**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**








**FORM
      10-K/A**




**(Amendment
      No. 2)**




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





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





**o** **TRANSITION 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**









**EXPLANATORY
      NOTE**





The
      purpose of this Amendment No. 2 to our Annual Report on Form 10-K for our fiscal
      year ended December 31, 2007 is to amend Items 2, 6, 7 and 8 included in
      our original filing made on April 1, 2008, as amended on April 4, 2008 (the
      “Prior Filing”) as follows:




Item
      2.  Properties (beginning on page 20): The
      description of properties has been amended to update daily net production
      information.




Item
      6.
      Selected Financial Data (beginning on page 27): The selected financial data
      has
      been amended to include five years of selected financial and operational data
      for Tandem Energy Holdings, Inc. (“Tandem”), as the former parent company of
      Tandem Energy Corporation (“TEC”), the assets of which we acquired on October
      26, 2007.





Item
      7.
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations (beginning on page 29): Management’s Discussion and Analysis of
      Financial Condition and Results of Operations has been amended to include pro
      forma consolidated results of operations for the years ended December 31, 2007
      and 2006 and TEC historical results of operations for the period from January
      1,
      2007 through October 26, 2007 compared to the year ended December 31, 2006
      and
      for the year ended December 31, 2006 as compared to the year ended December
      31,
      2005. TEC’s parent company, Tandem, held assets consisting largely of its
      investment in TEC, and, accordingly, the consolidated financial statements
      of
      Tandem represent the TEC assets.





Item
      8.
      Financial Statements and Supplementary Data (beginning on page F1): The audited
      financial statements for Tandem have been amended to include financial
      information for the fiscal year ended December 31, 2005.





In
      accordance with Rule 12b-15 under the Securities Exchange Act of 1934, this
      Amendment No. 2 also includes currently dated certifications from the Company’s
      principal executive officer and principal financial officer as required by
      Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.





Except
      as
      described above, this Amendment No. 2 does not amend any other information
      set
      forth in the Prior Filing and the Company has not updated disclosures contained
      therein to reflect any events that occurred at a date subsequent to the date
      of
      the Prior Filing.





You
      should not deem the filing of this Amendment No. 2 to be an admission that
      our
      Form 10-K filed on April 1, 2008 or our Amendment No. 1. to our Form 10-K filed
      on April 4, 2008, when made, included any known, untrue statement of material
      fact or knowingly omitted to state a material fact necessary to make a statement
      in such filing not misleading.












Page**PART
                I****Item
                1.**
            **Business.**
            2**Item
                1A.**
            **Risk
                Factors.**
            11**Item
                1B.**
            **Unresolved
                Staff Comments.**
            20**Item
                2.**
            **Properties.**
            20**Item
                3.**
            **Legal
                Proceedings.**
            24**Item
                4.**
            **Submission
                of Matters to a Vote of Security Holders.**
            24**PART
                II****Item
                5.**
            **Market
                For Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of****Equity
                Securities.**
            25**Item
                6.**
            **Selected
                Financial Data.**
            27**Item
                7.**
            **Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations.**
            29**Item 7A.**
            **Quantitative
                and Qualitative Disclosures About Market Risk.**
            42**Item
                8.**
            **Financial
                Statements and Supplementary Data.**
            43**Item
                9.**
            **Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure.**
            44**Item 9A.**
            **Controls
                and Procedures.**
            44**Item 9B.**
            **Other
                Information.**
            45**PART
                III****Item
                10.**
            **Directors
                and Executive Officers of the Registrant and Corporate
                Governance.**
            46**Item
                11.**
            **Executive
                Compensation.**
            49**Item
                12.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters.**
            61**Item
                13.**
            **Certain
                Relationships and Related Transactions and Director
                Independence.**
            65**Item
                14.**
            **Principal
                Accountant Fees and Services.**
            69**PART
                IV****Item
                15.**
            **Exhibits
                and Financial Statement Schedules.**
            71










**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 33.




**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 since the
      acquisition on October 26, 2007 averaged 241 Bbls of oil and 656 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
      since the acquisition on October 26, 2007 averaged 111 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 since the
      acquisition on October 26, 2007 averaged 1 Bbls of oil and 631 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.





*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
      since the acquisition on October 26, 2007 averaged 78 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 since the acquisition on October
      26, 2007 averaged 42 Bbls of oil and 96 Mcf per day. The field is also producing
      approximately 150 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
      since the acquisition on October 26, 2007 averaged 37 Bbls of oil per day.
      The
      field is also producing approximately 180 Bbls of water per day.




*Lothian
      Properties.* In
      December 2007 we purchased, for $6.2 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.




21





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 numbers of wells during the period
      from
      the closing of the TEC acquisition on October 26, 2007 through December 31,
      2007. No exploratory wells were drilled during the presented
      periods.




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




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
      any
      necessary 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.




22




**Reserve
      Report Summary**





Prior
      to
      the TEC acquisition, Tandem had engaged Williamson Petroleum Consultants, Inc.
      (“WPC”), as its independent petroleum engineers. WPC performed an engineering
      evaluation to estimate proved reserves and future net revenues from TEC’s oil
      and gas properties and issued their report thereon as of December 31, 2007.
      Certain information utilized in the preparation of this report 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 Tandem and TEC. 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
      their report 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




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





A
      summary
      of the total proved reserves of 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.





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





23




**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




24




**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




25




(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/ANovember
                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.




26





**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, and 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. The
      selected data provided are not necessarily indicative of Platinum’s future
      results of operations or financial performance.




**Period
                  From**
                **April
                  25, 2005**
                **(Inception)****to**
                **December
                  31,**
                **2005**
            
            **Year
                  Ended**
                **December
                  31,**
                **2006**
            
            **Year
                  Ended**
                **December
                  31,**
                **2007**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 - increase (decrease)
            
            $
            —
            
            $
            —
            
            $
            (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
            
            $
            —
            
            $
            —
            
            $
            —




**December
                31,**
              **2005**
            
            
            **December
                31,**
              **2006**
            
            
            **December
                31,**
              **2007**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




27





**Tandem
      Selected Historical Financial Information**





The
      following table sets forth certain selected financial and operational data
      of
      Tandem as the former parent company of TEC. TEC was the sole subsidiary of
      Tandem. Tandem’s assets consisted largely of its investment in TEC, and,
      accordingly, the consolidated financial statements of Tandem represent the
      assets that were acquired and liabilities that were assumed by
      Platinum. The selected financial information presented below was derived from
      Tandem’s audited consolidated financial statements for the period January 1,
      2007 through October 26, 2007 and for the three year period ended December
      31,
      2006, and from Tandem’s unaudited consolidated financial statements for the year
      ended December 31, 2003. The unaudited selected financial information for the
      year ended December 31, 2003 is presented for TEC only and does not include
      financial information reflecting the acquisition of the properties of Shamrock
      Energy Corporation. The operational data for all periods presented is unaudited.
      All the data should be read together with Tandem’s historical consolidated
      financial statements and accompanying notes and Tandem’s Management’s Discussion
      and Analysis of Financial Condition and Results of Operations presented
      elsewhere in this report. The selected data provided are not necessarily
      indicative of Tandem’s future results of operations or financial
      performance.




**For
                the Years Ended December 31,**
            
            **January
                1 to October 26,****Unaudited**
            
            **Audited**
            
            **Audited****2003**
            
            **2004**
            
            **2005**
            
            **2006**
            
            **2007**(in
                thousands, except per share, production and reserve
                information)Consolidated
                Income Statement Data:Operating
                revenues
            
            $
            5,360
            
            $
            8,018
            
            $
            14,249
            
            $
            18,051
            
            $
            13,985Lease
                operating expenses(1)
            
            
            3,093
            
            
            2,841
            
            
            4,273
            
            
            6,517
            
            
            5,500Net
                income (loss)
            
            
            696
            
            
            3,714
            
            
            (36,309
            )
            
            6,295
            
            
            (2,851
            )Net
                income (loss) per common shareBasic
                and diluted
            
            $
            0.23
            
            $
            1.24
            
            $
            (1.96
            )
            $
            0.26
            
            
            (0.12
            )Weighted
                average common stock and common stock equivalents
                outstandingBasic
                and diluted
            
            
            3,000
            
            
            3,000
            
            
            18,515
            
            
            23,799
            
            
            23,792Consolidated
                Balance Sheet Data:Total
                assets
            
            $
            4,374
            
            $
            8,520
            
            $
            34,650
            
            $
            36,903
            
            $
            36,477Total
                liabilities
            
            
            1,831
            
            
            3,227
            
            
            51,397
            
            
            47,356
            
            
            49,825Long-term
                debt, less current maturities
            
            
            1,300
            
            
            —
            
            
            42,000
            
            
            40,250
            
            
            21,000Total
                stockholders’ equity (deficit)
            
            
            2,543
            
            
            5,293
            
            
            (16,747
            )
            
            (10,453
            )
            
            (13,348
            )Consolidated
                Statement of Cash Flow Data:Cash
                flow provided by (used in)Operating
                activities
            
            $
            689
            
            $
            4,524
            
            $
            6,259
            
            $
            5,995
            
            $
            2,299Investing
                activities
            
            
            (475
            )
            
            (998
            )
            
            (6,751
            )
            
            (6,702
            )
            
            (1,177
            )Financing
                activities
            
            
            —
            
            
            (1,771
            )
            
