ended December 31, 2007 except as
      follows. One initial statement of beneficial ownership on Form 3 was not filed
      timely by Braesridge Energy LLC. Braesridge filed one late Form 4 in 2007
      reporting seven purchases of common stock and filed one late Form 4 in 2008
      reporting two purchases of warrants in 2007 and nineteen purchases of warrants
      in 2008.





**Item
      11.**  **Executive
      Compensation.**





**Compensation
      Discussion and Analysis**





*The
      following discussion and analysis of compensation arrangements of the named
      executive officers of our company should be read together with the compensation
      tables and related disclosures set forth below.*




46





This
      compensation discussion and analysis explains our compensation philosophy,
      policies and practices with respect to our executive officers.





General.
      Our board of directors is responsible for establishing and administering
      policies governing the compensation of our executive officers. None of our
      current directors is independent under the requirements of the Nasdaq corporate
      governance rules. We are currently searching for candidates who would be
      considered “independent” under the Nasdaq corporate governance standards. We
      expect that these individuals, once identified and appointed to current
      vacancies on the board, will form a compensation committee at which point our
      policies with respect to executive compensation will be administered by our
      board in consultation with such compensation committee. We intend for our
      compensation policies to provide for compensation that is sufficient to attract,
      motivate and retain executives of outstanding ability and potential and to
      establish an appropriate relationship between executive compensation and the
      creation of shareholder value. To meet these goals, our compensation committee
      will be charged with recommending executive compensation packages to our board
      of directors.





It
      is
      anticipated that performance-based and equity-based compensation will be an
      important foundation in executive compensation packages as we believe it is
      important to maintain a strong link between executive incentives and the
      creation of shareholder value. We believe that performance and equity-based
      compensation can be an important component of the total executive compensation
      package for maximizing shareholder value while, at the same time, attracting,
      motivating and retaining high-quality executives. The 2006 Long Term Incentive
      Plan reflects what we believes is a focus on performance- and equity-based
      compensation. Since we do not yet have a compensation committee, we have not
      yet
      adopted any formal guidelines for allocating total compensation between equity
      compensation and cash compensation for executives hired in the
      future.




Overall,
      we seek to provide total compensation packages that are competitive in terms
      of
      potential value to our executives, and which are tailored to the unique
      characteristics and needs within the oil and gas industry in order to create
      an
      executive compensation program that will adequately reward our executives for
      their roles in creating value for our shareholders. We intend to be competitive
      with other similarly situated companies in the oil and gas
      industry.





The
      compensation decisions regarding our executives will be based on our need to
      attract individuals with the skills necessary for us to achieve our business
      plan, to reward those individuals fairly over time, and to retain those
      individuals who continue to perform at or above our expectations.





It
      is
      anticipated that our executives’ compensation will have three primary components
      - salary, cash incentive bonus and stock-based awards. We will view the three
      components of executive compensation as related but distinct. Although our
      compensation committee will review total compensation, we do not believe that
      significant compensation derived from one component of compensation should
      negate or reduce compensation from other components. We anticipate determining
      the appropriate level for each compensation component based in part, but not
      exclusively, on our view of internal equity and consistency, individual
      performance and other information deemed relevant and timely. Since our
      compensation committee has not yet been formed, we have not adopted any formal
      or informal policies or guidelines for allocating compensation between long-term
      and currently paid out compensation, between cash and non-cash compensation,
      or
      among different forms of compensation.




In
      addition to the guidance provided by our compensation committee, we may utilize
      the services of third parties from time to time in connection with the hiring
      and compensation awarded to executive employees. This could include
      subscriptions to executive compensation surveys and other
      databases.




47





Our
      compensation committee will be charged with performing an annual review of
      our
      executive officers’ cash compensation and equity holdings to determine whether
      they provide adequate incentives and motivation to executive officers and
      whether they adequately compensate the executive officers relative to comparable
      officers in other companies.





***Compensation
      Components***





*Base
      Salary* .
      Generally, working with the compensation committee, we anticipate setting
      executive base salaries at levels comparable with those of executives in similar
      positions and with similar responsibilities at comparable companies. We will
      seek to maintain base salary amounts at or near the industry norms while
      avoiding paying amounts in excess of what we believe is necessary to motivate
      executives to meet corporate goals. It is anticipated that base salaries will
      generally be reviewed annually, subject to terms of employment agreements,
      and
      that the compensation committee and board will seek to adjust base salary
      amounts to realign such salaries with industry norms after taking into account
      individual responsibilities, performance and experience.





*Annual
      Bonuses* .
      We
      intend to utilize cash incentive bonuses for executives to focus them on
      achieving key operational and financial objectives within a yearly time horizon.
      Near the beginning of each year, the board, upon the recommendation of the
      compensation committee and subject to any applicable employment agreements,
      will
      determine performance parameters for appropriate executives. At the end of
      each
      year, the board and compensation committee will determine the level of
      achievement for each corporate goal.





*Equity
      Awards* .
      We will
      also use stock options and other stock-based awards to reward long-term
      performance. We believe that providing a meaningful portion of our executives’
total compensation package in stock options and other stock-based awards will
      align the incentives of our executives with the interests of our shareholders
      and with our long-term success. The compensation committee and board will
      develop their equity award determinations based on their judgments as to whether
      the complete compensation packages provided to our executives, including prior
      equity awards, are sufficient to retain, motivate and adequately award the
      executives. Equity awards will be granted through Platinum’s 2006 Long Term
      Incentive Plan described below.





Stock
      ownership guidelines have not been implemented by our board of directors for
      our
      named executive officers. We will continue to periodically review best practices
      and re-evaluate our position with respect to stock ownership
      guidelines.





*Other
      Compensation* .
      We will
      establish and maintain various employee benefit plans, including medical,
      dental, life insurance and 401(k) plans. These plans will be available to all
      salaried employees and will not discriminate in favor of executive officers.
      We
      may extend other perquisites to our executives that are not available to our
      employees generally.





**Summary
      Compensation Table**





The
      following table sets forth the aggregate compensation awarded to, earned by
      or
      paid to our Chairman and our Chief Executive Officer, who are collectively
      referred to as our named executive officers, in 2006 and 2007. Prior to our
      completion of the TEC acquisition on October 26, 2007, none of our executive
      officers received any compensation.





48




**Name
                and Principal Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock
                Awards ($)**
            
            **Option
                Awards ($)**
            
            **Non-Equity
                Incentive Plan Compensation**
              **($)**
            
            **Change
                in Pension Value and Nonqualified Deferred Compensation
                Earnings**
            
            **All
                Other Compensation**
              **($)**
            
            **Total**
              **($)**Tim
                Culp,
              Chairmanof
                the Board (1)
            
            
            2007
              
              2006
            
            $
              $
            177,700
              156,000
            (2)
            $
              
              $
            0
              
              5,000
            
            $
              
              $
            0
              
              0
            
            $
              
              $
            0
              
              0
            
            
            —
              
              —
            
            
            —
              
              —
            
            $
              
              $
            0
              
              0
            
            $
              
              $
            177,700
              
              161,000Barry
                Kostiner,
              ChiefExcutive
                Officerand
                Secretary (3)
            
            
            2007
              
              
              2006
            
            $
              
              
              $
            30,000
              
              
              0
            
            $
              
              
              $
            10,000
              
              
              0
            
            $
              
              
              $
            0
              
              
              0
            
            $
              
              
              $
            0
              
              
              0
            
            
            —
              
              
              —
            
            
            —
              
              
              —
            
            $
              
              
              $
            0
              
              
              0
            
            $
              
              
              $
            40,000
              
              
              0




(1)
            From
                January 1, 2006 until the completion of the TEC acquisition on
                October 26, 2007, Mr. Culp received compensation from TEC as an
                officer of TEC.





(2)
            Of
                this total, $136,036 was earned prior to the completion of the TEC
                acquisition and $41,664 was earned after
                completion.





(3)
            Mr.
                Kostiner did not receive any compensation from Platinum until the
                completion of the TEC acquisition on October 26,
                2007.




**Equity
      Awards**





No
      options, restricted stock or other awards under our 2006 Long Term Incentive
      Plan or otherwise have been made or committed to be made by the Company as
      of
      the date of this report.





**Pension
      Benefits**





No
      pension benefits have been awarded or provided by us as of the date of this
      report.





**Non-Qualified
      Deferred Compensation**





We
      do not
      have any deferred compensation plans as of the date of this report.





**Employment,
      Severance and Change of Control Arrangements**





We
      have
      not entered into any employment, severance or change of control agreements.
      However, pursuant to the TEC acquisition agreement, we have agreed to enter
      into
      an employment agreement with Mr. Culp providing for Mr. Culp to serve as
      Chairman of Platinum for an initial term of not less than two years. In
      addition, under the terms of the acquisition agreement, we will enter into
      an
      employment agreement with Michael G. Cunningham, current employee of New TEC,
      providing for a term of at least two years and otherwise consistent with the
      written offers of employment accepted by such individuals.





49




We
      have entered into a merger agreement to acquire
      Maverick Engineering, Inc., pursuant to which, as a condition to closing, Mr.
      Robert Kovar will enter into an employment agreement with Platinum. The
      employment agreement provides that we will employ Mr. Kovar as Chief Operating
      Officer of Platinum and as President of Maverick, which will be our wholly
      owned
      subsidiary, pursuant to the merger agreement. The
      agreement provides for an initial five year period with a base salary at an
      annual rate of $200,000 and stock options pursuant to our 2006 Long Term
      Incentive Plan to purchase 250,000 shares of Company common stock over that
      5
      year period. Mr. Kovar will receive from an initial grant of stock options
      to
      purchase 50,000 shares of common stock of Platinum in the form of non-qualified
      stock options. On each of the four succeeding anniversaries of the effective
      date of the employment agreement, Mr. Kovar will receive an additional 50,000
      non-qualified stock options pursuant to the 2006 Long Term Incentive Plan.
      All
      of such stock options: (i) shall entitle Mr. Kovar to purchase shares of
      Platinum common stock at an exercise price equal to the fair market value (as
      defined in the 2006 Long Term Incentive Plan) per share of Platinum’s common
      stock on the date of grant; and (ii) shall vest with respect to 10,000 of the
      shares on each anniversary of the grant until all shares represented by the
      stock options are granted. Upon a change in control of Platinum, the employment
      agreement provides that all options granted to Mr. Kovar will immediately vest.
      The agreement also contains certain non-solicit and non-compete provisions
      that
      will apply to Mr. Kovar. There can be no assurances that the acquisition of
      Maverick will be consummated, or that if it is consummated, that the employment
      agreement will be according to the terms described.




**Long-Term
      Incentive Compensation Plan**





***Background***





Platinum’s
      2006 Long-Term Incentive Plan has been approved by our board of directors and
      our stockholders at the special meeting of stockholders held on October 26,
      2007, in connection with the consummation of the TEC acquisition.





The
      purposes of our Plan are to create incentives designed to motivate our employees
      to significantly contribute toward our growth and profitability, to provide
      our
      executives, directors and other employees, and persons who, by their position,
      ability and diligence, are able to make important contributions to our growth
      and profitability, with an incentive to assist us in achieving our long-term
      corporate objectives, to attract and retain executives and other employees
      of
      outstanding competence, and to provide such persons with an opportunity to
      acquire an equity interest in us.





We
      may
      grant incentive and non-qualified stock options, stock appreciation rights,
      performance units, restricted stock awards and performance bonuses, or
      collectively, awards, to our officers and key employees, and those of our
      subsidiaries. In addition, the Plan authorizes the grant of non-qualified stock
      options and restricted stock awards to our directors and to any independent
      contractors and consultants who by their position, ability and diligence are
      able to make important contributions to our future growth and profitability.
      Generally, all classes of our employees are eligible to participate in our
      Plan.
      No options, restricted stock or other awards under the Plan have been made
      or
      committed to be made as of the date of this report.





The
      following is a summary of the material provisions of our Plan and is qualified
      in its entirety by reference to the complete text of our Plan, a copy of which
      is filed as Exhibit 10.5 to our Current Report on Form 8-K filed November 1,
      2007). We cannot determine the benefits to be received by our directors or
      officers under the Plan, or the benefits that would have been received by our
      directors and officers in 2006 had the Plan been in effect in 2006.




50




***Stock
      Subject to the 2006 Plan***





We
      have
      reserved a maximum of 4 million shares of our authorized common stock for
      issuance upon the exercise of awards to be granted pursuant to our Plan. Each
      share issued under an option or under a restricted stock award will be counted
      against this limit. Shares to be delivered at the time a stock option is
      exercised or at the time a restricted stock award is made may be available
      from
      authorized but unissued shares or from stock previously issued but which we
      have
      reacquired and hold in our treasury.





In
      the
      event of any change in our outstanding common stock by reason of any
      reorganization, recapitalization, stock split, stock dividend, combination
      of
      shares, asset acquisition, consolidation, issuance of rights or other similar
      transactions, the number of shares of our common stock which may be issued
      upon
      exercise of outstanding options, and the exercise price of options previously
      granted under our Plan, will be proportionally adjusted to prevent any
      enlargement or dilution of the rights of holders of previously granted options
      as may be appropriate to reflect any such transaction or event.




***Administration***





Our
      board
      will establish a compensation committee that, among other duties, will
      administer the Plan. The compensation committee will be composed of at least
      three members of the board, a majority of whom will be “non-employee directors”
within the meaning of Rule 16b-3(b)(3) of the Securities Exchange Act of 1934,
      as amended. Members of our compensation committee will serve at the pleasure
      of
      our board. In connection with the administration of our Plan, the compensation
      committee, with respect to awards to be made to any person who is not one of
      our
      directors, will:





·
            Determine
                which employees and other persons will be granted awards under our
                Plan;





·
            grant
                the awards to those selected to
                participate;





·
            Determine
                the exercise price for options; and





·
            prescribe
                any limitations, restrictions and conditions upon any
                awards.





With
      respect to stock options or restricted stock awards to be made to any of our
      directors, the compensation committee will make recommendations to our board
      of
      directors as to:





·
            which
                of such persons should be granted stock options, restricted stock
                awards,
                performance units or stock appreciation
                rights;





·
            the
                terms of proposed grants of awards to those selected by our board
                of
                directors to participate;





·
            the
                exercise price for options; and





·
            any
                limitations, restrictions and conditions upon any
                awards.





Any
      grant
      of awards to any of directors under our Plan must be approved by our board
      of
      directors.





In
      addition, the compensation committee will:





·
            interpret
                our Plan; and




51




·
            make
                all other determinations and take all other action that may be necessary
                or advisable to implement and administer our
                Plan.





***Types
      of Awards***





Our
      Plan
      permits the compensation committee to grant the following types of
      awards.





*Stock
      Options* .
      Stock
      options are contractual rights entitling an optionee who has been granted a
      stock option to purchase a stated number of shares of our common stock at an
      exercise price per share determined at the date of the grant. Options are
      evidenced by stock option agreements with the respective optionees. The exercise
      price for each stock option granted under our Plan will be determined by our
      board of directors or a committee of the board at the time of the grant, but
      will not be less than fair market value on the date of the grant. Our board
      of
      directors or a committee of the board will also determine the duration of each
      option; however, no option may be exercisable more than ten years after the
      date
      the option is granted. Within the foregoing limitations, the board of directors
      or committee of the board may, in its discretion, impose limitations on exercise
      of all or some options granted under our Plan, such as specifying minimum
      periods of time after grant during which options may not be exercised. Options
      granted under our Plan will vest at rates specified in the option agreement
      at
      the time of grant; however, all options granted under our Plan will vest upon
      the occurrence of a change of control, as defined in the Plan. Our Plan also
      contains provisions for our board of directors or a committee of the board
      to
      provide in the participants’ option award agreements for accelerating the right
      of an individual employee to exercise his or her stock option or restricted
      stock award in the event of retirement or other termination of employment.
      No
      cash consideration is payable to us in exchange for the grant of
      options.




Our
      Plan
      provides that the stock options may either be Incentive Stock Options within
      the
      meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or
      Non-Qualified Options, which are stock options other than Incentive Stock
      Options within the meaning of Sections 422 of the Code. Incentive Stock Options
      may be granted only to our employees or employees of our subsidiaries, and
      must
      be granted at a per share option price not less than the fair market value
      of
      our common stock on the date the Incentive Stock Option is granted. In the
      case
      of an Incentive Stock Option granted to a stockholder who owns shares of our
      outstanding stock of all classes representing more that 10% of the total
      combined voting power of all of our outstanding stock of all classes entitled
      to
      vote in the election of directors, the per share option price must be not less
      than 110% of the fair market value of one share of our common stock on the
      date
      the Incentive Stock Option is granted and the term of such option may not exceed
      five years. As required by the Code, the aggregate fair market value, determined
      at the time an Incentive Stock Option is granted, of our common stock with
      respect to which Incentive Stock Options may be exercised by an optionee for
      the
      first time during any calendar year under all of our incentive stock option
      plans may not exceed $100,000.





The
      exercise price for Non-Qualified Options may not be less than the fair market
      value of our common stock on the date the Non-Qualified Option is granted.
      Non-Qualified Options are not subject to any of the restrictions described
      above
      with respect to Incentive Stock Options. The exercise price of stock options
      may
      be paid in cash, in whole shares of our common stock, in a combination of cash
      and our common stock, or in such other form of consideration as our board of
      directors or the committee of the board may determine, equal in value to the
      exercise price. However, only shares of our common stock which the option holder
      has held for at least six months on the date of the exercise may be surrendered
      in payment of the exercise price for the options. The maximum number of shares
      subject to stock options that may be awarded in any fiscal year to any employee
      may not exceed 100,000 and the number of shares subject to stock options that
      may be awarded in any fiscal year to any director may not exceed 10,000. In
      no
      event may a stock option be exercised after the expiration of its stated
      term.




52





*Stock
      Appreciation Rights.* A stock
      appreciation right permits the grantee to receive an amount (in cash, common
      stock, or a combination thereof) equal to the number of stock appreciation
      rights exercised by the grantee multiplied by the excess of the fair market
      value of our common stock on the exercise date over the stock appreciation
      rights’ exercise price. Stock appreciation rights may or may not be granted in
      connection with the grant of an option. The exercise price of stock appreciation
      rights granted under the Plan will be determined by the board of directors
      or a
      committee of the board; provided, however, that such exercise price cannot
      be
      less than the fair market value of a share of common stock on a date the stock
      appreciation right is granted (subject to adjustments). A stock appreciation
      right may be exercised in whole or in such installments and at such times as
      determined by the board of directors or a committee of the board.





*Restricted
      Stock.* Restricted shares of our common stock may be granted under our Plan subject
      to
      such terms and conditions, including forfeiture and vesting provisions, and
      restrictions against sale, transfer or other disposition as the boa rd of
      directors or a committee of the board may determine to be appropriate at the
      time of making the award. In addition, the board of directors or a committee
      of
      the board may direct that share certificates representing restricted stock
      be
      inscribed with a legend as to the restrictions on sale, transfer or other
      disposition, and may direct that the certificates, along with a stock power
      signed in blank by the grantee, be delivered to and held by us until such
      restrictions lapse. The board of directors or a committee of the board, in
      its
      discretion, may provide in the award agreement for a modification or
      acceleration of shares of restricted stock in the event of permanent disability,
      retirement or other termination of employment or business relationship with
      the
      grantee. The maximum number of restricted shares that may be awarded under
      the
      Plan to any employee may not exceed 100,000 shares and the number of restricted
      shares that may be awarded in any fiscal year to any director may not exceed
      10,000 shares.




*Performance
      Units* .
      The
      Plan permits grants of performance units, which are rights to receive cash
      payments equal to the difference (if any) between the fair market value of
      our
      common stock on the date of grant and its fair market value on the date of
      exercise of the award, except to the extent otherwise provided by the board
      of
      directors or a committee of the board or required by law. Such awards are
      subject to the fulfillment of conditions that may be established by the board
      of
      directors or a committee of the board including, without limitation, the
      achievement of performance targets based upon the factors described above
      relating to restricted stock awards.





*Performance
      Bonus* .
      The
      Plan permits grants of performance bonuses, which may be paid in cash, common
      stock or combination thereof as determined by the board of directors or a
      committee of the board. The maximum value of performance bonus awards granted
      under the Plan shall be established by the compensation committee at the time
      of
      the grant. An employee’s receipt of such amount will be contingent upon
      achievement of performance targets during the performance period established
      by
      the compensation committee. The performance targets will be determined by the
      board of directors or a committee of the board based upon the factors described
      above relating to restricted stock awards. Following the end of the performance
      period, the board of directors or a committee of the board will determine the
      achievement of the performance targets for such performance period. Payment
      may
      be made within 60 days of such determination. Any payment made in shares of
      common stock will be based upon the fair market value of the common stock on
      the
      payment date. The maximum amount of any performance bonus payable to a
      participant in any calendar year is $500,000.





***Transferability***





With
      the
      exception of Non-Qualified Stock Options, awards are not transferable other
      than
      by will or by the laws of descent and distribution. Non-Qualified Stock Options
      are transferable on a limited basis. Restricted stock awards are not
      transferable during the restriction period.




53




***Change
      of Control Event***





The
      Plan
      provides for the acceleration of any unvested portion of any outstanding awards
      under the Plan upon a change of control event.





***Termination
      of Employment/Relationship***





Awards
      granted under our Plan that have not vested will generally terminate immediately
      upon the grantee’s termination of employment or business relationship with us or
      any of our subsidiaries for any reason other than retirement with our consent,
      disability or death. The board of directors or a committee of the board may
      determine at the time of the grant that an award agreement should contain
      provisions permitting the grantee to exercise the stock options for any stated
      period after such termination, or for any period the board of directors or
      a
      committee of the board determines to be advisable after the grantee’s employment
      or business relationship with us terminates by reason of retirement, disability,
      death or termination without cause. Incentive Stock Options will, however,
      terminate no more than three months after termination of the optionee’s
      employment, twelve months after termination of the optionee’s employment due to
      disability and three years after termination of the optionee’s employment due to
      death. The board of directors or a committee of the board may permit a deceased
      optionee’s stock options to be exercised by the optionee’s executor or heirs
      during a period acceptable to the board of directors or a committee of the
      board
      following the date of the optionee’s death but such exercise must occur prior to
      the expiration date of the stock option.





***Dilution;
      Substitution***





As
      described above, our Plan will provide protection against substantial dilution
      or enlargement of the rights granted to holders of awards in the event of stock
      splits, recapitalizations, asset acquisitions, consolidations, reorganizations
      or similar transactions. New award rights may, but need not, be substituted
      for
      the awards granted under our Plan, or our obligations with respect to awards
      outstanding under our Plan may, but need not, be assumed by another corporation
      in connection with any asset acquisition, consolidation, acquisition,
      separation, reorganization, sale or distribution of assets, liquidation or
      like
      occurrence in which we are involved. In the event that our Plan is assumed,
      the
      stock issuable with respect to awards previously granted under our Plan shall
      thereafter include the stock of the corporation granting such new option rights
      or assuming our obligations under the Plan.





***Amendment
      of the Plan***





Our
      board
      may amend our Plan at any time. However, without stockholder approval, our
      Plan
      may not be amended in a manner that would:





·
            increase
                the number of shares that may be issued under our
                Plan;





·
            Materially
                modify the requirements for eligibility for participation in our
                Plan;





·
            Materially
                increase the benefits to participants provided by our Plan;
                or





·
            otherwise
                disqualify our Plan for coverage under Rule 16b-3 promulgated under
                the
                Securities Exchange Act of 1934, as
                amended.




54




Awards
      previously granted under our Plan may not be impaired or affected by any
      amendment of our Plan, without the consent of the affected
      grantees.





***Accounting
      Treatment***





Under
      generally accepted accounting principles with respect to the financial
      accounting treatment of stock options used to compensate employees, upon the
      grant of stock options under our Plan, the fair value of the options will be
      measured on the date of grant and this amount will be recognized as a
      compensation expense ratably over the vesting period. Stock appreciation rights
      granted under the Plan must be settled in common stock. Therefore, stock
      appreciation rights granted under the Plan will receive the same accounting
      treatment as options. The cash we receive upon the exercise of stock options
      will be reflected as an increase in our capital. No additional compensation
      expense will be recognized at the time stock options are exercised, although
      the
      issuance of shares of common stock upon exercise may reduce basic earnings
      per
      share, as more shares of our common stock would then be
      outstanding.





When
      we
      make a grant of restricted stock, the fair value of the restricted stock award
      at the date of grant will be determined and this amount will be recognized
      over
      the vesting period of the award. The fair value of a restricted stock award
      is
      equal to the fair market value of our common stock on the date of
      grant.




Due
      to
      consideration of the accounting treatment of stock options and restricted stock
      awards by various regulatory bodies, it is possible that the present accounting
      treatment may change.




***Tax
      Treatment***





The
      following is a brief description of the federal income tax consequences, under
      existing law, with respect to awards that may be granted under our
      Plan.





*Incentive
      Stock Options.* An
      optionee will not realize any taxable income upon the grant or the exercise
      of
      an Incentive Stock Option. However, the amount by which the fair market value
      of
      the shares covered by the Incentive Stock Option (on the date of exercise)
      exceeds the option price paid will be an item of tax preference to which the
      alternative minimum tax may apply, depending on each optionee’s individual
      circumstances. If the optionee does not dispose of the shares of our common
      stock acquired by exercising an Incentive Stock Option within two years from
      the
      date of the grant of the Incentive Stock Option or within one year after the
      shares are transferred to the optionee, when the optionee later sells or
      otherwise disposes of the stock, any amount realized by the optionee in excess
      of the option price will be taxed as a long-term capital gain and any loss
      will
      be recognized as a long-term capital loss. We generally will not be entitled
      to
      an income tax deduction with respect to the grant or exercise of an Incentive
      Stock Option.





If
      any
      shares of our common stock acquired upon exercise of an Incentive Stock Option
      are resold or disposed of before the expiration of the prescribed holding
      periods, the optionee would realize ordinary income, instead of capital gain.
      The amount of the ordinary income realized would be equal to the lesser of
      (i)
      the excess of the fair market value of the stock on the exercise date over
      the
      option price; or (ii) in the case of a taxable sale or exchange, the amount
      of
      the gain realized. Any additional gain would be either long-term or short-term
      capital gain, depending on whether the applicable capital gain holding period
      has been satisfied. In the event of a premature disposition of shares of stock
      acquired by exercising an Incentive Stock Option, we would be entitled to a
      deduction equal to the amount of ordinary income realized by the
      optionee.




55





*Non-Qualified
      Options* .
      An
      optionee will not realize any taxable income upon the grant of a Non-Qualified
      Option. At the time the optionee exercises the Non-Qualified Option, the amount
      by which the fair market value at the time of exercise of the shares covered
      by
      the Non-Qualified Option exceeds the option price paid upon exercise will
      constitute ordinary income to the optionee in the year of such exercise. We
      will
      be entitled to a corresponding income tax deduction in the year of exercise
      equal to the ordinary income recognized by the optionee. If the optionee
      thereafter sells such shares, the difference between any amount realized on
      the
      sale and the fair market value of the shares at the time of exercise will be
      taxed to the optionee as capital gain or loss, short- or long-term depending
      on
      the length of time the stock was held by the optionee before sale.





*Stock
      Appreciation Rights* .
      A
      participant realizes no taxable income and we are not entitled to a deduction
      when a stock appreciation right is granted. Upon exercising a stock appreciation
      right, a participant will realize ordinary income in an amount equal to the
      fair
      market value of the shares received minus any amount paid for the shares, and
      we
      will be entitled to a corresponding deduction. A participant’s tax basis in the
      shares of common stock received upon exercise of a stock appreciation right
      will
      be equal to the fair market value of such shares on the exercise date, and
      the
      participant’s holding period for such shares will begin at that time. Upon sale
      of the shares of common stock received upon exercise of a stock appreciation
      right, the participant will realize short-term or long-term capital gain or
      loss, depending upon whether the shares have been held for more than one year.
      The amount of such gain or loss will be equal to the difference between the
      amount realized in connection with the sale of the shares, and the participant’s
      tax basis in such shares.




