UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549





FORM
10-Q





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





For the
quarterly period ended June 30, 2010





or





 ̈
            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
      or other jurisdiction of incorporation or
                organization)
              
              (I.R.S.
      Employer Identification No.)11490
      Westheimer Road, Suite 1000
                Houston,
      Texas
                (Address
      of principal executive offices)
              
              77077
                (Zip
      Code)





(281)
649-4500


(Registrant's
telephone number, including area code)





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. Yesx  No ̈





Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be posted
pursuant to Rule 405 of Regulation S-T (S 232.405 of this chapter) during the
preceding 12 months (or such shorter period that the registrant was required to
submit and post such files). Yes ̈  No ̈





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 (check one).


Large
Accelerated Filer ̈   Accelerated
Filer ̈   Non-Accelerated
Filer ̈ (Do not check if a
smaller reporting company) Smaller
reporting companyx


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




As of
August 20, 2010, 22,606,476 of the registrant’s common stock, par value $0.0001
per share, were outstanding.









PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARIES


Table
of Contents





PagePART
      I- FINANCIAL INFORMATIONItem
      1.
                  Financial
      Statements (Unaudited)
                  
                  3Item
      2.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  
                  21Item
      3.
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  
                  28Item
      4T.
                  Controls
      and Procedures
                  
                  28PART
      II- OTHER INFORMATIONItem
      1.
                  Legal
      Proceedings
                  
                  30Item
      1A.
                  Risk
      Factors
                  
                  31Item
      2.
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  
                  31Item
      3.
                  Defaults
      Upon Senior Securities
                  
                  31Item
      4.
                  Removed
      and Reserved
                  
                  31Item
      5.
                  Other
      Information
                  
                  31Item
      6.
                  Exhibits
                  
                  32Signatures
                  
                  33




Page
2 of 33


PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(UNAUDITED)





June
      30, 2010
                  
                  
                  December
      31, 2009ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                  
                  $
                  4,588,484
                  
                  
                  $
                  2,941,939Accounts
      receivable, net of $224,392 allowance for doubtful accounts as of June 30,
      2010 and December 31, 2009Oil
      and gas sales
                  
                  
                  2,191,961
                  
                  
                  
                  2,079,201Service
                  
                  
                  3,079,466
                  
                  
                  
                  2,961,546Inventory
                  
                  
                  422,452
                  
                  
                  
                  410,791Fair
      value of commodity derivatives - current
                  
                  
                  3,050,878
                  
                  
                  
                  3,595,144Prepaid
      expenses and other current assets
                  
                  
                  257,301
                  
                  
                  
                  610,989Total
      Current Assets
                  
                  
                  13,590,542
                  
                  
                  
                  12,599,610Property
      and equipment, at costOil
      and gas properties, full cost method
                  
                  
                  208,377,394
                  
                  
                  
                  208,291,206Other
      property and equipment
                  
                  
                  5,594,108
                  
                  
                  
                  5,565,746Less
      accumulated depreciation, depletion, amortization and
      impairment
                  
                  
                  (170,506,757
                  )
                  
                  
                  (167,973,630
                  )Property
      and equipment, net
                  
                  
                  43,464,745
                  
                  
                  
                  45,883,322Other
      assetsFair
      value of commodity derivatives
                  
                  
                  3,258,487
                  
                  
                  
                  3,190,294Real
      estate held for development
                  
                  
                  2,700,000
                  
                  
                  
                  2,700,000Total
      Assets
                  
                  $
                  63,013,774
                  
                  
                  $
                  64,373,226LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      payableTrade
                  
                  $
                  2,239,011
                  
                  
                  $
                  2,154,188Oil
      and gas sales
                  
                  
                  1,231,598
                  
                  
                  
                  920,818Unearned
      service revenues
                  
                  
                  1,290,666
                  
                  
                  
                  1,525,356Accrued
      liabilities and other
                  
                  
                  1,886,939
                  
                  
                  
                  2,508,579Income
      taxes payable
                  
                  
                  289,525
                  
                  
                  
                  328,324Current
      portion of asset retirement obligation
                  
                  
                  801,915
                  
                  
                  
                  812,670Current
      maturities of long-term debt, capital lease obligations and notes
      payable
                  
                  
                  14,224,840
                  
                  
                  
                  17,802,925Total
      Current Liabilities
                  
                  
                  21,964,494
                  
                  
                  
                  26,052,860Long-term
      debt and capital lease obligations, net of current portion
                  
                  
                  98,860
                  
                  
                  
                  111,315Notes
      payable - acquisitions
                  
                  
                  3,548,384
                  
                  
                  
                  3,422,433Other
      accrued liabilities
                  
                  
                  119,735
                  
                  
                  
                  119,735Asset
      retirement obligation
                  
                  
                  6,458,288
                  
                  
                  
                  6,426,424Total
      Liabilities
                  
                  
                  32,189,761
                  
                  
                  
                  36,132,767COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'  EQUITYPreferred
      stock, $0.0001 par value, 1,000,000 authorized, 0 issued
                  
                  
                  —
                  
                  
                  
                  —Common
      stock, $0.0001 par value; 75,000,000 shares authorized; 24,068,675 issued
      and 22,606,476 and  22,070,762 outstanding at June 30, 2010
      and December 31, 2009, respectively
                  
                  
                  2,407
                  
                  
                  
                  2,407Additional
      paid-in capital
                  
                  
                  152,113,738
                  
                  
                  
                  155,175,771Accumulated
      deficit
                  
                  
                  (109,830,077
                  )
                  
                  
                  (111,276,255
                  )Treasury
      stock – 1,462,199 and 1,997,913 shares,  respectively, at
      cost
                  
                  
                  (11,462,055
                  )
                  
                  
                  (15,661,464
                  )Total
      Stockholders' Equity
                  
                  
                  30,824,013
                  
                  
                  
                  28,240,459Total
      Liabilities and Stockholders' Equity
                  
                  $
                  63,013,774
                  
                  
                  $
                  64,373,226





The
accompanying notes are an integral part of these consolidated financial
statements.


Page
3 of 33


PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(UNAUDITED)





Three
      Months Ended
                
                
                Six
      Months EndedJune
      30,
                
                
                June
      30,2010
                
                
                2009
                
                
                2010
                
                
                2009REVENUESOil
      and gas sales
                
                $
                4,514,266
                
                
                $
                4,465,303
                
                
                $
                10,570,462
                
                
                $
                7,780,004Service
      revenues
                
                
                4,124,569
                
                
                
                4,487,219
                
                
                
                8,738,987
                
                
                
                10,007,7148,638,835
                
                
                
                8,952,522
                
                
                
                19,309,449
                
                
                
                17,787,718COSTS
      AND EXPENSESLease
      and other operating expense
                
                
                2,981,247
                
                
                
                2,203,471
                
                
                
                5,272,114
                
                
                
                4,933,899Cost
      of service revenues
                
                
                4,257,397
                
                
                
                4,281,185
                
                
                
                8,538,842
                
                
                
                9,614,886Marketing,
      general and administrative expense
                
                
                847,807
                
                
                
                2,317,738
                
                
                
                2,623,734
                
                
                
                4,548,459Depreciation,
      depletion and amortization expense
                
                
                1,143,098
                
                
                
                1,866,365
                
                
                
                2,533,127
                
                
                
                3,796,309Accretion
      of asset retirement obligations
                
                
                -
                
                
                
                80,834
                
                
                
                356,347
                
                
                
                159,547Total
      costs and expenses
                
                
                9,229,549
                
                
                
                10,749,593
                
                
                
                19,324,164
                
                
                
                23,053,100Operating
      Income (Loss)
                
                
                (590,714
                )
                
                
                (1,797,071
                )
                
                
                (14,715
                )
                
                
                (5,265,382
                )OTHER
      INCOME (EXPENSE)Interest
      income
                
                
                8,613
                
                
                
                881
                
                
                
                59,025
                
                
                
                4,314Interest
      expense
                
                
                (252,228
                )
                
                
                (334,726
                )
                
                
                (512,187
                )
                
                
                (630,617
                )Commodity
      derivatives – realized and unrealized
      gains  (losses)
                
                
                3,244,782
                
                
                
                (8,405,839
                )
                
                
                1,938,976
                
                
                
                (7,878,394
                )Other
                
                
                -
                
                
                
                122
                
                
                
                —
                
                
                
                2,553Total
      other income (expense)
                
                
                3,001,167
                
                
                
                (8,739,562
                )
                
                
                1,485,814
                
                
                
                (8,502,144
                )Income
      (Loss) Before Income Taxes
                
                
                2,410,453
                
                
                
                (10,536,633
                )
                
                
                1,471,099
                
                
                
                (13,767,526
                )Provision
      (Benefit) From Income Taxes
                
                
                11,503
                
                
                
                (3,674,709
                )
                
                
                24,921
                
                
                
                (4,789,446
                )Net
      Income (Loss)
                
                $
                2,398,950
                
                
                $
                (6,861,924
                )
                
                $
                1,446,178
                
                
                $
                (8,978,080
                )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES:Basic
      and Diluted
                
                
                22,606,475
                
                
                
                22,070,762
                
                
                
                22,472,547
                
                
                
                22,070,762NET
      INCOME (LOSS) PER COMMON SHARE:Basic
      and Diluted
                
                $
                0.11
                
                
                $
                (0.31
                )
                
                $
                0.06
                
                
                $
                (0.41
                )





The
accompanying notes are an integral part of these consolidated financial
statements.