            610
            
            
            (500
            )
            
            (545
            )Operating
                Data:Product
                salesOil
                (Bbl)
            
            
            96,459
            
            
            103,788
            
            
            156,503
            
            
            214,845
            
            
            165,282Gas
                (Mcf)
            
            
            462,817
            
            
            678,085
            
            
            723,634
            
            
            735,550
            
            
            560,900Boe
            
            
            173,595
            
            
            216,802
            
            
            277,109
            (2)
            
            337,437
            
            
            258,766Average
                sales pricesOil
                ($/Bbl)
            
            $
            29.91
            
            $
            40.48
            
            $
            56.18
            
            $
            62.94
            
            $
            61.68Gas
                ($/Mcf)
            
            $
            5.40
            
            $
            5.63
            
            $
            7.54
            
            $
            6.16
            
            $
            6.76Average
                Lifting Cost per Boe of Production:
            
            $
            17.82
            
            $
            13.10
            
            $
            15.42
            
            $
            19.31
            
            $
            21.25Proved
                reservesOil
                (Bbls)
            
            
            268,150
            
            
            988,597
            
            
            5,814,505
            
            
            5,539,928
            
            
            5,523,587Gas
                (Mcf)
            
            
            5,848,673
            
            
            16,603,591
            
            
            21,896,697
            
            
            20,786,645
            
            
            20,892,748Boe
            
            
            1,242,929
            
            
            3,755,862
            
            
            9,463,955
            (3)
            
            9,004,369
            
            
            9,005,712




28




The
      following unaudited information relates to TEC’s net and gross oil and gas wells
      and developed leasehold acres as of October 26, 2007:




**Net**
            
            **Gross**Productive
                oil wells
            
            
            201.3
            
            
            272.0Productive
                gas wells
            
            
            13.8
            
            
            21.0Total
                productive wells(4)
            
            
            215.1
            
            
            293.0Developed
                leasehold acres
            
            
            16,480
            
            
            21,550





(1)
            Lease
                operating expenses include all direct operating expenses, severance
                taxes
                on oil and gas, and ad valorem taxes associated with oil and gas
                properties.(2)
            Production
                on a Boe basis for 2005 was 28% higher than 2004. This increase was
                due
                primarily to the production from the oil and gas properties acquired
                from
                Shamrock in June, 2005.(3)
            Proved
                reserves increased approximately 250% from 2004 to 2005 due primarily
                to
                the oil and gas properties acquired from Shamrock in June, 2005 and
                the
                effect of higher pricing on the economic limit of the consolidated
                reserves at the end of 2005.(4)
            The
                total productive well count includes 40 oil wells and no gas wells
                completed in multiple zones.





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




On
      October 26, 2007, we acquired substantially all of the assets and assumed
      substantially all of the liabilities of TEC. Set forth below are:





(A)  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.





(B)  Results
      of operations for TEC for the period from January 1, 2007 through October 26,
      2007 as compared to the year ended December 31, 2006 and for the year ended
      December 31, 2006 as compared to the year ended December 31, 2005. TEC’s parent
      company, Tandem, held assets consisting largely of its investment in TEC, and,
      accordingly, the consolidated financial statements of Tandem represent the
      TEC
      assets.





(C)  Pro
      forma
      consolidated results of operations for the years ended December 31, 2007 and
      2006. The unaudited pro forma financial information gives effect to the
      acquisition as if it happpened on the first day of each year.








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 and TEC 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
      Historical***





The
      following discussion relates to Platinum for the years ended December 31, 2007
      and December 31, 2006 and for the period from April 25, 2005 (Inception) to
      December 31, 2005:





*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 F-15. 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 F-22. 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.




***TEC
      Historical***




The
      following is a summary of financial information for TEC and is provided to
      present the history of operating results from the assets purchased by Platinum
      on October 26, 2007. The comparative results are for the period from January
      1,
      2007 through October 26, 2007 as compared to the year ended December 31, 2006
      and for the year ended December 31, 2006 as compared to the year ended December
      31, 2005. TEC’s parent company, Tandem, held assets consisting largely of its
      investment in TEC, and, accordingly, the consolidated financial statements
      of
      Tandem represent the TEC assets.





*Comparison
      of the period from January 1, 2007 through October 26, 2007, to the Year Ended
      December 31, 2006*





TEC’s
      oil
      and gas sales revenues for the period from January 1, 2007 through October
      26,
      2007, consisting exclusively of oil and gas sales, $14.0 million compared to
      $17.8 million during the year ending December 31, 2006. If we include the $4.1
      million in oil and gas sales revenues of New TEC after October 26, 2007, TEC
      would have recorded a 2% increase in revenues. The increase in revenues was
      due
      primarily to stronger oil prices during the 2007 period, offset by an overall
      6%
      decrease in production on a Boe basis.





Oil
      and
      gas production costs in the form of lease operating expense on a Boe basis
      increased 10% from $19.31 per Boe during 2006 to $21.25 per boe during the
      period from January 1, 2007 through October 26, 2007. The increase in operating
      costs in 2007 was due primarily to a focus, in the Ira Field of Scurry County,
      Texas, to bring a number of inactive wells into compliance with regulatory
      statutes. This involved testing the integrity of the downhole casing in
      approximately 40 wells. In a number of cases, the wells were repaired and either
      placed back on production or remain idle awaiting further remedial work. In
      some
      cases, the wells were actually plugged and abandoned. Only the testing and
      repair costs are included in lease operating expense. The cost to plug and
      abandon these wells is not included in lease operating expense, but is included
      in the capitalized costs of oil and gas properties. This particular testing
      program was completed in October, 2007. Some elements of lease operating
      expenses are only partially controllable by management. Other factors outside
      management control, such as the availability of goods and services, could have
      an adverse effect on lease operating costs in the future.





*Comparison
      of Fiscal Year ended December 31, 2006 to Fiscal Year ended December 31,
      2005*




The
      results of operations between periods will not be comparable in most respects,
      primarily due to the significance of the acquisition by TEC of certain Shamrock
      Energy Corporation (“Shamrock") oil and gas properties in June
      2005.




TEC’s
      oil
      and gas sales revenues for 2006, consisting exclusively of oil and gas sales,
      increased 27% to $18.1 million compared to $14.2 million during 2005. The
      increase in revenues was primarily attributable to the acquisition of the
      Shamrock oil and gas properties in June 2005.




TEC’s
      production for 2006 (on an Mboe basis) increased by 22% to 337.4 Mboe as
      compared to 277.1 Mboe during 2005. This increase in production was due
      primarily to the acquisition of the Shamrock oil and gas properties in June
      2005.




For
      2006,
      TEC’s average realized gas price of $6.16 per Mcf represented an 18% decrease
      from the average price of $7.54 during 2005, and its realized oil price per
      barrel increased by 12% from $56.18 during 2005 to $62.94 during 2006. The
      overall increases in average product prices were attributable to the
      volatility of the markets for oil and gas, over which TEC had no
      control.




31




Oil
      and
      gas production costs in the form of lease operating expense on a boe basis
      increased from $15.42 per boe during 2005 to $19.31 per boe during 2006. The
      increase in operating costs in 2006 was due primarily to the increased cost
      of
      goods and services in the oil and gas production industry. It is likely that
      this trend will continue to contribute to higher production costs in future
      periods.




Depreciation,
      depletion and amortization (“DD&A”) increased 38%, from $1.9 million in 2005
      to $2.6 million in 2006. The increase was due primarily to the Shamrock asset
      acquisition in June 2005.




General
      and administrative expense, excluding non-cash stock-based employee
      compensation, was $2.8 million for 2006, 55% higher than this expense for 2005
      of $1.8 million. Such increase was due primarily to higher administrative costs
      associated with the acquisition of the Shamrock assets and legal and audit
      fees
      associated with the historical audits and due diligence efforts related to
      the
      proposed transaction with Platinum.




Gain
      on
      sales of property and equipment for 2005 of $707,239 consisted primarily of
      a
      gain associated with the sale of land located in and adjacent to TEC’s Tomball
      field. TEC recognized a gain of $368,067 during the first quarter of 2006
      related to the sale to a third party of one of TEC’s drilling rigs. Total gains
      for the sale of property and equipment during 2006 was $401,470.




Interest
      expense was $3.5 million during 2006 as compared to interest expense of $1.7
      million during 2005. As of December 31, 2006, TEC’s indebtedness was $42.0
      million as a result of funding the acquisitions of TEC and the assets of
      Shamrock and the redemption of the shares of one of TEC’s two stockholders, all
      of which occurred in June 2005. Outstanding indebtedness under a revolving
      line
      of credit facility with a bank in the amount of $21.0 million and notes payable
      to the principles of TEC and Shamrock in the aggregate totaling $21.0 million
      comprise the $42.0 million in indebtedness. The $3.5 million interest incurred
      during 2006 consists of approximately $1.8 million associated with the revolving
      line of credit and $1.7 million associated with the notes to the former
      principles of TEC and Shamrock. ******




TEC
      recorded a $3.5 million gain during 2006 associated with the change in fair
      value of its derivatives since the end of 2005. Since TEC had not designated
      any
      derivative contracts as cash flow hedges, all cash settlements and changes
      resulting from mark-to-market valuations were recorded as changes in fair value
      of derivatives. Future gains or losses on changes in derivatives will be
      impacted by the volatility of commodity and interest rates, as well as the
      terms
      of any new derivative contracts.