*Restricted
      Stock Award* .
      A
      recipient of restricted stock generally will not recognize any taxable income
      until the shares of restricted stock become freely transferable or are no longer
      subject to a substantial risk of forfeiture. At that time, the excess of the
      fair market value of the restricted stock over the amount, if any, paid for
      the
      restricted stock is taxable to the recipient as ordinary income. If a recipient
      of restricted stock subsequently sells the shares, he or she generally will
      realize capital gain or loss in the year of such sale in an amount equal to
      the
      difference between the net proceeds from the sale and the price paid for the
      stock, if any, plus the amount previously included in income as ordinary income
      with respect to such restricted shares.





A
      recipient has the opportunity, within certain limits, to fix the amount and
      timing of the taxable income attributable to a grant of restricted stock.
      Section 83(b) of the Code permits a recipient of restricted stock, which is
      not
      yet required to be included in taxable income, to elect, within 30 days of
      the
      award of restricted stock, to include in income immediately the difference
      between the fair market value of the shares of restricted stock at the date
      of
      the award and the amount paid for the restricted stock, if any. The election
      permits the recipient of restricted stock to fix the amount of income that
      must
      be recognized by virtue of the restricted stock grant. We will be entitled
      to a
      deduction in the year the recipient is required (or elects) to recognize income
      by virtue of receipt of restricted stock, equal to the amount of taxable income
      recognized by the recipient.





*Performance
      Units and Performance Bonuses* .
      A
      participant realizes no taxable income and we are not entitled to a deduction
      when performance units or performance bonuses are awarded. When the performance
      units or performance bonuses vest and become payable upon the achievement of
      the
      performance objectives, the participant will realize ordinary income equal
      to
      the amount of cash received or the fair market value of the shares received
      minus any amount paid for the shares, and we will be entitled to a corresponding
      deduction. A participant’s tax basis in shares of common stock received upon
      payment will be equal to the fair market value of such shares when the
      participant receives them. Upon sale of the shares, the participant will realize
      short-term or long-term capital gain or loss, depending upon whether the shares
      have been held for more than one year at the time of sale. Such gain or loss
      will be equal to the difference between the amount realized upon the sale of
      the
      shares and the tax basis of the shares in the participant’s hands.





56




*Section
      162(m) of the Code* .
      Section
      162(m) of the Code precludes a public corporation from taking a deduction for
      annual compensation in excess of $1.0 million paid to its chief executive
      officer or any of its four other highest-paid officers. However, compensation
      that qualifies under Section 162(m) of the Code as “performance-based” is
      specifically exempt from the deduction limit. Based on Section 162(m) of the
      Code and the regulations thereunder, our ability to deduct compensation income
      generated in connection with the exercise of stock options or stock appreciation
      rights granted under the Plan should not be limited by Section 162(m) of the
      Code. Further, we believe that compensation income generated in connection
      with
      performance awards granted under the Plan should not be limited by Section
      162(m) of the Code. The Plan has been designed to provide flexibility with
      respect to whether restricted stock awards or performance bonuses will qualify
      as performance-based compensation under Section 162(m) of the Code and,
      therefore, be exempt from the deduction limit. If the vesting restrictions
      relating to any such award are based solely upon the satisfaction of one of
      the
      performance goals set forth in the Plan, then we believe that the compensation
      expense relating to such an award will be deductible by us if the awards become
      vested. However, compensation expense deductions relating to such awards will
      be
      subject to the Section 162(m) deduction limitation if such awards become vested
      based upon any other criteria set forth in such award (such as the occurrence
      of
      a change in control or vesting based upon continued employment with
      us).





**  *Certain
      Awards Deferring or Accelerating the Receipt of Compensation* .
      Section
      409A of the Internal Revenue Code, enacted as part of the American Jobs Creation
      Act of 2004, imposes certain new requirements applicable to “nonqualified
      deferred compensation plans.” If a nonqualified deferred compensation plan
      subject to Section 409A fails to meet, or is not operated in accordance with,
      these new requirements, then all compensation deferred under the plan may become
      immediately taxable. Stock appreciation rights and deferred stock awards which
      may be granted under the plan may constitute deferred compensation subject
      to
      the Section 409A requirements. It is our intention that any award agreement
      governing awards subject to Section 409A will comply with these new
      rules.





**Limitations
      on Liability and Indemnification Matters**





We
      have
      adopted provisions in our certificate of incorporation that will limit the
      liability of our directors and executive officers for monetary damages for
      breach of their fiduciary duties to the maximum extent permitted by Delaware
      law. Under Delaware laws a certificate of incorporation may provide that
      directors of a corporation will not be personally liable for monetary damages
      for breach of their fiduciary duties as directors, except liability
      for:





·
            any
                breach of their duty of loyalty to our company or our
                stockholders;





·
            acts
                or omissions not in good faith or which involve intentional misconduct
                or
                a knowing violation of law;





·
            unlawful
                payments of dividends or unlawful stock repurchases or redemptions
                as
                provided in Section 174 of the Delaware General Corporation Law;
                or





·
            any
                transaction from which the director derived an improper personal
                benefit.





57


The
      limits on a director’s or officer’s liability in our certificate of
      incorporation will not apply to liabilities arising under the federal securities
      laws and will not affect the availability of equitable remedies such as
      injunctive relief or rescission.





Our
      certificate of incorporation together with our bylaws provide that we must
      indemnify our directors and executive officers and may indemnify our other
      officers and employees and other agents to the fullest extent permitted by
      law.
      We believe that indemnification under our bylaws covers at least negligence
      and
      gross negligence on the part of indemnified parties. Our bylaws also permit
      us
      to secure insurance on behalf of any officer, director, employee or other agent
      for any liability arising out of his or her actions in that capacity, regardless
      of whether our bylaws would otherwise permit indemnification. We believe that
      the indemnification provisions of our certificate of incorporation and bylaws
      are necessary to attract and retain qualified persons as directors and officers.
      We also maintain directors’ and officers’ liability insurance.





We
      have
      entered and expect to continue to enter into agreements to indemnify our
      directors, executive officers and other employees as determined by the board
      of
      directors. These agreements provide for indemnification for related expenses
      including attorneys’ fees, judgments, fines and settlement amounts incurred by
      any of these individuals in any action or proceeding. We believe that these
      provisions and agreements are necessary to attract and retain qualified persons
      as our directors and executive officers.




At
      present we are not aware of any pending litigation or proceeding involving
      any
      director, officer, employee or agent of our company in such person’s capacity
      with our company where indemnification will be required or permitted. We are
      also not aware of any threatened litigation or proceedings that might result
      in
      a claim for indemnification.





**Director
      Compensation**





Our
      current directors all serve as officers or employees and did not receive
      additional compensation for their board service in 2007.





**Item
      12.**  **Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters.**





The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of March 31, 2008:





·
            each
                person known by us to be the beneficial owner of more than 5% of
                our
                outstanding shares of common stock;





·
            each
                of our officers and directors; and





·
            all
                our officers and directors as a
                group.





58




**Name
                and Address of Beneficial Owner(1)**
            
            **Amount
                and Nature of**
              **Beneficial**
              **Ownership**
            
            **Approximate
                Percentage of Outstanding Common Stock**Azimuth
                Opportunity, Ltd.(2)
            
            
            1,542,000
            
            
            6.0
            %J.D.
                Capital Management LLC(3)
              J.
                David Rogers
            
            
            5,586,600
            
            
            23.7
            %Millennium
                Management LLC(4)
            
            
            1,209,800
            
            
            5.5
            %D.B.
                Zwirn Special Opportunities Fund, L.P.(5)
              D.B.
                Zwirn Special Opportunities Fund, Ltd.
              HCM/2
                Special Opportunities LLC
            
            
            1,625,000
            
            
            6.3
            %QVT
                Financial LP(6)
            
            
            1,250,983
            
            
            5.16
            %Braesridge
                Energy LLC(7)
            
            
            8,473,100
            
            
            31.3
            %Tandem
                Energy Holdings, Inc.(8)
            
            
            7,692,308
            
            
            32.0
            %Mark
                Nordlicht(9)
            
            
            2,151,000
            
            
            8.3
            %Barry
                Kostiner(10)
            
            
            968,130
            
            
            4.0
            %William
                C. Glass(11)
            
            
            270,000
            
            
            1.0
            %Richard
                Geyser(12)
            
            
            90,000
            
            
            *
            %James
                H. Dorman(13)
            
            
            60,000
            
            
            *
            %Jim
                L. Troxel(14)
            
            
            60,000
            
            
            *
            %Tim
                G. Gulp(8)
            
            
            —
            
            
            —All
                directors and executive officers as a group (6
                individuals)
            
            
            1,448,130
            
            
            6.0
            %




*Denotes
      percentages of less than 1%.





(1)
            Unless
                otherwise indicated, the business address of each of the individuals
                is 25
                Phillips Parkway, Montvale, New Jersey
                07645.





(2)
            Based
                upon a Statement on Schedule 13G (Amendment No. 1) dated December
                13, 2006
                filed by Azimuth Opportunity, Ltd. The address of Azimuth Opportunity,
                Ltd. is c/o WSmiths Finance, Nemours Chambers, P.O. Box 3170, Road
                Town,
                Tortola, British Virgin Islands.





(3)
            Based
                upon a Statement on Schedule 13D dated March 10, 2008 filed by J.D.
                Capital Management LLC (“JD Capital”) and J. David Rogers, we understand
                that JD Capital is the investment manager of Tempo Master Fund LP
                and
                Tempo Fund LLC and, by virtue of such status, may be deemed to be the
                beneficial owner of 3,392,400 shares of common stock and presently
                exercisable warrants to purchase 2,194,200 shares of common stock
                owned by
                Tempo. Mr. Rogers is the managing member of J.D. Capital and has
                voting
                and investment power with respect to the shares. The address of J.D.
                Capital and Mr. Rogers is Two Greenwich Plaza, Greenwich, Connecticut
                06830.




(4)
            Based
                upon a Statement on Schedule 13D dated December 26, 2007 filed by
                Millenco
                LLC, Millennium Partners, L.P., Millennium Management LLC and Israel
                A.
                Englander. Millenco LLC is the beneficial owner of 1,101,400 shares
                of
                common stock and presently exercisable warrants to purchase 8,400
                shares
                at an exercise price of $6.00 per share. Millennium Partners, L.P.
                is the
                beneficial owner of 100,000 shares of common stock. Millennium Management
                LLC is the manager of Millenco LLC and the managing partner of Millennium
                Partners, L.P. Mr. Englander is the managing member of Millennium
                Management LLC. Therefore, both Millennium Management LLC and Mr.
                Englander may be deemed to beneficially own an aggregate of 1,209,800
                shares. The address of each of the parties is c/o Millennium Management
                LLC, 666 Fifth Avenue, New York, New York
                10103.




59




(5)
            Based
                upon a Statement on Schedule 13G dated September 5, 2006 filed by
                D.B.
                Zwirn & Co., L.P., DBZ GP, LLC, Zwirn Holdings, LLC, Daniel B. Zwirn,
                D.B. Zwirn Special Opportunities Fund, L.P. (“Fund L.P.”), D.B. Zwirn
                Special Opportunities Fund, Ltd. (“Fund Ltd.”) and HCM/Z Special
                Opportunities LLC (“Opportunities LLC”), D.B. Zwirn & Co., L.P., DBZ
                GP, LLC, Zwirn Holdings, LLC, and Daniel B. Zwirn may each be deemed
                the
                beneficial owner of (i) 573,750 shares of common stock owned by Fund,
                L.P., (ii) 932,500 shares of common stock owned by Fund, Ltd. and
                (iii)
                118,750 shares of common stock owned by Opportunities LLC. D.B. Zwirn
                & Co., L.P. is the manager of each of Fund L.P., Fund Ltd. and
                Opportunities LLC, and, consequently, has voting control and investment
                discretion over the shares of common stock held by each of the Funds.
                Furthermore, Daniel B. Zwirn is the managing member of, and thereby
                controls, Zwirn Holdings, LLC, which in turn is the managing member
                of
                and, thereby, controls DBZ GP, LLC, which in turn is the general
                partner
                of and thereby controls D.B. Zwirn & Co., L.P. The address of each of
                the parties is 745 Fifth Avenue, 18th Floor, New York, NY 10151,
                except
                for Fund Ltd. which has an address at P.O. Box 896, George Town,
                Harbour
                Centre, 2nd Floor, Grand Cayman, Cayman Islands, British West Indies
                and
                Opportunities LLC which has an address at Seven Mile Beach, Grand
                Cayman,
                Cayman Islands, British West
                Indies.





(6)
            Based
                upon a Statement on Schedule 13G (Amendment No. 1) dated February
                7, 2008
                filed by QVT Financial LP, QVT Financial GP LLC, QVT Fund LP, and
                QVT
                Associates GP LLC. QVT Financial LP is the investment manager for
                QVT Fund
                LP, which beneficially owns 940,595 shares of common stock. QVT Financial
                LP is also the investment manager for a separate discretionary account,
                which holds 106,092 shares of common stock. QVT Financial LP has
                the power
                to direct the vote and disposition of the common stock held by each
                of the
                QVT Fund LP and the separate discretionary account. Accordingly,
                QVT
                Financial LP may be deemed to be the beneficial owner of an aggregate
                amount of 1,250,983 shares of common stock. QVT Financial LP is the
                general partner of QVT Financial LP and QVT Associates GP LLC is
                the
                general partner of the QVT Fund LP. The address of each of the parties
                is
                1177 Avenue of the Americas, 9 th Floor New York, New York 10036,
                except
                QVT Fund LP whose address is Walkers SPV, Walkers House, P.O. Box
                908GT,
                Mary Street, George Town, Grand Cayman, Cayman
                Islands.





(7)
            Based
                on a Statement on Schedule 13D (Amendment No. 10) dated March 5,
                2008,
                filed by Braesridge Energy LLC and Syd Ghermezian and a Form 4 filed
                by
                Braesridge Energy LLC and Syd Ghermezian, dated March 26, 2008,
                the 8,473,100 shares listed includes (i) 3,454,800 shares of
                common stock and (ii) presently exercisable warrants to purchase
                5,018,300 shares at an exercise price of $6.00 per share.****Braesridge Energy LLC’s address is 9440 West Sahara, Suite 240, Las Vegas,
                Nevada 89117. For a description of Braesridge and activities with
                respect
                thereto by our Chief Executive Officer, Barry Kostiner, see “Certain
                Relationships and Related Party Transactions” beginning on page 62 of
                this report.




(8)
            Immediately
                prior to its dissolution and distribution of its assets - which are
                comprised of these shares - Tandem will hold these shares, which
                it
                acquired as a result of its merger with TEC, its wholly-owned subsidiary.
                On February 14, 2008, we filed a registration statement on Form S-1
                relating to the distribution of the shares to the Tandem shareholders.
                On
                or about the effective date of that registration statement, these
                shares
                will be distributed to the shareholders of Tandem as part of Tandem’s
                dissolution and distribution of its assets. Mr. Tim Culp, a shareholder
                of
                Tandem and our Chairman of the Board and a member of our board of
                directors, will receive approximately 27% of the Platinum common
                stock
                covered by the registration statement in Tandem’s dissolution. Mr. Culp
                disclaims any beneficial ownership of the Platinum shares held by
                Tandem.
                Tandem’s address is 200 N. Loraine, Suite 400, Midland, Texas
                79701.




60




(
                9)
            Includes
                21,000 shares owned directly by Mr. Nordlicht and 2,130,000 shares
                held by
                Platinum Management (NY) LLC, a limited liability company controlled
                by
                Mr. Nordlicht. The address of Mr. Nordlicht and Platinum Management
                (NY)
                LLC is 152 West 57th Street, New York, New York
                10019.





(10)
            Does
                not include an aggregate of 480,000 shares of common stock he may
                receive
                in the event Messrs. Glass, Geyser, Dorman or Troxel’s shares do not vest
                as described below in footnotes 11, 12, 13, and 14, respectively.
                Prior to
                the IPO, Mr. James E. Bashaw (a former director of Platinum) entered
                into
                a Subscription Agreement to subscribe for 45,000 shares of Platinum
                common
                stock. Pursuant to the Agreement, Mr. Bashaw agreed that in the event
                he
                ceases to remain a director of Platinum until the expiration of the
                escrow
                period, Mr. Kostiner would have the right to elect within 3 months
                following such termination of services to purchase Mr. Bashaw’s shares at
                $0.0001 per share. On August 15, 2007, Mr. Kostiner entered into
                an
                agreement with Mr. Bashaw pursuant to which Mr. Kostiner agreed to
                purchase Mr. Bashaw’s 45,000 shares of Platinum common stock at the
                expiration of the three year escrow period, conditioned upon consummation
                of the asset acquisition. These shares will remain in escrow until
                the
                expiration of the three year escrow
                period.





(11)
            These
                shares vest in full upon the expiration of the three-year escrow
                period,
                October 24, 2008, provided Mr. Glass is still affiliated with us
                at such
                time, or if his affiliation has been terminated without cause or
                as a
                result of death or disability. In the event Mr. Glass is not affiliated
                with us, for reasons other than as described in the previous sentence,
                at
                the time of the expiration of the three-year escrow period, these
                shares
                revert back to Mr. Kostiner upon his election, within three months
                of Mr.
                Glass’ termination, to purchase the shares at $.0001 per
                share.




(12)
            These
                shares vest in full upon the expiration of the three-year escrow
                period,
                October 24, 2008, provided Mr. Geyser is still affiliated with us
                at such
                time, or if his affiliation has been terminated without cause or
                as a
                result of death or disability. In the event Mr. Geyser is not affiliated
                with us, for reasons other than as described in the previous sentence,
                at
                the time of the expiration of the three-year escrow period, these
                shares
                revert back to Mr. Kostiner upon his election, within three months
                of Mr.
                Geyser’s termination, to purchase the shares at $.0001 per
                share.





(13)
            These
                shares vest in full upon the expiration of the three-year escrow
                period,
                October 24, 2008, provided Mr. Dorman is still affiliated with us
                at such
                time, or if his affiliation has been terminated without cause or
                as a
                result of death or disability. In the event Mr. Dorman is not affiliated
                with us, for reasons other than as described in the previous sentence,
                at
                the time of the expiration of the three-year escrow period, these
                shares
                revert back to Mr. Kostiner upon his election, within three months
                of Mr.
                Dorman’s termination, to purchase the shares at $.0001 per
                share.




61




(14)
            These
                shares vest in full upon the expiration of the three-year escrow
                period,
                October 24, 2008, provided Mr. Troxel is still affiliated with us
                at such
                time, or if his affiliation has been terminated without cause or
                as a
                result of death or disability. In the event Mr. Troxel is not affiliated
                with us, for reasons other than as described in the previous sentence,
                at
                the time of the expiration of the three-year escrow period, these
                shares
                revert back to Mr. Kostiner upon his election, within three months
                of Mr.
                Troxel’s termination, to purchase the shares at $.0001 per share. Mr.
                Troxel’s business address is 1001 McKinney, Suite 2200, Houston, Texas
                77002.





**Securities
      Authorized for Issuance Under Our Long-Term Incentive Compensation
      Plan**





The
      following chart reflects the status of securities authorized under our Long-Term
      Incentive Plan as of December 31, 2007:


**Equity
                  Compensation Plan Information**Plan
                  Category
              
              Number
                  of securities to be issued upon exercise of outstanding options,
                  warrants
                  and rights
              
              Weighted-average
                  exercise price of outstanding
                options,
                  warrants and rights
              
              Number
                  of securities remaining available for future issuance under equity
                  compensation plansEquity
                  compensation plans approved by security holders
              
              N/A
              
              N/A
              
              4,000,000Equity
                  compensation plans not approved by security holders
              
              N/A
              
              N/A
              
              0Total
              
              N/A
              
              N/A
              
              4,000,000




**Item
      13.**  **Certain
      Relationships and Related Transactions and Director
      Independence**




**Review,**  **Approval**  **or
      Ratification of Related Party Transactions**





We
      do not
      maintain a formal written procedure for the review and approval of transactions
      with related persons. It is our policy for the disinterested members of our
      board to review all related party transactions on a case by case basis. To
      receive approval, a related-party transaction must have a business purpose
      for
      Platinum and be on terms that are fair and reasonable to Platinum and as
      favorable to Platinum as would be available from non-related entities in
      comparable transactions.




**Platinum
      Related Party Transactions**





Prior
      to
      our IPO, we issued an aggregate of 3,250,000 shares of our common stock to
      the
      individuals set forth below for $25,000 in cash, at an average purchase price
      of
      approximately $0.0077 per share as follows:




62





**Name**
            
            **Number
                of Shares**
            
            **Relationship
                to Us**Platinum
                Management (NY) LLC
            
            1,922,918
            
            Stockholder
                (beneficially owned by our former Chairman, Mark
                Nordlicht)Barry
                Kostiner
            
            812,500
            
            Chief
                Executive Officer, Secretary and DirectorWilliam
                C. Glass
            
            243,750
            
            President
                and DirectorRichard
                Geyser
            
            81,250
            
            Vice
                PresidentJames
                H. Dorman
            
            54,166
            
            Executive
                Vice PresidentJim
                L. Troxel
            
            54,166
            
            Executive
                Vice PresidentAlbert
                Helmig
            
            40,625
            
            Former
                DirectorJames
                E. Bashaw
            
            40,625
            
            Former
                Director




On
      September 23, 2005, our board of directors authorized a stock dividend of
      .3846153 of a share of common stock for each outstanding share of common stock,
      effectively lowering the purchase price to $.0056 per share. The sole purpose
      of
      such stock dividend authorized by the board of directors was to maintain the
      existing stockholders’ collective ownership at 20% of our issued and outstanding
      shares of common stock immediately after our IPO.





On
      October 21, 2005, we effected a four-for-five reverse stock split, effectively
      raising the purchase price to $0.0069 per share. The sole purpose for such
      reverse stock split authorized by the board and approved by our stockholders
      was
      to maintain the existing stockholders’ collective ownership at 20% of our issued
      and outstanding shares of common stock immediately after our IPO. Following
      the
      reverse stock split, there were 3,600,000 shares of common stock outstanding
      as
      reflected in the section entitled “Security Ownership Of Certain Beneficial
      Owners And Management” beginning on page 58.





The
      holders of the majority of these shares will be entitled to make up to two
      demands that we register these shares pursuant to a registration rights
      agreement. The holders of the majority of these shares may elect to exercise
      these registration rights at any time after the date on which these shares
      of
      common stock are released from escrow, which, except in limited circumstances,
      is not before three years from the date of the IPO. In addition, these
      stockholders have certain “piggy-back” registration rights on registration
      statements filed subsequent to the date on which these shares of common stock
      are released from escrow. We will bear the expenses incurred in connection
      with
      the filing of any such registration statements.




Platinum
      Partners Value Arbitrage, L.P., an affiliate of Mark Nordlicht, made available
      to us certain office and secretarial services, as we required from time to
      time
      through the consummation of the TEC acquisition. We agreed to pay Platinum
      Partners Value Arbitrage, L.P. $7,500 per month for these services. Platinum
      Management NY LLC is the general partner of Platinum Partners Value Arbitrage,
      L.P. and Mark Nordlicht, our former Chairman of the Board, is the managing
      member and 100% owner of Platinum Management (NY) LLC. As a result, he benefited
      from the transaction to the extent of his interest in Platinum Partners Value
      Arbitrage, L.P. However, this arrangement was solely for our benefit and was
      not
      intended to provide Mr. Nordlicht compensation in lieu of a salary. We believe,
      based on fees for similar services in the New York City metropolitan area,
      that
      the fee charged by Platinum Partners Value Arbitrage, L.P. was at least as
      favorable as we could have obtained from an unaffiliated person. However, as
      our
      directors may not be deemed “independent,” we did not have the benefit of
      disinterested directors approving this transaction.





During
      2005, Mark Nordlicht, our former Chairman of the Board, advanced a total of
      approximately $180,000 to us to cover expenses related to the IPO. This loan
      was
      repaid together with interest at a rate of 4% per annum upon consummation of
      the
      IPO. During 2006, Mr. Nordlicht advanced to us an aggregate of $75,000 pursuant
      to two promissory notes. During 2007, Mr. Nordlicht advanced to us an aggregate
      of $1,032,000 pursuant to twelve promissory notes. The notes accrued interest
      at
      a rate of 5% per annum and matured upon the consummation of the TEC acquisition.
      We paid the amounts owing under the notes at the closing of the TEC acquisition
      and the notes were cancelled.




63





We
      have
      reimbursed and will continue to reimburse our officers and directors for any
      reasonable out-of-pocket business expenses incurred by them in connection with
      certain activities on our behalf such as identifying and investigating possible
      acquisitions. There is no limit on the amount of accountable out-of-pocket
      expenses reimbursable by us, which will be reviewed only by our board or a
      court
      of competent jurisdiction if such reimbursement is challenged.





Pursuant
      to an escrow agreement, all of the shares of our common stock outstanding prior
      to our IPO were placed in escrow with American Stock Transfer & Trust
      Company, as escrow agent, until the earliest of (i) October 24, 2008; (ii)
      our
      liquidation; or (iii) the consummation of a liquidation, merger, stock exchange
      or other similar transaction which results in all of our stockholders having
      the
      right to exchange their shares of common stock for cash, securities or other
      property subsequent to our consummating the TEC acquisition.





During
      the escrow period, the holders of these shares are not able to sell or transfer
      their securities except to their spouses and children or trusts established
      for
      their benefit, but have retained all other rights as our stockholders,
      including, without limitation, the right to vote their shares of common stock
      and the right to receive cash dividends, if declared. If dividends are declared
      and payable in shares of common stock, such dividends will also be placed in
      escrow.





Mr.
      Lance
      Duncan, a director and officer of Tandem for a short time from March 2005
      through June 1, 2005, introduced Platinum’s management to Tandem, which resulted
      in the acquisition agreement. As a consequence of his efforts in this regard,
      we
      paid to Mr. Duncan a finder’s fee of $3.0 million at the consummation of the TEC
      acquisition for introduction of the parties. We also entered into a consulting
      agreement with Mr. Duncan, the term of which commenced upon the consummation
      of
      the TEC acquisition, for future consulting services including investigation
      and
      evaluation of possible future acquisitions for us. Under the terms of the
      consulting agreement, we agreed to issue to Mr. Duncan a total of 714,286 shares
      of our restricted common stock, 25% to be issued upon commencement of services
      and the remainder in semi-annual installments of 25% each over the eighteen
      month term of the agreement. On October 26, 2007, the first installment of
      178,
      572 shares were issued to Mr. Duncan.




Simultaneous
      with the purchase of TEC by Tandem in June 2005, TEC acquired the Shamrock
      Assets, comprised largely of oil and gas properties, for $44.2 million. At
      the
      date of the Shamrock acquisition, TEC’s then sole stockholder, Mr. Tim Culp,
      also owned or controlled two-thirds of the outstanding stock of Shamrock. The
      remaining one-third of Shamrock was owned or controlled by Mr. Jack Chambers
      who
      received approximately $19.2 million, including cash of $2.6 million, the
      issuance of a $3.0 million note payable, repayment of certain Shamrock debt
      totaling $1.6 million and 4.0 million shares of Tandem common stock valued
      at
      $3.00 per share, or $12.0 million, for his one-third interest. The note payable
      to Mr. Chambers was repaid in connection with the consummation of the TEC
      acquisition on October 26, 2007.