Page
4 of 33


PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(UNAUDITED)







Six
      Months EndedJune
      30,2010
                
                
                2009Cash
      Flows From Operating ActivitiesNet
      Income / (Loss)
                
                $
                1,446,178
                
                
                $
                (8,978,080
                )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activities:Depreciation,
      depletion and amortization
                
                
                2,533,127
                
                
                
                3,796,309Accretion
      of asset retirement obligation
                
                
                356,347
                
                
                
                159,547Accretion
      of debt discount
                
                
                125,951
                
                
                
                117,169Stock
      based compensation
                
                
                39,161
                
                
                
                90,000Deferred
      income taxes
                
                
                -
                
                
                
                (4,818,634
                )Commodity
      derivatives – realized and unrealized (gains) losses
                
                
                (1,938,976
                )
                
                
                7,878,394Changes
      in operating assets and liabilities:Accounts
      receivable – Oil and gas
                
                
                (137,244
                )
                
                
                (169
                )Accounts
      receivable – Service
                
                
                (117,920
                )
                
                
                2,429,099Inventory
                
                
                (11,661
                )
                
                
                (44,116
                )Prepaid
      expenses and other current assets
                
                
                353,688
                
                
                
                242,986Accounts
      payable – Trade
                
                
                84,823
                
                
                
                (915,674
                )Accounts
      payable – Oil and gas
                
                
                125,601
                
                
                
                (591,055
                )Accrued
      liabilities, unearned service revenues and other
                
                
                241,885
                
                
                
                (1,126,020
                )Income
      taxes payable
                
                
                (38,799
                )
                
                
                42,713Net
      cash provided by (used in) operating activities
                
                
                3,062,161
                
                
                
                (1,717,531
                )Cash
      Flows From Investing ActivitiesPurchases
      of property and equipment
                
                
                (264,609
                )
                
                
                (965,722
                )Cash
      received on settlement of derivative contracts
                
                
                2,439,533
                
                
                
                1,165,930Net
      cash provided by investing activities
                
                
                2,174,924
                
                
                
                200,208Cash
      Flows From Financing ActivitiesProceeds
      of revolving credit facility
                
                
                -
                
                
                
                1,000,000Payments
      on long-term debt and capital leases
                
                
                (3,590,540
                )
                
                
                (679,592
                )Net
      cash provided by (used in) financing activities
                
                
                (3,590,540
                )
                
                
                320,408Net
      Increase (Decrease)  in Cash and
      Cash  Equivalents
                
                
                1,646,545
                
                
                
                (1,196,915
                )Cash
      and Cash Equivalents - Beginning of the Period
                
                
                2,941,939
                
                
                
                3,668,092Cash
      and Cash Equivalents - End of Period
                
                $
                4,588,484
                
                
                $
                2,471,177SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONCash
      paid during the period for:Interest
                
                $
                371,870
                
                
                $
                432,427Income
      taxes
                
                
                —
                
                
                
                70,000Non-Cash
      Investing and Financing ActivitiesIssuance
      of treasury stock to settle accrued liability
                
                $
                1,098,215
                
                
                $
                —Asset
      retirement cost and obligation
                
                $
                151,000
                
                
                $
                50,278





The
accompanying notes are an integral part of these consolidated financial
statements.


Page5 of 33


PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


June
30, 2010


(UNAUDITED)





Note
1 - Organization, Business and Operations





Platinum
Energy Resources, Inc. and subsidiaries (the “Company” or “Platinum”) considers
itself to be in two lines of business:





(i) The
oil and gas division, which has approximately 37,000 acres under lease in
relatively long-lived fields with well-established production histories. 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; and





(ii) The
engineering and construction services division, which services primarily three
types of clients: (1) upstream oil and gas, domestic oil and gas producers and
pipeline companies; (2) industrial, petrochemical and refining plants; and (3)
infrastructure, private and public sectors, including state municipalities,
cities, and port authorities. Maverick Engineering, Inc. (Maverick) operates out
of facilities headquartered in Houston, Texas and operates primarily in
Texas.





Note
2 – Going Concern





The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. The Company has incurred
significant losses, resulting in cumulative losses of $109,830,077 through June
30, 2010.  At June 30, 2010 the Bank of Texas loan balance was
approximately $9.5 million.  The Company’s current cash on hand is not
adequate to satisfy the Bank of Texas debt.





The
Company’s outstanding loan with the Bank of Texas originally matured on June 1,
2010.  On August 6, 2010, the Company paid $1 million of principal to the
Bank of Texas and was granted an extension to the maturity date of the loan
to  September 1, 2010.  Beyond the extended maturity date, the
Company’s available options to settle the outstanding loan with the Bank of
Texas may require a combination of actions, including possible further
liquidation of the Company’s hedge positions, use of available cash on hand, a
partial sale of its oil and gas assets, seeking additional equity financing, or
the refinancing of its existing debt.  If the Company is unable to raise
additional equity or to refinance its loan with the Bank of Texas, then it will
have no choice but to sell a portion of its oil and gas properties.
Additionally, no assurance can be given that any such financing or refinancing,
if achievable, will be adequate to meet our ultimate capital needs and to
support our growth. If the Company is not able to obtain additional financing on
a timely basis and on satisfactory terms, or should the Company receive a
foreclosure notice from the Bank of Texas, our operations would be materially
negatively impacted.  Further the Company has assets and liabilities that
could be adversely affected by unfavorable outcomes of litigation in
progress.  See Litigation Note 15 for a full discussion of
litigation.





As a
result of the above discussed conditions, there exists substantial doubt about
our ability to continue as a going concern. Our consolidated financial
statements are presented on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business. The consolidated financial statements do not include any adjustments
relating to the recoverability of the recorded assets or the classification of
liabilities that may be necessary should the Company be unable to continue as a
going concern.





Note
3 – Basis of Presentation





The
accompanying unaudited interim consolidated financial statements as of June 30,
2010 and for the three and six months then ended have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and pursuant to the instructions to
Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange
Commission (“SEC”) and on the same basis as the annual audited consolidated
financial statements. The unaudited interim consolidated balance sheet as of
June 30, 2010, unaudited interim consolidated statements of operations for the
three and six months ended June 30, 2010 and 2009, and the unaudited interim
consolidated statements of cash flows for the six months ended June 30, 2010 and
2009 include all adjustments, consisting only of normal recurring adjustments,
which management considers necessary for a fair presentation of the financial
position, operating results and cash flows for the periods presented. The
results for the three and six months ended June 30, 2010 are not necessarily
indicative of results to be expected for the year ending December 31, 2010 or
for any future interim periods.  The notes to the consolidated financial
statements do not include all of the information and notes required by
accounting principles generally accepted in the United States of America for
complete consolidated financial statements. The accompanying unaudited interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in our Annual
Report on Form 10-K for the year ended December 31, 2009 as filed with the
SEC.





The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All material intercompany balances and transactions
have been eliminated.


Page
6of 33


PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


June
30, 2010


(UNAUDITED)





Note
4 — Summary of Significant Accounting Policies





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. Significant estimates include volumes of oil and natural gas reserves
and production, abandonment obligations, impairment of oil and natural gas
properties (if any), depreciation, depletion and amortization, income taxes, bad
debts, derivatives, contingencies and litigation.





Cash
and Cash Equivalents





Cash and
cash equivalents include demand deposits and money market funds for purposes of
the statements of cash flows. The Company considers all highly liquid monetary
instruments with original maturities of three months or less to be cash
equivalents. Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash deposits. Accounts
at each financial institution are insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $250,000.   As of June 30, 2010, the
Company had deposits with institutions in excess of the insured limits totaling
$3,340,429.





Allowance
for Doubtful Accounts





The
Company’s reported balance of accounts receivable, net of allowance for doubtful
accounts, represents management’s estimate of the amount that ultimately will be
realized in cash.  The Company reviews the adequacy of the allowance for
doubtful accounts on an ongoing basis, using historical payment trends, the age
of the receivables and knowledge of the individual customers.  When the
analyses indicate, management increases or decreases the allowance
accordingly.  If the financial condition of our customers were to
deteriorate, additional allowances may be required.  The Company did not
change its allowance for doubtful accounts during the three or six month periods
ended June 30, 2010.





Oil and Gas
Properties





The
Company uses the full cost method of accounting for exploration and development
activities. Under this method of accounting, the costs of unsuccessful, as well
as successful, exploration and development activities are capitalized as oil and
gas properties. 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.





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 the Company 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.





Under the
full cost method of accounting, a ceiling test is performed quarterly. 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 the carrying value of oil and gas
properties.  The capitalized costs of proved oil and gas properties, net of
accumulated depreciation, depletion, amortization, and impairment 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, using average prices for the preceding 12 months applied on a
non-escalated basis and including the effect of derivative instruments that
qualify as cash flow hedges, if any, 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
depreciation, depletion, amortization and impairment.


Page
7 of 33




Depletion
is provided using the unit-of-production method based upon estimates of proved
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. If the results of an assessment indicate that the
properties are impaired, the amount of the impairment is deducted from the
capitalized costs to be amortized. Once the assessment of unproved properties is
complete and when major development projects are evaluated, the costs previously
excluded from amortization are transferred to the full cost pool and
amortization begins. The amortizable base includes estimated future development
costs and where significant, dismantlement, restoration and abandonment costs,
net of estimated salvage value.