***Platinum
      Unaudited Pro Forma Consolidated Financial Information***





The
      following tables set forth summary financial information for our pro forma
      consolidated results of operations for the years ended December 31, 2007 and
      2006. The unaudited pro forma financial information includes the consolidated
      statements of operations of TEC for the two years ended December 31, 2007 and
      the results of operations of Platinum for these same periods. The pro forma
      financial information is adjusted to illustrate the estimated pro forma effects
      of the asset acquisition of TEC, the simultaneous transfer of funds from the
      trust account associated with the non-converting shareholders,
      the reclassification of shares of shareholders electing not to convert as
      if these events had occurred at the beginning of each year presented. The
      unaudited pro forma financial information should be read in conjunction with
      the
      consolidated financial statements of the Company and the historical financial
      statements of Tandem Energy Holdings, Inc. and other financial information
      appearing elsewhere herein.





The
      unaudited pro forma adjustments are based upon available information and certain
      assumptions that we believe are directly attributable to these transactions
      and
      are factually supportable.





The
      unaudited pro forma financial information is for informational purposes only
      and
      is not intended to represent or be indicative of the consolidated results of
      operations that we would have reported had the TEC asset acquisition been
      completed as of the dates presented, and should not be taken as representative
      of our future consolidated results of operations.





The
      results of operations of the subsequent other acquisitions made by us have
      not
      been included in this presentation, as their results of operations would not
      be
      significant.




Consolidated
                Unaudited Pro Forma Statements of Operations Information of the Year
                Ended
                December 31,2006
            
            
            2007Oil
                and Gas Revenues
            
            $
            17,812,000
            
            $
            18,140,000Income
                (loss) before income taxes
            
            
            545,000
            
            
            (9,204,000
            )Net
                income (loss)
            
            
            400,000
            
            
            (5,817,000
            )Earnings
                (loss) per share:Basic
            
            $
            0.02
            
            $
            (0.24
            )Diluted
            
            
            0.01
            
            
            (0.24
            )




32




The
      following adjustments have been made to the historical results of operations
      of
      TEC and Platinum in developing this unaudited pro forma data:





· The
        elimination of interest expense earned on the trust account funds held by
        Platinum;


· The
        elimination of interest expense on TEC indebtedness assumed paid at the
        inception of each period;


· Adjustment
        of depletion expense based upon the accounting treatment prescribed by FAS
        141
        with respect to TEC oil and gas assets;


· Inclusion
        of stock based compensation associated with officers’ stock options and with a
        consulting agreement;


· Adjustment
        of officers’ salary for the assumed compensation levels that would be in effect
        upon consummation; and


· Assumed
        effective tax rate on net income (loss) of 35%.


· Pro
        forma
        weighted average shares outstanding used to determine pro forma earnings
        (loss)
        per share reflects the shares issued in the acquisition of the assets of
        TEC,
        the redemption of non-converting shareholders, the transfer to equity of
        shareholders electing to retain their shares and the issuance of shares for
        stock based compensation as if these events had occurred at the beginning
        of the
        period. Common stock equivalents associated with the IPO warrants were included
        in determining pro forma EPS in 2006, because their effect would have been
        dilutive. The impact of the purchase of treasury shares in November 2007
        was
        also reflected.





The
      pro
      forma revenues for 2007 represent TEC historical oil and gas revenues for the
      period from January 1, 2007 through October 26, 2007 combined with the
      historical TEC oil and gas revenues for the period from October 27, 2007 though
      December 31, 2007. This results in a full 12 months of TEC actual revenues
      in
      each period being reflected in this pro forma presentation.





The
      increase in revenues was due primarily to stronger oil prices during the 2007
      period, offset by an overall decrease in production on a Boe basis.





The
      principal reason for the pro forma loss before income taxes of $9,204,000 in
      2007 as compared to pro forma income before income taxes of $545,000 was a
      loss
      on change in fair value of derivatives of $5.1 million in 2007 versus a gain
      of
      $3.5 million in 2006. This one item accounts for an $8.6 million reduction
      in
      pro forma net income in 2007 as compared to 2006.





**Liquidity
      and Capital Resources**





***Platinum***





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.




33





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
      $50,650,000, 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).




34




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 F-15.





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
“Cash Flow 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.
      Robert 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
      Cash Flow 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 Cash Flow Notes. The balance
      of
      the Cash Flow 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, New TEC 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 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.




35




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.




***TEC***





*Overview*





TEC’s
      primary sources of capital were cash flow from operations and funding under
      its
      revolving line of credit facility. TEC borrowed funds under the revolving line
      of credit facility as needed to supplement its operating cash flow as a
      financing source for its capital expenditure program.





*Cash
      Flow*





Substantially
      all of TEC’s cash flow was derived from the production of its oil and gas
      reserves. TEC used this cash flow to fund its on-going developmental activities
      in search of new oil and gas reserves and for operating expenses relating to
      the
      production of existing reserves.





Cash
      flow
      from operations was $2.3 million for the nine months ended September 30, 2007,
      compared to $4.3 million for the nine months ended September 30, 2006. The
      decrease was due primarily to a 7% decline in the average product prices on
      a
      Boe basis during the comparative periods, along with a 4% drop in production
      on
      a Boe basis, as more fully discussed in the “Results of Operations” section
      above. Another contributing factor was the increase in general and
      administrative expenses. For the period January 1, 2007 to October 26, 2007
      cash
      flow from operations was $2.3 million, This data for the comparable period
      of
      the preceding year was not available, but management believes the relationship
      in consistent with the discussion regarding the comparable September
      30th periods.





*Financing
      Activities*





A
      major
      bank provided TEC with a revolving line of credit facility, initially in the
      principal amount of $23.0 million, on which it relied heavily for both its
      short-term liquidity (working capital) and its long-term financing needs. The
      funds available to TEC under this revolving line of credit facility were limited
      to the amount of the borrowing base established by the bank from time to time
      and are secured by TEC’s oil and gas properties. On February 28, 2007 the new
      borrowing base was set at $21.1 million with mandatory principle reduction
      requirements of $250,000 per month beginning October 1, 2007. The credit
      facility was to mature on June 8, 2008. Accordingly, Tandem classified the
      entire outstanding balance of $20.5 million as a current liability on its
      balance sheet dated October 26, 2007.





In
      connection with Platinum’s acquisition of the assets of TEC, 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.





In
      conjunction with and simultaneous to the establishment of the new credit
      facility among New TEC, PER Gulf Coast, Inc. and Bank of Texas, the previously
      existing $5 million credit agreement with Guaranty Bank was terminated. No
      outstanding borrowings existed at the time of the termination.




*Supplemental
      Information*





The
      following information is intended to supplement the consolidated financial
      statements with data that is not readily available from those statements. The
      data consists of certain operating results of TEC for the period January 1,
      2007
      through October 26, 2007, along with the actual results of New TEC reported
      by
      Platinum for the remainder of 2007 subsequent to the acquisition on October
      26,
      2007. This presentation provides a comparative analysis of certain of TEC’s
      production data for the year ended December 31, 2007 as compared to the year
      ended December 31, 2006. These results do not include the operating results
      of
      PER Gulf Coast, Inc.




**Tandem**
              **January
                1, 2007 through**
              **October
                26, 2007**
            
            
            **New
                TEC**
              **October
                26, 2007 through**
              **December
                31, 2007**
            
            
            **Total-
                Year Ended December 31, 2007**
            
            
            **Tandem
                - Year Ended**
              **December
                31, 2006****Oil
                and Gas Production Data:**Oil
                (MBbls)
            
            
            165.3
            
            
            38.7
            
            
            204.0
            
            
            214.8Gas
                (MMcf)
            
            
            560.9
            
            
            125.8
            
            
            686.7
            
            
            735.6BOE
                (MBbls)
            
            
            258.8
            
            
            59.7
            
            
            318.5
            
            
            337.4**Average
                Sales Prices(1):**Oil
                ($/Bbl):
            
            $
            61.68
            
            $
            83.52
            
            $
            65.82
            
            $
            62.94Gas($/Mcf):
            
            $
            6.76
            
            $
            7.34
            
            $
            6.87
            
            $
            6.16**Average
                Lifting Cost per BOE of Production:**
            
            $
            21.25
            
            $
            28.41
            
            $
            22.59
            
            $
            19.31




36




**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. These results include the operating results of PER Gulf
        Coast,
        Inc.
  **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.
  37
  **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.
  38
  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 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;
  39
 ·
              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.
  40
 
 **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.
  41
  **Item 7A.**  **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)
  42
  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/A beginning on page F-1.
  43
 
 **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 and other subsequent acquisitions, 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 substantially
        all
        of the assets and assumed all of the liabilities of TEC. Management has excluded
        New TEC and the other acquisitions referred to herein in Item 1, Business
        -
        Growth Strategy and Note 4b - Other Business Combinations from its evaluation
        of
        the effectiveness of our internal control over financial reporting as of
        December 31, 2007, due to the limited time from the dates of such acquisitions
        through December 31, 2007, in which to perform such evaluations. The net
        revenues attributable to New TEC and the other acquisitions accounted for
        all of
        our consolidated revenues for the year ended December 31, 2007, and their
        aggregate total assets represented approximately 91% of our consolidated
        total
        assets as of December 31, 2007. Management plans to assess the internal controls
        over financial reporting for all of our 2007 acquisitions in 2008.
  Marcum
        & Kleigman LLP, the independent registered public accounting firm that
        audited our consolidated financial statements included in this Annual Report
        on
        Form 10-K/A, 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. Their audit of the effectiveness of the Company’s
        internal control over financial reporting as of December 31, 2007 excluded
        our
        recent TEC and other subsequent acquisitions.
 