In
      connection with the acquisition of the two-thirds interest in Shamrock, TEC
      paid
      to Messrs. Tim and Dyke Culp, $25.0 million, including payment of cash totaling
      $5.3 million, notes payable of $6.0 million, and the repayment of certain
      Shamrock debt totaling approximately $3.2 million, and issued to Messrs. Culp
      an
      aggregate 3.5 million shares of Tandem common stock valued at $3.00 per share
      or
      $10.5 million. The notes payable to Messrs. Tim and Dyke Culp were repaid in
      connection with the consummation of the TEC acquisition on October 26, 2007.
      During 2007 Tim Culp received interest income from the notes, totaling
      $1,179,658.




64




**Braesridge
      Energy, LLC**




Our
      Chief
      Executive Officer, Barry Kostiner, is 28% owner of Braesridge Energy, LLC and
      was the manager of Braesridge from its inception on July 19, 2007
      until February 14, 2008. Braesridge is a privately owned entity formed by
      Mr. Kostiner and an entity controlled by the Ghermezian family, to invest in
      energy opportunities. Mr. Kostiner transferred to Braesridge his interest in
      KD
      Resources, LLC, an oil and gas company purchased in May 2007 by Mr. Kostiner
      and
      Mr. Dorman, the executive vice president of Platinum, in exchange for his
      interest in Braesridge. Braesridge has entered into several plans in conformity
      with Rule 10b5-1 under the Securities Exchange Act of 1934 under which
      Braesridge has purchased an aggregate of 3,454,800 shares of our common stock
      and 5,018,300 warrants to purchase our shares at $6.00 per share. As of the
      date
      of this report, to our knowledge, Braesridge has made no other investment and
      holds no other interests other than KD Resources and Platinum securities.
      Braesridge is currently the beneficial owner of 31.3% of the outstanding shares
      of our company. See “Securities Ownership of Certain Beneficial Owners and
      Managers.” As manager of Braesridge, Mr. Kostiner’s duties included review of,
      and due diligence relating to, investment opportunities in the oil and gas
      industry, subject to his fiduciary and other duties owed to Platinum as
      described below.




As
      our
      director and Chief Executive Officer, Mr. Kostiner is subject to fiduciary
      duties to us, which includes, under Delaware law, the requirement to present
      business opportunities to a corporation if (i) the corporation could financially
      undertake the opportunity; (ii) the opportunity is within the corporation’s line
      of business; and (iii) it would not be fair to the corporation and its
      stockholders for the opportunity not to be brought to the attention of the
      corporation. Thus, to the extent a business opportunity arises that satisfies
      the above criteria, Mr. Kostiner would be required to first present the
      opportunity to our board. Further, Mr. Kostiner is subject to our Code of Ethics
      pursuant to which our employees, officers and directors must refrain from
      engaging in any activity or having a personal interest that presents a “conflict
      of interest.” To the extent any potential business opportunity could constitute
      a conflict of interest transaction, Mr. Kostiner would be required to seek
      a
      waiver from compliance with the Code of Ethics from the disinterested directors
      of our board. If our disinterested directors chose not to pursue the business
      opportunity and Mr. Kostiner was granted a waiver of the Code of Ethics, then,
      as disclosed under “ Directors
      and Executive Officers of the Registrant and Corporate Governance - Code
      of Ethics,” such waiver would be posted on the Company’s web site. Mr. Kostiner
      was granted a waiver from the Code of Ethics in connection with the purchase
      of
      certain oil and gas properties by KD Resources, LLC. Under the terms of his
      agreement with the Ghermezian family, Mr. Kostiner must first present any oil
      and gas business opportunity satisfying the criteria referenced above to
      Platinum and must receive a waiver of his obligations under our Code of Ethics
      before the business opportunity would be available to Braesridge. For further
      discussion on conflicts of interests, see “Risk Factors - Our officers and
      directors are now and may in the future become affiliated with entities engaged
      in business activities similar to ours and, accordingly, may have conflicts
      of
      interest in determining to which entity a particular business opportunity should
      be presented.”




**Director
      Independence**




Our
      equity securities are not listed on an exchange or automated quotation system
      that requires its listed companies to have independent directors.




Under
      the
      Nasdaq rules, a majority of the board of directors must be comprised of
      independent directors as defined in Nasdaq Rule 4200. Under Nasdaq Rule
      4200(a)(15), an "Independent director" means a person other than an executive
      officer or employee of the company or any other individual having a relationship
      which, in the opinion of the issuer's board of directors, would interfere with
      the exercise of independent judgment in carrying out the responsibilities of
      a
      director. The rule then sets forth a list of persons who are not considered
      independent under these rules. Audit committee members are subject to
      additional, more stringent requirements under Nasdaq Rule 4350(d). Audit
      committee members must: (i) be independent as defined under Rule 4200; (ii)
      meet
      the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities
      Exchange Act of 1934 (subject to the exemptions provided in Exchange Act Rule
      10A-3(c)); (iii) not have participated in the preparation of the financial
      statements of the company or any current subsidiary of the company at any time
      during the past three years; and (iv) be able to read and understand fundamental
      financial statements, including a company's balance sheet, income statement,
      and
      cash flow statement. None of our current directors can be deemed independent
      under the Nasdaq rules and our company does not have separately designated
      audit, compensation or nominating committees.





65




**Item
      14.**  **Principal
      Accountant Fees and Services**




The
      firm
      of Marcum & Kleigman LLP acts as our principal accountant. The following is
      a summary of fees paid to our principal accountant for services
      rendered.





**Audit
      Fees**


The
        aggregate fees for professional services rendered by our principal accountants,
        Marcum & Kleigman LLP, for 2007 and 2006 were:
 
 **Type
                  of Fees**
              
              **2006**
              
              **2007**Audit
                  fees
              
              $
              122,500
              
              $
              117,500Audit-related
                  fees
              
              $
              0
              
              $
              126,000Tax
                  fees
              
              $
              4,800
              
              $
              7,500All
                  other fees
              
              $
              0
              
              $
              0





During
      the year ended December 31, 2006, the fees for our principal accountant were
      $122,500 for the review of our Quarterly Reports on Form 10-Q for the quarters
      ended March 31, 2006, June 30, 2006 and September 30, 2006 and the audits of
      our
      financial statements to be included in our Annual Reports on Form 10-K for
      the
      period from inception through December 31, 2005 and for the year ended December
      31, 2006.





During
      the year ended December 31, 2007, the fees for our principal accountant were
      $117,500 for the review of our Quarterly Reports on Form 10-Q for the quarters
      ended March 31, 2007, June 30, 2007 and September 30, 2007 and the audits of
      our
      financial statements to be included in our Annual Reports on Form 10-K for
      the
      years ended December 31, 2006 and December 31, 2007.





**Audit
      Related Fees**




During
        the fiscal year ended December 31, 2006, the audit related fees for our
        principal accountant were $0.00. During
        the fiscal year ended December 31, 2007, the
        audit
        related fees for our principal accountant were $126,000
        in connection with the acquisition of TEC (financial statements included
        in the
        definitive proxy statement).





**Tax
      Fees**





During
      fiscal year 2006, our principal accountant rendered services to us for tax
      compliance in the amount of $4,800, and rendered no services with respect to
      tax
      advice and tax planning.





During
      fiscal year 2007, our principal accountant rendered services to us for tax
      compliance in the amount of $7,500, and rendered no services with respect to
      tax
      advice and tax planning.





**All
      Other Fees**





During
      2006 and 2007, there were no fees billed for services provided by the principal
      accountant other than those set forth above.





66




**Audit
      Committee Approval**





We
      currently do not have an audit committee. Our board of directors approved the
      engagement of Marcum & Kleigman LLP as our independent registered public
      accounting firm in a meeting held on March 28, 2008.


67




**PART
      IV**




**Item
      15.**  **Exhibits
      and Financial Statement Schedules**




**(a)**
            **Financial
                Statements.**




Our
      financial statements as set forth in the Index to Financial Statements attached
      hereto commencing on page F-1 are hereby incorporated by
      reference.




**(b)**
            **Exhibits.**




The
      following exhibits, which are numbered in accordance with Item 601 of
      Regulation S-K, are filed herewith or, as noted, incorporated by reference
      herein:




**Exhibi**
              **Number**
            
            **Exhibit
                Description**2.1
            
            Asset
                Acquisition Agreement and Plan of Reorganization dated October 4,
                2006 by
                and among Platinum, Tandem Energy Corporation, a Colorado corporation,
                and
                PER Acquisition Corporation, a Delaware corporation and wholly owned
                subsidiary of the Corporation (included as Annex A of the Definitive
                Proxy
                Statement (File No. 000-51553), filed October 17, 2007 and incorporated
                by
                reference herein)2.2
            
            Amendment
                No. 1 to the Asset Acquisition Agreement and Plan of Reorganization
                dated
                December 6, 2006 by and among Platinum, Tandem Energy Corporation
                and PER
                Acquisition Corporation (included as Annex A of the Definitive Proxy
                Statement (File No. 000-51553), filed October 17, 2007 and incorporated
                by
                reference herein)2.3
            
            Amendment
                No. 2 to the Asset Acquisition Agreement and Plan of Reorganization
                dated
                February 9, 2007 by and among Platinum, Tandem Energy Corporation
                and PER
                Acquisition Corporation (included as Annex A of the Definitive Proxy
                Statement (File No. 000-51553), filed October 17, 2007 and incorporated
                by
                reference herein)2.4
            
            Amendment
                No. 3 to the Asset Acquisition Agreement and Plan of Reorganization
                dated
                March 29, 2007 by and among Platinum, Tandem Energy Corporation and
                PER
                Acquisition Corporation (included as Annex A of the Definitive Proxy
                Statement (File No. 000-51553), filed October 17, 2007 and incorporated
                by
                reference herein)2.5
            
            Amendment
                No. 4 to the Asset Acquisition Agreement and Plan of Reorganization
                dated
                June 1, 2007 by and among Platinum, Tandem Energy Corporation and
                PER
                Acquisition Corporation (included as Annex A of the Definitive Proxy
                Statement (File No. 000-51553), filed October 17, 2007 and incorporated
                by
                reference herein)2.6
            
            Amendment
                No. 5 to the Asset Acquisition Agreement and Plan of Reorganization
                dated
                July 18, 2007 by and among Platinum, Tandem Energy Corporation and
                PER
                Acquisition Corporation (included as Annex A of the Definitive Proxy
                Statement (File No. 000-51553), filed October 17, 2007 and incorporated
                by
                reference herein)




68




2.7
            
            Amendment
                No. 6 to the Asset Acquisition Agreement and Plan of Reorganization
                dated
                September 4, 2007 by and among Platinum, Tandem Energy Corporation
                and PER
                Acquisition Corporation (included as Annex A of the Definitive Proxy
                Statement (File No. 000-51553), filed October 17, 2007 and incorporated
                by
                reference herein)2.8
            
            Amendment
                No. 7 to the Asset Acquisition Agreement and Plan of Reorganization
                dated
                October 26, 2007 by and among Platinum, Tandem Energy Corporation
                and PER
                Acquisition Corporation (incorporated by reference from Exhibit 2.8
                to
                Platinum’s Current Report on Form 8-K filed November 1,
                2007)2.9
            
            Agreement
                and Plan of Merger among Platinum Energy Resources, Inc., PERMSub,
                Inc.,
                Maverick Engineering, Inc. and Robert L. Kovar Services, LLC as
                Stockholder Representative entered into as of March 18, 2008 (incorporated
                by reference from Exhibit 2.1 to Platinum’s Current Report on Form 8-K
                filed March 20, 2008)3.1
            
            Amended
                and Restated Certificate of Incorporation of Platinum (incorporated
                by
                reference from Exhibit 3.1 to Platinum’s Current Report on Form 8-K filed
                November 1, 2007)3.2
            
            Amended
                and Restated Bylaws of Platinum (incorporated by reference from Exhibit
                3.2 to Platinum’s Current Report on Form 8-K filed November 1,
                2007)4.1
            
            Specimen
                Unit Certificate (incorporated by reference from Exhibit 4.1 to Platinum’s
                Registration Statement on Form S-1 (File No. 333-125687) on June
                10,
                2005)4.2
            
            Specimen
                Common Stock Certificate (incorporated by reference from Exhibit
                4.2 to
                Platinum’s Registration Statement on Form S-1 (File No. 333-125687) on
                June 10, 2005)4.3
            
            Specimen
                Warrant Certificate (incorporated by reference from Exhibit 4.3 to
                Platinum’s Registration Statement on Form S-1 (File No. 333-125687) on
                June 10, 2005)4.4
            
            Form
                of Warrant Agreement between American Stock Transfer & Trust Company
                and the Registrant (incorporated by reference from Exhibit 4.4 to
                Platinum’s Registration Statement on Form S-1 (File No. 333-125687) on
                June 10, 2005)4.5
            
            Form
                of Unit Purchase Option to be granted to Representative (incorporated
                by
                reference from Exhibit 4.5 to Platinum’s Registration Statement on Form
                S-1 (File No. 333-125687) on June 10, 2005)4.6
            
            Warrant
                Clarification and Confirmation Agreement, dated as of November 3,
                2006,
                between Platinum Resources, Inc. and American Stock Transfer and
                Trust
                Company (incorporated by reference from Exhibit 4.1 to Platinum’s Current
                Report on Form 8-K filed November 9, 2006)4.7
            
            Amendment
                to Unit Purchase Options, dated as of November 3, 2006, among Platinum
                Energy Resources, Inc. and the holders of Unit Purchase Options
                (incorporated by reference from Exhibit 4.2 to Platinum’s Current Report
                on Form 8-K filed November 9, 2006)




69




10.1
            
            Credit
                Agreement among Tandem Energy Corporation, PER Gulf Coast, Inc. and
                Bank
                of Texas, N.A. entered into as of March 14, 2008 (incorporated by
                reference from Exhibit 10.1 to Platinum’s Current Report on Form 8-K filed
                March 20, 2008)10.2
            
            Credit
                Agreement, effective as of June 8, 2005, betweenTEC
                and Guaranty Bank, FSB(incorporated
                by reference from Exhibit 10.1 to Platinum’s Current Report on Form 8-K
                filed November 1, 2007)10.3
            
            First
                Amendment to Credit Agreement, effective as of October 21, 2005,
                between
                TEC and Guaranty Bank, FSB (incorporated by reference from Exhibit
                10.2 to
                Platinum’s Current Report on Form 8-K filed November 1,
                2007)10.4
            
            Waiver
                and Second Amendment to Credit Agreement, effective as of February
                15,
                2006, between TEC and Guaranty Bank, FSB (incorporated by reference
                from
                Exhibit 10.3 to Platinum’s Current Report on Form 8-K filed November 1,
                2007)10.5
            
            Assignment,
                Waiver and Third Amendment to Credit Agreement, effective as of October
                26, 2007, among TEC, New TEC and Guaranty Bank, FSB (incorporated
                by
                reference from Exhibit 10.4 to Platinum’s Current Report on Form 8-K filed
                November 1, 2007)10.6
            
            Platinum’s
                2006 Long-Term Incentive Compensation Plan (incorporated by reference
                from
                Exhibit 10.5 to Platinum’s Current Report on Form 8-K filed November 1,
                2007)10.7
            
            Office
                Lease Agreement executed July 28, 2006 by and between Loraine at
                Texas
                Office Tower, Ltd. dba Centennial Tower, Ltd. and TEC (incorporated
                by
                reference from Exhibit 10.6 to Platinum’s Current Report on Form 8-K filed
                November 1, 2007)10.8
            
            Form
                of Stock Escrow Agreement between the Registrant, American Stock
                Transfer
                & Trust Company and the Initial Stockholders (incorporated by
                reference from Exhibit 10.10 to Platinum’s Registration Statement on Form
                S-1 (File No. 333-125687) on June 10, 2005)10.9
            
            Form
                of Registration Rights Agreement among the Registrant and the Initial
                Stockholders (incorporated by reference from Exhibit 10.13 to Platinum’s
                Registration Statement on Form S-1 (File No. 333-125687) on June
                10,
                2005)10.10
            
            Purchase
                and Sale Agreement, dated December 18, 2007 entered into between
                Tandem
                Energy Corporation and Lothian Oil, Inc. (incorporated by reference
                from
                Exhibit 10.1 to Platinum’s Current Report on Form 8-K filed on January 3,
                2008)10.11
            
            Amendment,
                dated December 27, 2007 to Purchase and Sale Agreement, dated December
                18,
                2007 entered into between Tandem Energy Corporation and Lothian Oil,
                Inc.
                (incorporated by reference from Exhibit 10.2 to Platinum’s Current Report
                on Form 8-K filed on January 3, 2008)




70




14
            
            Code
                of Conduct and Ethics (incorporated by reference from Exhibit 14
                to
                Platinum’s Annual Report on Form 10-K for the fiscal year ended December
                31, 2005 filed on March 24, 2006)21
            
            Subsidiaries
                of Platinum24
            
            Power
                of Attorney (included on the signature page)31.1
            
            Section
                302 Certification of Principal Executive Officer31.2
            
            Section
                302 Certification of Principal Financial Officer32.1
            
            Section
                906 Certification




71




**PLATINUM
      ENERGY RESOURCES, INC.**





**INDEX
      TO FINANCIAL STATEMENTS**





**Platinum
                Energy Resources, Inc.**Report
                of Independent Registered Public Accounting Firm
            
            
            F1-1Consolidated
                Balance Sheets — December 31, 2007 and 2006
            
            
            F1-2Consolidated
                Statements of Operations — For the years ended December 31, 2007 and 2006
                and the period from April 25, 2005 (inception) to December 31,
                2005
            
            
            F1-3Consolidated
                Statements of Changes in Stockholders’ Equity — For the years ended
                December 31, 2007 and 2006 and the period from April 25, 2005 (inception)
                to December 31, 2005
            
            
            F1-4Consolidated
                Statements of Cash Flows — For the years ended December 31, 2007 and 2006
                and the period from April 25, 2005 (inception) to December 31,
                2005
            
            
            F1-5Notes
                to Consolidated Financial Statements
            
            
            F1-6**Tandem
                Energy Holdings, Inc.**Report
                of Independent Certified Public Accountants
            
            
            F2-1Consolidated
                Balance Sheets — October 26, 2007 and December 31, 2006
            
            
            F2-2Consolidated
                Statements of Operations — For the period from January 1, 2007 through
                October 26, 2007 and the year ended December 31, 2006
            
            
            F2-3Consolidated
                Statements of Stockholders’ Equity (Deficit) — For the period from January
                1, 2007 through October 26, 2007 and the year ended December 31,
                2006
            
            
            F2-4Consolidated
                Statements of Cash Flows — For the period from January 1, 2007 through
                October 26, 2007 and the year ended December 31, 2006
            
            
            F2-5Notes
                to Consolidated Financial Statements
            
            
            F2-6





72
 
  **REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUTING FIRM**
  To
          the
          Board of Directors and Stockholders of
 Platinum
          Energy Resources Inc. and Subsidiaries
  We
          have
          audited the accompanying consolidated balance sheets of Platinum Energy
          Resources Inc. and Subsidiaries (the “Company”) as of December 31, 2007 and
          2006, and the related consolidated statements of operations, stockholders’
equity and cash flows for each of the years ended, December 31, 2007 and
          2006
          and for the period from April 25, 2005 (Inception) to December 31, 2005.
          We have
          also audited the Company’s internal control over financial reporting as of
          December 31, 2007, based on the criteria established in Internal
          Control — Integrated Framework issued by the Committee of Sponsoring
          Organizations of the Treadway Commission. The Company’s management is
          responsible for these consolidated financial statements, for maintaining
          effective internal control over financial reporting, and for its assessment
          of
          the effectiveness of internal control over financial reporting. Our
          responsibility is to express an opinion on these consolidated financial
          statements and an opinion on the Company’s internal control over financial
          reporting based on our audits.
  We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audits to obtain reasonable assurance about whether the
          consolidated financial statements are free of material misstatement and
          whether
          effective internal control over financial reporting was maintained in all
          material respects. Our audits of the consolidated financial statements
          included
          examining, on a test basis, evidence supporting the amounts and disclosures
          in
          the consolidated financial statements, assessing the accounting principles
          used
          and significant estimates made by management, and evaluating the overall
          consolidated financial statement presentation. Our audit of internal control
          over financial reporting included obtaining an understanding of internal
          control
          over financial reporting, assessing the risk that a material weakness exists,
          and testing and evaluating the design and operating effectiveness of internal
          control based on the assessed risk. Our audits also included performing
          such
          other procedures as we considered necessary in the circumstances. We believe
          that our audits provide a reasonable basis for our opinions.
  A
          company’s internal control over financial reporting is a process designed to
          provide reasonable assurance regarding the reliability of financial reporting
          and the preparation of financial statements for external purposes in accordance
          with generally accepted accounting principles. A company’s internal control over
          financial reporting includes those policies and procedures that (1) pertain
          to
          the maintenance of records that, in reasonable detail, accurately and fairly
          reflect the transactions and dispositions of the assets of the company;
          (2)
          provide reasonable assurance that transactions are recorded as necessary
          to
          permit preparation of financial statements in accordance with generally
          accepted
          accounting principles, and that receipts and expenditures of the company
          are
          being made only in accordance with authorizations of management and directors
          of
          the company; and (3) provide reasonable assurance regarding prevention
          or timely
          detection of unauthorized acquisition, use, or disposition of the company’s
          assets that could have a material effect on the financial
          statements.
  Because
          of its inherent limitations, internal control over financial reporting
          may not
          prevent or detect misstatements. Also, projections of any evaluation of
          effectiveness to future periods are subject to the risk that controls may
          become
          inadequate because of changes in conditions, or that the degree of compliance
          with the policies or procedures may deteriorate.
  In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the consolidated financial position of Platinum
          Energy
          Resources Inc. and Subsidiaries at December 31, 2007 and 2006, and the
          consolidated results of its operations and its cash flows for each of the
          years
          December 31, 2007 and 2006 and for the period from April 25, 2005 (Inception
          to
          December 31, 2005) in conformity with accounting principles generally accepted
          in the United States of America. Also, in our opinion, the Company maintained,
          in all material respects, effective internal control over financial reporting
          as
          of December 31, 2007, based on the criteria established in Internal
          Control — Integrated Framework issued by the Committee of Sponsoring
          Organizations of the Treadway Commission.
 
 /s/
          Marcum & Kliegman LLP
  New
          York,
          New York
 March
          31,
          2008


F1-1


**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 CONSOLIDATED
          BALANCE SHEETS
  December
                  31,2007
              
              2006ASSETSCURRENT
                  ASSETSCash
              
              $
              16,429,619
              
              $
              -Cash
                  and cash equivalents held in trust
              
              
              —
              
              
              109,213,492Accounts
                  receivable, netOil
                  and gas sales
              
              
              2,619,363
              
              
              —Affiliates
                  and other
              
              
              668,216
              
              
              —Inventory
              
              
              88,556
              
              
              —Prepaid
                  expenses and other current assets
              
              
              299,445
              
              
              79,526Total
                  Current Assets
              
              
              20,105,199
              
              
              109,293,018Property
                  and equipment, at costOil
                  and gas properties, full cost method
              
              
              170,571,663
              
              
              —Other
              
              
              3,293,108
              
              
              —Less
                  accumulated depreciation, depletion and amortization
              
              
              (1,253,026
              )
              
              —Property
                  and equipment, net
              
              
              172,611,745
              
              
              —Other
                  assetsDeferred
                  acquisition and financing costs
              
              
              —
              
              
              1,662,632Fair
                  value of commodity derivatives
              
              
              73,446
              
              
              —Advance
                  payment and costs, Pleasanton transaction
              
              
              2,522,639
              
              
              —Covenant
                  not to compete
              
              
              376,164
              
              
              —Real
                  estate held for development
              
              
              2,700,000
              
              
              —Total
                  Assets
              
              $
              198,389,193
              
              $
              110,955,650LIABILITIES
                  AND STOCKHOLDERS' EQUITYCURRENT
                  LIABILITIESAccounts
                  payableTrade
              
              $
              1,132,725
              
              $
              1,471,167Oil
                  and gas sales
              
              
              1,074,222
              
              
              —Due
                  to related party
              
              
              —
              
              
              85,585Notes
                  payable - stockholder
              
              
              —
              
              
              75,000Fair
                  value of commodity derivatives
              
              
              3,116,542
              
              
              —Asset
                  retirement obligation - current
              
              
              186,545
              
              
              —Accrued
                  liabilities and other
              
              
              181,430
              
              
              —Income
                  taxes payable
              
              
              254,960
              
              
              130,960Total
                  Current Liabilities
              
              
              5,946,424
              
              
              1,762,712Asset
                  retirement obligation
              
              
              3,390,094
              
              
              —Deferred
                  income taxes
              
              
              48,085,215
              
              
              —Common
                  stock subject to possible redemption, 2,878,560 shares at conversion
                  value
              
              
              —
              
              
              21,831,77751,475,309
              
              
              21,831,777COMMITMENTS
                  AND CONTINGENCIESSTOCKHOLDERS'
                  EQUITYPreferred
                  stock, $.0001 par value, 1,000,000 authorized, 0 issued
              
              
              —
              
              
              —Common
                  stock, $.0001 par value; 75,000,000 shares authorized; 24,068,675
                  and
                  18,000,000 shares (which includes 2,878,560 subject to possible
                  conversion
                  in 2006) issued and outstanding, respectively
              
              
              2,407
              
              
              1,512Additional
                  paid-in capital
              
              
              155,064,142
              
              
              85,424,242Retained
                  earnings
              
              
              1,562,375
              
              
              1,935,407Treasury
                  stock - 1,997,913 shares
              
              
              (15,661,464
              )
              
              —Total
                  Stockholders' Equity
              
              
              140,967,460
              
              
              87,361,161Total
                  Liabilities and Stockholders' Equity
              
              $
              198,389,193
              
              $
              110,955,650
  *See
        notes to consolidated financial statements*




F1-2




**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
  Year
                  Ended December 31, 2007
              
              Year
                  Ended December 31, 2006
              
              Period
                  from April 25, 2005 (Inception) to December 31, 2005RevenuesOil
                  and Gas Sales
              
              $
              4,308,184
              
              $
              -
              
              $
              -Costs
                  and expensesLease
                  and other operating expense
              
              
              1,776,247
              
              
              —
              
              
              —Marketing,
                  general and administrative expense
              
              
              2,741,235
              
              
              717,590
              
              
              150,399Administrative
                  cost allowance - related party
              
              
              28,015
              
              
              68,710
              
              
              16,875Depreciation,
                  depletion and amortization expense
              
              
              1,253,026
              
              
              —
              
              
              —Accretion
                  of abandonment obligations
              
              
              38,358
              
              
              —
              
              
              —Total
                  costs and expenses
              
              
              5,836,881
              
              
              786,300
              
              
              167,274Operating
                  loss
              
              
              (1,528,697
              )
              
              (786,300
              )
              
              (167,274
              )Other
                  Income (Expenses)Interest
                  income, net of interest allocated to common stock subject to possibleredemption
                  of $616,217, $760,718 and $0
              
              
              2,799,229
              
              
              2,568,672
              
              
              476,102Interest
                  (expense)
              
              
              (59,580
              )
              
              (2,693
              )
              
              (5,000
              )Change
                  in fair value of commodity derivatives
              
              
              (1,472,522
              )
              
              —
              
              
              —Other
              
              
              (23,462
              )
              
              —
              
              
              —Total
                  other income, net
              
              
              1,243,665
              
              
              2,565,979
              
              
              471,102(Loss)
                  Income Before Income Taxes
              
              
              (285,032
              )
              