Contingencies





Certain
conditions may exist as of the date the financial statements are issued, which
may result in a loss to the Company but which will only be resolved when one or
more future events occur or fail to occur. The Company’s management and its
legal counsel assess such contingent liabilities, and such assessments
inherently involve an exercise of judgment. In assessing loss contingencies
related to legal proceedings that are pending against the Company or unasserted
claims that may result in such proceedings, the Company’s legal counsel
evaluates the perceived merits of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of relief sought or expected to be
sought therein.





If the
assessment of a contingency indicates that it is probable that a material loss
has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If
the assessment indicates that a potentially material loss contingency is not
probable, but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material, would be
disclosed.





Loss
contingencies considered remote are generally not disclosed unless they involve
guarantees, in which case the nature of the guarantee would be
disclosed.





Subsequent
Events





Management
evaluated subsequent events to determine if events or transactions occurring
through the date at which the financial statements were available to be issued
required disclosure.  Management determined that, except as disclosed
in Note 16, no such events have occurred that would require adjustment to or
disclosure in the financial statements.





Reclassifications





Certain
reclassifications have been made to prior year information to conform to the
current period presentation.




Recently
Issued Accounting Pronouncements





Accounting
standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on our consolidated financial statements
upon adoption.





Note
5 - Oil and Gas Properties




The
following table sets forth the Company’s costs incurred in oil and gas property
acquisition, exploration and development activities for the six months ended
June 30, 2010 (stated in thousands):





Balance
      at January 1, 2010
                    
                    $
                    208,291Acquisition
      of properties:Proved
                    
                    
                    —Unproved
                    
                    
                    —Exploration
      Costs
                    
                    
                    —Revision
      to asset retirement obligation
                    
                    
                    (151
                    )Development
      costs
                    
                    
                    237Balance
      at June 30, 2010
                    
                    $
                    208,377





The
following table sets forth the Company’s capitalized costs relating to oil and
gas producing activities at June 30, 2010 and December 31, 2009 (stated in
thousands):


Page
8 of 33





June 30,
                    2010
                  
                  
                  December 31,
                    2009Properties
      subject to depletion, depreciation and amortization
                  
                  $
                  208,377
                  
                  
                  $
                  208,291Properties
      not subject to depletion, depreciation and amortization
                  
                  
                  -
                  
                  
                  
                  -208,377
                  
                  
                  
                  208,291Accumulated
      depletion and impairment
                  
                  
                  (166,710
                  )
                  
                  
                  (164,497
                  )Net
      capitalized costs
                  
                  $
                  41,667
                  
                  
                  $
                  43,794




Note
6 – Derivative Financial Instruments




The
Company engages in price risk management 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.
All derivative instruments are 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. Changes in fair value of derivative instruments which are not designated
as cash flow hedges are recorded in other income (expense) as Commodity
derivatives - realized and unrealized gains and losses. The obligations under
the derivatives contracts are collateralized by the same assets that
collateralize the Senior Credit Facility, and the contracts are cross-defaulted
to the Senior Credit Facility.  Substantially all of the derivative
financial instruments are collateral for the Senior Credit Facility further
described in Note 9.




While the
use of these arrangements may limit the Company's ability to benefit from
increases in the price of oil and natural gas, it is also intended to reduce the
Company's potential exposure to significant price declines. These derivative
transactions are generally placed with major financial institutions that the
Company believes are financially stable; however, in light of the recent global
financial crisis, there can be no assurance of the
foregoing.


Page
9of 33




For
the three months ended June 30, 2010 and 2009, the Company included in other
income (expenses) realized and unrealized gains (losses) related to its
derivative contracts as follows (stated in thousands):




Three Months
                    Ended June 30,
                    2010
                  
                  
                  Three Months
                    Ended June 30,
                    2009Crude
      oil derivatives gains (losses)Realized
                  
                  $
                  730
                  
                  
                  
                  328Unrealized
                  
                  
                  2,515
                  
                  
                  
                  (8,734
                  )$
                  3,245
                  
                  
                  
                  (8,406
                  )





For the
six months ended June 30, 2010 and 2009, the Company included in other income
(expenses) realized and unrealized gains (losses) related to its derivative
contracts as follows (stated in thousands):





Six Months
                    Ended June 30,
                    2010
                  
                  
                  Six Months
                    Ended June 30,
                    2009Crude
      oil derivatives gains (losses)Realized
                  
                  $
                  782
                  
                  
                  
                  1,166Unrealized
                  
                  
                  1,157
                  
                  
                  
                  (9,044
                  )$
                  1,939
                  
                  
                  
                  (7,878
                  )





In June
2010, the Company liquidated six put contracts at $85 per barrel and an
additional five put contracts at $80 per barrel.  These put contracts
had settlement dates through December 2010, The net proceeds to the Company were
$1.16 million in cash.   Presented below is a summary of the
Company’s crude oil derivative financial contracts at June 30,
2010:





Period
                    Ended
                    June 30,
                  
                  Instrument
                    Type
                  
                  Total
                    Volumes
                    (BBL)
                  
                  
                  Contract
                    Price
                  
                  
                  FairValueAsset
                    (statedin
                    thousands)2011
                  
                  Puts
                  
                  
                  50,000
                  
                  
                  
                  75.00
                  
                  
                  $
                  204Puts
                  
                  
                  70,000
                  
                  
                  
                  80.00
                  
                  
                  
                  680Swaps
                  
                  
                  70,000
                  
                  
                  
                  95.50
                  
                  
                  
                  1,315Swaps
                  
                  
                  60,000
                  
                  
                  
                  95.25
                  
                  
                  
                  8522012
                  
                  Swaps
                  
                  
                  60,000
                  
                  
                  
                  95.25
                  
                  
                  
                  806Swaps
                  
                  
                  60,000
                  
                  
                  
                  95.00
                  
                  
                  
                  976Puts
                  
                  
                  50,000
                  
                  
                  
                  80.00
                  
                  
                  
                  5722013
                  
                  Swaps
                  
                  
                  60,000
                  
                  
                  
                  95.00
                  
                  
                  
                  904Total
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  6,309




Note
7 – Fair Value Measurements




As
defined in ASC 820, fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (exit price). In determining the fair value
of its derivative contracts, the Company evaluates its counterparty and third
party service provider valuations and adjusts for credit risk when
appropriate.  ASC 820 establishes a framework for measuring fair value
and expands disclosure about fair value measurements. The statement requires
fair value measurements be classified and disclosed in one of the following
categories:


Page
10 of 33




Level
      1:
            Unadjusted
      quoted prices in active markets that are accessible at the measurement
      date for identical, unrestricted assets or liabilities. The Company
      considers active markets as those in which transactions for the assets or
      liabilities occur in sufficient frequency and volume to provide pricing
      information on an ongoing basis.





Level
      2:
            Quoted
      prices in markets that are not active, or inputs which are observable,
      either directly or indirectly, for substantially the full term of the
      asset or liability. This category includes those derivative instruments
      that are valued using observable market data. Substantially all of these
      inputs are observable in the marketplace throughout the full term of the
      derivative instrument, can be derived from observable data, or supported
      by observable levels at which transactions are executed in the
      marketplace.





Level
      3:
            Measured
      based on prices or valuation models that require inputs that are both
      significant to the fair value measurement and less observable from
      objective sources (i.e., supported by little or no market activity). Level
      3 instruments can include derivative instruments where the Company does
      not have sufficient corroborating market evidence of significant inputs to
      the valuation model to support classifying these instruments as Level 1 or
      Level 2.




As
required by ASC 815, financial assets and liabilities are classified based on
the lowest level of input that is significant to the fair value measurement. The
Company’s assessment of the significance of a particular input to the fair value
measurement requires judgment, and may affect the valuation of the fair value of
assets and liabilities and their placement within the fair value hierarchy
levels.




The
following table presents information about the Company’s assets and liabilities
that are measured at fair value on a recurring basis as of June 30, 2010, and
indicates the fair value hierarchy of the valuation techniques utilized by the
Company to determine such fair value.  The fair value of derivative
financial instruments is determined based on counterparties’ valuation models
that utilize market-corroborated inputs.





As of June 30, 2010(in
      thousands)Level 1
                    
                    
                    Level 2
                    
                    
                    Level
      3
                    
                    
                    TotalCommodity
      derivatives – oil and gas
                    
                    $
                    —
                    
                    
                    $
                    6,309
                    
                    
                    $
                    —
                    
                    
                    $
                    6,309




The
determination of the fair values above incorporates various factors required
under ASC 815. These factors include the impact of our nonperformance risk and
the credit standing of the counterparties involved in the Company’s derivative
contracts.




Gains and
losses (realized and unrealized) included in earnings for the three and six
months ended June 30, 2010 and 2009 are reported in other income on the
consolidated statement of operations.


Page
11 of 33





PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


June
30, 2010


(UNAUDITED)




During
periods of market disruption, including periods of volatile oil and natural gas
prices, rapid credit contraction or illiquidity, it may be difficult to value
certain of the Company’s derivative instruments if trading becomes less frequent
and/or market data becomes less observable. There may be certain asset classes
that were in active markets with observable data that become illiquid due to the
current financial environment. In such cases, derivative instruments may fall to
Level 3 and thus require more subjectivity and management judgment. As such,
valuations may include inputs and assumptions that are less observable or
require greater estimation, as well as valuation methods which are more
sophisticated or require greater estimation, thereby resulting in valuations
with less certainty. Further, rapidly changing commodity and unprecedented
credit and equity market conditions could materially impact the valuation of
derivative instruments as reported within our consolidated financial statements
and the period-to-period changes in value could vary significantly. Decreases in
value may have a material adverse effect on our results of operations or
financial condition.