 **Changes
        in Internal Control over Financial Reporting**
 
 As
        described above, the Company was previously a blank check company. 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 and assumed the duties previously performed by Mr. Nordlicht.
        As a result of the TEC and subsequent acquisitions, substantial changes occurred
        in the Company’s system of internal control over financial reporting as the
        existing controls over financial reporting related to TEC and the other
        subsequent acquisitions had to be integrated into the Company’s
        system.
  44
  **Item 9B.**  **Other
        Information.**
  Not
        applicable.
  45
  **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.
  46
  ***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.
  47
  **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.
  48
 
 **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.*
  49
  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.
  50
 
 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.
  51
  **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.
 **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,
                  Chairman
                
                
                2007
                
                $
                177,700
                
                $
                0
                
                $
                0
                
                $
                0
                
                
                —
                
                
                —
                
                $
                0
                
                $
                177,700of
                    the Board(1)
                
                
                2006
                
                $
                156,000
                (2)
                $
                5,000
                
                $
                0
                
                $
                0
                
                
                —
                
                
                —
                
                $
                0
                
                $
                161,000Barry
                    Kostiner,
                  Chief
                
                
                2007
                
                $
                30,000
                
                $
                10,000
                
                $
                0
                
                $
                0
                
                
                —
                
                
                —
                
                $
                0
                
                $
                40,000Excutive
                    Officer and Secretary(3)
                
                
                2006
                
                $
                0
                
                $
                0
                
                $
                0
                
                $
                0
                
                
                —
                
                
                —
                
                $
                0
                
                $
                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.
  52
  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.
  53
  ***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
  54
  ·
              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.
  55
 
 *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.
  56
  ***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.
  57
  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.
   58
 
 *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.
  59
   *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.
  60
  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.
  61
  
 **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.
  62
  (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 65 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.
  63
  (
                  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.
   64
  (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.
  65
  **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:
 
 **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 61.
 
 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.
  66
 
 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.
  67
  **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.
  68
 
 **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.
  69
  **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.
  70
 
 **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:
 
 **Exhibit**
                **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)
  71
 
 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)
  72
 
 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, between TEC 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)
  73
 
 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 Platinum (incorporated by reference from Exhibit 21 to Platinum’s
                  Annual Report on Form 10-K for the fiscal year ended December 31,
                  2007
                  filed on April 1, 2008)31
              
              Section
                  302 Certification of Principal Executive and Financial
                  Officer32.1
              
              Section
                  906 Certification
  74
 
 **PLATINUM
        ENERGY RESOURCES, INC.**
 
 **INDEX
        TO FINANCIAL STATEMENTS**
 
 **Platinum
                  Energy Resources, Inc.**Report
                  of Independent Registered Public Accounting Firm
              
              
              F-2Consolidated
                  Balance Sheets — December 31, 2007 and 2006
              
              
              F-3Consolidated
                  Statements of Operations — For the years ended December 31, 2007 and 2006
                  and the period from April 25, 2005 (inception) to December 31,
                  2005
              
              
              F-4Consolidated
                  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
              
              
              F-5Consolidated
                  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
              
              
              F-6Notes
                  to Consolidated Financial Statements
              
              
              F-7**Tandem
                  Energy Holdings, Inc.**Report
                  of Independent Certified Public Accountants
              
              
              F-31Consolidated
                  Balance Sheets — October 26, 2007 and December 31, 2006
              
              
              F-32Consolidated
                  Statements of Operations — For the period from January 1, 2007 through
                  October 26, 2007 and the years ended December 31, 2006 and
                  2005
              
              
              F-33Consolidated
                  Statements of Stockholders’ Equity (Deficit) — For the period from January
                  1, 2007 through October 26, 2007 and the years ended December 31,
                  2006 and
                  2005
              
              
              F-34Consolidated
                  Statements of Cash Flows — For the period from January 1, 2007 through
                  October 26, 2007 and the years ended December 31, 2006 and
                  2005
              
              
              F-35Notes
                  to Consolidated Financial Statements
              
              
              F-36
 F-1
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING 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 the years then ended 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
        included in the accompanying Management’s Report on 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.
 
 Our
        audit
        of the Company’s internal control over financial reporting as of December 31,
        2007 did not include the Company’s internal control over financial reporting
        applicable to the TEC acquisition, which acquisition was consummated on October
        26, 2007, and other subsequent acquisitions as discussed in Note 4 to the
        consolidated financial statements. TEC and the other acquisitions accounted
        for
        100% of the Company’s net revenues for the year ended December 31, 2007, and
        approximately 91% of the Company’s consolidated total assets as of December 31,
        2007.
  Except
        as
        discussed in the preceding paragraph, 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 as of December 31, 2007 and 2006, and the
        consolidated results of its operations and its cash flows for the years then
        ended 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, except for the effect of any deficiencies
        that
        might have been determined to have existed had we audited the internal control
        over financial reporting applicable to the TEC and other acquisitions discussed
        in the second paragraph above, 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
  F-2
  **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*
  F-3
  **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 - Current
              
              
              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*
  F-4
   **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*
  F-5
  **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
  F-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
        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 for the
        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 substantially all 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.
  F-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**
  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.
  F-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**
  *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.
  F-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**
 
 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
              )
 
  F-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**
  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.
  F-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**
  *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.
  F-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**
  *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.
  F-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
        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.
  F-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
        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.
  F-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**
  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.
  F-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**
 
 ·
              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”.
 
 F-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
        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 unaudited pro forma consolidated results of operations assume that
        the
        acquisitions of the acquired entities as disclosed herein were completed
        as of
        January 1 for each of the years shown below:
 
 Year
                  Ended December 31,
              
              Revenue
              
              Income
                  (Loss) Before Income Taxes
              
              Net
                  Income (Loss)
              
              Earnings
                  (Loss)
                Per
                  SharePro
                  forma 2007
              
              $
              22,547,000
              
              $
              (7,089,000
              )
              $
              (4,608,000
              )
              $
              (0.19
              )Pro
                  forma 2006
              
              $
              22,298,000
              
              $
              4,791,000
              
              $
              3,114,000
              
              $
              0.13
 
 The
        pro
        forma combined results are not necessarily indicative of the results that
        actually would have occurred if the TEC acquisition and the other acquisitions
        had been completed as of the beginning of 2007 or 2006, nor are they necessarily
        indicative of future consolidated results. For certain acquisition transactions
        for which adequate data was not available, estimates of certain expenses
        were
        used.
  F-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
        4 — Business Combinations - continued**
  ***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.
  F-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
        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.
  F-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
        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
              )
              
              (356,000
              )1,406,000
              
              
              —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.
  F-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
        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 $1.5
        million.
  F-22
  **PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
        the Years Ended December 31, 2007 and 2006**
 **And
        the Period From April 25, 2005 (Inception) to December 31,
        2005**
  **Note
        11 - Price, Interest Rate and Credit Risk Management Activities -
        continued**
  Presented
        below is a summary of the Company’s crude oil and natural gas derivative
        financial contracts at December 31, 2007, with crude oil prices expressed
        in
        dollars per barrels of crude oil and notional crude oil volumes in barrels
        of
        crude oil per year; and natural gas prices expressed in dollars per million
        British thermal units ($/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.
 
 F-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
        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
 F-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
        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.
  F-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**
 
 (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
 
 F-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
        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
  F-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
        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.
  F-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**
  **Note
        15 — Subsequent Events - continued**
  c.
        On
        March 14, 2008, two operating subsidiaries of the Company, New 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
              )
 
  F-29
  **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.
  F-30
  **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 years ended December
          31,
          2006 and 2005. 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 years
          ended
          December 31, 2006 and 2005, 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
  F-31
  **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
                    receivable:Oil
                    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
                
                
                584,045
                
                
                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
                    Fair 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 summary of accounting policies and footnotes are an integral
          part
          of these financial statements.*
  F-32
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 **For
          the Period January 1, 2007 through October 26, 2007 and Years Ended December
          31,
          2006 and 2005**
 
 **2007**
                
                **2006**
                
                **2005**RevenuesOil
                    and gas sales
                
                $
                13,985,263
                
                $
                18,051,060
                
                $
                14,249,449Costs
                    and expensesLease
                    operating expense
                
                
                5,499,538
                
                
                6,516,711
                
                
                4,273,420General
                    and administrative
                
                
                2,912,083
                
                
                2,836,837
                
                
                1,824,676Stock-based
                    compensation
                
                
                —
                
                
                —
                
                
                37,605,730Depreciation,
                    depletion and amortization
                
                
                2,150,027
                
                
                2,641,315
                
                
                1,915,613Accretion
                    of asset retirement obligation
                
                
                116,258
                
                
                137,222
                
                
                120,209Total
                    costs and expenses
                
                
                10,677,906
                
                
                12,132,085
                
                
                45,739,648Operating
                    income (loss)
                
                
                3,307,357
                
                
                5,918,975
                
                
                (31,490,199
                )Other
                    income (expense)Interest
                    expense
                