              1,779,679
              
              
              303,828Provision
                  For Income Taxes
              
              
              88,000
              
              
              120,000
              
              
              28,100Net
                  (Loss) Income
              
              $
              (373,032
              )
              $
              1,659,679
              
              $
              275,728WEIGHTED
                  AVERAGE NUMBER OF COMMON SHARES:Basic
              
              
              18,876,347
              
              
              15,121,440
              
              
              6,549,489Diluted
              
              
              18,876,347
              
              
              17,479,194
              
              
              6,980,246NET
                  (LOSS) INCOME PER COMMON SHARE:Basic
              
              $
              (0.02
              )
              $
              0.11
              
              $
              0.04Diluted
              
              $
              (0.02
              )
              $
              0.09
              
              $
              0.04


*See
        notes to consolidated financial statements*


F1-3




**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS’ EQUITY**
  Common
                  stock
              
              Additional
                  paid-in
              
              Retained
              
              Treasury
              
              Total
                  stockholders'Shares
              
              Amount
              
              capital
              
              earnings
              
              Stock
              
              equityCommon
                  shares issued to founders for cash, May 6, 2005 at $.0077 per
                  share
              
              
              3,250,000
              
              $
              325
              
              $
              24,675
              
              $
              —
              
              $
              —
              
              $
              25,000Retroactive
                  effect of common stock dividend, declared September 23,
                  2005
              
              
              1,250,000
              
              
              125
              
              
              (125
              )
              
              —
              
              
              —
              
              
              —Retroactive
                  effect of four-for-five reverse split effected October 21,
                  2005
              
              
              (900,000
              )
              
              (90
              )
              
              90
              
              
              —
              
              
              —
              
              
              —Sale
                  of 14,400,000 units, net of underwriters’ discount and offering expenses
                  (includes 2,878,560shares
                  subject to possible conversion), October 28, 2005 at $8.00 per
                  Unit
              
              
              14,400,000
              
              
              1,440
              
              
              106,470,273
              
              
              —
              
              
              —
              
              
              106,471,713Proceeds
                  subject to possible conversion of 2,878,560 shares, October 28,
                  2005 at
                  $7.32 per Unit
              
              
              (2,878,560
              )
              
              (288
              )
              
              (21,070,771
              )
              
              —
              
              
              —
              
              
              (21,071,059
              )Proceeds
                  from issuance of option, October 28, 2005
              
              
              —
              
              
              —
              
              
              100
              
              
              —
              
              
              —
              
              
              100Net
                  income, for the period from April 25, 2005 (Inception) to December
                  31,
                  2005
              
              
              —
              
              
              —
              
              
              —
              
              
              275,728
              
              
              —
              
              
              275,728Balance
                  at December 31, 2005
              
              
              15,121,440
              
              
              1,512
              
              
              85,424,242
              
              
              275,728
              
              
              —
              
              
              85,701,482Net
                  income, for the year ended December 31, 2006
              
              
              —
              
              
              —
              
              
              —
              
              
              1,659,679
              
              
              —
              
              
              1,659,679Balance
                  at December 31, 2006
              
              
              15,121,440
              
              
              1,512
              
              
              85,424,242
              
              
              1,935,407
              
              
              —
              
              
              87,361,161Shares
                  not redeemed by shareholders upon TEC
              
              
              1,076,355
              
              
              108
              
              
              8,390,687
              
              
              —
              
              
              —
              
              
              8,390,795Issaunce
                  of shares in connection with acquisition of TEC
              
              
              7,692,308
              
              
              769
              
              
              59,999,231
              
              
              —
              
              
              —
              
              
              60,000,000Shares
                  issued to consultant for services
              
              
              178,572
              
              
              18
              
              
              1,249,982
              
              
              —
              
              
              —
              
              
              1,250,000Treasury
                  shares purchased
              
              
              (1,997,913
              )
              
              —
              
              
              —
              
              
              —
              
              
              (15,661,464
              )
              
              (15,661,464
              )Net
                  (loss), for the year ended December 31, 2007
              
              
              —
              
              
              —
              
              
              —
              
              
              (373,032
              )
              
              —
              
              
              (373,032
              )Balance
                  at December 31, 2007
              
              
              22,070,762
              
              $
              2,407
              
              $
              155,064,142
              
              $
              1,562,375
              
              $
              (15,661,464
              )
              $
              140,967,460


*See
      notes to consolidated financial
      statements*




F1-4


**PLATINUM
              ENERGY RESOURCES, INC. AND
              SUBSIDIARIES**


**CONSOLIDATED
        STATEMENTS OF CASH FLOWS**


Year
                Ended December 31, 2007
            
            Year
                Ended December 31, 2006
            
            Period
                from April 25, 2005 (Inception) to December 31, 2005Cash
                Flows From Operating ActivitiesNet
                (loss) income
            
            $
            (373,032
            )
            $
            1,659,679
            
            $
            275,728Adjustments
                to reconcile net (loss) income to net cash provided by(used
                in) operating activities:Depreciation,
                depletion and amortization
            
            
            1,253,026
            
            
            —
            
            
            —Accretion
                of asset retirement obligation
            
            
            38,358
            
            
            —
            
            
            —Amortization/writeoff
                of bank loan fees
            
            
            25,000
            
            
            —
            
            
            —Stock
                based compensation
            
            
            1,250,000
            
            
            —
            
            
            —Change
                in fair value of derivatives
            
            
            1,472,522
            
            
            —
            
            
            —Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (1,114,095
            )
            
            —
            
            
            —Inventory
            
            
            (2,974
            )
            
            —
            
            
            —Prepaid
                expenses and other current assets
            
            
            10,905
            
            
            39,185
            
            
            (118,711
            )Accounts
                payable
            
            
            119,215
            
            
            241,273
            
            
            87,795Accrued
                liabilities and other
            
            
            (177,695
            )
            
            —
            
            
            —Due
                to related party
            
            
            (85,585
            )
            
            68,710
            
            
            16,875Income
                taxes payable
            
            
            108,655
            
            
            102,860
            
            
            28,100Commodity
                derivatives
            
            
            (2,636,855
            )
            
            —
            
            
            —Net
                cash (used in) provided by operating activities
            
            
            (112,555
            )
            
            2,111,707
            
            
            289,787Cash
                Flows From Investing ActivitiesDeposits
                to Trust Fund
            
            
            (3,082,629
            )
            
            (3,329,390
            )
            
            (105,884,102
            )Release
                of Cash held in trust fund
            
            
            112,296,121
            
            
            —
            
            
            —Additions
                to property and equipment
            
            
            (1,713,819
            )
            
            —
            
            
            —Performance
                deposit
            
            
            —
            
            
            (500,000
            )
            
            —Recovery
                of perfomance deposit upon restructuring
            
            
            —
            
            
            500,000
            
            
            —Acquisition
                of business of TEC, net of cash acquired of $2,959,773
            
            
            (41,744,861
            )
            
            —
            
            
            —Acquistion
                of other business
            
            
            (15,518,501
            )
            
            —
            
            
            —Advance
                payment and costs, Pleasanton transaction
            
            
            (2,522,639
            )
            
            —
            
            
            —Deferred
                acquistion costs
            
            
            (1,994,052
            )
            
            (520,533
            )
            
            —Net
                cash provided by (used in) investing activities
            
            
            45,719,620
            
            
            (3,849,923
            )
            
            (105,884,102
            )Cash
                Flows From Financing ActivitiesInterest
                on cash held in trust allocated to commonstock
                subject to possible redemption
            
            
            616,217
            
            
            760,718
            
            
            —Proceeds
                from the sale of common stock
            
            
            —
            
            
            —
            
            
            25,000Proceeds
                from notes payable-stockholder
            
            
            1,032,000
            
            
            75,000
            
            
            180,000Repayment
                of note payable-stockholder
            
            
            (1,107,000
            )
            
            —
            
            
            (180,000
            )Payments
                to redeeming shareholders
            
            
            (14,057,199
            )
            
            —
            
            
            —Gross
                proceeds of public offering
            
            
            —
            
            
            —
            
            
            115,200,000Payments
                of costs of public offering
            
            
            —
            
            
            —
            
            
            (8,728,287
            )Purchase of
                treasury stock
            
            
            (15,661,464
            )
            
            —
            
            
            —Proceeds
                from issuance of underwriter’s stock option
            
            
            —
            
            
            —
            
            
            100Net
                cash (used in) provided by financing activities
            
            
            (29,177,446
            )
            
            835,718
            
            
            106,496,813Net
                Increase (Decrease) in Cash
            
            
            16,429,619
            
            
            (902,498
            )
            
            902,498Cash
                - Beginning of the Period
            
            
            —
            
            
            902,498
            
            
            —Cash
                - End of Period
            
            $
            16,429,619
            
            $
            —
            
            $
            902,498SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATIONCash
                paid during the period for:Interest
            
            $
            (59,580
            )
            $
            2,693
            
            $
            5,000Income
                taxes - state
            
            $
            —
            
            $
            17,140
            
            $
            —Non-Cash
                Investing and Financing Activities:Non-Converting
                common shares subject to
              possible
                redemption converted to equity
            
            $
            8,390,795
            
            $
            —
            
            $
            —Deferrred
                acquisition costs accrued and deferred
            
            $
            100,000
            
            $
            1,142,099
            
            $
            —Acquisition
                of TEC:Assets
                acquired and liabilities assumed:Cash
            
            $
            2,959,773Accounts
                Receivable
            
            
            1,923,957Inventory
            
            
            85,582Property
                and equipmentOil
                and gas properties, full cost method
            
            
            154,881,344Other
            
            
            1,381,398Other
                current assets
            
            
            246,169Real
                estate held for development
            
            
            2,700,000Accounts
                payable
            
            
            (1,983,134
            )Fair
                value of commodity derivatives - noncurrent
            
            
            (4,207,430
            )Asset
                retirement obligation
            
            
            (2,542,881
            )Deferred
                income taxes
            
            
            (48,100,560
            )Total
                purchase price
            
            
            107,344,218Less:
                Cash consideration paid to sellers
            
            
            (41,704,634
            )Less:
                Cash paid to finder
            
            
            (3,000,000
            )Less:
                Other closing costs including legal and accounting
            
            
            (2,639,584
            )Non-cash
                consideration - common stock issued to seller
            
            $
            60,000,000All
                other acquisition:Assets
                acquired and liabilities assumed:Accounts
                Receivable
            
            $
            883,655Due
                from TEC on date of acquisition
            
            
            64,976Property
                and equipmentOil
                and gas properties, full cost method
            
            
            13,553,206Other
            
            
            1,635,900Covenant
                not to compete, gross
            
            
            376,164Asset
                retirement obligation
            
            
            (995,400
            )15,518,501Less:
                Cash consideration paid to sellers
            
            
            (15,465,365
            )Less:
                Legal fees
            
            
            (53,136
            )Non-cash
                consideration
            
            $
            —




See
        notes to consolidated financial
        statements


F1-5


**PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          1 - Organization, Business and Operations**
  Platinum
          Energy Resources, Inc. and subsidiaries (the “Company” or “Platinum”) was
          incorporated in Delaware on April 25, 2005 as a blank check company
          forthe
          purpose of effecting a business combination with an unidentified operating
          business in the global oil and gas Exploration & Production (“E&P”)
          industry. In October 2007, the Company acquired substantiallyall of the assets and assumed all of the liabilities of Tandem
          Energy Corporation (which is sometimes referred to herein as “TEC”) described in
          Note 4 below, a Colorado Corporation. The Company had no operations other
          than
          conducting an initial public offering and seeking a business combination.
 
 Currently
          the Company is an independent oil and gas exploration and production company.
          It
          has approximately 37,000 acres under lease in relatively long-lived fields
          with
          well-established production histories, 21,000 of which were acquired as
          part of
          the TEC acquisition. The Company’s properties are concentrated primarily in the
          Gulf Coast region in Texas, the Permian Basin in Texas and New Mexico and
          the
          Fort Worth Basin in Texas.
 
 The
          registration statement of the Company’s initial public offering (the “Offering”)
          was declared effective on October 24, 2005. The Company consummated the
          Offering
          on October 28, 2005 and received net proceeds of approximately $106,472,000.
          See
          Note 3 - “Initial Public Offering,” for a complete discussion. On October 26,
          2007 the Company successfully consummated a Business Combination, as more
          fully
          described in Note 4 herein. See Note 4 -“Business Combination” for a discussion
          of the definitive Asset Acquisition Agreement and Plan of Reorganization
          entered
          into on October 26, 2006, as amended, which replaced an Agreement and Plan
          or
          Merger entered into on January 26, 2006 with the same parties.
  **Note
          2 — Summary of Significant Accounting Policies**
  *Principles
          of Consolidation*
  The
          consolidated financial statements include the accounts of the Company and
          its
          wholly owned subsidiaries. All material intercompany balances and transactions
          have been eliminated.
  *Estimates
          and Assumptions*
  The
          preparation of financial statements in conformity with accounting principles
          generally accepted in the United States of America requires management
          to make
          estimates and assumptions that affect the reported amounts of assets and
          liabilities and the disclosure of contingent assets and liabilities as
          of 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. The accounting policy most affected by management’s estimates and
          assumptions is the reliance on estimates of proved reserves to compute
          the
          provision for depreciation, depletion and amortization (“DD&A”), and the
          determination of any impairment of long-lived assets.
  *Oil
          and Gas Properties*
  The
          Company uses the full cost method of accounting for exploration and development
          activities as defined by the Securities and Exchange Commission (“SEC”). Under
          this method of accounting, the costs of unsuccessful, as well as successful,
          exploration and development activities are capitalized as properties and
          equipment. This includes any internal costs that are directly related to
          exploration and development activities but does not include any costs related
          to production, general corporate overhead or similar activities. Gain or
          loss on
          the sale or other disposition of oil and gas properties is not recognized,
          unless the gain or loss would significantly alter the relationship between
          capitalized costs and proved reserves of oil and natural gas attributable
          to a
          country. The Company has defined a cost center by country. Currently, all
          of the
          Company’s oil and gas properties are located within the continental United
          States.
  F1-6
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
 **Note
            2 — Summary of Significant Accounting Policies -
            continued**
  Properties
          and equipment may include costs that are excluded from costs being depreciated
          or amortized. Oil and gas costs excluded represent investments in unproved
          properties and major development projects in which New TEC owns a direct
          interest. These unproved property costs include nonproducing leasehold,
          geological and geophysical costs associated with leasehold or drilling
          interests
          and exploration drilling costs. All costs excluded are reviewed at least
          quarterly to determine if impairment has occurred. The amount of any impairment
          is transferred to the capitalized costs being amortized in the DD&A
          pool.
  *Depreciation,
          Depletion and Amortization*
  The
          depreciable base for oil and gas properties includes the sum of capitalized
          costs net of accumulated DD&A, estimated future development costs and asset
          retirement costs not accrued in oil and gas properties, less costs excluded
          from
          amortization and salvage. The depreciable base of oil and gas properties
          and
          mineral investments are amortized using the unit-of-production method based
          on
          total proved oil and gas reserves. Properties and equipment carrying values
          do
          not purport to represent replacement or market values.
  *Proved
          Oil and Gas Reserves*
  In
          accordance with Rule 4-10(a) of SEC Regulation S-X, proved oil and gas
          reserves
          are the estimated quantities of crude oil, natural gas, and natural gas
          liquids
          which geological and engineering data demonstrate with reasonable certainty
          to
          be recoverable in future years from known reservoirs under existing economic
          and
          operating conditions, i.e., prices and costs as of the date the estimate
          is
          made. Prices include consideration of changes in existing prices provided
          only
          by contractual arrangements, but not on escalation based upon future
          conditions.
  (i)
                Reservoirs
                    are considered proved if economic producibility is supported
                    by either
                    actual production or conclusive formation tests. The area of
                    a reservoir
                    considered proved includes (A) that portion delineated by drilling
                    and
                    defined by gas-oil and/or oil-water contacts, if any; and (B)
                    the
                    immediately adjoining portions not yet drilled, but which can
                    be
                    reasonably judged as economically productive on the basis of
                    available
                    geological and engineering data. In the absence of information
                    on fluid
                    contacts, the lowest known structural occurrence of hydrocarbons
                    controls
                    the lower proved limit of the
                    reservoir.
  (ii)
                Reserves
                    which can be produced economically through application of improved
                    recovery techniques (such as fluid injection) are included in
                    the “proved”
                    classification when successful testing by a pilot project, or
                    the
                    operation of an installed program in the reservoir, provides
                    support for
                    the engineering analysis on which the project or program was
                    based.
  (iii)
                Estimates
                    of proved reserves do not include the
                    following:
  (A)
                oil
                    that may become available from known reservoirs but is classified
                    separately as “indicated additional
                    reserves”;
  (B)
                crude
                    oil, natural gas, and natural gas liquids, the recovery of which
                    is
                    subject to reasonable doubt because of uncertainty as to geology,
                    reservoir characteristics, or economic
                    factors;
  (C)
                crude
                    oil, natural gas, and natural gas liquids, that may occur in
                    undrilled
                    prospects; and
  (D)
                crude
                    oil, natural gas, and natural gas liquids, that may be recovered
                    from oil
                    shales, coal, gilsonite and other such
                    sources.
  F1-7
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          2 — Summary of Significant Accounting Policies - continued**
  *Ceiling
          Test*
  Under
          the
          full cost method of accounting, a ceiling test is performed each quarter.
          The
          full cost ceiling test is an impairment test prescribed by SEC Regulation
          S-X
          Rule 4-10. The ceiling test determines a limit, on a country-by-country
          basis,
          on the book value of oil and gas properties. Currently, all of the Company’s
          operations are located in the United States. The capitalized costs of proved
          oil
          and gas properties, net of accumulated DD&A and the related deferred income
          taxes, may not exceed the estimated future net cash flows from proved oil
          and
          gas reserves, excluding future cash outflows associated with settling asset
          retirement obligations that have been accrued on the balance sheet, generally
          using prices in effect at the end of the period held flat for the life
          of
          production and including the effect of derivative instruments that qualify
          as
          cash flow hedges, discounted at 10%, net of related tax effects, plus the
          cost
          of unevaluated properties and major development projects excluded from
          the costs
          being amortized. If capitalized costs exceed this limit, the excess is
          charged
          to expense and reflected as additional accumulated DD&A.
  *Asset
          Retirement Obligation*
  The
          Company follows the provisions of Statement of Financial Accounting Standards
          (“SFAS”) No. 143, *Accounting
          for Asset Retirement Obligations.* SFAS
          No. 143 requires the Company to recognize a liability for the present value
          of all legal obligations associated with the retirement of tangible, long-lived
          assets and capitalize an equal amount as a cost of the asset. The cost
          of the
          abandonment obligations, less estimated salvage values, is included in
          the
          computation of depreciation, depletion and amortization.
  *Income
          Taxes*
  The
          Company follows the asset and liability method prescribed by SFAS No. 109, *Accounting
          for Income Taxes (“SFAS 109”).* Under
          this method of accounting for income taxes, deferred tax assets and liabilities
          are recognized for the future tax consequences attributable to differences
          between the financial statement carrying amounts of existing assets and
          liabilities and their respective tax bases. Deferred tax assets and liabilities
          are measured using enacted tax rates expected to apply to taxable income
          in the
          years in which those temporary differences are expected to be recovered
          or
          settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities
          of a change in enacted tax rates is recognized in income in the period
          that
          includes the enactment date.
 
 Effective
          January 1, 2007, the Company adopted the provisions of Financial Accounting
          Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income
          Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies
          the accounting for uncertainty in income taxes recognized in the Company’s
          financial statements in accordance with SFAS 109, and prescribes a recognition
          threshold and measurement process for financial statement recognition and
          measurement of a tax position taken or expected to be taken in a tax return.
          FIN
          48 also provides guidance on derecognition, classification, interest and
          penalties, accounting in interim periods, disclosure and
          transition.
 
 Management
          has evaluated and concluded that there are no significant uncertain tax
          positions requiring recognition in the Company’s financial statements as of
          January 1, 2007. The evaluation was performed for the tax period April
          25
          (inception) to December 31, 2005 and the for the year ended December 31,
          2006,
          the tax years which remain subject to examination for Federal and New Jersey
          State purposes as of September 30, 2007.
 
 The
          Company’s policy is to classify assessments, if any, for tax related interest as
          interest expenses and penalties as marketing, general and administrative
          expenses.
 
 *Stock-Based
          Compensation*
  The
          Company has adopted SFAS No. 123(R) “Share Based Payment”
(“SFAS 123(R)”). This statement is a revision of SFAS Statement
          No. 123, and supersedes APB Opinion No. 25, and its related
          implementation guidance.
  F1-8
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          2 — Summary of Significant Accounting Policies - continued**
 
 SFAS 123(R)
          addresses all forms of share based payment (“SBP”) awards including shares
          issued under employee stock purchase plans, stock options, restricted stock
          and
          stock appreciation rights.Under SFAS 123(R), SBP awards are
          measured at fair value on the awards’ grant date, based on the estimated number
          of awards that are expected to vest and results in a charge to operations.
          No
          such instruments were issued in 2005, 2006 and 2007.
 
 *Non-Employee
          Stock Based Compensation* **
  The
          Company accounts for equity instruments issued to non-employees in accordance
          with the provisions of SFAS No. 123(R) and Emerging Issues Task Force
          (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments That are
          Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
          Goods or Services,” (“EITF 96-18”) which requires that such equity instruments
          be recorded at their fair value on the measurement date. The measurement
          of
          stock-based compensation is subject to periodic adjustment as the underlying
          equity instrument vests. No such instruments were issued in 2005, 2006
          and 2007.
The
          Company issued 178,572 shares of its common stock in connection with a
          consulting agreement as described in Note 6 (f).
 
 *Income
          Per Share*
  The
          Company follows the provisions of SFAS No. 128, “Earnings Per Share” (“SFAS No.
          128”). In accordance with SFAS No. 128, earnings per common share amounts
          (“Basic EPS”) were computed by dividing earnings
          by the weighted average number of common shares outstanding for the period.
          Earnings per common share amounts, assuming dilution (“Diluted EPS”), were
          computed by reflecting the potential dilution from the exercise of dilutive
          common stock purchase warrants. SFAS No. 128 requires the presentation
          of both
          Basic EPS and Diluted EPS on the face of the consolidated statements of
          operations.
 
 Reconciliations
          between the numerators and denominators of the Basic and Diluted EPS
          computations for earnings for each period are as follows.
  Year
                    Ended December 31, 2007Net
                      Income  (Loss)
                    (Numerator)
                
                Shares
                    (Denominator)
                
                Per
                      Share Amounts**Basic
                    EPS**Net
                    Income
                
                $
                (373,032
                )
                
                18,876,347
                
                $
                (0.02
                )**Effect
                    of Dilutive Securities**
                
                
                —
                
                
                —
                
                
                —Warrants
                
                
                
                
                
                —
                
                
                —Net
                    income attributable to common stock and assumed exercise of
                    warrants
                
                $
                (373,032
                )
                
                18,876,347
                
                $
                (0.02
                )
  F1-9
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          2 — Summary of Significant Accounting Policies - continued**
  Year
                    Ended December 31, 2006Net
                    Income
                  (Numerator)
                
                Shares
                  (Denominator)
                
                Per
                    Share
                  Amounts**Basic
                    EPS**Net
                    Income
                
                $
                1,659,679
                
                
                15,121,440
                
                $
                0.11**Effect
                    of Dilutive Securities**Warrants
                
                $
                —
                
                
                2,357,754
                
                $
                (0.02
                )Net
                    income attributable to common stock and assumed exercise of
                    warrants
                
                $
                1,659,679
                
                
                17,479,194
                
                $
                0.09
  Period
                    From April 25, 2005 through
                  December
                    31, 2005Net
                    Income
                  (Numerator)
                
                Shares
                  (Denominator)
                
                Per
                    Share
                  Amounts**Basic
                    EPS**Net
                    Income
                
                $
                275,728
                
                
                6,549,489
                
                $
                0.04**Effect
                    of Dilutive Securities**Warrants
                
                $
                —
                
                
                430,757
                
                $
                0.00Net
                    income attributable to common stock and assumed exercise of
                    warrants
                
                $
                275,728
                
                
                6,980,246
                
                $
                0.04
  In
          2005
          and 2006, common shares subject to possible conversion of 2,878,560 were
          excluded from the calculation of Basic EPS in 2006 and 2007 since such
          shares if
          redeemed, only participate in their Pro-Rata share of the trust earnings.
          Subsequent to the date of the Acquisition transaction, October 26, 2007,
          an
          additional 1,076,355, which were not redeemed, were included in the
          determination of weighted average number of common shares outstanding.
          The
          Company has determined that the Warrants contained in the Units sold in
          the IPO
          (see Note 3) are dilutive for all the 2005 and 2006 periods, and accordingly
          included the effects of the Warrants in Diluted EPS using the Treasury
          Stock
          Method in those periods, and has determined that their inclusion in 2007
          would
          be antidilutive and thus excluded the affects of the Warrants in 2007.
          An option
          to purchase 720,000 Units was excluded in the computation of Diluted
          EPS because the option exercise price exceeded the average market price for
          the Units in all periods.
  F1-10
 **PLATINUM
              ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
              the Years Ended December 31, 2007 and 2006**
 **And
              the Period From April 25, 2005 (Inception) to December 31,
              2005**
  **Note
          2 — Summary of Significant Accounting Policies - continued**
  *Environmental
          Expenditures*
  The
          Company is subject to extensive federal, state and local environmental
          laws and
          regulations. These laws regulate the discharge of materials into the environment
          and may require the Company to remove or mitigate the environmental effects
          of
          the disposal or release of petroleum or chemical substances at various
          sites.
          Environmental expenditures are expensed or capitalized depending on their
          future
          economic benefit. Expenditures that relate to an existing condition caused
          by
          past operations and that have no future economic benefits are
          expensed.
 
 Liabilities
          for expenditures of a non-capital nature are recorded when environmental
          assessment and/or remediation is probable, and the costs can be reasonably
          estimated. Such liabilities are generally undiscounted unless the timing
          of cash
          payments for the liability or component is fixed or reliably determinable.
  *Hedging
          Activities*
  From
          time
          to time, the Company may utilize derivative instruments, consisting of
          swaps,
          floors and collars, to attempt to reduce its exposure to changes in commodity
          prices and interest rates. The Company accounts for its derivatives in
          accordance with SFAS No. 133, *Accounting
          for Derivative Instruments and Hedging Activities,* as
          amended. SFAS No. 133 requires that all derivative instruments be
          recognized as assets or liabilities in the balance sheet, measured at fair
          value. The accounting for changes in the fair value of a derivative depends
          on
          both the intended purpose and the formal designation of the derivative.
          Designation is established at the inception of a derivative, but subsequent
          changes to the designation are permitted. The Company has elected not to
          designate any of its derivative financial contracts as accounting hedges
          and,
          accordingly, has accounted for these derivative financial contracts using
          mark-to-market accounting. Changes in fair value of derivative instruments
          which
          are not designated as cash flow hedges are recorded in other income (expense)
          as
          changes in fair value of derivatives.
  *Cash
          and Cash Equivalents*
  The
          Company considers all cash and highly liquid investments with original
          maturities of three months or less to be cash equivalents.
  *Concentration
          of Credit Risk - Cash*
  The
          Company maintains its cash balances at two major financial institutions.
          Certain
          balances may at times exceed the federally insured limits established by
          the
          Federal Deposit Insurance Corporation. The Company has not experienced
          any
          losses in such accounts and believes it is not exposed to any significant
          credit
          risk.
  *Concentration
          Risk - Other*
  The
          Company sells its oil and natural gas production to various customers,
          serves as
          operator in the drilling, completion and operation of oil and gas wells,
          and
          from time to time enters into derivatives transactions with various
          counterparties. When management deems appropriate, the Company may obtain
          letters of credit to secure amounts due from its significant oil and gas
          purchasers and follow other procedures to monitor credit risk from joint
          owners
          and derivatives counterparties.
  *Inventory*
  Inventory
          consists primarily of tubular goods and other well equipment which the
          Company
          plans to utilize in its ongoing exploration and development activities
          and is
          carried at the lower of cost or market value.
  *Real
          Estate Held for Development*
  The
          Company’s real estate held for development was recorded at fair market value
          when the Company completed its purchase of the assets of Tandem Energy
          Corporation on October 26, 2007 as described more fully in Note 4, and
          relates
          to approximately 41 acres of undeveloped land located near Tomball,
          Texas.
  F1-11
 **PLATINUM
              ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
              the Years Ended December 31, 2007 and 2006**
 **And
              the Period From April 25, 2005 (Inception) to December 31,
              2005**
  **Note
          2 — Summary of Significant Accounting Policies - continued**
  *Revenue
          Recognition and Gas Balancing*
  The
          Company utilizes the sales method of accounting for oil, natural gas and
          natural
          gas liquids revenues whereby revenues, net of royalties, are recognized
          as the
          production is sold to purchasers. The amount of gas sold may differ from
          the
          amount to which the Company is entitled based on its revenue interests
          in the
          properties. The Company did not have any significant gas imbalance positions
          at
          December 31, 2007 and 2006.
  *Comprehensive
          Income*
  SFAS
          No.
          130, *Reporting
          Comprehensive Income,* established standards for reporting and displaying comprehensive income
          and its
          components (revenue, expenses, gains and losses) in a full set of
          general-purpose financial statements. There were no differences between
          net
          income and comprehensive income in 2007, 2006 or 2005.
  *Accounts
          Receivable and Allowance for Doubtful Accounts*
  The
          Company’s trade receivables consist primarily of receivables from non-operators
          who own an interest in properties which the Company operates, and trade
          receivables associated with the operations of the Company’s wholly owned
          subsidiary, Red Iron Tool, Inc. Insofar as the receivables relate to oil
          and gas
          trade receivables, the Company has the ability and the right to withhold
          oil and
          gas revenues from any owner who is delinquent in their payments. The accounts
          receivables of Red Iron Tool, Inc. are generally with established customers
          with
          no history of non-payment. With respect to these accounts receivable acquired
          in
          the Lothian acquisition described in Note 4, the Company established an
          allowance for doubtful accounts approximating $100,000 upon acquisition.
          .
 