Cash and
cash equivalents, receivables, accounts payable and accrued liabilities were
each estimated to have a fair value approximating the carrying amount due to the
short maturity of those instruments.  Indebtedness under the Company’s
secured revolving bank credit facility and loans related to the acquisition of
Maverick were estimated to have a fair value approximating the carrying amount
since the interest rate is generally market sensitive.




Note 8 – Commitments and
Contingencies




Lance
Duncan Consulting Agreement




Effective
with the Tandem acquisition on October 26, 2007, the Company entered into a
consulting agreement with Mr. Lance Duncan for consulting services, including
investigation and evaluation of possible future acquisitions for the Company.
Under the terms of the consulting agreement, the Company agreed to issue to Mr.
Duncan a total of 714,286 shares of the Company’s restricted common stock as
consideration over the period of service. These shares were fixed in number
(except for stock splits or other recapitalizations). These shares were to be
issued in semi-annual installments over the eighteen month term of the agreement
beginning with the closing of the Tandem acquisition.




On
October 26, 2007, the first installment of 178,572 of irrevocable shares was
issued to Mr. Duncan.  These shares were valued at $1,250,000 which
was charged to operations during the year ended December 31,
2007.  The Company was required to issue the remaining 535,714 shares
of its common stock in 2008. The Company did not issue these shares due to a
dispute between the Company and Mr. Duncan.  In February 2010, all
claims between the Company and Mr. Duncan were resolved and the balance of the
shares was distributed accordingly.  See Note 14.





Note
9 - Long-Term Debt and Capital Lease Obligations





The
following table sets forth the Company’s long-term debt position as of June 30,
2010 and December 31, 2009 (stated in thousands):




June 30,
                              2010
                            
                            
                            December 31,
                              2009Oil
      and gas revolving line of credit
                            
                            (a)
                            
                            $
                            9,509
                            
                            
                            $
                            13,029Notes
      payable - acquisitions
                            
                            (b)
                            
                            
                            3,548
                            
                            
                            
                            3,422Revolving
      line of credit to former shareholders – Maverick
                            
                            (c)(f)
                            
                            
                            2,917
                            
                            
                            
                            2,917Term
      note to former shareholders - Maverick
                            
                            (d)(f)
                            
                            
                            252
                            
                            
                            
                            252Second
      term note to former shareholders - Maverick
                            
                            (e)(f)
                            
                            
                            1,404
                            
                            
                            
                            1,404Capital
      lease obligations
                            
                            
                            
                            
                            242
                            
                            
                            
                            312$
                            17,872
                            
                            
                            $
                            21,336Less:
      Current maturities
                            
                            
                            
                            
                            14,225
                            
                            
                            
                            17,802Long-term
      debt
                            
                            
                            
                            $
                            3,647
                            
                            
                            $
                            3,534


Page
12of 33




PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


June
30, 2010


(UNAUDITED)




(a)   On March
14, 2008, Tandem and PER Gulf Coast, Inc. (“Borrower”) which are wholly-owned
subsidiaries of the Company, entered into a Senior Secured Revolving Credit
Facility (“Senior Credit Facility”) with Bank of Texas. The Senior Credit
Facility provided for a revolving credit facility up to the lesser of the
borrowing base and $100 million. The initial borrowing base was set at $35
million.  The facility is collateralized by substantially all of the
Company’s proved oil & gas assets as well as substantially all of the
derivative financial instruments discussed in Note 6.  The Senior
Credit Facility was originally to mature on March 14, 2012, at which time all
outstanding borrowings would have to be repaid.




Under the
terms of the Senior Credit Facility, the Borrower 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.  A financial covenant under
the Senior Credit Facility requires us to maintain a ratio of indebtedness to
cash flow of no more than 3 to 1. The Company, as the parent company, is not a
co-borrower or guarantor of the line, and transfers from the Borrower 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.




In June
2009, the borrowing base was reduced to $15 million and the Senior Credit
Facility was amended to change the interest rate provisions. Under the amended
loan agreement, outstanding debt bears interest at LIBOR, plus a margin, which
varies according to the ratio of the Borrower’s outstanding borrowings against
the defined borrowing base, ranging from 2.5% to 3.5%, provided the interest
rate does not fall below a floor rate of 4.5% per annum.  In addition,
the Borrower is obligated to the bank for a monthly fee of any unused portion of
the line of credit at the rate of 0.50% per annum.  The maturity date
was also modified to June 1, 2010.




In May
2010, the Company paid down $1.5 million on the Senior Credit
Facility.  In June, the Company paid down an additional $2 million on
the Senior Credit Facility utilizing cash on hand and the proceeds from the
liquidation of certain derivative contracts as further described in Note
6.  The Borrower did not repay the amounts due under the Senior Credit
Facility on June 1, 2010.




On
August 6, 2010 with an effective date of June 1, 2010, the Company and the Bank
of Texas executed an amendment to the Senior Credit Facility.  The
Amendment (1) granted the Company an extension on the maturity date of the loan
to September 1, 2010,  (2) reduced the Borrowing Base under the Senior
Credit Facility to approximately $9.5 million, (3) required the Company to
reduce the then outstanding balance of $9.5 million under the Senior Credit
Facility by $1 million, (4) waived certain events of default of the Borrower
through the period ended May 31, 2010, and (5) increased the interest rate floor
to a rate of not less than 5% per annum.  The Company paid a fee of
$40,000 to the Bank of Texas in connection with the waivers and the extension in
the maturity date and $36,846 in interest.  Additionally, on August 6,
2010, the Company used cash on hand to pay down $1 million on the Senior Credit
Facility, reducing the Bank of Texas loan balance to approximately $8.5
million.




As of
June 30, 2010, the $9.5 million outstanding under the revolving line of credit
was bearing interest at the bank’s base rate, which was
5.0%.  The Company believes it is currently in compliance with the
terms of the amended Senior Credit Facility.




(b)Maverick-As part of the
acquisition of Maverick, the Company agreed to pay $5 million over 5 years
pursuant to non-interest bearing cash flow notes, subject to certain escrows,
holdbacks and post-closing adjustments (“Cash Flow Notes”). The Cash Flow Notes
are payable quarterly at the rate of 50% of pre-tax net income generated by the
Maverick business on a stand-alone basis in the preceding quarter. At the five
year anniversary of the Cash Flow Notes, if the aggregate quarterly payments
made pursuant to the formula described in the preceding sentence are less than
$5 million, any shortfall will be converted into a one year term note, bearing
interest at the prime rate plus 2% per annum, with principal and interest due in
equal monthly installments over the twelve month
term.    The Cash Flow Notes can be accelerated by certain
events, including change in control of Maverick.  The Company’s
believes that no events since the acquisition of Maverick have triggered an
acceleration in the due date of the Cash Flow Notes.




The
purchase price was 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. The Cash Flow
Notes were reduced by the amount of the working capital post closing adjustment,
which was determined by the Company to be $645,596. At the time the acquisition
was completed, a discount to present value in the amount of $1,320,404 was
recorded and deducted from the Cash Flow Notes as these notes are non-interest
bearing for the initial 5 years of their term. As a result, the net carrying
value of the Cash Flow Notes on April 29, 2008 was
$3,034,000.  Accretion of the discount related to the Cash Flow Notes
of $63,544 and $59,114, for the three months ended June 30, 2010 and 2009,
respectively, and for the six months ended June 30, 2010 and 2009, $125,951 and
$117,169, respectively, was recognized as interest
expense.


Page
13 of 33




On April
16, 2009, the Company received a written notice of acceleration from Robert L.
Kovar Services, LLC, as the stockholder representative, claiming that the
Company failed to make timely mandatory prepayments in the amount of $110,381
due under the terms of the Cash Flow Notes.   The Company has not
reclassified the long-term portion of these Cash Flow Notes included in Notes
payable – acquisitions to current liabilities.  It is the Company’s
position that Maverick generated  pretax quarterly losses during the
period April 29, 2008 through June 30, 2010, and as such the Company was not
obligated to make a mandatory payment to the note
holders.   Generally Accepted Accounting Principles in the United
States of America (“GAAP”) require intangible assets to be amortized over their
useful lives.  In addition, goodwill and intangible assets are
evaluated annually for potential impairment.  The pretax income as
calculated by Robert L. Kovar Services, LLC, as the stockholder representative,
did not include amortization expense or impairment charges related to intangible
assets and goodwill in accordance with GAAP.  These Cash  Flow
Notes are now the subject of litigation between Kovar and the Company as further
described in Note 15.




(c) $2,917,000 revolving line
of credit, payable to the Maverick former shareholders in monthly interest
payments at prime plus .25%, principal and unpaid interest due at maturity in
September 2010.   No payments were made during 2010.  The
interest rate applicable under this agreement is currently 3.5%. See Litigation
- Note 15.




(d) $252,000 term note,
payable to the Maverick former shareholders in monthly principal and interest
payments of $10,280 with interest at prime plus .75%, unpaid principal and
interest was due at maturity in May 2009. No payments were made in
2010.  See Litigation - Note 15.




(e) $1,404,000 second term
note, payable to the Maverick former shareholders in monthly interest payments
at prime plus .50% beginning in April 2008, and beginning in October 2008,
principal payments of $23,390 plus interest until maturity in April 2013. No
payments were made in 2010.  The current interest rate applicable
under this agreement is 3.75%.  See Litigation - Note 15.