                
                (2,944,902
                )
                
                (3,503,812
                )
                
                (1,726,583
                )Partnership
                    income
                
                
                4,600
                
                
                49,877
                
                
                8,399Change
                    in fair value of derivatives
                
                
                (3,636,450
                )
                
                3,308,703
                
                
                (5,194,155
                )Gain
                    on sale of property and equipment
                
                
                127,021
                
                
                401,470
                
                
                707,239Other
                
                
                291,774
                
                
                229,054
                
                
                69,794Total
                    other income (expense), net
                
                
                (6,157,957
                )
                
                485,292
                
                
                (6,135,306
                )Income
                    (loss) before income taxes
                
                
                (2,850,600
                )
                
                6,404,267
                
                
                (37,625,505
                )Income
                    tax benefit (expense)Current
                
                
                —
                
                
                (109,747
                )
                
                658,264Deferred
                
                
                —
                
                
                —
                
                
                657,850Total
                    income tax benefit (expense)
                
                
                —
                
                
                (109,747
                )
                
                1,316,114NET
                    INCOME (LOSS)
                
                $
                (2,850,600
                )
                $
                6,294,520
                
                $
                (36,309,391
                )Earnings
                    (loss) per share
                
                $
                (.12
                )
                
                .26
                
                
                (1.96
                )Weighted
                    average shares outstanding
                
                
                23,792,495
                
                
                23,799,322
                
                
                18,514,688
  *The
          accompanying summary of accounting policies and footnotes are an integral
          part
          of these financial statements.*
  F-33
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)**
 **For
          the Years Ended December 31, 2005 and 2006 and For the Period January 1,
          2007
          through October 26, 2007**
  **Common
                    Stock****Shares**
                
                **Par
                    Value**
                
                **Additional
                    Paid-In Capital**
                
                **Retained
                    Earnings (Deficit)**
                
                **Total**Balance,
                    January 1, 2005
                
                
                1,000
                
                $
                10
                
                $
                2,710,115
                
                $
                2,582,457
                
                $
                5,292,582Acquisition
                    and retirement of treasury stock
                
                
                (500
                )
                
                (5
                )
                
                —
                
                
                (13,015,000
                )
                
                (13,015,005
                )Shares
                    issued in conjunction with:Conversion
                    of TEC shares
                
                
                2,999,500
                
                
                2,995
                
                
                (2,995
                )
                
                —
                
                
                —Conversion
                    of Tandem shares
                
                
                16,322
                
                
                16
                
                
                (16
                )
                
                —
                
                
                —Acquisition
                    of Shamrock assets
                
                
                7,500,000
                
                
                7,500
                
                
                11,992,500
                
                
                —
                
                
                12,000,000Compensation
                    for management
                
                
                9,243,000
                
                
                9,243
                
                
                33,845,567
                
                
                —
                
                
                33,854,810Compensation
                    for consultants
                
                
                2,507,000
                
                
                2,507
                
                
                3,748,413
                
                
                —
                
                
                3,750,920Private
                    placement offerings
                
                
                1,533,000
                
                
                1,533
                
                
                1,482,217
                
                
                —
                
                
                1,483,750Distributions
                    to shareholdersAcquisition
                    of TEC -shares
                
                
                —
                
                
                —
                
                
                10,500,000
                
                
                (10,500,000
                )
                
                —Acquisition
                    of Shamrock assets
                
                
                —
                
                
                —
                
                
                —
                
                
                (11,699,375
                )
                
                (11,699,375
                )Acquisition
                    of TEC -notes payable
                
                
                —
                
                
                —
                
                
                —
                
                
                (12,000,000
                )
                
                (12,000,000
                )Other
                
                
                —
                
                
                —
                
                
                —
                
                
                (105,500
                )
                
                (105,500
                )Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                (36,309,391
                )
                
                (36,309,391
                )Balance,
                    December 31, 2005
                
                
                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 of common 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 summary of accounting policies and footnotes are an integral
          part
          of these financial statements.*
  F-34
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **For
          the Period January 1, 2007 through October 26, 2007 and Years Ended December
          31,
          2006 and 2005**
 
 **2007**
                
                **2006**
                
                **2005**Cash
                    flows from operating activities:Net
                    income (loss)
                
                $
                (2,850,600
                )
                $
                6,294,520
                
                $
                (36,309,391
                )Adjustments
                    to reconcile net income (loss) to net cash provided by operating
                    activities:Depreciation,
                    depletion and amortization
                
                
                2,150,027
                
                
                2,641,315
                
                
                1,915,613Accretion
                    of asset retirement obligation
                
                
                116,258
                
                
                137,222
                
                
                120,209Amortization
                    of deferred loan fees
                
                
                222,223
                
                
                266,669
                
                
                155,555Partnership
                    income
                
                
                (4,600
                )
                
                (49,877
                )
                
                (8,399
                )Gain
                    on sale of real estate held for development
                
                
                (127,021
                )
                
                (401,470
                )
                
                (707,239
                )Change
                    in fair value of derivatives
                
                
                3,636,450
                
                
                (3,308,703
                )
                
                5,194,155Stock-based
                    compensation
                
                
                —
                
                
                —
                
                
                37,605,730Current
                    income tax benefit
                
                
                —
                
                
                —
                
                
                (630,497
                )Deferred
                    income tax benefit
                
                
                —
                
                
                —
                
                
                (657,850
                )Changes
                    in operating assets and liabilities:Decrease
                    (increase) in accounts receivable
                
                
                120,657
                
                
                266,633
                
                
                (796,317
                )Increase
                    in inventory
                
                
                (11,801
                )
                
                (35,057
                )
                
                (38,724
                )Decrease
                    (increase) in other current assets
                
                
                (195,913
                )
                
                —
                
                
                700Increase
                    (decrease) in accounts payable
                
                
                257,587
                
                
                (211,499
                )
                
                618,147Increase
                    (decrease) in income taxes payable
                
                
                (138,398
                )
                
                753,550
                
                
                (436,387
                )Increase
                    (decrease) in accrued liabilities and other
                
                
                (590,245
                )
                
                (119,461
                )
                
                725,852Decrease
                    in commodity derivatives
                
                
                (285,673
                )
                
                (239,045
                )
                
                (491,736
                )Net
                    cash provided by operating activities
                
                
                2,298,951
                
                
                5,994,797
                
                
                6,259,421Cash
                    flows from investing activities:Property
                    and equipment additions
                
                
                (1,311,028
                )
                
                (7,342,671
                )
                
                (7,518,057
                )Partnership
                    distributions
                
                
                4,600
                
                
                55,200
                
                
                11,000Proceeds
                    from sale of property and equipment
                
                
                —
                
                
                585,099
                
                
                929,469Decrease
                    in advance relocation fees
                
                
                —
                
                
                —
                
                
                (173,588
                )Proceeds
                    from sale of real estate held for development
                
                
                129,143
                
                
                —
                
                
                —Net
                    cash used in investing activities
                
                
                (1,177,285
                )
                
                (6,702,372
                )
                
                (6,751,176
                )Cash
                    flows from financing activities:Long-term
                    borrowings
                
                
                —
                
                
                —
                
                
                23,000,000Payment
                    of bank loan fees
                
                
                —
                
                
                —
                
                
                (825,000
                )Payments
                    of bank borrowings
                
                
                (500,000
                )
                
                (500,000
                )
                
                (1,500,000
                )Payments
                    of notes to former shareholders
                
                
                —
                
                
                —
                
                
                (147,280
                )Cash
                    distributions to shareholders
                
                
                —
                
                
                —
                
                
                (8,401,453
                )Proceeds
                    from issuance of stock
                
                
                —
                
                
                —
                
                
                1,483,750Purchase
                    and retirement of common stock
                
                
                (44,500
                )
                
                —
                
                
                —Acquisition
                    and retirement of treasury stock
                
                
                —
                
                
                —
                
                
                (13,000,000
                )Net
                    cash (used in) provided by financing activities
                
                
                (544,500
                )
                
                (500,000
                )
                
                610,017Net
                    increase (decrease) in cash and cash equivalents
                
                
                577,166
                
                
                (1,207,575
                )
                
                118,262Cash
                    and cash equivalents, beginning of year
                
                
                2,482,608
                
                
                3,690,183
                
                
                3,571,921Cash
                    and cash equivalents, end of year
                
                $
                3,059,774
                
                $
                2,482,608
                
                $
                3,690,183
   *The
          accompanying summary of accounting policies and footnotes are an integral
          part
          of these financial statements.*
  F-35
   **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **CONSOLIDATED
          STATEMENTS OF CASH FLOWS - (continued)**
 **For
          the Period January 1, 2007 through October 26, 2007 and Years Ended December
          31,
          2006 and 2005**
  **2007**
                
                **2006**
                
                **2005**Non-cash
                    financing and investing activities:Asset
                    retirement cost and obligation
                
                $
                (42,271
                )
                $
                77,545
                
                $
                126,550Stock
                    issued in connection with:Shamrock
                    asset acquisition
                
                $
                —
                
                $
                —
                
                $
                12,000,000Distribution
                    to shareholders
                
                $
                —
                
                $
                —
                
                $
                10,500,000Stockholder
                    distributions financed by note payable
                
                $
                —
                
                $
                —
                
                $
                12,000,000Cash
                    paid during the year for:Taxes
                
                $
                40,250
                
                $
                75,327
                
                $
                408,274Interest
                
                $
                2,771,510
                
                $
                3,063,202
                
                $
                1,343,398
  *The
          accompanying summary of accounting policies and footnotes are an integral
          part
          of these financial statements.*
   F-36
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **For
          the Period January 1, 2007 through October 26, 2007 and Years Ended December
          31,
          2006 and 2005**
 
 **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.
  F-37
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **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.(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”;
  F-38
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          2 — Summary of Significant Accounting Policies
 - (continued)**
 
 (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.
  *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.
  F-39
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          2 — Summary of Significant Accounting Policies
 - (continued)**
  *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.
  *Stock-Based
          Compensation*
  Tandem
          has not issued any stock-based compensation to employees for the for the
          period
          from January 1, 2007 through October 26, 2007 or 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 October 26, 2007,
          Tandem
          does not have any other stock-based compensation plans or
          obligations.
  F-40
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          2 — Summary of Significant Accounting Policies
 - (continued)**
  *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
          October 26, 2007 or 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 2007, 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 26, 2007and December 31, 2006, 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.
  F-41
  **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 15, these recent accounting pronouncements will have no future
          impact on
          the Company.
 