 *Recent
          Accounting Pronouncements*
 
 In
          September 2006, the Financial Accounting Standards Board (“FASB”) issued
          Statement of Financial Accounting Standards (“SFAS”) No. 157, *Fair
          Value Measurements* .
          SFAS
          157 defines fair value as used in numerous accounting pronouncements,
          establishes a framework for measuring fair value in accordance with generally
          accepted accounting principles and expands disclosure requirements related
          to
          the use of fair value measures in financial statements. SFAS 157 will be
          effective for the Company’s financial statements for the fiscal year beginning
          January 1, 2008.
  In
          February 2007, the FASB issued SFAS 159, *The
          Fair Value Option for Financial Assets and Financial Liabilities, Including
          an
          Amendment of FASB Statement No. 115,* which
          will become effective on January 1, 2008. FAS 159 permits entities to
          measure eligible financial assets, financial liabilities and firm commitments
          at
          fair value, on an instrument-by-instrument basis, that are otherwise not
          permitted to be accounted for at fair value under other generally accepted
          accounting principles. The fair value measurement election is irrevocable
          and
          subsequent changes in fair value must be recorded in earnings.
  In
          April 2007, the FASB issued FASB Staff Position FIN 39-1, *Amendment
          of FASB Interpretation No. 39* .
          FSP FIN
          39-1 clarifies that a reporting entity that is party to a master netting
          arrangement can offset fair value amounts recognized for the right to reclaim
          cash collateral (a receivable) or the obligation to return cash collateral
          (a
          payable) against fair value amounts recognized for derivative instruments
          that
          have been offset under the same master netting arrangement. FSP FIN 39-1
          is
          effective for financial statements issued for fiscal years beginning after
          November 15, 2007.
  F1-12
 **PLATINUM
              ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
              the Years Ended December 31, 2007 and 2006**
 **And
              the Period From April 25, 2005 (Inception) to December 31,
              2005**
  **Note
          2 — Summary of Significant Accounting Policies - continued**
  In
          December 2007, the FASB issued SFAS No. 141 (revised 2007), *Business
          Combinations* (“SFAS
          141(R)”), which replaces FASB Statement No. 141. SFAS 141(R) establishes
          principles and requirements for how an acquirer recognizes and measures
          in its
          financial statements the identifiable assets acquired, the liabilities
          assumed,
          any non- controlling interest in the acquiree and the goodwill acquired.
          The
          Statement also establishes disclosure requirements
          that will enable users to evaluate the nature and financial effects of
          the
          business combination. SFAS 141(R) is effective for acquisitions that occur
          in an
          entity’s fiscal year that begins after December 15, 2008.
 
 In
          December 2007, the FASB issued SFAS No. 160, *Noncontrolling
          Interests in Consolidated Financial Statements—an amendment of ARB
          No. 51* .
          SFAS
          160 requires that accounting and reporting for minority interests will
          be
          recharacterized as noncontrolling interests and classified as a component
          of
          equity. SFAS 160 also establishes reporting requirements that provide sufficient
          disclosures that clearly identify and distinguish between the interests
          of the
          parent and the interests of the noncontrolling owners. SFAS 160 applies
          to all
          entities that prepare consolidated financial statements, except not-for-profit
          organizations, but will affect only those entities that have
          an
          outstanding noncontrolling interest in one or more subsidiaries or that
          deconsolidate a subsidiary. This statement is effective as of the beginning
          of
          an entity’s first fiscal year beginning after December 15,
          2008.
 
 **Note
          3 — Initial Public Offering**
  On
          October 28, 2005, the Company sold to the public 14,400,000 units (“Units”) at
          an offering price of $8.00 per Unit. Each Unit consists of one share of
          the
          Company’s common stock, $0.0001 par value, and one Redeemable Common Stock
          Purchase Warrant (“Warrants”). Each Warrant entitles the holder to purchase from
          the Company one share of common stock at an exercise price of $6.00 commencing
          on the later of the completion of a Business Combination with a target
          business
          or one year from the effective date of the Offering and expiring four years
          from
          the effective date of the Offering. The Warrants will be redeemable, in
          whole or
          in part, upon written consent of the representative of the underwriters,
          at a
          price of $0.01 per Warrant upon thirty (30) days notice after the Warrants
          become exercisable, only in the event that the last sale price of the common
          stock is at least $11.50 per share for any twenty (20) trading days within
          a
          thirty (30) trading day period ending on the third day prior to the date
          on
          which notice of redemption is given. Separate trading of the common stock
          and
          Warrants comprising the Units commenced on or about December 9, 2005.
 
 In
          connection with the Offering, the Company issued an option (the “Units Purchase
          Option” or “UPO”), for $100.00, to the representative of the underwriters to
          purchase up to 720,000 Units at an exercise price of $10.00 per Unit. The
          Units
          issuable upon exercise of this option are identical to those described
          in the
          preceding paragraph, except that the warrants underlying the Units will
          be
          exercisable at $7.50 per share. This option is exercisable at $10.00 per
          Unit
          commencing on the later of the consummation of a Business Combination or
          one
          year from the date of the prospectus relating to the Offering (October
          24, 2005)
          and expiring five years from such date. The option may be exercised for
          cash or
          on a “cashless” basis, at the holder’s option, such that the holder may use the
          appreciated value of the option (the difference between the exercise prices
          of
          the option and the underlying Warrants and the market price of the Units
          and
          underlying securities) to exercise the option without the payment of any
          cash.
          The option and the 720,000 units, the 720,000 shares of common stock and
          the
          720,000 warrants underlying such units, and the 720,000 shares of common
          stock
          underlying such warrants, were deemed compensation by the National Association
          of Securities Dealers (“NASD”) and are therefore subject to a 180-day lock-up.
          Additionally, the option may not be sold, transferred, assigned, pledged
          or
          hypothecated for a one-year period (including the foregoing 180-day period)
          following the date of the Offering prospectus. The option grants to holders
          demand and “piggy back” rights for periods of five and seven years,
          respectively, from the date of the Offering with respect to the registration
          under the Securities Act of the securities directly and indirectly issuable
          upon
          exercise of the option. The Company would be obligated to bear all fees
          and
          expenses attendant to registering the securities.
  F1-13
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          3 — Initial Public Offering - continued**
 
 The
          exercise price and number of units issuable upon exercise of the option
          may be
          adjusted in certain circumstances including in the event of a stock dividend,
          or
          a recapitalization, reorganization, merger or consolidation. However, the
          option
          will not be adjusted for issuances of common stock at a price below its
          exercise
          price.
  Should
          the Company be unable to deliver shares of its common stock underlying
          the
          exercise of the Warrants included in the Units and shares of its common
          stock
          underlying the exercise of the Company’s Unit Purchase Option as a result of the
          absence of an effective registration statement with respect to these securities,
          then the Warrants and the UPO would not be exercisable and the Company
          will have
          no obligation to pay holders of the Warrants and UPO any cash or otherwise
“net
          cash settle” the Warrant or the UPO. In this event, the Warrants and UPO may
          expire worthless.
 
 The
          Company has accounted for the fair value of the option, inclusive of the
          receipt
          of the $100.00 cash payment, as an expense of the Offering resulting in
          a charge
          directly to stockholders’ equity. The Company estimated that the fair value of
          this option was approximately $2,412,000 ($0.168 per Unit) using a Black-Scholes
          option-pricing model. The fair value of the option granted to the representative
          of the underwriters was estimated as of the date of grant using the following
          assumptions: (i) expected volatility of 49.65%, (ii) risk-free interest
          rate of
          4.34%, (iii) expected life of 5 years and (iv) a dividend rate of
          zero.
  Because
          the Company did not have a trading history, the Company estimated the potential
          volatility of its common stock price based upon volatility of a representative
          sample of comparable companies .
  **Note
          4 — Business Combinations**
  **a.
          Tandem Energy Acquisition**
  On
          October 4, 2006, Platinum, through its wholly-owned subsidiary, PER Acquisition
          Corporation (which changed its name to Tandem Energy Corporation (“New TEC”), a
          Delaware corporation, upon consummation of the Acquisition), entered into
          an
          Acquisition Agreement pursuant to which Platinum would acquire all of the
          assets
          and assume substantially all of the liabilities of the predecessor entity,
          Tandem Energy Corporation (TEC), a Colorado corporation, including the
          assumption of approximately $42 million of TEC’s debt, in exchange for the
          issuance of approximately 8 million shares of Platinum common stock.
 
 On
          October 26, 2007, Platinum consummated the TEC acquisition pursuant to
          the
          Acquisition Agreement. At the closing, New TEC acquired all of the assets
          and assumed substantially all of the liabilities of TEC for $107,344,219,
          including approximately $41.7 million of TEC’s debt (including accrued
          interest), in exchange for the issuance of 7,692,308 shares of Platinum
          common
          stock with a per share cash value of $7.80 per share. Included in the purchase
          price were customary closing costs and commissions associated with the
          transaction.
  F1-14
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          4 — Business Combinations - continued**
  At
          the
          closing of the Acquisition, the net proceeds of the IPO that were placed
          in the
          trust account, including the interest thereon (approximating $112 million
          in the
          aggregate), were released to the Company and were used to (i) retire the
          $41.7
          million in indebtedness of TEC assumed in connection with the TEC acquisition,
          (ii) make payments in
          the
          aggregate amount of $14,057,199 to Platinum stockholders owning 1,802,205
          shares
          of common stock who voted against the acquisition and exercised their rights
          to
          convert their shares into a pro rata portion of the trust account and (iii)
          pay
          a finder’s fee of $3.0 million to Mr. Lance Duncan, as well as other
          transaction-related expenses. The remainder of the funds became available
          to the
          Company for corporate purposes.
  In
          November 2007, Platinum repurchased 1,997,913 shares of Platinum common
          stock
          for a total purchase price of $15,661,464 (including commissions) pursuant
          to
          its previously announced share repurchase program. The remainder of the
          funds
          will be applied towards, among other things, future acquisitions (see Note
          4, *Business
          Combinations* ),
          working capital, capital expenditures and further repurchases of shares
          of
          Platinum common stock.
 
 In
          addition, in accordance with the Asset Acquisition agreement, the Company
          filed
          a registration statement with the Securities and Exchange Commission with
          respect to the approximately 7.7 million Platinum common shares issued
          in
          connection with the Acquisition. This registration statement has not yet
          become
          effective.
  In
          connection with the Asset Acquisition Agreement:
 
 ·
                The
                    Company retained C.K. Cooper & Company, Inc., an investment banking
                    firm, to provide a fairness opinion as to whether the consideration
                    to be
                    paid by the Company in the Asset Acquisition was fair, from a
                    financial
                    point of view, to the Company’s stockholders and that the fair value of
                    TEC was at least equal to 80% of the Company’s net assets. C.K. Cooper was
                    originally retained to provide a fairness opinion in connection
                    with the
                    previously proposed merger with Tandem and was paid $50,000 at
                    that time.
                    In October 2006, the Company, entered into a letter agreement
                    with C.K.
                    Cooper to provide a fairness opinion in connection with respect
                    to the
                    Asset Acquisition Agreement, with $25,000 paid upon execution
                    of the
                    arrangement and an additional $25,000 due upon closing of the
                    Asset
                    Acquisition.
 
 ·
                The
                    Company entered into a Finders Agreement and a Consulting Agreement
                    with
                    Mr. Lance Duncan, an individual with prior affiliations with
                    Tandem, who
                    had been given limited authority by Tandem management to act
                    on its
                    behalf. These agreements are more fully described in Note 6f.
  **b.
          Other Business Combinations**
 
 The
          following acquisitions (the “Other Acquisitions”) made in late 2007 are
          reflected in Platinum’s consolidated results of operations for the period from
          their respective dates of acquisition and the balance sheet as of December
          31,
          2007 in accordance with the provisions of SFAS #141, “Business Combinations”.
 
 ·
                In
                    December 2007, Platinum, through its wholly owned subsidiary,
                    PER Gulf
                    Coast, Inc., acquired a 50% working interest in the La Rosa field
                    for
                    approximately $5.3 million. Although the La Rosa field is a producing
                    field of approximately 3,800 acres in Refugio County, Texas,
                    actual
                    production was minimal. The primary focus of the acquisition
                    is related to
                    its recompletion and re-entry potential. The entire purchase
                    price was
                    allocated to oil and gas properties.
 
 ·
                In
                    December 2007, Platinum, through its wholly owned subsidiary,
                    Tandem
                    Energy Corporation, acquired, out of bankruptcy court, oil and
                    gas
                    properties, including approximately 200 producing wells, located
                    in
                    Chavez, Lea and Eddy counties, New Mexico previously owned by
                    Lothian Oil,
                    Inc. for $6.9 million. Approximately 55% of the reserves are
                    proved
                    developed. On the closing date, production
                    was approximately 140 gross barrels of oil equivalents (“boe”)
                    per day,
                    and one of the primary fields is adjacent to the Ballard Field in
                    Eddy County. Approximately $700,000 of the purchase price was
                    allocated to
                    accounts receivable. The balance of the purchase price, $6.2
                    million, was
                    allocated to oil and gas
                    properties.
 
 F1-15
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          4 — Business Combinations - continued**
 
 ·
                In
                    December 2007, Platinum, through its wholly owned subsidiary,
                    Tandem
                    Energy Corporation, acquired an additional 50% working interest
                    in the
                    Barnett Shale acreage within the Ball Field for approximately
                    $920,000.
                    This acquisition increased the net acreage position by 2,300
                    net acres and
                    gave us a 100% working interest in the Barnett Shale. The entire
                    purchase
                    price was allocated to oil and gas properties. There is currently
                    no
                    production on this lease from the Barnett
                    Shale.
 
 ·
                In
                    December 2007, Platinum purchased, for approximately $2.2 million
                    (including transaction costs), the outstanding stock of Red Iron
                    Tool,
                    Inc.( Red Iron). As a result, Red Iron is now a wholly owned
                    subsidiary of
                    Platinum. Red Iron owns three pulling units and other service
                    equipment
                    near TEC’s Ira field in Scurry County, Texas. One of its rigs has been
                    continuously servicing that field since June, 2007. The other
                    two have
                    been under contract by other operators. Additionally, the former
                    president
                    of Red Iron, will assist TEC in providing oversight of the Ira
                    Field. Red Iron may continue to contract the rigs to third party
                    operators
                    when not in use on the Company’s properties. Of the acquisition cost,
                    approximately $1.6 million was allocated to the equipment acquired,
                    approximately $185,000 in accounts receivable, and approximately
                    $376,000
                    was allocated to the former owners 2 year employment agreement,
                    and
                    non-compete contract. The cost allocated to the contract will
                    be amortized
                    over the life of the non-compete of five
                    years.
 
 ·
                In
                    December 2007, Platinum purchased through its wholly owned subsidiary,
                    TEC, a 100% working interest in various producing leases in Scurry
                    county,
                    Texas for approximately $300,000. TEC is the operator of these
                    leases
                    which are located near TEC’s Ira
                    Unit.
  The
          assets and liabilities of TEC and the other acquisitions were recorded
          in the
          Company’s consolidated balance sheet at their fair values at the date of
          acquisition in accordance with the provisions for SFAS # 141, “Business
          Combinations”.
  F1-16
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          4 — Business Combinations - continued**
  The
          following details the allocation of the purchase price of the TEC and Other
          Acquisitions:
 **Consideration
                      -**
                  
                  **TEC**
                  
                  **Other
                      Acquisitions**
                  
                  **Total**Cash
                  
                  $
                  47,344,219
                  
                  $
                  15,518,501
                  
                  $
                  62,862,720Equity
                      instruments (7,692,308 Platinum common shares )
                  
                  
                  60,000,000
                  
                  
                  -
                  
                  
                  60,000,000$
                  107,344,219
                  
                  $
                  15,518,501
                  
                  $
                  122,862,720**Recognized
                      amount of identifiable assets acquired and****liabilities
                      assumed -****Assets
                      acquired**Cash
                  
                  $
                  2,959,773
                  
                  $
                  883,655
                  
                  $
                  3,843,428Accounts
                      receivable, net
                  
                  
                  1,923,957
                  
                  
                  -
                  
                  
                  1,923,957Inventory
                  
                  
                  85,582
                  
                  
                  -
                  
                  
                  85,582Property
                      and equipment:Oil
                      and Gas Properties
                  
                  
                  154,881,344
                  
                  
                  13,553,206
                  
                  
                  168,434,550Other
                  
                  
                  1,381,398
                  
                  
                  1,635,900
                  
                  
                  3,017,298Covenant
                      not to compete and other
                  
                  
                  246,169
                  
                  
                  441,140
                  
                  
                  687,309Real
                      estate held for development
                  
                  
                  2,700,000
                  
                  
                  -
                  
                  
                  2,700,000**Liabilities
                      assumed**Accounts
                      payable and other
                  
                  
                  (1,983,133
                  )
                  
                  -
                  
                  
                  (1,983,133
                  )Asset
                      retirement obligations
                  
                  
                  (2,542,881
                  )
                  
                  (995,400
                  )
                  
                  (3,538,281
                  )Fair
                      value of commodity derivatives
                  
                  
                  (4,207,430
                  )
                  
                  -
                  
                  
                  (4,207,430
                  )Deferred
                      income taxes
                  
                  
                  (48,100,560
                  )
                  
                  -
                  
                  
                  (48,100,560
                  )**Total
                      identifiable net assets**
                  
                  **$**
                  **107,344,219**
                  
                  **$**
                  **15,518,501**
                  
                  **$**
                  **122,862,720**
 ***Unaudited
          Pro-Forma Financial Information***
  The
          following table represents the affect of the aforementioned acquisitions
          on
          revenues, net income loss and EPS included in Platinum’s consolidated
          income statement for the year ended December 31, 2007 and the revenue and
          operating income of the combined entity had the acquisition had occurred
          on
          January 1, 2007 or January 1, 2006:
 Total
                      of AcquisitionsRevenue
                  
                  Income
                      (Loss)
                      Before Income Taxes
                  
                  
                  Net
                      Income (Loss)
                  
                  Earnings
                      (loss)
                    per
                      shareActual
                    from acquisition date through 12/31/07
                  
                  $ 
                         4,300,000
                  
                  $(700,000)
                  
                  
                  $ 
                       (540,000)
                  
                  $     
                      (0.02)Supplemental
                      pro forma from 1/1/07 - 12/31/07
                  
                  $22,546,777
                  
                  $(4,800,000)
                  
                  
                  $(1,700,000)
                  
                  $     
                      (0.07)Supplemental
                      pro forma from 1/1/06 - 12/31/06
                  
                  $22,297,811
                  
                  $   
                      (2,800,000)
                  
                  
                  $  2,900,000
                  
                  $     
                      (0.02)
   For
            certain acquisition transactions for which adequate data was not available,
            estimates of expenses were assumed.
   F1-17
 **PLATINUM
              ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
              the Years Ended December 31, 2007 and 2006**
 **And
              the Period From April 25, 2005 (Inception) to December 31,
              2005**
  **Note
            4 — Business Combinations - continued**
  The
          pro
          forma combined results are not necessarily indicative of the results that
          actually would have occurred if the TEC acquisition or the Other Acquisitions
          had been completed as of the beginning of 2007, or 2006, nor are they
          necessarily indicative of future consolidated results.
  The
          pro
          forma revenues include the revenues and operating profit of the TEC acquisition,
          the Lothian acquisition and the Red Iron acquisition. No pro forma results
          are
          presented for the La Rosa or the Barnett Shale acquisitions, as the information
          was not available or was immaterial.
  ***Other
          Non-Controlling Acquisitions by Platinum***
 
 In
          November 2007, Platinum, through its wholly owned subsidiary, PER Gulf
          Coast,
          Inc., acquired a non-controlling 12% working interest in the North Minnie
          Bock
          field, a producing field in Nueces County, Texas for approximately $1.1
          million. Although the North Minnie Bock field is a producing field of
          approximately 3,800 acres, actual production was minimal. The primary focus
          of
          the acquisition is related to its recompletion and re-entry potential.
          The
          entire purchase price was allocated at fair value to oil and gas properties.
  **Note
          5— Note Payable — Stockholder**
  In
          the
          year ended December 31, 2006 and 2007, the Company received an aggregate
          of
          $75,000 and $1,032,000, respectively from the proceeds of a note payable
          to an
          officer and stockholder of the Company. The notes, which bore interest
          at 5% per
          annum, were repaid upon the consummation of the Asset Acquisition Agreement
          on
          October 26, 2007.
  **Note
          6 - Commitments**
 
 a.
          The
          Company has engaged Casimir Capital LP (“CCLP”), the representative of the
          underwriters, on a non-exclusive basis, as its agent for the solicitation
          of the
          exercise of the Warrants. To the extent not inconsistent with the guidelines
          of
          the NASD and the rules and regulations of the SEC, the Company has agreed
          to pay
          CCLP for bona fide services rendered, a commission equal to 5% of the exercise
          price for each warrant exercised more than one year after the date of an
          effective prospectus if the exercise was solicited by the underwriters.
          In
          addition to soliciting, either orally or in writing, the exercise of the
          warrants, the representative’s services may also include disseminating
          information, either orally or in writing, to warrant holders about the
          Company
          or the market for its securities, and assisting in the processing of the
          exercise of the warrants. No compensation will be paid to the representative
          upon the exercise of the warrants if:
 
 ·
                the
                    market price of the underlying shares of common stock is lower
                    than the
                    exercise price;
 
 ·
                the
                    holder of the warrants has not confirmed in writing that the
                    underwriters
                    solicited the exercise;
 
 ·
                the
                    warrants are held in a discretionary
                    account;
 
 ·
                the
                    warrants are exercised in an unsolicited transaction;
                    or
 
 ·
                the
                    arrangement to pay the commission is not disclosed in the prospectus
                    provided to warrant holders at the time of
                    exercise.
 F1-18
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
 **Note
            6 - Commitments** **-
            continued**
 
 b.
            On
            March 20, 2006, the Board of Directors of the Company approved its 2006
            Long-Term Incentive Plan (the “Plan”), which became effective with the
            consummation of the Asset Acquisition of TEC and the approval of the
            Company’s stockholders. Pursuant to Plan, the Company may grant incentive and
            non-qualified stock options, stock appreciation rights, performance units,
            restricted stock awards and performance bonuses, or collectively, awards,
            to
            officers and key employees. In addition, the Plan authorizes the grant
            of
            non-qualified stock options and restricted stock awards to directors
            and to any
            independent contractors and consultants. Generally, all classes of employees
            are
            eligible to participate in the Plan.
 The
          Company has reserved a maximum of 4 million shares of its authorized common
          stock for issuance upon the exercise of awards to be granted pursuant to
          the
          Plan.
  Other
          than stock options issuable in connection with the Maverick acquisition
          described in Note 15 below, no options, restricted stock or other awards
          under
          the Plan have been made or committed to be made as of the date hereof.
  *d.
          Leases*
  The
          Company leases office space from third parties under non-cancelable operating
          leases that expire October, 2010. The Company also has operating leases
          for
          office equipment. Rental expense pursuant to these facility and equipment
          leases
          amounted to $12,424 for the period from October 27, 2007 through December
          31,
          2007. In January 2008, the Company expanded its space and extended its
          lease
          maturity. Future minimum annual lease payments, which reflect this modification,
          under the non-cancelable lease for the years ending December 31 are as
          follows:
 2008
                      
                      $
                      119,2692009
                      
                      
                      125,4102010
                      
                      
                      121,3202011
                      
                      
                      80,880Thereafter
                      
                      
                      —$
                      446,879
 e.Stock
          Repurchase Program
 In
            November 2006, the Company’s board approved a share repurchase program to
            repurchase shares of Company common stock in open market transactions
            in an
            amount up to $80 million, following the consummation of a the Asset Acquisition.
            On November 1, 2007, the board of directors instituted the initial stage
            of this
            share repurchase program and established a plan in conformity with the
            provisions of Rule 10b5-1 to purchase up to 2,000,000 shares of Platinum
            common
            stock in open market transactions during the month of November 2007,
            subject to
            the broker, volume, price and timing restrictions of Rule 10b-18 under
            the
            Securities Exchange Act of 1934. Pursuant to the plan, the Company purchased
            1,997,913 shares for an aggregate of $15,661,464 in November 2007 under
            this
            stage of the repurchase program. The initial share repurchase plan expired
            November 30, 2007, but the Company may resume repurchases in the future,
            pursuant to our share repurchase program.
  *f.*  *Consulting
          Agreement*
 
 Mr.
          Lance
          Duncan, a director and officer of Tandem for a short time from March 2005
          through June 1, 2005, introduced Platinum’s management to Tandem, which resulted
          in the Asset Acquisition Agreement. As a consequence of his efforts in
          this
          regard, Mr. Duncan was paid a finder’s fee of $3.0 million at the consummation
          of the TEC acquisition for introduction of the parties. The Company also
          entered
          into a consulting agreement with Mr. Duncan, the term of which commenced
          upon
          the consummation of the TEC acquisition, for consulting services, including
          investigation and evaluation of possible future acquisitions for the Company.
          Under the terms of the consulting agreement, the Company valued such services
          at
          $5 million and agreed to issue to Mr. Duncan a total of 714,286 shares
          of the
          Company’s restricted common stock in consideration over the period of service.
          These shares are to be issued in semi-annual installments over the eighteen
          month term of the agreement beginning with the closing of the TEC acquisition.
          On October 26, 2007, the first installment of 178, 572 irrevocable shares
          were
          issued to Mr. Duncan. The accompanying financial statements for the period
          from
          October 26, 2007 to December 31, 2007 include stock based compensation
          expense
          in the amount of $1,250,000 associated with these shares.
  F1-19
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
            7 — Income Taxes**
 The
              Company utilizes an asset liability approach to determine the extent
              of any
              deferred income taxes, as described in SFAS No. 109, “Accounting for Income
              Taxes.” This method gives consideration to the future tax consequences
              associated with differences between financial statement and tax bases
              of assets
              and liabilities.
  The
              provision for income taxes for the year ended December 31, 2007 and
              2006 is
              comprised of current New Jersey state income taxes.
  A
              reconciliation of the federal statutory income tax rate to the Company’s
              effective tax rate as reported is as follows:
  **2007**
                    
                    **2006**Taxes
                        at federal statutory rate
                    
                    
                    (35.0
                    )%
                    
                    34.0
                    %State
                        income tax net of federal benefit
                    
                    
                    20.0
                    %
                    
                    4.5
                    %Non
                        taxable income - interest
                    
                    
                    (302.0
                    )%
                    
                    (49.1
                    )%Non
                        deductible expenses
                    
                    
                    0.0
                    %
                    
                    1.0
                    %Increase
                        in valuation allowance
                    
                    
                    348.0
                    %
                    
                    16.3
                    %Effective
                        income tax rate
                    
                    
                    31.0
                    %
                    
                    6.7
                    %
  Significant
              components of deferred tax assets and liabilities at December 31, 2007
              and 2006
              are as follows:
  **2007**
                    
                    **2006**Deferred
                        expenses - start-up costs
                    
                    $
                    384,000
                    
                    $
                    356,000Other
                    
                    
                    4,000
                    
                    
                    —Commodity
                        derivatives
                    
                    
                    1,775,000
                    
                    
                    —Net
                        operating loss carryforward
                    
                    
                    609,000
                    
                    
                    —Less:
                        valuation allowance
                    
                    
                    1,366,000
                    
                    
                    356,0001,406,000
                    
                    
                    —Difference
                        between fair value of assets acquired and tax basis
                    
                    
                    (49,491,000
                    )
                    
                    —Net
                        deferred tax assets (liabilities)
                    
                    $
                    (48,085,000
                    )
                    $
                    —
 
 At
              December 31, 2007. the Company did not record an income tax credit
              for its net
              operating losses and other temporary differences because it is more
              likely than
              not that these will not be realizable based upon the results of operations
              for
              2008. The Company has recorded a full valuation allowance against its
              net
              deferred tax assets at December 31, 2006 since management believes
              that based
              upon available objective evidence it is more likely than not that the
              deferred
              tax assets at December 31, 2006 will not be realized.
  The
              valuation allowance for deferred tax assets increased by approximately
              $1,010,000 for the year ended December 31, 2007 and by approximately
              $292,000
              for the period ended December 31, 2006.
  