(f) On April 29, 2009,
Maverick received a notice of acceleration (the “Acceleration Letter”) with
respect to the revolving line of credit, the term note and the second term note
payable to the Maverick former shareholders (the”Maverick Notes”) and governed
by a Loan Agreement and related Security Agreement originally dated April 30,
2005 and April 29, 2005, respectively.  The Acceleration Letter
alleges that Maverick failed to comply with certain covenants under the terms of
the Loan Agreement and that Maverick failed to make payments due under the
Notes.  The outstanding principal, accrued interest and late charges
alleged to be owed by Maverick in the Acceleration Letter total
$4,659,227.  The Acceleration Letter also contends that interest
continues to accrue at the default rate of 18% per annum.  In a
separate letter, dated May 1, 2009, Robert L. Kovar Services, LLC, as the
stockholder representative for the sellers, purported to terminate the revolving
credit facility under the Loan Agreement and demanded turnover of all collateral
securing indebtedness under the Loan Agreement, including the Maverick Notes. No
payments were made after the first quarter of 2009 through June 30, 2010.The
Company and Maverick have asserted claims in litigation against the holders of
the Maverick Notes, Robert L. Kovar Services, LLC, Robert L. Kovar,
individually, and others.  The litigation is in its early stages and,
accordingly, the Company cannot predict the outcome of these
matters.  See Litigation Note - 15.  The Company is accruing
interest on the Maverick Notes while the claims are being resolved.





Annual
maturities of indebtedness at June 30, 2010 are as follows (stated in
thousands):




For
      the Year Ended June 30,2011
                  
                  $
                  14,0822012
                  
                  
                  -2013
                  
                  
                  3,5482014
                  
                  
                  -Thereafter
                  
                  
                  -$
                  17,630




The
following is a schedule of future minimum lease payments under capitalized
leases together with the present value of the net minimum lease payments at June
30, 2010 (stated in thousands):




For
      the Year Ended June 30,2011
                  
                  $
                  1742012
                  
                  
                  902013
                  
                  
                  17Thereafter
                  
                  
                  -Total
      minimum lease payments
                  
                  
                  281Less:  Amount
      representing interest
                  
                  
                  (39
                  )Current
      value of minimum lease payments
                  
                  
                  242Less:  Current
      maturities
                  
                  
                  (143
                  )$
                  99


The
effective interest rate on capitalized leases ranges from 5% -
31%.   Page
14 of 33




PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


June
30, 2010


(UNAUDITED)





Note
10 – Asset Retirement Obligation




For the
Company, asset retirement obligations (“ARO”) represent the systematic, monthly
accretion and depreciation of future abandonment costs of tangible assets such
as wells, service assets, and other facilities. The fair value of a liability
for an asset’s retirement obligation is recorded in the period in which it is
incurred if a reasonable estimate of fair value can be made, and the
corresponding cost is capitalized as part of the carrying amount of the related
long-lived asset. The liability is accreted to its then present value each
period, and the capitalized cost is depreciated over the useful life of the
related asset. If the liability is settled for an amount other than the recorded
amount, an adjustment is made to the full cost pool, with no gain or loss
recognized, unless the adjustment would significantly alter the relationship
between capitalized costs and proved reserves. The Company’s policy with respect
to ARO is to assign depleted wells to a salvager for the assumption of
abandonment obligations before the wells have reached their economic limits; the
Company has estimated its future ARO obligation with respect to its operations.
The ARO assets, which are carried on the balance sheet as part of the full cost
pool, have been included in our amortization base for the purposes of
calculating depreciation, depletion and amortization expense.




The
following table describes changes in the asset retirement liability as of June
30, 2010. The ARO liability in the table below includes amounts classified as
long-term at June 30, 2010 (stated in thousands):




Six Months
                    Ended June 30,
                    2010ARO
      liability at beginning of period – Current and Long-Term
                  
                  $
                  7,239Abandonments
      during period
                  
                  
                  (185
                  )Accretion
      expense
                  
                  
                  356Obligations
      arising during period
                  
                  
                  3Changes
      in estimates
                  
                  
                  (153
                  )ARO
      liability at end of period – Current and Long-Term
                  
                  $
                  7,260




Note 11 – Earnings
per Share




Basic earnings per share (“EPS”) amounts are calculated using the
weighted average number of common shares outstanding during each period. Diluted
EPS assumes the exercise of all stock options, warrants and convertible
securities having exercise prices less than the average market price of the
common stock during the periods, using the treasury stock method. When a loss
from continuing operations exists, potential common shares are excluded in the
computation of diluted EPS because their inclusion would result in an
anti-dilutive effect on per share amounts.




Reconciliations
between the numerators and denominators of the basic and diluted EPS
computations for each period are as follows (in thousands, except per share
data):





Three
      Months Ended June 30,2010
                      
                      
                      2009Numerator:Net
      Income (loss) applicable to common stockholders
                      
                      $
                      2,398,950
                      
                      
                      $
                      (6,861,924
                      )Denominator:Denominator
      for basic earnings (loss) per share — weighted-average shares
      outstanding
                      
                      
                      22,606,475
                      
                      
                      
                      22,070,762Effect
      of potentially dilutive common shares:Warrants
                      
                      
                      —
                      
                      
                      
                      —Employee
      and director stock options
                      
                      
                      —
                      
                      
                      
                      —Denominator
      for diluted earnings (loss) per share — weighted-average shares
      outstanding and assumed conversions
                      
                      
                      22,606,475
                      
                      
                      
                      22,070,762Basic
      earnings ( loss) per share
                      
                      $
                      0.11
                      
                      
                      $
                      (0.31
                      )Diluted
      earnings ( loss) per share
                      
                      $
                      0.11
                      
                      
                      $
                      (0.31
                      )


Page
15 of 33





Six
      Months Ended June 30,2010
                              
                              
                              2009Numerator:Net
      Income (loss) applicable to common stockholders
                              
                              $
                              1,446,178
                              
                              
                              $
                              (8,978,080
                              )Denominator:Denominator
      for basic earnings (loss) per share — weighted-average shares
      outstanding
                              
                              
                              22,472,547
                              
                              
                              
                              22,070,762Effect
      of potentially dilutive common shares:Warrants
                              
                              
                              —
                              
                              
                              
                              —Employee
      and director stock options
                              
                              
                              —
                              
                              
                              
                              —Denominator
      for diluted earnings (loss) per share — weighted-average shares
      outstanding and assumed conversions
                              
                              
                              22,472,547
                              
                              
                              
                              22,070,762Basic
      earnings (loss) per share
                              
                              $
                              0.06
                              
                              
                              $
                              (0.41
                              )Diluted
      earnings (loss) per share
                              
                              $
                              0.06
                              
                              
                              $
                              (0.41
                              )





The increasein weighted-average shares
outstanding at June 30, 2010, is the result of issuing 535,714 shares to Lance
Duncan.For the three
and six months ended June 30, 2010 and 2009, the Company excluded options to
purchase 151,000 and 156,000 shares of common stock, respectively, as the effect
would be anti-dilutive.





Note
12 – Income Taxes




Deferred
income taxes are provided on a liability method whereby deferred tax assets and
liabilities are established for the difference between the financial
reporting and income tax basis of assets and liabilities as well as operating
loss and tax credit carry forwards.  Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized.





The
Company has computed the tax provision for the six months ended June 30, 2010 in
accordance with the provisions of ASC 740 – Income Taxes and ASC 270 –
Interim
Reporting.  The Company has estimated that its effective tax
rate for US purposes will be zero for 2010, and consequently, recorded no U.S.
income tax benefit for the six months ended June 30, 2010 due to the substantial
uncertainty regarding ultimate realization.




At June
30, 2010, the Company had, subject to the limitations discussed below,
approximately $28 million of net operating loss carryforwards for U.S. purposes.
These loss carryforwards will expire from 2026 through 2030 if not
utilized.




In
addition to any Section 382 limitations for change of control, uncertainties
exist as to the future utilization of the operating loss carryforwards under the
criteria set forth under ASC 740. Therefore, the Company has increased its
valuation allowance at June 30, 2010 to approximately $8.8 million, an increase
of roughly $0.1 million from December 31, 2009.





The
current period income tax expense is solely attributable to Texas Margin taxes
accrued during the period.




Note
13 - Segment Information




The
Company considers itself to be in two lines of business - (i) as an independent
oil and gas exploration and production company and (ii) as an engineering
services company.




Page
16of 33





(i)
              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, adjusted by
      agreed-upon increases or decreases 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. For the six months
      ended June 30, 2010, three customers accounted for approximately 46%,
      12% and 12% of the Company’s crude oil and natural gas
      revenues.  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.