 **Note
          3 — Common Stock and Significant Transactions**
  The
          following is a description of Tandem’s common stock transactions and other
          significant events:
  **Date**
                
                
                **Description
                    of Transaction**
                
                **Issuance
                    (Cancellation) of Shares of Common Stock**February
                    2005(1)
                
                
                Acquisition
                    of control of Pacific
                
                16,322March
                    1, 2005(2)
                
                
                Proposed
                    acquisitions of TEC and Shamrock by Tandem Energy Holdings, Inc.
                    (Texas)
                
                —March
                    7, 2005(1)
                
                
                Shares
                    issued to sole officer and director (Mortensen)
                
                20,000,000March
                    8, 2005(3)
                
                
                Shares
                    issued to third parties
                
                2,000,000March
                    16, 2005(3)
                
                
                Shares
                    issued to third parties
                
                250,000March
                    17, 2005(4)
                
                
                Cancellation
                    of shares issued to Mortensen
                
                (20,000,000)March
                    17, 2005(4)
                
                
                Issuance
                    of shares to TEC/Shamrock control group and former director
                    Mortensen
                
                20,000,000May
                    31, 2005(5)
                
                
                Original
                    TEC and Shamrock purchase agreements terminated
                
                —June
                    1, 2005(5)
                
                
                Cancellation
                    of shares issued to TEC/Shamrock control group and former director
                    Mortensen
                
                (20,000,000)June
                    1, 2005(6)
                
                
                Restated
                    acquisition agreements of TEC and Shamrock
                
                —
 
 F-42
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          3 — Common Stock and Significant Transactions
 - (continued)**
  **Date**
                
                **Description
                    of Transaction**
                
                **Issuance
                    (Cancellation) of**
                  **Shares
                    of Common Stock**June
                    1, 2005(7)
                
                Issuance
                    of shares to Tandem management as compensation
                
                9,143,000June
                    8, 2005(8)
                
                Acquisition
                    and retirement of Tandem treasury stock
                
                —June
                    8, 2005(9)
                
                Shares
                    issued for acquisition of Shamrock assets
                
                7,500,000June
                    8, 2005(10)
                
                Shares
                    issued for acquisition of TEC stock
                
                3,000,000June
                    14, 2005(7)
                
                Shares
                    issued to related party
                
                100,000June-July
                    2005(7)
                
                Shares
                    issued for compensation
                
                257,000Total
                    shares issued
                
                
                
                20,000,000June
                    14, 2005(11)
                
                Shares
                    issued in connection with private
                    placement  offering
                
                
                
                1,533,000Total
                    shares outstanding
                
                
                
                23,799,322
  *1.
          Acquisition of Control of Pacific*
  In
          mid-March 2005, a group of promoters, including Mr. Lyle Mortensen
          (“Mortensen”), claimed to have acquired control of Pacific Medical Group, which
          in February 2005 had changed its name to Tandem and declared a 1 for 500
          reverse
          stock split resulting in 16,322 shares of common stock outstanding. Mr.
          Mortensen was named sole officer and director, and on March 7, 2005, he
          issued
          himself 20,000,000 shares of common stock.
  *2.
          Proposed Acquisitions of TEC and Shamrock*
  In
          February 2005, Mr. Mortensen had incorporated a new privately held Texas
          corporation (Tandem, Texas) to facilitate the acquisition of TEC and the
          Shamrock Assets. It was intended that Tandem, Texas would then be rolled
          up into
          Tandem.
  On
          March
          1, 2005, Tandem (Texas) entered into agreements to purchase the common
          stock of
          TEC and certain oil and gas properties owned by Shamrock to be completed
          no
          later than May 31, 2005. See the discussion below under the captions “ *9 — Acquisition
          of Shamrock Assets by Tandem* ”
and
“ *10 — Acquisition
          of TEC* .”
  *3.
          Shares Issued to Third Parties*
  In
          conjunction with its formation, on March 8, 2005 and March 16, 2005, Tandem
          issued 2,000,000 and 250,000 shares, respectively, to third parties and
          recorded
          compensation expense of $2,680,000 and $335,000, respectively, ($1.34 per
          share)
          based on Tandem’s average closing trading price on the OTC Pink Sheet system two
          days before and two days after the transaction (the “average trading
          price”).
  *4.
          March 17, 2005 Cancellation and Issuance of Common Stock*
  On
          March
          17, 2005, in anticipation of the fulfillment of the March 1, 2005 proposed
          TEC
          and Shamrock acquisitions, Mortensen cancelled the 20,000,000 shares issued
          to
          himself on March 7, 2005, and on March 17, 2005, Mortensen, as sole officer
          and
          director, issued 20 million restricted shares of common stock to a group
          comprised of Mortensen, principals of Tandem and Shamrock (Tim Culp, Dyke
          Culp
          and Jack Chambers) and others.
  On
          March
          30, 2005, Mortensen appointed certain TEC and Shamrock owners and management
          members as officers and directors of Tandem and immediately resigned as
          officer
          and director.
  *5.
          Termination of Original TEC/Shamrock Acquisition Agreements and Cancellation
          of
          Stock*
  On
          May
          31, 2005, the original TEC/Shamrock acquisition agreements terminated due
          to the
          inability to secure the necessary financing. As a result of the terminations,
          on
          June 1, 2005, Tandem’s new board of directors
          cancelled all 20 million shares of common stock issued on March 17, 2005,
          for
          lack of consideration, and that they were issued in connection with the
          fulfillment of the acquisition of Tandem, Texas by Tandem, which never
          occurred.
  F-43
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          3 — Common Stock and Significant Transactions
 - (continued)**
  All
          of
          the cancelled 20 million shares were subsequently returned to Tandem, except
          for
          2.878 million shares controlled by Mortensen. Management of TEC believes
          that
          all of the shares controlled by Mortensen are null and void. See the additional
          discussion below under the captions *“7 — Compensation
          Shares”* with
          respect to any resolution of Mortensen’s 2.878 million shares.
  *6.
          Revised TEC/Shamrock Purchase Agreements*
  On
          June
          1, 2005, after the May 31, 2005 termination of the original TEC/Shamrock
          purchase agreements, management of TEC revised and restated the TEC/Shamrock
          purchase agreements.
  *7.
          Compensation Shares*
  On
          June
          1, 2005, Tandem issued to Tandem’s management team and other related parties
          9,143,000 compensation shares valued at $33,554,810 ($3.67 per share) and,
          on
          June 14, 2005, 100,000 compensation shares to others valued at $300,000
          ($3.00
          per share), based on the average trading price at date of issuance. All
          management shares were restricted and subject to a voting
          agreement.
  Mortensen
          is contesting Tandem’s cancellation of his 2.878 million shares of common stock.
          Although management believes Mortensen’s claim is without merit, if Mortensen is
          partially or completely successful, certain members of Tandem’s management team
          have agreed to reduce their compensation shares for any Mortensen shares
          and to
          reimburse Tandem for any related expense. Accordingly, any resolution of
          the
          Mortensen’s shares will have no effect on Tandem’s total shares outstanding or
          its results of operations.
  In
          addition, during June-July 2005, TEC issued 257,000 compensation shares
          valued
          at $735,920 (ranging from $1.96-$3.67 per share), based on the average
          trading
          price at date of issuance.
  The
          following is a summary of TEC’s compensation share expense for the year ended
          December 31, 2005:
 
 **Date
                    Issued**
                
                **Shares**
                
                **Expense**Third
                    parties(3)
                
                
                March
                    8, 2005
                
                
                2,250,000
                
                $
                3,015,000Management
                
                
                June
                    1, 2005
                
                
                9,143,000
                
                
                33,554,810Related
                    party
                
                
                June
                    14, 2005
                
                
                100,000
                
                
                300,000Others
                
                
                June-July
                    2005
                
                
                257,000
                
                
                735,920Total
                
                
                
                
                