 F1-20
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          9 - Long-Term Debt**
 
 In
          connection with the TEC asset acquisition on October 26, 2007, TEC assigned
          its
          rights and obligations under the Credit Agreement to Platinum’s wholly-owned
          subsidiary, New TEC. An Assignment, Waiver and Third Amendment to Credit
          Agreement (the “Third Amendment”) was made and entered into effective as of
          October 26, 2007 among TEC, New TEC and the lender. Pursuant to the Third
          Amendment, a new borrowing base was set at $5 million. All other material
          terms
          of the Credit Agreement remained unchanged. All outstanding borrowings
          under the
          Credit Agreement in the principal amount of $20,500,000 were paid off at
          the
          closing of the Acquisition. Accordingly there are no outstanding borrowings
          under the Credit Agreement at December 31, 2007, nor were there any outstanding
          balances in the period October 26, 2007 through December 31, 2007.
 
 As
          more
          fully described in Note 14, on March 14, 2008, two operating subsidiaries
          of the
          Company, Tandem Energy Corporation and PER Gulf Coast, Inc. entered into
          a new
          credit facility with an initial borrowing base of $35 million.
  **Note
          10 - Marketing Arrangements, Segment Information and Major
          Customers**
  The
          Company considers itself to be in one line of business, as an independent
          oil
          and gas exploration and production company.
  The
          Company sells substantially all of its crude oil production under short-term
          contracts based on prices quoted on the New York Mercantile Exchange (“NYMEX”)
          for spot West Texas Intermediate contracts, less agreed-upon deductions
          which
          vary by grade of crude oil.
  The
            majority of the Company’s natural gas production is sold under short-term
            contracts based on pricing formulas which are generally market responsive.
            From
            time to time, The Company may also sell a portion of the gas production
            under
            short-term contracts at fixed prices. The Company believes that the loss
            of any
            of its oil and gas purchasers would not have a material adverse effect
            on its
            results of operations due to the availability of other
            purchasers.
  For
          the
          period from October 27, 2007 to December 31, 2007, two customers accounted
          for
          approximately 48% and 16% of New TEC’s crude oil and natural gas revenues. The
          Company believes that the loss of any of its significant customers would
          not
          create a financial risk as the Company's oil and gas production can be
          sold to
          others at similar prices.
  **Note
          11 - Price, Interest Rate and Credit Risk Management
          Activities**
  *Price
          and Interest Rate Risks*
  The
          Company engages in price risk management activities from time to time.
          These
          activities are intended to manage the Company’s exposure to fluctuations in
          commodity prices for natural gas and crude oil. The Company utilizes derivative
          financial instruments, primarily price collars, puts and calls, as the
          means to
          manage this price risk. In addition to these financial transactions, the
          Company
          is a party to various physical commodity contracts for the sale of hydrocarbons
          that cover varying periods of time and have varying pricing provisions.
          Under
          SFAS No. 133, *Accounting
          for Derivative Instruments and Hedging Activities,* as
          amended by SFAS Nos. 137, 138 and 149, these various physical commodity
          contracts qualify for the normal purchases and normal sales exception and
          therefore, are not subject to hedge accounting or mark-to-market accounting.
          The
          financial impact of these various physical commodity contracts is included
          in
          revenues at the time of settlement, which in turn affects average realized
          hydrocarbon prices. The Company has elected not to designate any of its
          derivative financial contracts as accounting hedges and, accordingly, has
          accounted for these derivative financial contracts using mark-to-market
          accounting. For the period from October 26, 2007 to December 31, 2007,
          the
          Company recognized losses on its hedging activities of $1.5 million.
 F1-21
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
 **Note
          11 - Price, Interest Rate and Credit Risk Management Activities -
          continued**
  Presented
          below is a summary of the Company’s crude oil and natural gas derivative
          financial contracts at December 31, 2007, with crude oil prices expressed
          in
          dollars per barrels of crude oil and notional crude oil volumes in barrels
          of
          crude oil per year; and natural gas prices expressed in dollars per million
          British thermal units ($/MMBtu) and notional natural gas volumes in million
          British thermal units per year (MMBtuy). As indicated, The Company does
          not have
          any financial derivative contracts that extend beyond December
          2011.
  The
          Company accounts for its financial derivative contracts using mark-to-market
          accounting. The total fair value of the crude oil and natural gas financial
          derivative contracts at December 31, 2007, was a liability of approximately
          $3.0 million. The
          purchase of TEC’s assets, as more fully described in Note 3, includes the
          derivative contracts and the associated liabilities described
          herein.
 **Period**
                  
                  **Instrument
                      Type**
                  
                  **Total
                      Volumes (MMBTU/BBL)**
                  
                  
                  **Weighted
                      Average (Floor/Ceiling)**
                  
                  **Fair
                      Value Asset/ (Liability) (stated in thousands)**2008
                  
                  Gas
                      Collar
                  
                  64,615
                  
                  
                  5.00/11.02
                  
                  
                  (25
                  )Gas
                      Call Option Sold
                  
                  64,615
                  
                  
                  9.10
                  
                  
                  (128
                  )Gas
                      Call Option Purchased
                  
                  64,615
                  
                  
                  12.00
                  
                  
                  36Gas
                      Put Option Sold
                  
                  64,615
                  
                  
                  5.00
                  
                  
                  (11
                  )Gas
                      Put Option Purchased
                  
                  64,615
                  
                  
                  6.00
                  
                  
                  46Oil
                      Collar
                  
                  113,502
                  
                  
                  40.00/72.10
                  
                  
                  (2,455
                  )Oil
                      Call Option Sold
                  
                  125,000
                  
                  
                  67.00
                  
                  
                  (3,282
                  )Oil
                      Call Option Purchased
                  
                  125,000
                  
                  
                  72.10
                  
                  
                  2,7032009
                  
                  Oil
                      Swaps
                  
                  120,000
                  
                  
                  71.00
                  
                  
                  (1,928
                  )2010
                  
                  Oil
                      Put Option Purchased
                  
                  120,000
                  
                  
                  75.00
                  
                  
                  1,0152011
                  
                  Oil
                      Put Option Purchased
                  
                  120,000
                  
                  
                  80.00
                  
                  
                  986Total
                      fair value liability
                  
                  
                  
                  
                  
                  
                  $
                  (3,043
                  )
 
 The
          fair
          value of the Company’s financial derivative contracts at December 31, 2007 are
          shown in the accompanying financial statements as follows (in
          thousands):
 
 Fair
                    value of commodity derivative:Current
                    portion
                
                $
                (3,116
                )Long-term
                    portion
                
                
                73Total
                    fair value liability
                
                $
                (3,043
                )
 
 The
          natural gas and crude oil prices shown in the above table are based on
          the
          corresponding NYMEX index and have been valued using actively quoted prices
          and
          quotes obtained from the counterparties to the derivative agreements. The
          above
          prices represent a weighted average of several contracts entered into and
          are on
          a per MMBtu or per barrel basis for gas and oil derivatives, respectively.
          Total
          volumes shown for the crude oil collar reflect
          net volumetric positions with a single counterparty under which contracts
          provide for netting of all settlement amounts.
   F1-22
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
            11 - Price, Interest Rate and Credit Risk Management Activities -
            continued**
 The
          following table summarizes the estimated fair value of financial instruments
          and
          related transactions at December 31, 2007 (in millions):
  **Carrying****Amount**
                  
                  **Estimated****Fair
                      Value (1)**NYMEX-Related
                      Commodity DerivativeMarket
                      Positions (1)
                  
                  $
                  3.0
                  
                  
                  3.0
 (1)
                Estimated
                    fair values have been determined by using available market data
                    and
                    valuation methodologies. Judgment is required in interpreting
                    market data
                    and the use of different market assumptions or estimation methodologies
                    may affect the estimated fair value
                    amounts.
 
 **Note
          12 - Oil and Gas Properties**
 
 **** As
          described in Note 4, **** all
          of
          the Company’s oil and gas properties were purchased during the year ended
          December 31, 2007.
  The
          following table sets forth the Company’s costs incurred in oil and gas property
          acquisition, exploration and development activities for the period from
          October
          26, 2007 through December 31, 2007:
 Acquisition
                      of propertiesProved
                  
                  $
                  169,214,135Unproved
                  
                  
                  -Exploration
                      Costs
                  
                  
                  -Development
                      Costs
                  
                  
                  1,380,167$
                  170,594,302
  F1-23
  **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          12- Oil and Gas Properties - continued**
  The
          following table sets forth the Company’s capitalized costs relating to oil and
          gas producing activities at December 31, 2007:
 Proved
                      oil and gas properties
                  
                  $
                  170,594,302Unproved
                      oil and gas properties
                  
                  
                  -170,594,302Accumulated
                      depletion
                  
                  
                  (1,227,000
                  )Net
                      capitalized costs
                  
                  $
                  169,367,302
 **Note
          13 - Oil and Gas Reserve Information (Unaudited)**
  The
          estimates of proved oil and gas reserves utilized in the preparation of
          the
          consolidated financial statements were prepared by Williamson Petroleum
          Consultants (Williamson), independent petroleum engineers, and by the Company’s
          reservoir engineer. The portion of the total reserves evaluated by Williamson
          on
          a Boe basis was approximately 94.1%, and on a standardized measure of future
          net
          cash flows basis was approximately 94.4%. The reserves engineered by the
          Company’s reservoir engineer are related to the proved undeveloped reserves
          associated with the Lothian acquisition, more fully discussed in Note 4,
          which
          was consummated on December 28, 2007. Williamson’s report contains the reserves
          associated with the proved developed producing portion of the Lothian
          acquisition, but because the purchase took place so late in the year, Williamson
          did not have time to evaluate the validity of the proved undeveloped reserves.
          There was no disagreement as to the existence of the reserves; merely that
          Williamson did not have the time to evaluate the estimate. The Company,
          therefore, felt it important to include the proved undeveloped reserves,
          since a
          significant portion of the basis for the purchase was associated with the
          proved
          undeveloped reserves. Both such estimates were made in accordance with
          guidelines established by the Securities and Exchange Commission and the
          Financial Accounting Standards Board, which require that reserve reports
          be
          prepared under economic and operating conditions existing at the registrant’s
          year end with no provision for price and cost escalations except by contractual
          arrangements. Future cash inflows were computed by applying year-end prices
          to
          the year-end quantities of proved reserves. Future development, abandonment
          and
          production costs were computed by estimating the expenditures to be incurred
          in
          developing, producing, and abandoning proved oil and gas reserves at the
          end of
          the year, based on year-end costs. Future income taxes were computed by
          applying
          statutory tax rates to the estimated net pre-tax cash flows after consideration
          of tax basis and tax credits and carryforwards. All of the Company’s reserves
          are located in the United States. For information about the Company’s results of
          operations from oil and gas producing activities, see the accompanying
          consolidated statements of operations.
  In
          accordance with Rule 4-10(a) of SEC Regulation S-X, proved oil and gas
          reserves
          are the estimated quantities of crude oil, natural gas, and natural gas
          liquids
          which geological and engineering data demonstrate with reasonable certainty
          to
          be recoverable in future years from known reservoirs under existing economic
          and
          operating conditions, i.e., prices and costs as of the date the estimate
          is
          made. Prices include consideration of changes in existing prices provided
          only
          by contractual arrangements, but not on escalations based upon future
          conditions.
  F1-24
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          13 - Oil and Gas Reserve Information (Unaudited) -
          continued**
 
 (1)
          Reservoirs are considered proved if economic producibility is supported
          by
          either actual production or conclusive formation test. The area of a reservoir
          considered proved includes (A) that portion delineated by drilling and
          defined
          by gas-oil and/or oil-water contacts, if any, and (B) the immediately adjoining
          portions not yet drilled, but which can be reasonably judged as economically
          productive on the basis of available geological and engineering data. In
          the
          absence of information on fluid contacts, the lowest known structural occurrence
          of hydrocarbons controls the lower proved limit of the reservoir.
  (2)
          Reserves which can be produced economically through application of improved
          recovery techniques (such as fluid injection) are included in the proved
          classification when successful testing by a pilot project, or the operation
          of
          an installed program in the reservoir, provides support for the engineering
          analysis on which the project or program was based.
  (3)
          Estimates of proved reserves do not include the following: (A) oil that
          may
          become available from known reservoirs but is classified separately as
          indicated
          additional reserves; (B) crude oil, natural gas, and natural gas liquids,
          the
          recovery of which is subject to reasonable doubt because of uncertainty
          as to
          geology, reservoir characteristics, or economic factors; (C) crude oil,
          natural
          gas, and natural gas liquids, that may occur in undrilled prospects; and
          (D) crude oil, natural gas, and natural gas liquids, that may be recovered
          from
          oil shales, coal, gilsonite and other such sources.
  The
          Company emphasizes that reserve estimates are inherently imprecise. Accordingly,
          the estimates are expected to change as more current information becomes
          available. In addition, a portion of the Company’s proved reserves are
          classified as proved developed non-producing and proved undeveloped, which
          increases the imprecision inherent in estimating reserves which may ultimately
          be produced.
  The
          following table sets forth proved oil and gas reserves together with the
          changes
          therein and proved developed reserves (oil in Bbls, gas in Mcf, gas converted
          to
          Boe’s at six Mcf per Bbl) for the year ended December 31, 2007. (in
          thousands):
 **2007****Oil**
                  
                  **Gas**
                  
                  **Boe****(in
                      thousands)**Proved
                      reserves:Beginning
                      of period
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —Revisions
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —Extensions
                      and discoveries
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —Sales
                      of minerals-in-place
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —Purchases
                      of minerals-in-place
                  
                  
                  6,565
                  
                  
                  21,938
                  
                  
                  10,221Production
                  
                  
                  (39
                  )
                  
                  (126
                  )
                  
                  (60
                  )End
                      of period
                  
                  
                  6,526
                  
                  
                  21,812
                  
                  
                  10,161Proved
                      developed reserves:Beginning
                      of period
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —End
                      of period
                  
                  
                  2,639
                  
                  
                  6,497
                  
                  
                  3,722
  F1-25
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          13 - Oil and Gas Reserve Information (Unaudited) -
          continued**
 
 The
          following table sets forth standardized measure of discounted future net
          cash
          flows (stated in thousands) relating to proved reserves for the year ended
          December 31, 2007:
 
 **2007****(in
                    thousands)**Future
                    cash inflows
                
                $
                755,292Future
                    costs:Production
                
                
                (188,072
                )Abandonment
                
                
                (13,735
                )Development
                
                
                (54,692
                )Income
                    taxes
                
                
                (177,440
                )Future
                    net cash inflows
                
                
                321,35310%
                    discount factor
                
                
                (150,331
                )Standardized
                    measure of discounted net cash flows
                
                $
                171,022
 
 *Impact
          of Pricing*
  The
          estimates of cash flows and reserve quantities shown above are based on
          year-end
          oil and gas prices, except in those cases where future natural gas or oil
          sales
          are covered by physical contracts at specified prices. Forward price volatility
          is largely attributable to supply and demand perceptions for natural gas
          and
          crude oil.
  Under
          full-cost accounting rules, the Company reviews the carrying value of its
          proved
          oil and gas properties each quarter. Under these rules, capitalized costs
          of
          proved oil and gas properties, net of accumulated DD&A and deferred income
          taxes, may not exceed the present value of estimated future net cash flows
          from
          proved oil and gas reserves, discounted at 10%, plus the lower of cost
          or fair
          value of unproved properties included in the costs being amortized, net
          of
          related tax effects (the “ceiling”). These rules generally require pricing
          future oil and gas production at the unescalated oil and gas prices at
          the end
          of each fiscal quarter and require a write-down if the “ceiling” is exceeded.
          Given the volatility of oil and gas prices, it is reasonably possible that
          the
          Company’s estimate of discounted future net cash flows from proved oil and gas
          reserves could change in the near term. If oil and gas prices decline
          significantly, even if only for a short period of time, it is possible
          that
          write-downs of oil and gas properties could occur in the future.
  The
          estimated present value of future cash flows relating to proved reserves
          is
          extremely sensitive to prices used at any measurement period. The average
          prices
          used for each commodity for the year ended December 31, 2007 were as
          follows:
 
 **Average
                    Prices****As
                    of December 31,**
                
                **Oil**
                
                **Gas**2007
                
                $
                92.44
                
                $
                7.02
  F1-26
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
  **Note
          14 — Litigation**
 
 On January
          16, 2008, Exxon Mobil Corporation filed a petition in the 270 th District
          Court of Harris County, Texas, naming TEC and a third party, Merenco Realty,
          Inc., demanding environmental remediation of certain properties
          in Tomball, Texas. In 1996, pursuant to an assignment agreement, Exxon
          Mobil
          sold certain oil and gas leasehold interests and real estate interests
          in
          Tomball, Texas to TEC’s predecessor in interest, Merit Energy Corporation.
          In 1999, TEC assigned its 50% undivided interest in one of the tracts in
          the
          acquired property to Merenco, an affiliate of TEC, owned 50% by our chairman
          of
          the board, Tim Culp. In October 2007, the Texas Railroad Commission notified
          Exxon Mobil of an environmental site assessment alleging soil and groundwater
          contamination for a site in the area of Tomball, Texas. Exxon Mobil believes
          that the site is one which was sold to TEC and claims that TEC is obligated
          to
          remediate the site under the assignment agreement. Exxon Mobil has requested
          that the court declare the defendants obligated to restore and remediate
          the
          properties and has requested any actual damages arising from breach and
          attorneys’ fees. The Company believes that Exxon Mobil’s claim that TEC is
          responsible for any remediation of such site is without merit and we intend
          to
          vigorously defend ourselves against this claim. However, no assurance can
          be
          given that we will prevail in this matter. Platinum acquired substantially
          all
          the assets and liabilities of TEC in the TEC acquisition. Merenco was not
          acquired by Platinum in the TEC acquisition and Platinum’s chairman, Tim Culp,
          continues to have a 50% ownership interest in Merenco.
 
 **Note
          15 — Subsequent Events**
  a.
          In
          January 2008, the Company acquired a 70% working interest in the Pleasanton
          field for approximately $5.5 million. $2.5 million of the $5 million purchase
          price is recorded as a Deposit on the December 31, 2007 balance sheet.
          The
          remainder of the purchase price was paid in January 2008. The Pleasanton
          Field
          is a non-producing field of approximately 4,200 acres in Atascosa County,
          Texas.
          The field contains previously drilled and abandoned wells. The final purchase
          price is subject to normal closing adjustments and to adjustments arising
          from
          indemnification provisions of the agreement.
 
 b.
          On
          March 18, 2008, the Company, Maverick Engineering, Inc. (“Maverick”) and Robert
          L. Kovar Services, LLC entered into an Agreement and Plan of Merger (the
“Merger
          Agreement”) for a gross purchase price of $11 million, subject to a working
          capital purchase price adjustment, with $6 million paid at closing and
          the
          remaining $5 million to be paid over the next 6 years pursuant to a non-interest
          bearing note (the “Cashflow Notes”). In addition, the Company will assume
          Maverick’s indebtedness under certain bank and loan arrangements, which
          aggregate balances approximated $4.5 million at January 31, 2008. Maverick’s
          bank has not consented to continue of its bank term loan or to its working
          capital revolving credit line upon closing. Rober L. Kovar has agreed to
          personally assume the indebtedness under the bank term loan, which approximated
          $ 1.67 million as of January 31, 2008. Maverick shareholders, as represented
          by
          Robert L. Kovar Services, LLC, have agreed to the reduction of the $6 million
          intended to be paid at closing by the outstanding balance on the line of
          credit
          on the closing date, which approximated $1.97 million on January 31, 2008
          in the
          event that a replacement line of credit is not in place on the closing
          date.
          These proceeds would be used to payoff its bank obligation under the revolving
          line of credit. Upon obtaining a replacement line of credit, such withheld
          amounts would be paid to Robert L. Kovar Services, LLC for distribution
          to the
          selling Maverick shareholders. The Cashflow Notes will be payable quarterly
          at
          the rate of 50% of pre-tax net income, as it is defined in the Merger Agreement,
          generated by the Maverick business on a standalone basis in the preceding
          quarter. Payment can be accelerated by certain events, including change
          in
          control. The purchase
          price also subject to adjustment for any change in working capital as defined
          in
          the agreement, between October 31, 2007 and the closing date, as well as
          other
          adjustments associated with changes in indebtedness. Any adjustment will
          be
          treated as a modification of the amount of the Cashflow Notes. The balance
          of
          the Cashflow Notes remaining unpaid upon maturity, if any, will be converted
          into a 12 month self amortizing note bearing interest at the annual rate
          of 2%
          over the banks prime rate. Established in 1993, Maverick is a full-service
          engineering service company with 270 employees including a staff of 70
          engineers, consultants, surveyors, scientists and planners. Maverick is
          a provider of project management, engineering, procurement, and
          construction management services to both the public and private sectors.
          Maverick is based in South Texas with offices in Corpus Christi, Victoria,
          Harlingen and Houston. In connection with the transaction, the Company
          will
          enter into an five year employment agreement with Robert Kovar, the founder
          and
          CEO of Maverick, pursuant to which he will join Platinum as its Chief Operating
          Officer in addition to continuing as CEO and President of Maverick. In
          connection with his employment agreement Mr. Kovar will receive base annual
          compensation of $200,000 and stock options to purchase 250,000 shares of
          Company
          common stock over that 5 year period. Mr. Kovar’s responsibilities will include
          oversight of all operations, including engineering, drilling, and
          production.
  F1-27
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
 **Note
            15 — Subsequent Events - continued**
 c.
          On
          March 14, 2008, two operating subsidiaries of the Company, TEC and PER
          Gulf
          Coast, Inc. (collectively the “Co-borrowers”) entered into a new credit facility
          with the Bank of Texas (the “Bank”) establishing a revolving line of credit with
          an initial borrowing base of $35 million. The revolving line of credit
          is
          secured by the Co-borrower’s oil and gas properties and will be used to
          facilitate the execution of the two entities’ drilling
          and acquisition programs. The line bears interest at either the Bank’s base rate
          or LIBOR, plus a margin which varies with the ratio of the Co-borrower’s
          outstanding borrowings against the defined borrowing base, ranging from
          1.5% to
          2.25 % The
          Co-borrower’s can choose periodically to change the interest rate base which
          applies to outstanding borrowings. Under the terms of revolving line of
          credit
          agreement, the Co-borrowers must maintain certain financial ratios, must
          repay
          any amounts due in excess of the borrowing base, and may not declare any
          dividends or enter into any transactions resulting in a change in control,
          without the Bank’s consent. The Company, as the parent company, is not a
          co-borrower or guarantor of the line, and transfers from the co-borrowers
          to the
          parent company are limited to (i) $1 million per fiscal year to the parent
          for
          management fees, and (ii) the repayment of up to $2 million per fiscal
          year in
          subordinate indebtedness owed to the parent. As of March 18, there was
          $5.5
          million outstanding under the revolving line of credit. In conjunction
          with the
          execution of the new line of credit and as required under the terms of
          the new
          credit facility, the Company novated its existing hedge positions from
          its
          existing counterparty’s over to the Bank under terms satisfactory to the
          Company. In connection with establishing the line of credit, the Bank received
          a
          commitment fee of $87,500 and a fee of $60,229 for its expenses in connection
          with the aforementioned novation. In addition, the Co-borrowers are obligated
          to
          the bank for a monthly fee of any unused portion of the line of credit
          at the
          rate of 0.25% per annum.
 
 In
          conjunction with and simultaneous to the establishment of the new Bank
          credit
          facility, the previously existing $5 million line of credit with another
          bank
          was terminated. No outstanding borrowings existed at the time of the termination
          of this previous arrangement.
 
 **Note
          16 - Quarterly Financial Data (Unaudited)**
 
 The
          following table sets forth certain unaudited quarterly results of operations
          for
          each of the quarters in the years ended December 31, 2007 and 2006. The
          operating results for any quarter are not necessarily indicative of the
          results
          for any future period.
  **Year
                    ended December 31, 2007**
                
                1st
                    Quarter
                
                2nd
                    Quarter
                
                3rdQuarter
                
                4thQuarterTotal
                    revenue
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                4,308,184Lease
                    and other operating expenses (a)
                
                
                —
                
                
                —
                
                
                —
                
                
                3,067,631Gross
                    profit
                
                
                —
                
                
                —
                
                
                —
                
                
                1,240,553Net
                    income (loss)
                
                $
                497,865
                
                $
                578,843
                
                
                615,974
                
                
                (2,065,714
                )Per
                    share amounts:Net
                    earnings (loss) - Basic:
                
                $
                .03
                
                $
                .04
                
                $
                .04
                
                $
                (.10
                )Net
                    earnings (loss) - Diluted:
                
                $
                .03
                
                $
                .03
                
                $
                .03
                
                $
                (.10
                )
  F1-28
 **PLATINUM
            ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
            the Years Ended December 31, 2007 and 2006**
 **And
            the Period From April 25, 2005 (Inception) to December 31,
            2005**
 **Year
                      ended December 31, 2006**
                
                1st
                    Quarter
                
                2nd
                    Quarter
                
                3rd
                    Quarter
                
                4th
                    Quarter(a)Total
                    revenue
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                —Gross
                    profit
                
                
                —
                
                
                —
                
                
                —
                
                
                —Net
                    income
                
                $
                231,228
                
                $
                456,336
                
                $
                502,675
                
                $
                469,440Per
                    share amounts:Net
                    earnings - Basic:
                
                $
                .02
                
                $
                .03
                
                $
                .03
                
                $
                .03Net
                    earnings - Diluted:
                
                $
                .01
                
                $
                .03
                
                $
                .03
                
                $
                .03
  (a)
                Includes
                    depletion, depreciation and amortization expense of
                    $1,291,384.
 (b)
                Income
                    (loss) per share for the each year may not equal the sum of quarterly
                    income (loss) per share due to changes in average share
                    calculations.
  F1-29
  **Report
        of Independent Certified Public Accountants**
  To
        the
        Stockholders of
 Tandem
        Energy Holdings, Inc.
 