(ii)
            Maverick
      provides engineering and construction services primarily for three types
      of clients: (1) upstream oil & gas, domestic oil and gas producers and
      pipeline companies; (2) industrial, petrochemical and refining plants; and
      (3) infrastructure, private and public sectors, including state
      municipalities, cities, and port authorities. Maverick operates out of
      facilities headquartered in Victoria, Texas and operates primarily in
      Texas. The types of services provided include project management,
      engineering, procurement, and construction management services to both the
      public and private sectors, including the oil and gas business in which
      the Company is engaged. For the six months ended June 30, 2010, three
      customers accounted for approximately 42%, 18% and 15%. of the Company’s
      service revenues





The following table presents selected financial information for the Company’s
operating segments (stated in thousands):


Page
17 of 33





PLATINUM
ENERGY RESOURCES, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


June
30, 2010


(UNAUDITED)





Exploration
                
                
                
                
                
                
                
                
                ConsolidatedFor the Three Months Ended June 30,
      2010:
                
                and Production
                
                
                Engineering
                
                
                Parent
                
                
                TotalRevenues
                
                $
                4,514
                
                
                $
                4,125
                
                
                $
                
                
                
                $
                8,639Marketing,
      general and administrative expense
                
                $
                251
                
                
                $
                266
                
                
                $
                331
                
                
                $
                848Income
      (loss) before income taxes
                
                $
                3,342
                
                
                $
                (601
                )
                
                $
                (331
                )
                
                $
                2,410




Exploration
                
                
                
                
                
                
                
                
                ConsolidatedFor the Three Months Ended June 30, 2009:
                
                and Production
                
                
                Engineering
                
                
                Parent
                
                
                TotalRevenues
                
                $
                4,465
                
                
                $
                4,487
                
                
                $
                —
                
                
                $
                8,952Marketing,
      general and administrative expense
                
                $
                721
                
                
                $
                518
                
                
                $
                1,079
                
                
                $
                2,318Loss
      before income taxes
                
                $
                (8,659
                )
                
                $
                (799
                )
                
                $
                (1079
                )
                
                $
                (10,537
                )




Exploration
                
                
                
                
                
                
                
                
                ConsolidatedFor the Six Months Ended June 30, 2010:
                
                and Production
                
                
                Engineering
                
                
                Parent
                
                
                TotalRevenues
                
                $
                10,570
                
                
                $
                8,739
                
                
                $
                
                
                
                $
                19,309Marketing,
      general and administrative expense
                
                $
                1,244
                
                
                $
                510
                
                
                $
                870
                
                
                $
                2,624Income
      (loss) before income taxes
                
                $
                3,061
                
                
                $
                (720
                )
                
                $
                (870
                )
                
                $
                1,471




Exploration
                
                
                
                
                
                
                
                
                ConsolidatedFor the Six Months Ended June 30, 2009:
                
                and Production
                
                
                Engineering
                
                
                Parent
                
                
                TotalRevenues
                
                $
                7,780
                
                
                $
                10,008
                
                
                $
                -
                
                
                $
                17,788Marketing,
      general and administrative expense
                
                $
                1,661
                
                
                $
                1,189
                
                
                $
                1,698
                
                
                $
                4,548Income
      (loss) before income taxes
                
                $
                (10,305
                )
                
                $
                (1,765
                )
                
                $
                (1,698
                )
                
                $
                (13,768
                )





Exploration
                
                
                
                
                
                
                
                
                Consolidatedand Production
                
                
                Engineering
                
                
                Parent
                
                
                TotalTotal
      assets as of June 30, 2010
                
                $
                58,440
                
                
                $
                3,583
                
                
                $
                991
                
                
                $
                63,014Total
      assets as of December 31, 2009
                
                $
                55,350
                
                
                $
                5,581
                
                
                $
                3,441
                
                
                $
                64,372





Note
14 – Treasury Stock





In February 2010, the Company settled
its dispute with Mr. Lance Duncan and issued him 535,714 shares of common stock
out of its treasury stock holdings. The shares were originally recorded as
treasury shares at the Company’s purchase cost of $7.84 per share, or
$4,199,409. With the subsequent reissuance, the Company reduced the cost of
treasury shares by $4,199,409 and recorded $3,101,194, representing the
difference between the original acquisition cost of the shares and the value
accrued by the Company, as a decrease in additional paid-in
capital.





Note
15 – Litigation





From time
to time, the Company is party to certain legal actions and claims arising in the
ordinary course of business. While the outcome of these events cannot be
predicted with certainty, management does not anticipate these matters to have a
materially adverse effect on the financial position or results of operations of
the Company. As of the filing date, there has been no material change in the
litigation discussion below.




Page
18 of 33


Exxon
Litigation





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 and we currently are not able to
estimate the range of possible exposure or loss, if any, that might result from
this litigation. 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. Currently the Court has indicated a willingness to put the case on hold
pending completion of the Railroad Commission investigation.





Hyman
Litigation





On
November 11, 2008, Mr. Hyman, a former employee of KD Resources, filed a claim
against KD Resources and Platinum Energy stating that he was discharged from KD
Resources in violation of the Sarbanes-Oxley Act of 2002, Section 806,
Protection for Employees of Publicly Traded Companies Who Provide Evidence of
Fraud.  In December, 2008, the Department of Labor (“DOL”) dismissed
the complaint as not being timely filed.  On or about January 8, 2009, Mr.
Hyman appealed the ruling of the DOL. On January 16, 2009, the DOL filed an
Order to Show Cause whereby Mr. Hyman was ordered to show why his case should
not have been dismissed.  On February 14, 2009, Mr. Hyman filed his
response to the Order to Show Cause stating that he failed to file within the
required time because he was engaged in negotiations with the Respondents. 
On March 18, 2009, the Department of Labor dismissed Mr. Hyman’s claim for
failure to file within the 90-day filing period.   Mr. Hyman filed a
Petition for Review of the Decision and Order Dismissing Complaint issued March
18, 2009.  A Notice of the Appeal was filed April 10, 2009 which was
granted.  On March 31, 2010, in a split decision, the Administrative Review
Board reversed the decision of the Administrative Law Judge and Remanded the
case for further consideration.  It is the Company's contention that Mr.
Hyman did not file his complaint within the time required by Sarbanes-Oxley, and
in any case, was never an employee of Platinum Energy Resources or any of its
subsidiaries; as such we are not liable for any issues between Mr. Hyman and his
former employer, KD Resources.  It is the Company's further contention that
the only reason Platinum Energy is listed in this action is because it is a
public company and Mr. Hyman needs a public company in order to obtain his
status under the Sarbanes-Oxley Act. The case is currently in the discovery
phase and the judge imposed a deadline of September 1, 2010 to present briefs.
We believe the likelihood of any loss related to this litigation is
remote.





Kovar
Litigation





On
December 3, 2008, Robert Kovar filed suit against Platinum alleging that he
“Resigned for Good Reason” according to his employment contract. Mr. Kovar is
seeking a Declaration Judgment that he had “Good Reason” to resign his
employment at Platinum Energy and Maverick Engineering. Mr. Kovar is also
requesting payment of the severance package, accelerated vesting of options and
accelerated payment of the Cash Flow Notes (as described in the Platinum Energy,
Maverick Engineering Merger Agreement and Note 9 above) as described in his
employment agreement, plus attorney fees and court costs. It is our contention
that Mr. Kovar resigned his position without good reason and is therefore, not
entitled to severance or accelerated vesting of options. It is our additional
conviction that the Cash Flow Notes has been cancelled and that Platinum Energy
in no longer obligated to make any payments thereunder, pursuant to the terms of
Mr. Kovar’s employment agreement. We are currently in the discovery phase of
this matter. We believe that Mr. Kovar’s claim that he resigned with “Good
Reason” is without merit and we intend to vigorously defend ourselves against
this claim.




On April
16, 2009, the Company received a written notice of acceleration from Robert L.
Kovar Services, LLC, as the stockholder representative, claiming that the
Company failed to make timely mandatory prepayments in the amount of $110,381
due under the terms of the Cash Flow Notes.  On April 29, 2009,
Maverick received a notice of acceleration (the “Acceleration Letter”) with
respect to the Maverick Notes governed by a Loan Agreement and related Security
Agreement originally dated April 30, 2005 and April 29, 2005, respectively. The
Acceleration Letter alleges that Maverick failed to comply with certain
covenants under the terms of the Loan Agreement and that Maverick failed to make
payments due under the Maverick Notes. The outstanding principal, accrued
interest and late charges alleged to be owed by Maverick in the Acceleration
Letter total $4,659,227. The Acceleration Letter also contends that interest
continues to accrue at the default rate of 18% per annum. In a separate letter,
dated May 1, 2009, Robert L. Kovar Services, LLC, as the stockholder
representative for the sellers, purported to terminate the revolving credit
facility under the Loan Agreement and demanded turnover of all collateral
securing indebtedness under the Loan Agreement, including the Maverick Notes.
The Company and Maverick have asserted claims in litigation against the holders
of the Maverick Notes, Robert L. Kovar Services, LLC, Robert L. Kovar,
individually, and others. This litigation is in its early stages and,
accordingly, the Company cannot predict the outcome of these
matters.





Page
19 of 33





On May 3.
2009, Platinum and Maverick Engineering. Inc. filed suit against Robert L.
Kovar Services. LLC (“RKS”), Robert L. Kovar (“Kovar”), Rick J. Guerra
(“Guerra”), and Walker, Keeling, & Carroll. L.L.P. (“WKC”)
collectively (the Defendants”) alleging, among other things, a
suit for declaratory judgment asking the court to declare that Platinum and
Maverick are entitled to indemnification from the former Maverick
stockholders, including Guerra and Kovar, for any damages they suffer as a
result of a default on any note contained in the Maverick and PermSUB
Merger Agreement. In addition, Platinum and Maverick have asked the Court
to declare that WKC has breached the merger agreement by not stepping down
as the Merger Escrow Agent. Platinum and


Maverick
have also sued to recover costs of court and attorneys’ fees.




In
October, 2009, Platinum and Maverick Engineering filed a Second Amended Petition
with the following Causes of Action against the Defendants: Kovar fraudulently
induced Platinum to enter into the Merger Agreement; Common-Law Fraud; Statutory
Fraud; Breach of Fiduciary Duty; Tortious Interference with Merger Agreement;
Civil Conspiracy; and Breach of Contract. As this case is still in the discovery
phase of litigation, at this time, it is impossible for us to provide an
informed assessment of the likelihood of a favorable or unfavorable outcome
in this case.