                11,750,000
                
                $
                37,605,730
  *8.
          Acquisition and Retirement of TEC Treasury Stock*
  Historically,
          TEC was owned equally by Joe C. Bullard and Tim G. Culp, who served as
          its
          president and vice president, respectively. Prior to 2002, the spouses
          of Culp
          and Bullard also owned shares. Under a stock redemption agreement executed
          in
          2002, the spouses redeemed their shares for notes which required annual
          payments
          until the notes were satisfied. These notes were paid in full during the
          second
          quarter of 2005.
  On
          June
          8, 2005, in conjunction with the revised and restated TEC/Shamrock purchase
          agreements and pursuant to a share redemption agreement, TEC repurchased
          and
          retired as treasury stock one-half of its outstanding common shares owned
          by
          Bullard for $13.0 million and cancelled a $15,000 note receivable, funded
          by
          proceeds of the revolving line of credit discussed in Note 6 to the Consolidated
          Financial Statements. As a result, Tim Culp became the sole shareholder
          of
          TEC.
  F-44
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          3 — Common Stock and Significant Transactions
 - (continued)**
  *9.
          Acquisition of Shamrock Assets by Tandem*
  Historically,
          Shamrock was owned equally by Tim Culp, his brother Dyke Culp, and Jack
          Chambers. At date of acquisition, TEC’s then sole stockholder owned or
          controlled a two-thirds interest in Shamrock, the other one-third interest
          was
          owned or controlled by an unrelated third party. Accordingly, the acquisition
          of
          the two-thirds Shamrock interest has been accounted for as a combination
          of
          entities under common control using carryover historical costs, and the
          acquisition of the remaining one-third Shamrock interest has been accounted
          for
          as a purchase in accordance with SFAS No. 141, *Business
          Combinations* .
  The
          following is a summary of the combination of entities under common control
          related to the two-thirds Shamrock interest:
 
 Consideration
                    paid to predecessor shareholder:Cash
                    paid
                
                $
                5.3
                    millionIssuance
                    of note payable
                
                
                6.0
                    millionRepayment
                    of certain debt
                
                
                3.2
                    millionIssuance
                    of 3.5 million shares valued at average trading price of $3.00
                    per
                    share
                
                
                10.5
                    millionTotal
                    consideration paid
                
                
                25.0
                    millionLess
                    historic cost basis of net assets acquired
                
                
                2.8
                    millionDistribution
                    to predecessor shareholder
                
                $
                22.2
                    million
  The
          following is a summary of the purchase of the one-third Shamrock
          interest:
 
 Cash
                    paid
                
                $
                2.6
                    millionIssuance
                    of note payable
                
                
                3.0
                    millionRepayment
                    of certain debt
                
                
                1.6
                    millionIssuance
                    of 4.0 million shares valued at average trading price of $3.00
                    per
                    share
                
                
                12.0
                    millionTotal
                    purchase price
                
                $
                19.2
                    million
  The
          following is a summary of the Shamrock acquisition transactions:
  Cost
                    basis of assets acquired:Two-thirds
                    interest
                
                $
                2.8
                    millionOne-third
                    interest
                
                
                19.2
                    millionTotal
                    assets acquired
                
                
                22.0
                    millionDistribution
                    to predecessor shareholder
                
                
                22.2
                    millionTotal
                    consideration paid
                
                $
                44.2
                    million
  The
          results of operations of Shamrock’s oil and gas properties have been recorded in
          TEC’s consolidated financial statements since the June 1, 2005 acquisition
          date.
          Reference is made to Note 14 of the Consolidated Financial Statements for
          further discussion of the Shamrock acquisition.
  *10.
          Acquisition of TEC*
  On
          June
          8, 2005, pursuant to a restated purchase agreement, Tandem acquired the
          remaining 500 shares of capital stock outstanding in TEC from Tim Culp
          in
          exchange for 3.0 million shares of Tandem common stock and a note payable
          of
          $12.0 million. The 3.0 million shares of Tandem common stock were valued
          at the
          historic cost basis of the 500 shares of TEC common stock and the $12.0
          million
          note payable is reflected as a distribution to the Tandem
          shareholder.
  F-45
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          3 — Common Stock and Significant Transactions
 - (continued)**
  Since
          TEC
          was owned 100% by Tim Culp, and since Culp controlled more than 50% of
          Tandem,
          the acquisition of TEC by Tandem has been accounted for as a combination
          of
          entities under common control using Tandem’s and TEC’s carryover historical cost
          basis.
  Since
          the
          business combination is accounted for as a combination of entities under
          common
          control, no purchase value adjustment for Tandem or TEC is appropriate
          or
          necessary. Consequently, the consolidated financial statements presented
          herein
          are the historical results of operations of both TEC and Tandem.
  *11.
          Private Placement Offering*
  On
          March
          30, 2005, in contemplation of original March 1, 2005 proposed TEC and Shamrock
          acquisitions, Tandem began a 2,000,000 private placement offering at $1.00
          per
          share. On June 14, 2005, Tandem closed the private placement offering and
          issued
          1,533,000 shares of common stock and received net proceeds of approximately
          $1.5
          million. The net proceeds are being used for general operating
          purposes.
  *12.
          Purchase and Retirement of Stock*
  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 included in
          other
          current assets at October 26, 2007 and December 31, 2007 was $155,553 and
          $222,223, respectively.
 
 **Note
          5 — Asset Retirement Obligation**
  The
          following table summarizes the changes in the Tandem’s asset retirement
          obligation for the years ended December 31, 2005 and 2006 and for the period
          from January 1, 2007 through October 26, 2007 as follows:
  Balance,
                    January 1, 2005
                
                $
                602,938Additions
                    related to new properties
                
                
                126,550Additions
                    related to acquisition of Shamrock properties
                
                
                791,243Accretion
                    expense
                
                
                120,209Balance,
                    December 31, 2005
                
                
                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 and December 31, 2006 consisted of the
          following:
  **October
                    26, 2007**
                
                **December
                    31, 2006**Revolving
                    line of credit
                
                $
                20,500,000
                
                
                21,000,000Notes
                    to former TEC and Shamrock owners
                
                
                21,000,000
                
                
                21,000,000Total
                    long-term debt
                
                
                41,500,000
                
                
                42,000,000Less
                    current portion of long-term debt
                
                
                (20,500,000
                )
                
                (1,750,000
                )Long-term
                    debt, net of current portion
                
                $
                21,000,000
                
                
                40,250,000
  F-46
 **TANDEM
            ENERGY HOLDINGS, INC.**
 **(Successor
            to Tandem Energy Corporation)**
  **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 *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 15, 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
          15, 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 by
          Platinum. 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 9.
  *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 15, 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.
 F-47
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **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 years ended December 31,
            2006 and
            2005, 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
                )
  **Current**
                
                **Deferred**
                
                **Total**Year
                    ended December 31, 2005:State
                    income tax benefit (expense)
                
                $
                —
                
                
                —
                
                
                —Federal
                    income tax benefit (expense)
                
                
                658,264
                
                
                657,850
                
                
                1,316,114$
                658,264
                
                
                657,850
                
                
                1,316,114
  Income
          tax benefit (expense) for the period ended October 26, 2007 and the years
          ended
          December 31, 2006 and 2005, 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**
                
                **2006**
                
                **2005**Income
                    tax benefit (expense) computed at statutory rate
                
                $
                969,204
                
                
                (2,177,451
                )
                
                12,792,672Statutory
                    depletion
                
                
                —
                
                
                —
                
                
                483,123Nondeductible
                    expenses and other
                
                
                (461
                )
                
                (1,111
                )
                
                (4,195
                )Alternative
                    minimum tax
                
                
                —
                
                
                (34,421
                )
                
                —Utilization
                    (carryover) of net operating losses
                
                
                (968,743
                )
                
                2,103,236
                
                
                (11,955,486
                )Total
                    income tax benefit (expense)
                
                $
                —
                
                
                (109,747
                )
                
                1,316,114
  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.
  F-48
 **TANDEM
            ENERGY HOLDINGS, INC.**
 **(Successor
            to Tandem Energy Corporation)**
  **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
  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 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 years ended December 31, 2006 and 2005, two customers accounted
          for approximately 80% and 77%, respectively, 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. For the year ended December 31, 2005, Tandem recognized
          losses on its hedging activities of $5.2 million, including a mark-to-market
          loss of $4.7 million at December 31, 2005, and a $0.5 million cash charge
          for
          settled contracts.
  Presented
          below is a summary of Tandem’s crude oil and natural gas derivative financial
          contracts at October 26, 2007, with crude oil prices expressed in dollars
          per
          barrels of crude oil and notional crude oil volumes in barrels of crude
          oil per
          year; and natural gas prices expressed in dollars per million British thermal
          units ($/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 15,
          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
                  
                  462,000
                  
                  5.00/11.02
                  
                  (15)Gas
                      Call Option Sold
                  
                  462,000
                  
                  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)
 
 F-49
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          9 — Price, Interest Rate and Credit Risk Management Activities
 - (continued)**
  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.
 