 We
        have
        audited the consolidated balance sheets of Tandem Energy Holdings, Inc.,
        a
        Nevada corporation, (“Tandem”) successor to Tandem Energy Corporation as of
        October 26, 2007 and December 31, 2006, and the related consolidated statements
        of operations, stockholders’ equity (deficit), and cash flows for the period
        from January 1, 2007 through October 26, 2007 and the year ended December
        31,
        2006. These financial statements are the responsibility of Tandem’s management.
        Our responsibility is to express an opinion on these financial statements
        based
        on our audits.
 
 We
        conducted our audits in accordance with auditing standards generally accepted
        in
        the United States of America. Those standards require that we plan and perform
        the audit to obtain reasonable assurance about whether the financial statements
        are free of material misstatement. An audit includes consideration of internal
        control over financial reporting as a basis for designing audit procedures
        that
        are appropriate in the circumstances, but not for the purpose of expressing
        an
        opinion on the effectiveness of Tandem’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, assessing the accounting principles used and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audits provide a
        reasonable basis for our opinion.
 
 As
        discussed in Note 15, on October 26, 2007, Tandem consummated an agreement
        whereby a publicly-owned entity acquired all of the assets and assumed all
        of
        the liabilities of Tandem’s wholly-owned subsidiary, Tandem Energy Corporation.
        The accompanying financial statements are presented on a basis immediately
        prior
        to the sale.
 
 In
        our
        opinion, the consolidated financial statements, referred to above, present
        fairly, in all material respects, Tandem’s financial position at October 26,
        2007 and December 31, 2006, and the results of its operations and its cash
        flows
        for the period from January 1, 2007 through October 26, 2007 and the year
        ended
        December 31, 2006. there ended, in conformity with accounting principles
        generally accepted in the United States of America.
 
 /s/
        Johnson, Miller & Co., CPA’s, PC
 
 Midland,
        Texas
 March
        6,
        2008
  F2-1
  **TANDEM
        ENERGY HOLDINGS, INC.**
 **(Successor
        to Tandem Energy Corporation)**
  **CONSOLIDATED
        BALANCE SHEETS**
 **October
        26, 2007 and December 31, 2006**
  **2007**
              
              
              **2006****ASSETS**Current
                  assetsCash
                  and cash equivalents
              
              $
              3,059,774
              
              $
              2,482,608Accounts
                  receivableOil
                  and gas sales
              
              
              1,657,495
              
              
              1,551,494Affiliates
                  and other, net
              
              
              266,462
              
              
              493,120Inventory
              
              
              85,582
              
              
              73,781Federal
                  income tax receivable
              
              
              15,345
              
              
              —Other
                  current assets
              
              
              386,377
              
              
              301,578Total
                  current assets
              
              
              5,471,035
              
              
              4,902,581Property
                  and equipment, at costOil
                  and gas properties, full cost method
              
              
              36,753,241
              
              
              35,639,538Other
              
              
              1,426,089
              
              
              1,271,035Less
                  accumulated depreciation, depletion and amortization
              
              
              (7,785,307
              )
              
              (5,635,280
              )Property
                  and equipment, net
              
              
              30,394,023
              
              
              31,275,293Other
                  assetsInvestment
                  in partnership
              
              
              30,001
              
              
              30,001Deferred
                  fees, net of amortization
              
              
              —
              
              
              111,109Real
                  estate held for development
              
              
              582,045
              
              
              584,167Total
                  other assets
              
              
              612,046
              
              
              725,277Total
                  assets
              
              $
              36,477,104
              
              $
              36,903,151**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY (DEFICIT)**Current
                  liabilitiesAccounts
                  payableTrade
              
              $
              1,343,773
              
              $
              970,894Oil
                  and gas sales
              
              
              280,236
              
              
              395,528Current
                  portion of long-term debt
              
              
              20,500,000
              
              
              1,750,000Fair
                  value of commodity derivatives
              
              
              3,245,676
              
              
              633,073Current
                  income taxes payable
              
              
              —
              
              
              123,053Asset
                  retirement obligation - current
              
              
              186,545
              
              
              177,411Accrued
                  liabilities and other
              
              
              563,760
              
              
              936,712Total
                  current liabilities
              
              
              26,119,990
              
              
              4,986,671Long-term
                  debt, net of current portion
              
              
              21,000,000
              
              
              40,250,000Fair
                  value of commodity derivatives - non-current
              
              
              961,754
              
              
              440,873Asset
                  retirement obligation - non-current
              
              
              1,743,149
              
              
              1,678,296Total
                  liabilities
              
              
              49,824,893
              
              
              47,355,840Stockholders’
                  equity (deficit)Common
                  stock, $.001 par value, authorized 100,000,000 shares;
                Shares
                  issued and outstanding: 23,777,322 and 23,799,322,
                  respectively
              
              
              23,777
              
              
              23,799Additional
                  paid-in capital
              
              
              64,231,323
              
              
              64,275,801Retained
                  earnings (deficit)
              
              
              (77,602,889
              )
              
              (74,752,289
              )Total
                  stockholders’ equity (deficit)
              
              
              (13,347,789
              )
              
              (10,452,689
              )Total
                  liabilities and stockholders’ equity (deficit)
              
              $
              36,477,104
              
              $
              36,903,151
 
 *The
        accompanying notes are an integral part of these consolidated financial
        statements.*
  F2-2
  **TANDEM
        ENERGY HOLDINGS, INC.**
 **(Successor
        to Tandem Energy Corporation)**
  **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
  **2007**
              
              
              **2006**RevenuesOil
                  and gas sales
              
              $
              13,985,263
              
              $
              17,812,015Costs
                  and expensesLease
                  operating expense
              
              
              5,499,538
              
              
              6,516,711General
                  and administrative
              
              
              2,912,083
              
              
              2,836,837Stock-based
                  compensation
              
              
              —
              
              
              —Depreciation,
                  depletion and amortization
              
              
              2,150,027
              
              
              2,641,315Accretion
                  of asset retirement obligation
              
              
              116,258
              
              
              137,222Total
                  costs and expenses
              
              
              10,677,906
              
              
              12,132,085Operating
                  income
              
              
              3,307,357
              
              
              5,679,930Other
                  income (expense)Interest
                  expense
              
              
              (2,944,902
              )
              
              (3,503,812
              )Partnership
                  income
              
              
              4,600
              
              
              49,877Change
                  in fair value of derivatives
              
              
              (3,636,450
              )
              
              3,547,748Gain
                  on sale of property and equipment
              
              
              127,021
              
              
              401,470Other
              
              
              291,774
              
              
              229,054Total
                  other income (expense), net
              
              
              (6,157,957
              )
              
              724,337Income
                  (loss) before income taxes
              
              
              (2,850,600
              )
              
              6,404,267Income
                  tax benefit (expense)Current
              
              
              —
              
              
              (109,747
              )Deferred
              
              
              —
              
              
              —Total
                  income tax benefit (expense)
              
              
              —
              
              
              (109,747
              )Net
                  income (loss)
              
              $
              (2,850,600
              )
              $
              6,294,520Earnings
                  (loss) per share
              
              $
              (.12
              )
              $
              .26Weighted
                  average shares outstanding
              
              
              23,792,495
              
              
              23,799,322
 
 *The
        accompanying notes are an integral part of these consolidated financial
        statements.*
  F2-3
  **TANDEM
        ENERGY HOLDINGS, INC.****(Successor
        to Tandem Energy Corporation)**
  **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)**
 **For
        the Year Ended December 31, 2006 and For the Period From January 1, 2007
        through
        October 26, 2007**
  **Common
                  Stock**
              
              
              **Additional
                  Paid-in**
              
              
              **Retained
                  Earnings****Shares**
              
              
              **Par
                  Value**
              
              
              **Capital**
              
              
              **(Deficit)**
              
              
              **Total**Balance,
                  January 1, 2006
              
              
              23,799,322
              
              $
              23,799
              
              $
              64,275,801
              
              $
              (81,046,809
              )
              $
              (16,747,209
              )Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              6,294,520
              
              
              6,294,520Balance,
                  December 31, 2006
              
              
              23,799,322
              
              
              23,799
              
              
              64,275,801
              
              
              (74,752,289
              )
              
              (10,452,689
              )Acquisition
                  and retirement ofcommon
                  stock, at cost
              
              
              (22,000
              )
              
              (22
              )
              
              (44,478
              )
              
              —
              
              
              (44,500
              )Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              (2,850,600
              )
              
              (2,850,600
              )Balance,
                  October 26, 2007
              
              
              23,777,322
              
              $
              23,777
              
              $
              64,231,323
              
              $
              (77,602,889
              )
              $
              (13,347,789
              )
 
 *The
        accompanying notes are an integral part of these consolidated financial
        statements.*
  F2-4
  **TANDEM
        ENERGY HOLDINGS, INC.****(Successor
        to Tandem Energy Corporation)**
  **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **For
        the Period From January 1, 2007 through October 26, 2007 and the Year Ended
        December 31, 2006**
 **2007**
                
                **2006**Increase
                    (decrease) in Cash and Cash EquivalentsCash
                    flows from operating activities:Net
                    income (loss)
                
                $
                (2,850,600
                )
                $
                6,294,520
                )Adjustments
                    to reconcile net income (loss) to net cashprovided
                    by operating activities:Depreciation,
                    depletion and amortization
                
                
                2,150,027
                
                
                2,641,315Accretion
                    of asset retirement obligation
                
                
                116,258
                
                
                137,222Amortization
                    of deferred loan fees
                
                
                222,223
                
                
                266,669Partnership
                    income
                
                
                (4,600
                )
                
                (49,877
                )Gain
                    on sale of real estate held for development
                
                
                (127,021
                )
                
                (401,470
                )Change
                    in fair value of derivatives
                
                
                3,636,450
                
                
                (3,547,748
                )Changes
                    in operating assets and liabilities:Decrease
                    in accounts receivable
                
                
                120,657
                
                
                266,633Increase
                    in inventory
                
                
                (11,801
                )
                
                (35,057
                )Increase
                    in other current assets
                
                
                (195,913
                )
                
                —Increase
                    (decrease) in accounts payable
                
                
                257,587
                
                
                (211,499
                )Increase
                    (decrease) in income taxes payable
                
                
                (138,398
                )
                
                753,550Decrease
                    in accrued liabilities and other
                
                
                (590,245
                )
                
                (119,461
                )Decrease
                    in derivatives
                
                
                (285,673
                )
                
                —Net
                    cash provided by operating activities
                
                
                2,298,951
                
                
                5,994,797Cash
                    flows from investing activities:Property
                    and equipment additions
                
                
                (1,311,028
                )
                
                (7,342,671
                )Partnership
                    distributions
                
                
                4,600
                
                
                55,200Proceeds
                    from sale of property and equipment
                
                
                —
                
                
                585,099Proceeds
                    from sale of real estate held for development
                
                
                129,143
                
                
                —Net
                    cash used in investing activities
                
                
                (1,177,285
                )
                
                (6,702,372
                )Cash
                    flows from financing activities:Payments
                    of bank borrowings
                
                
                (500,000
                )
                
                (500,000
                )Purchase
                    and retirement of common stock
                
                
                (44,500
                )
                
                —Net
                    cash used in financing activities
                
                
                (544,500
                )
                
                (500,000
                )Net
                    increase (decrease) in cash and cash equivalents
                
                
                577,166
                
                
                (1,207,575
                )Cash
                    and cash equivalents, beginning of year
                
                
                2,482,608
                
                
                3,690,183Cash
                    and cash equivalents, end of year
                
                $
                3,059,774
                
                $
                2,482,608Non-cash
                    financing and investing activities:Asset
                    retirement cost and obligation
                
                $
                (42,271
                )
                $
                77,545Cash
                    paid during the year for:Taxes
                
                $
                40,250
                
                $
                75,327Interest
                
                $
                2,771,510
                
                $
                3,063,202
 
 *The
        accompanying notes are an integral part of these consolidated financial
        statements.*
 F2-5
  **TANDEM
        ENERGY HOLDINGS, INC.****(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
        the Period From January 1, 2007 Through October 26, 2007 and the Year Ended
        December 31, 2006**
  **Note
        1 — Organization, Basis of Presentation and Nature of
        Operations**
  *Organization*
  Tandem
        Energy Holdings, Inc. (“Tandem”) is a publicly traded, non-reporting company. It
        was originally incorporated in Nevada as Las Vegas Major League Sports, Inc.
        (“Las Vegas”) on July 22, 1993, to engage in certain business activities
        associated with the Canadian Football League. In April 1994, it completed
        an
        initial public offering and began trading under the symbol LVTD. In 1996,
        Las
        Vegas filed for bankruptcy protection and ceased being a reporting company
        and
        ceased operations. In 1998, Las Vegas changed its name to Pacific Medical
        Group,
        Inc. (“Pacific”) in connection with a share exchange transaction with a
        privately-held company whose business plan was to engage in the manufacture
        and
        sale of medical products. That business was unsuccessful and Pacific ceased
        operations for some years. In February, 2005, Pacific changed its name to
        Tandem
        Energy Holdings, Inc. and changed its trading symbol to TDYH.PK. In June,
        2005,
        Tandem Energy Corporation, a privately held Colorado corporation (“TEC”), which
        had acquired certain oil and gas assets of Shamrock Energy Corporation, a
        privately held Texas corporation (“Shamrock”), became a wholly owned subsidiary
        of Tandem. TEC and Shamrock, independent oil and gas E & P companies
        headquartered in Midland, Texas, have been engaged in the oil and gas industry
        since 1977 and 2004, respectively.
  *Basis
        of Presentation*
  The
        acquisition by Tandem in June, 2005, of all of the outstanding stock of TEC
        is
        accounted for as a combination of entities under common control, sometimes
        referred to hereinafter as the “share exchange.” Consequently, the assets,
        liabilities and results of operations presented herein are the historical
        results of operations of Tandem and TEC. The financial statements presented
        herein are the historical financial statements of the combined entities.
        See
        Note 3 for a detailed discussion of this transaction.
  *Nature
        of Operations*
  Tandem
        based in Midland, Texas, is engaged in the exploration, development and
        production of oil and gas properties located primarily in Texas and New
        Mexico.
  Substantially
        all of Tandem’s oil and gas production is sold under short-term contracts which
        are market-sensitive. Accordingly, Tandem’s financial condition, results of
        operations and capital resources are highly dependent upon prevailing market
        prices of, and demand for, crude oil and natural gas. These commodity prices
        are
        subject to wide fluctuations and market uncertainties due to a variety of
        factors that are beyond the control of Tandem. These factors include the
        level
        of global demand for petroleum products, foreign supply of oil and gas, the
        establishment of and compliance with production quotas by oil-exporting
        countries, weather conditions, the price and availability of alternative
        fuels,
        and overall economic conditions, both foreign and domestic.
  **Note
        2 — Summary of Significant Accounting Policies**
  *Principles
        of Consolidation*
  The
        consolidated financial statements include the accounts of Tandem and its
        wholly
        owned subsidiaries, Tandem Energy Corporation and Mixon Drilling, Inc. All
        intercompany balances and transactions have been eliminated.
  *Estimates
        and Assumptions*
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and the disclosure of contingent assets and liabilities as of
        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. The accounting policy most affected by management’s
        estimates and assumptions is the reliance on estimates of proved reserves
        to
        compute the provision for depreciation, depletion and amortization (“DD&A”),
        and the determination of any impairment of long-lived assets.
  F2-6
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
  **Note
        2 — Summary of Significant Accounting Policies -
        (continued)**
  *Oil
        and Gas Properties*
  TEC
        uses
        the full cost method of accounting for exploration and development activities
        as
        defined by the Securities and Exchange Commission (SEC). Under this method
        of
        accounting, the costs of unsuccessful, as well as successful, exploration
        and
        development activities are capitalized as properties and equipment. This
        includes any internal costs that are directly related to exploration and
        development activities but does not include any costs related to production,
        general corporate overhead or similar activities. Gain or loss on the sale
        or
        other disposition of oil and gas properties is not recognized, unless the
        gain
        or loss would significantly alter the relationship between capitalized costs
        and
        proved reserves of oil and natural gas attributable to a country. Tandem
        has
        defined a cost center by country. Currently, all of Tandem’s oil and gas
        properties are located within the continental United States.
  Properties
        and equipment include costs that are excluded from costs being depreciated
        or
        amortized. Oil and gas costs excluded represent investments in unproved
        properties and major development projects in which Tandem owns a direct
        interest. These unproved property costs include nonproducing leasehold,
        geological and geophysical costs associated with leasehold or drilling interests
        and exploration drilling costs. All costs excluded are reviewed at least
        quarterly to determine if impairment has occurred. The amount of any impairment
        is transferred to the capitalized costs being amortized in the DD&A
        pool.
  *Depreciation,
        Depletion and Amortization*
  The
        depreciable base for oil and gas properties includes the sum of capitalized
        costs net of accumulated DD&A, estimated future development costs and asset
        retirement costs not accrued in oil and gas properties, less costs excluded
        from
        amortization and salvage. The depreciable base of oil and gas properties
        and
        mineral investments are amortized using the unit-of-production method based
        on
        total proved oil and gas reserves. Properties and equipment carrying values
        do
        not purport to represent replacement or market values.
  *Proved
        Oil and Gas Reserves*
  In
        accordance with Rule 4-10(a) of SEC Regulation S-X, proved oil and gas reserves
        are the estimated quantities of crude oil, natural gas, and natural gas liquids
        which geological and engineering data demonstrate with reasonable certainty
        to
        be recoverable in future years from known reservoirs under existing economic
        and
        operating conditions, i.e., prices and costs as of the date the estimate
        is
        made. Prices include consideration of changes in existing prices provided
        only
        by contractual arrangements, but not on escalation based upon future
        conditions.
  (i)
              Reservoirs
                  are considered proved if economic producibility is supported by
                  either
                  actual production or conclusive formation tests. The area of a
                  reservoir
                  considered proved includes (A) that portion delineated by drilling
                  and
                  defined by gas-oil and/or oil-water contacts, if any; and (B) the
                  immediately adjoining portions not yet drilled, but which can be
                  reasonably judged as economically productive on the basis of available
                  geological and engineering data. In the absence of information
                  on fluid
                  contracts, the lowest known structural occurrence of hydrocarbons
                  controls
                  the lower proved limit of the
                  reservoir.
  (ii)
              Reserves
                  which can be produced economically through application of improved
                  recovery techniques (such as fluid injection) are included in the
“proved”
                  classification when successful testing by a pilot project, or the
                  operation of an installed program in the reservoir, provides support
                  for
                  the engineering analysis on which the project or program was
                  based.
  F2-7
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
  **Note
        2 — Summary of Significant Accounting Policies -
        (continued)**
  *Proved
        Oil and Gas Reserves (continued)*
  (iii)
  Estimates
        of proved reserves do not include the following:
  (A)
              oil
                  that may become available from known reservoirs but is classified
                  separately as “indicated additional
                  reserves”;
  (B)
              crude
                  oil, natural gas, and natural gas liquids, the recovery of which
                  is
                  subject to reasonable doubt because of uncertainty as to geology,
                  reservoir characteristics, or economic
                  factors;
  (C)
              crude
                  oil, natural gas, and natural gas liquids, that may occur in undrilled
                  prospects; and
  (D)
              crude
                  oil, natural gas, and natural gas liquids, that may be recovered
                  from oil
                  shales, coal, gilsonite and other such
                  sources.
  *Ceiling
        Test*
  Under
        the
        full cost method of accounting, a ceiling test is performed each quarter.
        The
        full cost ceiling test is an impairment test prescribed by SEC Regulation
        S-X
        Rule 4-10. The ceiling test determines a limit, on a country-by-country basis,
        on the book value of oil and gas properties. Currently, all of Tandem’s
        operations are located in the United States. The capitalized costs of proved
        oil
        and gas properties, net of accumulated DD&A and the related deferred income
        taxes, may not exceed the estimated future net cash flows from proved oil
        and
        gas reserves, excluding future cash outflows associated with settling asset
        retirement obligations that have been accrued on the balance sheet, generally
        using prices in effect at the end of the period held flat for the life of
        production and including the effect of derivative instruments that qualify
        as
        cash flow hedges, discounted at 10%, net of related tax effects, plus the
        cost
        of unevaluated properties and major development projects excluded from the
        costs
        being amortized. If capitalized costs exceed this limit, the excess is charged
        to expense and reflected as additional accumulated DD&A.
  *Asset
        Retirement Obligation*
  Tandem
        follows the provisions of Statement of Financial Accounting Standards (“SFAS”)
        No. 143, *Accounting
        for Asset Retirement Obligations.* SFAS
        No. 143 requires Tandem to recognize a liability for the present value of
        all legal obligations associated with the retirement of tangible, long-lived
        assets and capitalize an equal amount as a cost of the asset. The cost of
        the
        abandonment obligations, less estimated salvage values, is included in the
        computation of depreciation, depletion and amortization.
  *Income
        Taxes*
  Tandem
        follows the asset and liability method prescribed by SFAS No. 109, *Accounting
        for Income Taxes.* Under
        this method of accounting for income taxes, deferred tax assets and liabilities
        are recognized for the future tax consequences attributable to differences
        between the financial statement carrying amounts of existing assets and
        liabilities and their respective tax bases. Deferred tax assets and liabilities
        are measured using enacted tax rates expected to apply to taxable income
        in the
        years in which those temporary differences are expected to be recovered or
        settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities
        of a change in enacted tax rates is recognized in income in the period that
        includes the enactment date.
  F2-8
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
  **Note
        2 — Summary of Significant Accounting Policies -
        (continued)**
  *Environmental
        Expenditures*
  Tandem
        is
        subject to extensive federal, state and local environmental laws and
        regulations. These laws regulate the discharge of materials into the environment
        and may require Tandem to remove or mitigate the environmental effects of
        the
        disposal or release of petroleum or chemical substances at various sites.
        Environmental expenditures are expensed or capitalized depending on their
        future
        economic benefit. Expenditures that relate to an existing condition caused
        by
        past operations and that have no future economic benefits are
        expensed.
 
 Liabilities
        for expenditures of a non-capital nature are recorded when environmental
        assessment and/or remediation is probable, and the costs can be reasonably
        estimated. Such liabilities are generally undiscounted unless the timing
        of cash
        payments for the liability or component is fixed or reliably determinable.
  *Hedging
        Activities*
  From
        time
        to time, Tandem may utilize derivative instruments, consisting of swaps,
        floors
        and collars, to attempt to reduce its exposure to changes in commodity prices
        and interest rates. Tandem accounts for its derivatives in accordance with
        SFAS
        No. 133, *Accounting
        for Derivative Instruments and Hedging Activities,* as
        amended. SFAS No. 133 requires that all derivative instruments be
        recognized as assets or liabilities in the balance sheet, measured at fair
        value. The accounting for changes in the fair value of a derivative depends
        on
        both the intended purpose and the formal designation of the derivative.
        Designation is established at the inception of a derivative, but subsequent
        changes to the designation are permitted. Tandem has elected not to designate
        any of its derivative financial contracts as accounting hedges and, accordingly,
        has accounted for these derivative financial contracts using mark-to-market
        accounting. Changes in fair value of derivative instruments which are not
        designated as cash flow hedges are recorded in other income (expense) as
        changes
        in fair value of derivatives.
  *Cash
        and Cash Equivalents*
  Tandem
        considers all cash and highly liquid investments with original maturities
        of
        three months or less to be cash equivalents.
  *Concentration
        of Credit Risk - Cash*
  Tandem
        maintains its cash balances at a single major financial institution. Certain
        balances may at times exceed the federally insured limits established by
        the
        Federal Deposit Insurance Corporation. Tandem has not experienced any losses
        in
        such accounts and believes it is not exposed to any significant credit
        risk.
  *Inventory*
  Inventory
        consists primarily of tubular goods and other well equipment which Tandem
        plans
        to utilize in its ongoing exploration and development activities and is carried
        at the lower of cost or market value.
  *Investment
        in Partnership*
  Tandem
        uses the equity method to account for its non-operating 33-1/3% interest
        in a
        real estate partnership.
  *Real
        Estate Held for Development*
  Tandem’s
        real estate held for development is at cost and relates to undeveloped land
        located near Tomball, Texas.
  *Debt
        Financing Costs*
  As
        discussed in Note 4, certain financing costs related to Tandem’s revolving
        line of credit have been capitalized. The deferred debt financing costs are
        being amortized over the term of the financing.
  F2-9
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
  **Note
        2 — Summary of Significant Accounting Policies -
        (continued)**
  *Stock-Based
        Compensation*
  Tandem
        has not issued any stock-based compensation to employees for the two years
        ended
        December 31, 2006 and 2005, except for the issuance of common stock as
        compensation discussed in Notes 3 and 11. Such issuances were recorded at
        the
        fair value of the stock at the time of issuance. As of December 31, 2006,
        Tandem
        does not have any other stock-based compensation plans or
        obligations.
  *Revenue
        Recognition and Gas Balancing*
  Tandem
        utilizes the sales method of accounting for oil, natural gas and natural
        gas
        liquids revenues whereby revenues, net of royalties, are recognized as the
        production is sold to purchasers. The amount of gas sold may differ from
        the
        amount to which Tandem is entitled based on its revenue interests in the
        properties. Tandem did not have any significant gas imbalance positions at
        December 31, 2006 or 2005.
  *Comprehensive
        Income*
  SFAS
        No.
        130, *Reporting
        Comprehensive Income,* established standards for reporting and displaying comprehensive income and
        its
        components (revenue, expenses, gains and losses) in a full set of
        general-purpose financial statements. There were no differences between net
        income and comprehensive income in 2006 or 2005.
  *Concentration
        Risks*
  Tandem
        sells its oil and natural gas production to various customers, serves as
        operator in the drilling, completion and operation of oil and gas wells,
        and
        from time to time enters into derivatives with various counterparties. When
        management deems appropriate, Tandem may obtain letters of credit to secure
        amounts due from its significant oil and gas purchasers and follow other
        procedures to monitor credit risk from joint owners and derivatives
        counterparties.
  *Accounts
        Receivable and Allowance for Doubtful Accounts*
  Tandem’s
        trade receivables consist of receivables from non-operators who own an interest
        in properties which Tandem operates. Tandem has the ability and the right
        to
        withhold oil and gas revenues from any owner who is delinquent in their
        payments. At October 25, 2007 and December 31, 20065, all trade receivables
        were
        collectable; therefore, the allowance for doubtful accounts was
        zero.
 