Currently,
the trial date has been set for November 30, 2010.





Citgo
Litigation





On
October 14, 2009, Maverick Engineering filed suit in Harris County against CITGO
Refining & Chemical Company, LP for Breach of Contract. According to the
Petition, Maverick provided engineering services to CITGO and CITGO has refused
to pay for those services. Maverick is suing for recover of $357,538,
representing the outstanding accounts receivable balance due from CITGO on the
date the suit was filed, plus damages, costs, attorney fees, interest, and other
relief. While Maverick has performed all terms, conditions, and covenants
required under its contract with CITGO, it is too early in this litigation to be
able to predict the outcome.




Meier
Litigation





On
October 20, 2009, Lisa Meier filed suit for breach of her employment contract.
According to the Petition, Ms. Meier resigned for “good cause” and she is
seeking severance pay. On June 10, 2009, Ms. Meier delivered to the Board of
Directors of Platinum energy Resources, her second notice of intent to resign
for “Good Reason.” Ms. Meier’s first notice was submitted on October 23, 2008,
less than three months after entering into her employment agreement, and
subsequently withdrawn.




The Board
of Directors accepted Ms. Meier’s resignation, but stated that “good reason” did
not exist. This matter is currently in the early phase of litigation. We believe
that Ms. Meier’s claims are without merit and we intend to vigorously defend
ourselves against these claims. There have been no changes in circumstances
or events relating to this litigation since the discussion in the Company’s
annual report.





Note
16 – Subsequent Events




On August 6, 2010, the Company and Bank
of Texas executed the third amendment to the loan agreement effective June 1,
2010, between the two parties. The Company paid $1,076,846, consisting of $1
million in principal, $36,846 in interest and a $40,000 loan fee. In exchange,
the bank granted, among other things, an extension of the maturity date of the
loan to September 1, 2010. See Note 9 for further details on this
amendment.




Page
20 of 33




Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.





This
Quarterly Report on Form 10-Q includes 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. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to known and unknown
risks, uncertainties and assumptions about us that may cause our 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 such forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “may,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,”
or the negative of such terms or other similar expressions. Factors that might
cause or contribute to such a discrepancy include, but are not limited to, those
described in our other Securities and Exchange Commission filings.





The
following discussion should be read in conjunction with our Consolidated
Financial Statements and related Notes thereto included elsewhere in this
report.





Overview





We
consider ourselves to be in two lines of business - (i) as an independent oil
and gas exploration and production company and (ii) as an engineering and
construction services company.




i)
            In
      our oil and gas operations, we conduct oil and natural gas exploration,
      development, acquisition, and production. 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 an acceptable rate of return on our capital investment. We sell
      substantially all of our 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 our natural gas production is
      sold under short-term contracts based on pricing formulas which are
      generally market responsive. From time to time, we may also sell a portion
      of the gas production under short-term contracts at fixed
      prices.


Page
21 of 33




(ii)
            Through
      our wholly-owned Maverick operation, we provide engineering and
      construction services primarily for three types of clients: (1) upstream
      oil and gas, domestic oil and gas producers and pipeline companies; (2)
      industrial, petrochemical and refining plants; and (3) infrastructure,
      private and public sectors, including state municipalities, cities, and
      port authorities. Maverick operates out of facilities headquartered in
      Victoria, Texas and operates primarily in Texas. The types of services
      provided include project management, engineering, procurement, and
      construction management services to both the public and private sectors,
      including the oil and gas business in which we are engaged as described
      above. Maverick is based in south Texas with offices in Corpus Christi,
      Victoria, and Houston.





From time
to time, we may make strategic acquisitions in our oil and natural gas business
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.





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.


Page
22 of 33




Results
of Operations





Set forth
below are:





(A)
            A
      discussion of the results of operations for Platinum Energy Resources,
      Inc. ("Platinum") for the three and six months ended June 30, 2010, as
      compared to the three and six months ended June 30,
  2009;





(B)
            A
      discussion of the results of operations for our oil and gas entities for
      the three and six months ended June 30, 2010, as compared to the three and
      six months ended June 30, 2009; and





(C)
            A
      discussion of the results of operations for our engineering and
      construction services business for the three and six months ended June 30,
      2010, as compared to the three and six months ended June 30,
      2009.





(A)
- Results of Operations - Platinum





For
the three months ended June 30, 2010 as compared to the three months ended June
30, 2009





On a
consolidated basis we had net income of approximately $2.4 million during the
three month period ended June 30, 2010, compared to a net loss of approximately
$6.9 million during the comparative period ended June 30, 2009.




Our
general and administrative expenses, other than those attributable to our oil
and natural gas assets and our engineering services business, for the three
months ended June 30, 2010 was $331,000, as compared to approximately $1,079,000
for the three months ended June 30, 2009. The decrease of $748,000 was the
result of incurring significant non-recurring professional fees in efforts
undertaken to file Form 10-K and reorganize various functions of the company’s
business. The Company also continues to experience decreased expenses related to
a lower head count and continued monitoring of cost controls.





For
the six months ended June 30, 2010 as compared to the six months ended June 30,
2009





On a
consolidated basis we had net income of approximately $1.5 million during the
first six months ended June 30, 2010, compared to a net loss of approximately
$9.0 million during the comparative period ended June 30, 2009.




Our
general and administrative expenses, other than those attributable to our oil
and natural gas assets and our engineering services business, for the six months
ended June 30, 2010 was $870,000, as compared to approximately $1,698,000 for
the six months ended June 30, 2009. The decrease of $828,000 was the result of
incurring significant non-recurring professional fees in efforts undertaken to
file Form 10-K and reorganize various functions of the company’s business. The
Company also continues to experience decreased expenses related to a lower head
count and continued monitoring of cost controls.


Page
23of 33




(B)
- Results of Operations - Oil and Gas





For
the Three Months Ended June 30, 2010 as compared to the Three
Months Ended June 30, 2009





Our
revenues from oil and natural gas sales for the three months ended June 30, 2010
and 2009 remained relatively flat at $4.5 million and $4.4 million,
respectively. The average oil price we obtained on our product sales for the
three months ended June 30, 2010 was $77.60, compared to $55.51 for the three
months ended June 30, 2009. The average gas price we obtained for our product
for the three months ended June 30, 2010 was $4.21 per Mcf, as compared to $2.95
per Mcf for the three months ended June 30, 2009. Production on a BOE basis
decreased 23.1% from 103,265 BOE during the three months ended June 30, 2009 to
79,359 BOE’s during the three months ended June 30, 2010. The decrease in
production was a result of several fields undergoing routine maintenance in
addition to the necessary shut-down periods experienced during workovers being
performed under a broad program adopted in February 2010. We expect production
to return to higher levels once the workover program is completed in its
entirety. The Company expects to complete the workover program late in the
fourth quarter.





Oil and
gas production costs in the form of lease operating expense on a BOE basis
increased  by 73.9% from $21.43 to $37.57 during the three months ended
June 30, 2009 and 2010, respectively. The increase was due primarily to workover
programs put in place to improve the operating efficiency of the wells. During
the three months ended June 30, 2010, we incurred nonrecurring lease operating
costs totaling $752,226, or $9.47 per BOE, as part of a broad workover program.
Other factors outside management control, such as third party service
availability and the availability of adequate technical and field staff, could
have an adverse effect on lease operating costs in the future.





Depletion
expense for oil and gas properties was $988,000 and $1,427,000 for the three
months ended June 30, 2010 and 2009, respectively. This represents a decrease of
$439,000, or 31%, during the three months ended June 30, 2010 compared to the
three months ended June 30, 2009. The decrease was related to a lower carrying
value of our oil and gas properties as a result of the ceiling test impairment
recorded as of December 31, 2009.




We also incurred realized gains of $730,000 and unrealized gains of
$2,515,000 for the three months ended June 30, 2010 as compared to realized
gains of $328,000 and unrealized losses of approximately $8,734,000 during
the three months ended June 30, 2009 on the value of certain derivative contracts on crude oil. The
change was due to the volatility in the price of oil.


Supplemental
Oil and Gas Information





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




Three Months Ended June 30,2010
                    
                    
                    2009ProductionOil
      (Bbls)
                    
                    
                    60,961
                    
                    
                    
                    69,769Gas
      (Mcf)
                    
                    
                    110,388
                    
                    
                    
                    200,973Boe
      (Bbls)
                    
                    
                    79,359
                    
                    
                    
                    103,265Average
      PricesOil
      ($/Bbl)
                    
                    $
                    77.60
                    
                    
                    $
                    55.51Gas
      ($/Mcf)
                    
                    $
                    4.21
                    
                    
                    $
                    2.95Average
      Lifting CostPer
      Boe
                    
                    $
                    37.28
                    
                    
                    $
                    21.43





For
the Six Months Ended June 30, 2010 as compared to the Six Months
Ended June 30, 2009





Our
revenues from oil and gas sales for the six months ended June 30, 2010 were
$10.6 million. Oil and gas sales for the six months ended June 30, 2009 were
$7.8 million. The 36% increase in oil and gas revenues, or $2.8 million, was due
to an increase in commodity prices during the six months ended June 30, 2010.
The average oil price we obtained on our product sales for the six months ended
June 30, 2010 was $76.42, compared to $46.43 for the six months ended June 30,
2009. The average gas price we obtained for our product for the six months ended
June 30, 2010 was $4.91 per Mcf, as compared to $3.16 for the six months
ended June 30, 2009. Production on a BOE basis decreased 16.9% from 207,822
BOE’s during the six months ended June 30, 2009, to 157,255 BOE’s during the six
months ended June 30, 2010.