 F-50
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **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 $188,097, $135,128 and $34,146 for
            the
            period from January 1, 2007 through October 26, 2007 and the years ended
            December 31, 2006 and 2005, respectively. Future minimum annual lease
            payments
            under the non-cancelable lease for the years ending October 26 are as
            follows:
  2008
                
                $
                136,2572009
                
                
                125,8202010
                
                
                121,3202011
                
                
                80,880Thereafter
                
                
                —$
                464,277
  *Legal
          Proceedings*
  Except
          as
          discussed in Note 16, Tandem is not currently a defendant in any lawsuit
          arising
          in the ordinary course of business.
  **Note
          11 — Related Party Transactions**
  As
          discussed in Note 3, in 2005, TEC purchased as treasury stock the common
          shares
          held by one of its two shareholders for $13.0 million. The purchase was
          funded
          from a portion of the proceeds of Tandem’s revolving line of credit discussed in
          Note 6.
  As
          discussed in Note 3, Tandem issued a note payable to its primary shareholder,
          Mr. Culp, for $12.0 million in connection with the share exchange with
          TEC. Mr.
          Culp also received 1.8 million shares of restricted common stock in connection
          with the distribution of restricted shares issued to officers, directors
          and
          other related parties for services discussed in Note 3, such shares were
          valued
          for accounting purposes at $3.67 per share and the resulting approximately
          $6.6
          million was charged to compensation expense in 2005.
  As
          discussed in Note 3, in connection with the purchase of TEC, 7.4 million
          shares
          of restricted common stock were distributed to officers, directors and
          other
          related parties of Tandem, other than Mr. Culp, for services. The overall
          value
          of such shares (approximately $27.3 million) was charged to compensation
          expense
          in 2005, as discussed in Note 3.
 
 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 — Costs of Oil and Gas Properties**
  The
          following table sets forth certain information with respect to costs incurred
          in
          connection with Tandem’s oil and gas producing activities during the period
          ended October 26, 2007 and the year ended December 31, 2006.
  **October
                    26,****2007**
                
                **2006**(In
                    Thousands)Property
                    acquisitions:Proved
                
                $
                (308.5
                )
                $
                6.3Unproved
                
                
                —
                
                
                —Developmental
                    costsIntangible
                
                
                585.7
                
                
                4,229.0Tangible
                
                
                836.5
                
                
                2,328.2Exploratory
                    costs
                
                
                —
                
                
                —Total
                
                $
                1,113.7
                
                $
                6,563.5
 
  F-51
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          12 — Costs of Oil and Gas Properties
 - (continued)**
  The
          following table sets forth the capitalized costs for oil and gas properties
          as
          of October 26, 2007 and December 31, 2006.
  **October
                    26,****2007**
                
                **2006**(In
                    Thousands)Proved
                    properties
                
                $
                36,753.2
                
                $
                35,639.5Unproved
                    properties
                
                
                —
                
                
                —Total
                    capitalized costs
                
                
                36,753.2
                
                
                35,639.5Accumulated
                    depreciation, depletion and amortization
                
                
                (7,488.2
                )
                
                (5,469.2
                )Net
                    capitalized costs
                
                $
                29,265.0
                
                $
                30,170.3
  **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, independent petroleum engineers. Such estimates are 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 Tandem’s reserves are
          located in the United States. For information about Tandem’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.
  (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.
  F-52
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          13 — Oil and Gas Reserve Information (Unaudited)
 - (continued)**
  Tandem
          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 Tandem’s proved reserves are classified as proved
          developed nonproducing 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 years ended December 31, 2006 and 2005 (in
          thousands):
 
 **2006**
                
                **2005****Oil**
                
                **Gas**
                
                **Boe**
                
                **Oil**
                
                **Gas**
                
                **Boe**Proved
                    reserves:Beginning
                    of period
                
                
                5,814
                
                
                21,897
                
                
                9,464
                
                
                989
                
                
                16,604
                
                
                3,756Revisions
                
                
                (117
                )
                
                (1,034
                )
                
                (289
                )
                
                460
                
                
                (32
                )
                
                455Extensions
                    and discoveries
                
                
                57
                
                
                660
                
                
                167
                
                
                56
                
                
                3,482
                
                
                636Sales
                    of minerals-in-place
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —Purchases
                    of minerals-in-place
                
                
                —
                
                
                —
                
                
                —
                
                
                4,466
                
                
                2,567
                
                
                4,894Production
                
                
                (215
                )
                
                (736
                )
                
                (338
                )
                
                (157
                )
                
                (724
                )
                
                (277
                )End
                    of period
                
                
                5,539
                
                
                20,787
                
                
                9,004
                
                
                5,814
                
                
                21,897
                
                
                9,464Proved
                    developed reserves:Beginning
                    of period
                
                
                2,295
                
                
                6,077
                
                
                3,308
                
                
                989
                
                
                5,708
                
                
                1,940End
                    of period
                
                
                2,170
                
                
                5,691
                
                
                3,119
                
                
                2,295
                
                
                6,077
                
                
                3,308
  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, 2006 and 2005:
 
 **2006**
                
                **2005**Future
                    cash inflows
                
                $
                430,558
                
                
                551,286Future
                    costs:Production
                
                
                (121,129
                )
                
                (141,530
                )Abandonment
                
                
                (4,872
                )
                
                (4,665
                )Development
                
                
                (41,153
                )
                
                (41,810
                )Income
                    taxes
                
                
                (28,881
                )
                
                (61,738
                )Future
                    net cash inflows
                
                
                234,523
                
                
                301,54310%
                    discount factor
                
                
                (111,945
                )
                
                (114,098
                )Standardized
                    measure of discounted net cash flows
                
                $
                122,578
                
                
                187,445
 
 F-53
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          13 — Oil and Gas Reserve Information (Unaudited)
 - (continued)**
  The
          following table sets forth the changes in the standardized measure of discounted
          future net cash flows relating to proved reserves for the years ended December
          31, 2006 and 2005: (in thousands)
  **2006**
                
                
                **2005**Standardized
                    measure, beginning of year
                
                $
                187,445
                
                
                43,655Net
                    changes in sales prices, net of production costs
                
                
                (45,744
                )
                
                52,323Revisions
                    of quantity estimates
                
                
                (5,461
                )
                
                50,642Accretion
                    of discount
                
                
                20,159
                
                
                4,818Changes
                    in future development costs, including development costs incurred
                    that
                    reduced future development costs
                
                
                955
                
                
                (1,874
                )Changes
                    in timing and other
                
                
                (3,583
                )
                
                (2,121
                )Net
                    change in income taxes
                
                
                (20,981
                )
                
                (44,852
                )Future
                    abandonment costs
                
                
                (1,856
                )
                
                918Extensions
                    and discoveries
                
                
                3,178
                
                
                16,584Sales,
                    net of production costs:Continuing
                    operations
                
                
                (11,534
                )
                
                (10,321
                )Sales
                    of minerals-in-place
                
                
                —
                
                
                —Purchases
                    of minerals-in-place
                
                
                —
                
                
                77,673Net
                    increase (decrease) in standardized measure
                
                
                (64,867
                )
                
                143,790Standardized
                    measure, end of period
                
                $
                122,578
                
                
                187,445
  ***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, TEC 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 Tandem’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 years ended December 31, 2006 and 2005were
          as
          follows:
 
 **Average
                    Prices****As
                    of December 31,**
                
                **Oil**
                
                **Gas**2006
                
                $
                57.65
                
                
                5.352005
                
                $
                57.38
                
                
                9.94
   F-54
  **TANDEM
          ENERGY HOLDINGS, INC.**
 **(Successor
          to Tandem Energy Corporation)**
  **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Note
          14 — Shamrock Acquisition**
  On
          June
          8, 2005, Tandem, through its wholly-owned subsidiary TEC, acquired certain
          oil
          and gas properties located in the Permian Basin of West Texas, Southeastern
          New
          Mexico, and Hardin County in East Texas, from Shamrock. The total purchase
          price
          was approximately $44.2 million including the issuance of 7.5 million shares
          of
          Tandem common stock. Since the purchase of TEC by Tandem and the Shamrock
          asset
          acquisition by TEC occurred concurrently, the 7.5 million shares were issued
          directly by Tandem. See Note 3 for a complete discussion of the
          acquisition.
  The
          Shamrock properties included estimated total proved reserves of 4.9 million
          equivalent barrels of oil.
 
 **Acquisition
          Pro Forma**
  The
          following pro forma information shows the effect on Tandem’s consolidated
          results of operations as if the Shamrock acquisition occurred on January
          1,
          2005. The pro forma information (stated in thousands) includes numerous
          assumptions, and is not necessarily indicative of future results of
          operations.
  **2005**
                
                **2004****As
                    Reported**
                
                **Pro
                    Forma**
                
                **As
                    Reported**
                
                **Pro
                    Forma**Year
                    ended December 31:Oil
                    and gas sales
                
                $
                13,758
                
                
                16,203
                
                $
                8,018
                
                
                12,105Operating
                    expenses
                
                
                4,273
                
                
                5,233
                
                
                2,841
                
                
                4,508Operating
                    profit
                
                $
                9,485
                
                
                10,970
                
                $
                5,177
                
                
                7,597
  **Note
          15 — 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.
  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. Consideration for the transaction consisted of the assumption and
          satisfaction of $41.5 million of TEC indebtedness (Note 6), plus accrued
          interest, and $60 million payable in shares of common stock of Platinum.
          In
          accordance with the acquisition agreement, 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, then dividend these Platinum shares to Tandem. Pursuant
          to the
          acquisition agreement, Platinum is obligated to register the 7.7 million
          shares
          issued to TEC on the appropriate Securities and Exchange Commission form.
          Once
          the registration of the shares is complete, Tandem will distribute the
          Platinum
          shares to Tandem’s shareholders and liquidate.
  F-55
  **Note
          16 — 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 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. 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.
  F-56
   **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 15, 2008
   75