 *Recent
        Accounting Pronouncements*
 
 In
        September 2006, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standards (“SFAS”) No. 157, *Fair
        Value Measurements* .
        SFAS
        157 defines fair value as used in numerous accounting pronouncements,
        establishes a framework for measuring fair value in accordance with generally
        accepted accounting principles and expands disclosure requirements related
        to
        the use of fair value measures in financial statements. SFAS 157 will be
        effective for the Company’s financial statements for the fiscal year beginning
        January 1, 2008; however, earlier application is encouraged.
  In
        February 2007, the FASB issued SFAS 159, *The
        Fair Value Option for Financial Assets and Financial Liabilities, Including
        an
        Amendment of FASB Statement No. 115,* which
        will become effective on January 1, 2008. FAS 159 permits entities to
        measure eligible financial assets, financial liabilities and firm commitments
        at
        fair value, on an instrument-by-instrument basis, that are otherwise not
        permitted to be accounted for at fair value under other generally accepted
        accounting principles. The fair value measurement election is irrevocable
        and
        subsequent changes in fair value must be recorded in earnings.
  F2-10
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
  **Note
        2 — Summary of Significant Accounting Policies -
        (continued)**
  *Recent
        Accounting Pronouncements (continued)*
 
 In
        April 2007, the FASB issued FASB Staff Position FIN 39-1, *Amendment
        of FASB Interpretation No. 39* .
        FSP FIN
        39-1 clarifies that a reporting entity that is party to a master netting
        arrangement can offset fair value amounts recognized for the right to reclaim
        cash collateral (a receivable) or the obligation to return cash collateral
        (a
        payable) against fair value amounts recognized for derivative instruments
        that
        have been offset under the same master netting arrangement. FSP FIN 39-1
        is
        effective for financial statements issued for fiscal years beginning after
        November 15, 2007.
 
 In
        December 2007, the FASB issued SFAS No. 141 (revised 2007), *Business
        Combinations* (“SFAS
        141(R)”), which replaces FASB Statement No. 141. SFAS 141(R) establishes
        principles and requirements for how an acquirer recognizes and measures in
        its
        financial statements the identifiable assets acquired, the liabilities assumed,
        any non- controlling interest in the acquiree and the goodwill acquired.
        The
        Statement also establishes disclosure requirements that will enable users
        to
        evaluate the nature and financial effects of the business combination. SFAS
        141(R) is effective for acquisitions that occur in an entity’s fiscal year that
        begins after December 15, 2008.
 
 In
        December 2007, the FASB issued SFAS No. 160, *Noncontrolling
        Interests in Consolidated Financial Statements—an amendment of ARB
        No. 51* .
        SFAS
        160 requires that accounting and reporting for minority interests will be
        recharacterized as noncontrolling interests and classified as a component
        of
        equity. SFAS 160 also establishes reporting requirements that provide sufficient
        disclosures that clearly identify and distinguish between the interests of
        the
        parent and the interests of the noncontrolling owners. SFAS 160 applies to
        all
        entities that prepare consolidated financial statements, except not-for-profit
        organizations, but will affect only those entities that have an outstanding
        noncontrolling interest in one or more subsidiaries or that deconsolidate
        a
        subsidiary. This statement is effective as of the beginning of an entity’s first
        fiscal year beginning after December 15, 2008.
 
 As
        a
        result of the sale of TEC’s assets on October 26, 2007, as more fully described
        in Note 13, these recent accounting pronouncements will have no future impact
        on
        the Company.
 
 **Note
        3 — Common Stock and Significant Transactions**
  On
        September 7, 2007 and September 11, 2007, Tandem purchased 10,000 and 12,000
        shares of Common Stock, respectively, from third parties in private transactions
        for $44,500. These shares have been retired and are no longer carried as
        outstanding at October 26, 2007.
  **Note
        4 — Other Current Assets**
  Financing
        costs totaling $800,000 relating to Tandem’s revolving line of credit, as
        discussed in Note 6, were capitalized during 2005. Tandem is amortizing these
        costs to expense over the term of the financing; the portion scheduled to
        be
        amortized in 2007 ($222,223) is included in other current assets.
  F2-11
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
  **Note
        5 — Asset Retirement Obligation**
  The
        following table summarizes the changes in the Tandem’s asset retirement
        obligation for the period ended October 26, 2007 and the year ended December
        31,
        2006 as follows:
 
 Balance,
                  January 1, 2006
              
              $
              1,640,940Additions
                  related to new properties
              
              
              77,545Accretion
                  expense
              
              
              137,222Balance,
                  December 31, 2006
              
              
              1,855,707Revisions
                  of previous estimates
              
              
              (42,271
              )Accretion
                  expense
              
              
              116,258Balance,
                  October 26, 2007
              
              $
              1,929,694
  **Note
        6 — Long-Term Debt**
  TEC’s
        long-term debt at October 26, 2007, consisted of the following:
 
 Revolving
                  line of credit
              
              $
              20,500,000Notes
                  to former TEC and Shamrock owners
              
              
              21,000,000Total
                  long-term debt
              
              
              41,500,000Less
                  current portion of long-term debt
              
              
              (20,500,000
              )Long-term
                  debt, net of current portion
              
              $
              21,000,000
  *Revolving
        Line of Credit*
  On
        June
        8, 2005, TEC entered into a revolving line of credit agreement with a bank
        to
        provide an initial borrowing base of up to $23.0 million. The borrowing base
        is
        reduced by payments of $250,000 each month beginning July 1, 2005, and the
        lender may redetermine the borrowing base at its discretion. The revolving
        line
        of credit expires June 8, 2008. Under the terms of the third amendment to
        the
        credit agreement, dated September 21, 2006, and in anticipation of the impending
        asset sale referred to in Note 12, the borrowing base was set at $21.35 million
        and the mandatory principal reduction requirement was waived until December
        1,
        2006. The December 1, 2006 principle reduction requirement was waived. On
        June
        1, 2007, under the terms of the fourth amendment to the credit agreement,
        the
        new borrowing base was set at $21.1 million with mandatory principle reduction
        requirements of $250,000 per month beginning October 1, 2007. Since the
        revolving line of credit is due on June 8, 2008, TEC has reclassed the entire
        $20,500,000 as current as of October 26, 2007. As discussed more fully in
        Note
        13, the sale of the assets of TEC to Platinum Energy Resources, Inc., (Platinum)
        was consummated on October 26, 2007. TEC assigned all rights and obligations
        under the credit facility to Platinum. Pursuant to the amended credit facility,
        a new borrowing base was set at $5,000,000. All outstanding borrowings under
        the
        Credit Agreement were paid off at the closing of the Acquisition. Accordingly
        there are currently no outstanding borrowings under the Credit
        Agreement.
  F2-12
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
 
 **Note
        6 — Long-Term Debt - (continued)**
 
 The
        revolving line of credit, which is secured by Tandem’s oil and gas properties,
        bears interest at either the bank’s base rate or LIBOR, plus a margin which
        varies with the ratio of Tandem’s outstanding borrowings to a defined borrowing
        base. Tandem can choose periodically to change the interest rate base which
        applies to outstanding borrowings. As of October 26, 2007, $20.25 million
        due
        under the revolving line of credit bears interest payable at LIBOR plus 2.25%
        (7.09%), and $250,000 due under a floating rate loan bears interest at prime
        (7.75%).
  Under
        the
        terms of revolving line of credit agreement, Tandem must maintain certain
        financial ratios, must repay any amounts due in excess of the borrowing base,
        and may not declare any dividends or enter into any transactions resulting
        in a
        change in control, without the lender’s consent. In connection with the
        revolving line of credit, Tandem entered into crude oil and natural gas
        derivative swaps, puts and calls discussed in Note 8.
  *Notes
        to Former TEC and Shamrock Owners*
  Tandem
        issued a note payable to the sole stockholder of TEC as part of the overall
        consideration for the share exchange in 2005 when Tandem acquired TEC. Such
        note, in the principle amount of $12.0 million, bears interest at a national
        bank’s prime rate (7.75% at October 26, 2007) payable monthly. Interest only is
        due through May 31, 2009, at which point the note and any unpaid interest
        is due
        in full.
  TEC
        issued notes payable to three individuals as part of the overall consideration
        for the acquisition of the Shamrock properties in 2005. Such notes, in the
        aggregate totaling $9.0 million, bear interest at a national bank’s prime rate
        (7.75% at October 26, 2007) payable monthly. Interest is due through May
        31,
        2009, at which point the note and any unpaid interest is due in full.
  *Scheduled
        Maturities*
  Annual
        maturities of TEC’s long-term debt for the periods ended October 26 are as
        follows:
 
 2008
              
              $
              20,500,0002009
                  (1)
              
              
              21,000,000
  (1)
              As
                  discussed more fully in Note 13, the sale of the assets of TEC
                  to Platinum
                  Energy Resources, Inc., was consummated on October 26, 2007. All
                  outstanding notes and the bank loan balance ($41,500,000, plus
                  accrued
                  interest) were paid off at the closing of the
                  Acquisition.
  F2-13
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
 
 **Note
        7 — Income Taxes**
 
 Deferred
        tax assets and liabilities are the result of temporary differences between
        the
        financial statement carrying values and the tax basis of assets and liabilities.
        For the period ended October 26, 2007 and the year ended December 31, 2006,
        Tandem’s income tax benefit (expense) is summarized as follows:
  **Current**
              
              
              **Deferred**
              
              
              **Total**Period
                  ended October 26, 2007:State
                  income tax benefit (expense)
              
              $
              —
              
              
              —
              
              
              —Federal
                  income tax benefit ( expense)
              
              
              —
              
              
              —
              
              
              —$
              —
              
              
              —
              
              
              —
  **Current**
              
              **Deferred**
              
              **Total**Year
                  ended December 31, 2006:State
                  income tax benefit (expense)
              
              $
              —
              
              
              —
              
              
              —Federal
                  income tax benefit (expense)
              
              
              (109,747
              )
              
              —
              
              
              (109,747
              )$
              (109,747
              )
              
              —
              
              
              (109,747
              )
 
 Income
        tax benefit (expense) for the period ended October 26, 2007 and the year
        ended
        December 31, 2006, differs from the expected amount based on Tandem’s income
        (loss) before income taxes computed at the federal statutory income tax rate
        as
        follows:
 
 **October
                    26, 2007**
              
              **December
                    31, 2006**Income
                  tax benefit (expense) computed at statutory rate
              
              $
              969,204
              
              
              (2,177,451
              )Nondeductible
                  expenses and other
              
              
              (461
              )
              
              (1,111
              )Alternative
                  minimum tax
              
              
              -
              
              
              (34,421
              )Utilization
                  (carryover) of net operating losses
              
              
              (968,743
              )
              
              2,103,236Total
                  income tax benefit (expense)
              
              $
              -
              
              
              (109,747
              )
  At
        October 26, 2007, Tandem’s future financial and tax net operating loss
        carryforward benefits were approximately $8.5 million and $3.8 million,
        respectively, and are available to reduce future income taxes. If not utilized,
        the carryforwards will expire in 2027.
  **Note
        8 — Marketing Arrangements and Major Customers**
  Tandem
        sells substantially all of its crude oil production under short-term contracts
        based on prices quoted on the New York Mercantile Exchange (“NYMEX”) for spot
        West Texas Intermediate contracts, less agreed-upon deductions which vary
        by
        grade of crude oil.
  The
        majority of Tandem’s natural gas production is sold under short-term contracts
        based on pricing formulas which are generally market responsive. From time
        to
        time, Tandem may also sell a portion of the gas production
  F2-14
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
 
 **Note
        8 — Marketing Arrangements and Major Customers -
        (continued)**
 
 under
        short-term contracts at fixed prices. Tandem believes that the loss of any
        of
        its oil and gas purchasers would not have a material adverse effect on its
        results of operations due to the availability of other purchasers.
  During
        the period ended October 26, 2007, three customers accounted for approximately
        68% and for the year ended December 31, 2006, two customers accounted for
        approximately 80%, of Tandem’s crude oil and natural gas revenues. Tandem
        believes that the loss of any of Tandem’s significant customers would not create
        a financial risk as Tandem’s oil and gas production can be sold to others at
        similar prices.
  **Note
        9 — Price, Interest Rate and Credit Risk Management
        Activities**
  *Price
        and Interest Rate Risks*
  Tandem
        engages in price risk management activities from time to time. These activities
        are intended to manage Tandem’s exposure to fluctuations in commodity prices for
        natural gas and crude oil. Tandem utilizes derivative financial instruments,
        primarily price collars, puts and calls, as the means to manage this price
        risk.
        In addition to these financial transactions, Tandem is a party to various
        physical commodity contracts for the sale of hydrocarbons that cover varying
        periods of time and have varying pricing provisions. Under SFAS No. 133, *Accounting
        for Derivative Instruments and Hedging Activities,* as
        amended by SFAS Nos. 137, 138 and 149, these various physical commodity
        contracts qualify for the normal purchases and normal sales exception and
        therefore, are not subject to hedge accounting or mark-to-market accounting.
        The
        financial impact of these various physical commodity contracts is included
        in
        revenues at the time of settlement, which in turn affects average realized
        hydrocarbon prices.
  During
        2006 and 2005, as discussed in Note 6, Tandem’s revolving line of credit
        required Tandem to execute various crude oil and natural gas swaps, collars,
        puts and calls (derivative financial instruments). Tandem has elected not
        to
        designate any of its derivative financial contracts as accounting hedges
        and,
        accordingly, has accounted for these derivative financial contracts using
        mark-to-market accounting. For the period ended October 26, 2007, Tandem
        recognized losses on its hedging activities of $4.2 million, including a
        mark-to-market loss of $3.7 million at October 26, 2007. For the year ended
        December 31, 2006, Tandem recognized gains on its hedging activities of
        $3.3 million, including a mark-to-market gain of $3.5 million at
        December 31, 2006.
  Presented
        below is a summary of Tandem’s crude oil and natural gas derivative financial
        contracts at October 26, 2007, with crude oil prices expressed in dollars
        per
        barrels of crude oil and notional crude oil volumes in barrels of crude oil
        per
        year; and natural gas prices expressed in dollars per million British thermal
        units ($/MMBtu) and notional natural gas volumes in million British thermal
        units per year (MMBtuy). As indicated, Tandem does not have any financial
        derivative contracts that extend beyond October 2009.
  Tandem
        accounts for its financial derivative contracts using mark-to-market accounting.
        The total fair value of the crude oil and natural gas financial derivative
        contracts at October 26, 2007, was a liability of approximately
        $4.2 million. The sale
        of TEC’s assets, as more fully described in Note 13, includes the derivative
        contracts and the associated liabilities described herein.
  F2-15
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
  **Note
        9 — Price, Interest Rate and Credit Risk Management Activities -
        (continued)**
  **Period**
              
              
              **Instrument
                  Type**
              
              
              **Total
                  Volumes (MMBTU/BBL)**
              
              
              **Weighted
                  Average (Floor/Ceiling)**
              
              
              **Fair
                  Value Asset/ (Liability) (stated in
                  thousands)**2008
              
              
              Gas
                  Collar
              
              
              462,000
              
              
              5.00/11.02
              
              
              (15
              )Gas
                  Call Option Sold
              
              
              462000
              
              
              9.10
              
              
              (309
              )Gas
                  Call Option Purchased
              
              
              462,000
              
              
              12.00
              
              
              101Gas
                  Put Option Sold
              
              
              462,000
              
              
              5.00
              
              
              (86
              )Gas
                  Put Option Purchased
              
              
              462,000
              
              
              6.00
              
              
              57Oil
                  Collar
              
              
              136,336
              
              
              40.00/72.10
              
              
              (2,358
              )Oil
                  Call Option Sold
              
              
              150,000
              
              
              67.00
              
              
              (3,233
              )Oil
                  Call Option Purchased
              
              
              150,000
              
              
              72.10
              
              
              2,5972009
              
              
              Oil
                  Swaps
              
              
              120,000
              
              
              71.00
              
              
              (961
              )Total
                  fair value liability
              
              
              
              
              
              
              
              $
              (4,207
              )
  The
        fair
        value of Tandem’s financial derivative contracts at October 26, 2007 are shown
        in the accompanying financial statements as follows (in thousands):
 
 Fair
                  value of commodity derivative:Current
                  portion
              
              $
              (3,246
              )Long-term
                  portion
              
              
              (961
              )Total
                  fair value liability
              
              $
              (4,207
              )
  The
        natural gas and crude oil prices shown in the above table are based on the
        corresponding NYMEX index and have been valued using actively quoted prices
        and
        quotes obtained from the counterparties to the derivative agreements. The
        above
        prices represent a weighted average of several contracts entered into and
        are on
        a per MMBtu or per barrel basis for gas and oil derivatives, respectively.
        Total
        volumes shown for the crude oil collar reflect net volumetric positions with
        a
        single counterparty under which contracts provide for netting of all settlement
        amounts.
 
 The
        following table summarizes the estimated fair value of financial instruments
        and
        related transactions at October 26, 2007 (in millions):
  **Carrying**
                **Amount**
              
              
              **Estimated**
                **Fair
                  Value (1)**Long-Term
                  Debt
              
              $
              21.0
              
              
              21.0NYMEX-Related
                  Commodity DerivativeMarket
                  Positions (1)
              
              $
              4.2
              
              
              4.2
 
 (1) Estimated
        fair values have been determined by using available market data and valuation
        methodologies. Judgment is required in interpreting market data and the use
        of
        different market assumptions or estimation methodologies may affect the
        estimated fair value amounts.
  F2-16
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
 
 **Note
        10 — Commitments and Contingencies**
 
 *Leases*
  Tandem
        leases office space from third parties under non-cancelable operating leases
        that expires May 31, 2010. Beginning in 2006, Tandem also leased office
        equipment and a compressor in the Tomball field. Rental expense pursuant
        to
        these leases amounted to $135,128 and $34,146 for the years ended December
        31,
        2006 and 2005, respectively. Future minimum annual lease payments under the
        non-cancelable lease for the years ending December 31 are as
        follows:
 
 2008
              
              
              136,2572009
              
              
              125,8202010
              
              
              121,3202011
              
              
              80,880Thereafter
              
              
              —$
              464,277
  *Legal
        Proceedings*
  Except
        as
        discussed in Note 14, Tandem is not currently a defendant in any lawsuit
        arising
        in the ordinary course of business.
  **Note
        11 — Related Party Transactions**
 
 During
        the period ended October 26, 2007, Mixon Drilling Company, a wholly owned
        subsidiary of TEC, received approximately $49 thousand from a major shareholder
        to drill a well in southeast Texas. The shareholder is neither an employee
        nor a
        director of TEC, and the contract drilling rate was commensurate with third
        party rates.
 
 **Note
        12 — Oil and Gas Properties**
  The
        following table sets forth changes in Tandem’s capitalized costs for oil and gas
        properties for the period ended October 26, 2007 and the year ended December
        31,
        2006:
  **Intangible**
                **Costs**
              
              
              **Lease
                  & Well**
                **Equipment**
              
              
              **Leasehold**
                **Cost**
              
              
              **Total**Balance
                  at December 31, 2006
              
              
              9,507,070
              
              
              12,826,808
              
              
              13,305,660
              
              
              35,639,538Additions
              
              
              585,751
              
              
              836,489
              
              
              (308,537
              )
              
              1,113,703Balance
                  at October 26, 2007
              
              $
              10,092,821
              
              
              13,663,297
              
              
              12,997,123
              
              
              36,753,241
  **Note
        13 — Subsequent Event - Sale of Tandem Assets**
  On
        January 19, 2006, Tandem announced that it had executed a definitive merger
        agreement (“Merger Agreement”) with Platinum, a publicly-owned entity, for the
        acquisition of 100% of the outstanding stock of Tandem for total cash
        consideration of approximately $102 million.
  F2-17
  **TANDEM
        ENERGY HOLDINGS, INC.**
 **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
 
 **Note
        13 — Subsequent Event - Sale of Tandem Assets
        (continued)**
 
 On
        October 5, 2006, Platinum and Tandem announced that the proposed merger had
        been
        terminated, and announced a restructured transaction from a merger transaction
        to an acquisition of the assets of Tandem’s operating subsidiary TEC, pursuant
        to a plan of reorganization under Section 368(a)(1)(C) of the Internal Revenue
        Code. As a part of the new Asset Acquisition Agreement and Plan of
        Reorganization, dated October 4, 2006, Platinum Energy will acquire all of
        the
        assets and assume substantially all of the liabilities of TEC, including
        approximately $42 million of TEC’s debt, in exchange for the issuance of
        approximately 8 million Platinum shares to TEC shareholders.
  On
        October 26, 2007, the sale of TEC’s assets to Platinum was consummated and
        closed. The total number of shares received by TEC was 7,692,308, based on
        $60
        million divided by the per share cash value of the Platinum IPO trust account
        at
        the time of closing. The per share cash value was $7.80 as of the closing
        date.
        Under the terms of the agreement, TEC will liquidate, dividend the Platinum
        shares to Tandem, and cause Platinum to register the 7.7 million shares issued
        to TEC. Once the registration of the shares is complete, Tandem will distribute
        the Platinum shares to Tandem’s shareholders.
 
 **Note
        14 — Litigation**
 
 As
        discussed in Note 3, in early March, 2005, Tandem, whose board was comprised
        solely of one of its promoters, Lyle Mortensen, issued 20 million restricted
        shares of its common stock to Mr. Mortensen. Some of these shares were
        subsequently transferred by Mr. Mortensen to others including principals
        of TEC
        and Shamrock, Tim Culp, Dyke Culp and Jack Chambers, in late March, 2005.
        Concurrently, Mr. Mortensen resigned as a director and officer of Tandem.
        Tandem’s board cancelled all of the 20 million shares on the grounds that the
        stock was issued without consideration from Mr. Mortensen, in that the shares
        were originally issued in fulfillment of a planned acquisition of TEC/Shamrock
        by a Texas corporation formed by Mr. Mortensen to facilitate a contemplated
        merger of the new Texas corporation and Tandem. This contemplated merger
        never
        occurred. All of the cancelled shares were returned to Tandem, except for
        2.878
        million shares controlled by Mr. Mortensen. Management of Tandem believes
        that
        all of the shares controlled by Mr. Mortensen are null and void and has
        instructed its common stock transfer agent to place a hold on the Mr. Mortensen
        common stock certificates. On May 17, 2006, Tandem received notification
        from a
        third party claiming to be a “holder in due course” of a certificate
        representing 2.7
 million
        shares of Tandem common stock controlled by Mr. Mortensen and a demand that
        certificate be reissued without a restrictive legend as 2.7 million free-trading
        shares. Management of Tandem has and will continue to vigorously contest
        the
        third party claim.
  On
        May
        23, 2006, Tandem filed a lawsuit in Nevada District Court against Tandem’s
        transfer agent, the third party and three other defendants. The third party,
        as
        well as the three other defendants, successfully challenged the jurisdiction
        of
        the Nevada court over them and were therefore able to be excluded from the
        lawsuit, which proceeded without them and resulted in the court rendering
        a
        judgment that the certificates evidencing the shares are invalid and void
        and
        directing Tandem’s transfer agent to void the certificates if presented for
        transfer, as well as enjoining the transfer agent from transferring the
        certificates if so presented.
  The
        third
        party filed a competing lawsuit against Tandem and Platinum in the Florida
        Circuit court on or about June 14, 2006, seeking a declaration by the court
        that
        Tandem’s cancellation of the shares was improper and that the third party is the
        rightful owner of the shares, and an injunction prohibiting Tandem and Platinum
        from taking any action in detriment to his alleged rights in and to the shares.
        Tandem challenged the jurisdiction of the Florida court over it since it
        has had
        no contact with the state of Florida, and was successful in getting the judge
        in
        that lawsuit to enter an order dismissing the entire complaint filed by the
        third party on the grounds that the court did not have jurisdiction over
        the
        matter. The third party then sought approval of the court to file an amended
        complaint, but prior to any ruling by the court, the third party dismissed
        his
        lawsuit. On June 12, 2007, the third party filed a lawsuit in the United
        States
        District Court for the Western District of Texas, Midland-Odessa Division,
        against
  F2-18
  **TANDEM
        ENERGY HOLDINGS, INC.** **(Successor
        to Tandem Energy Corporation)**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **For
        the Period January 1, 2007 through October 26, 2007 and the Year Ended December
        31, 2006**
 
 **Note
        14 — Litigation (continued)**
 
 Tandem,
        TEC, and Messrs. Yocham, Culp, Chambers and Cunningham, and Tandem's transfer
        agent alleging conversion and conspiracy to convert with respect to the
        certificate representing the 2.7 million shares, and the Tandem, TEC and
        the
        other defendants in this lawsuit are vigorously contesting these allegations.
        Accordingly, based on SFAS No. 5, Accounting for Contingencies, no liability
        has
        been recorded in the accompanying consolidated financial
        statements.
  On
        September 25, 2006, Tandem filed a lawsuit against Mr. Mortensen and Mr.
        Mortensen’s corporate affiliate in the Judicial District Court in Tarrant
        County, Texas, the domicile of Mr. Mortensen and his affiliate, seeking a
        declaration by the court that the certificates issued to Mr. Mortensen and
        subsequently transferred to his affiliate are void, that the certificates
        were
        properly cancelled by Tandem and that the transfer agent is authorized to
        cancel
        and destroy the certificates. In addition, Tandem is seeking a temporary
        and
        permanent injunction against Mr. Mortensen, his affiliate and any other person
        in possession of the certificates prohibiting any transfer or other disposition
        of the certificates and ordering that they be cancelled. An answer in this
        lawsuit was filed by Mr. Mortensen and his affiliate, and Tandem is now
        proceeding with a vigorous prosecution of this case.
 
 On January
        16th, 2008, Exxon Mobil Corporation filed a petition in the 270 th District
        Court of Harris County, Texas, naming TEC and a third party, Merenco Realty,
        Inc., demanding environmental remediation of certain properties in Tomball,
        Texas. In 1996, pursuant to an assignment agreement, Exxon Mobil sold certain
        oil and gas leasehold interests and real estate interests in Tomball, Texas
        to
        TEC’s predecessor in interest, Merit Energy Corporation. In 1999, TEC assigned
        its 50% undivided interest in one of the tracts in the acquired property
        to
        Merenco, an affiliate of TEC, owned 50% by our chairman of the board, Tim
        Culp.
        In October 2007, the Texas Railroad Commission notified Exxon Mobil of an
        environmental site assessment alleging soil and groundwater contamination
        for a
        site in the area of Tomball, Texas. Exxon Mobil believes that the site is
        one
        which was sold to TEC and claims that TEC is obligated to remediate the site
        under the assignment agreement. Exxon Mobil has requested that the court
        declare
        the defendants obligated to restore and remediate the properties and has
        requested any actual damages arising from breach and attorneys’ fees. We believe
        that Exxon Mobil’s claim that TEC is responsible for any remediation of such
        site is without merit and we intend to vigorously defend ourselves against
        this
        claim. However, no assurance can be given that we will prevail in this matter.
        Platinum acquired substantially all the assets and liabilities of TEC in
        the TEC
        acquisition. Merenco was not acquired by Platinum in the TEC acquisition
        and
        Platinum’s chairman, Tim Culp, continues to have a 50% ownership interest in
        Merenco.
 
 F2-19




**SIGNATURES**
  Pursuant
        to the requirements of Section 13 or 15(d) 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.





**Platinum
                Energy Resources, Inc.**By:
            /s/
                Barry KostinerName:
            Barry
                KostinerTitle:
            Chief
                Executive OfficerDate:
                April 1, 2008









**POWER
      OF ATTORNEY**





The
      registrant and each person whose signature appears below hereby appoint Tim
      Culp
      and Barry Kostiner as attorneys-in-fact with full power of substitution,
      severally, to execute in the name and on behalf of the registrant and each
      such
      person, individually and in each capacity stated below, one or more amendments
      to the annual report which amendments may make such changes in the report as
      the
      attorney-in-fact acting deems appropriate and to file any such amendment to
      the
      report with the Securities and Exchange Commission.





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.







Signature
            
            Title
            
            DateBy:
            /s/
                Barry Kostiner
            
            Chief
                Executive Officer, (Principal Executive and
            
            April
                1, 2008Barry
                  Kostiner
            
            Financial
                and Accounting Officer) Secretary and DirectorBy:
            /s/
                Tim G. Culp
            
            Chairman
                of the Board and Director
            
            April
                1, 2008Tim
                G. CulpBy:
            /s/
                William C. Glass
            
            President
                and Director
            
            April
                1, 2008William
                C. Glass




48