Page
24 of 33




Oil and
gas production costs in the form of lease operating expense on a BOE basis
increased  by $9.13 per BOE, or 41.2%, from $23.74 per BOE during
the six months ended June 30, 2009 to $33.53 per BOE during the six
months ended June 30, 2010. The increase was due primarily to workover programs
put in place to improve the operating efficiency of the wells. During the six
months ended June 30, 2010, we incurred nonrecurring lease operating costs
totaling $958,578, or $6.10 per BOE, as part of a broad workover program. Other
factors outside management control, such as third party service availability and
the availability of adequate technical and field staff, could have an adverse
effect on lease operating costs in the future.





Depletion
expense for oil and gas properties was $2,213,000 and $2,974,000 for the six
months ended June 30, 2010 and 2009, respectively. This represents a decrease of
$761,000, or 26%, during the six months ended June 30, 2010 compared to the six
months ended June 30, 2009. The decrease was related to a lower carrying value
of our oil and gas properties as a result of the ceiling test impairment
recorded as of December 31, 2009.




We also incurred realized gains of
$782,000 and unrealized gains of $1,157,000 for the six months ended June 30,
2010 as compared to realized gains of $1,166,000 and unrealized losses of
approximately $9,044,000 during the six months ended June 30, 2009 on the
value of certain derivative contracts on crude oil. The change was due to the
volatility in the price of oil.


Supplemental
Oil and Gas Information





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




Six Months Ended June 30,2010
                    
                    
                    2009ProductionOil
      (Bbls)
                    
                    
                    121,410
                    
                    
                    
                    139,699Gas
      (Mcf)
                    
                    
                    215,068
                    
                    
                    
                    408,739Boe
      (Bbls)
                    
                    
                    157,255
                    
                    
                    
                    207,822Average
      PricesOil
      ($/Bbl)
                    
                    $
                    76.42
                    
                    
                    $
                    46.43Gas
      ($/Mcf)
                    
                    $
                    4.91
                    
                    
                    $
                    3.16Average
      Lifting CostPer
      Boe
                    
                    $
                    33.40
                    
                    
                    $
                    23.74





(C)
- Results of Operations - Engineering Services (Maverick)





For
the three months ended June 30, 2010 as compared to the three months ended June
30, 2009





Revenues
for the three months ended June 30, 2010 and the three months ended June
30, 2009 were $4.1 million and $4.5 million, respectively.  Gross
margin performance for these periods was (3.23%) and 4.64%,
respectively.  The decline in gross margin for the period ending June
30, 2010 was caused by a simultaneous work slowdown in our three largest
business segments (Industrial, Oil & Gas and Survey), and a large downturn
in U.S. economy. The southern division of Maverick, also, finished one of its
most profitable jobs in March 2010. When the senior engineers, staffed on the
completed project, were moved to other ongoing projects with significantly lower
multipliers, the result was having to bill at existing rates that were lower
than Mavericks costs. The Company does not expect this trend to continue into
the future, as rates can be renegotiated with clients and contracted personnel.
  Engineering services reported pretax losses of $601,111 and $798,520
in the three months ended June 30, 2010 and 2009, respectively.





For
the six months ended June 30, 2010 as compared to the six months ended June 30,
2009





Revenues
for the six months ended June 30, 2010 and the six months ended June 30,
2009 were $8.7 million and $10.0 million, respectively.  Gross margin
performance for these periods was 2.29% and 3.0%, respectively.  The
decline in gross margin at June 30, 2010 was caused by a simultaneous work
slowdown in our three largest business segments (Industrial, Oil & Gas and
Survey), largely as a result of project curtailments as clients adjusted to the
slowdown in the U.S. economy.  Engineering services reported pretax
losses of $720,345 and $1,765,316 in the six months ended June 30, 2010
and  2009, respectively.


Page
25 of 33


Liquidity
and Capital Resources





Going
Concern





The
accompanying consolidated financial statements have been prepared assuming we
will continue as a going concern.   We have incurred significant
losses since inception, resulting in cumulative losses of $109,830,077 through
June 30, 2010. Substantially all of these losses were a result of non-cash
writedowns associated with the full cost ceiling test impairment of our oil and
gas properties that occurred with the decline in product
prices.  Additionally, the outstanding loan with the Bank of Texas
originally matured on June 1, 2010 and remains unpaid as of the date of this
filing.   At June 30, 2010, the loan balance was approximately
$9.5 million.  Since June 30, 2010, we have paid down  the
loan to approximately $8.5 million by using excess cash on hand.  The
Bank of Texas loan is collateralized by substantially all of our proved oil
& gas assets, as well as substantially all of our derivative financial
instruments.  On August 6, 2010, Bank of Texas granted us an extension
of the maturity date to September 1, 2010.  Our current cash on hand
is not adequate to satisfy the Bank of Texas loan on the September 1, 2010
maturity date.





The
options available to us to settle the outstanding loan with the Bank of Texas
include further liquidation of our hedge positions, use of available cash, a
partial sale of our oil and gas assets, seeking additional equity financing, or
the refinancing of our existing debt.  There is no assurance that we will
be able to obtain such additional funds through equity or debt refinancing, or
any combination thereof. Additionally, no assurance can be given that any such
refinancing, if achievable, will be adequate to meet our ultimate capital needs
and to support our growth. If the Company is not able to obtain additional
financing on a timely basis and on satisfactory terms, or should the Bank of
Texas issue us a notice of foreclosure with respect to the assets
collateralizing the loan, our operations would be materially negatively
impacted.  However, at current product prices, our cash flow
associated with our oil and gas operations continues to be strong. Although the
options available to us to satisfy the bank debt are not attractive, we do
believe that we have the assets in place to satisfy this obligation.





Capital
Resources





At June
30, 2010, we had cash and cash equivalents of $4,588,484 and negative working
capital of $8,373,952, compared to cash and cash equivalents of $2,941,939 and
negative working capital of $13,453,250 at December 31, 2009.  The
improved working capital was primarily attributable to increased cash on hand
attributable to improved cash flow from operations, cash received in settlement
of derivative contracts and payments made against our outstanding Bank of Texas
loan balance.





Operating
activities provided cash during the six months ended June 30, 2010 of
$3,062,161, versus cash used in operations of $1,717,531 during the 2009
period.  The improved operating cash flow for the six months ended
June 30, 2010, was primarily attributable to net income for the 2010 period as
compared to a net loss for the 2009 period and favorable changes in working
capital items for the 2010 period, partially offset by the noncash gain
attributable to changes in the fair value of commodity derivatives during
2010.





Investing activities provided cash
during the six months ended June 30, 2010 of $2,174,924, versus $200,208 during
the 2009 period.  The improved cash flow from investing activities for
2010 was primarily attributable to the settlement of derivative contracts and
reduced capital expenditures during the 2010 period.  The Company
received $2,439,533 in the 2010 period for the settlement of derivative
contracts, as compared to $1,165,930 during the 2009 period.  The
Company had additions to property and equipment in the 2010 period of $264,609
versus $965,722 of additions during the 2009 period.





Financing activities used cash of
$3,590,540 during the six months ended June 30, 2010, versus providing cash of
$320,408 during the 2009 period.  The 2010 period used proceeds
received from the settlement of derivative contracts and excess cash on hand to
reduce the Senior Credit Facility with Bank of Texas by $3.5
million.  The 2009 period includes the impact of $1,000,000 in
proceeds received from the Senior Credit Facility with Bank of
Texas.  No such proceeds were received in the 2010
period.




Capital
Expenditures- Oil and Gas Development





The
reserve report prepared as of December 31, 2009 assumes that we will not spend
any capital expenditures in 2010 to exploit oil and gas opportunities. Our
primary focus since the beginning of the year has been to control our operating
costs.   As cash flow allows, we may commence a limited drilling
or continue our workover program in order to stem the natural decline associated
with our current production. The execution of any capital program is dependent
on the availability of technical and field staff, product pricing, rig
availability and an implementation of corporate strategy. Through June 30, 2010
we have incurred capital expenditures of approximately $237,000, primarily
related to a gathering system upgrade project.





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.


Page
26 of 33




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.




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;




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


Page
27 of 33




·
            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.




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.





Item
3.   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 June
30, 2010 our oil and gas subsidiaries had approximately $9.5 million in
outstanding borrowings associated with their credit facility with a major bank
and our engineering services subsidiary had $8.1 million in outstanding
borrowings under term notes with the selling shareholders from whom we acquired
Maverick, our engineering services business.




Price
Risks




See
Note 6 within the financial statements in Item 1 for a description of our
price risks and price risk management activities.




Item 4T.   Controls and
Procedures.




Evaluation
of Disclosure Controls and Procedures




The
Company carried out an evaluation, under the supervision and with the
participation of management, including the Company’s principal executive officer
and principal financial officer, of the effectiveness of the disclosure controls
and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of
June 30, 2010.  Based on that evaluation, the Company’s Principal executive
officer concluded that the Company’s disclosure controls and procedures were not
effective as of June 30, 2010 due to material weaknesses in our internal
controls related to inadequate staffing within our accounting department and
upper management, lack of consistent policies and procedures, inadequate
monitoring of controls, inadequate disclosure controls and significant turnover
among the staff and officers of the Company.  It is Management’s plan
to remediate the internal control material weakness by implementing new controls
and procedures that combined will improve the quality of the financial reporting
process.




Disclosure
controls and procedures include controls and procedures designed to ensure that
information required to be disclosed in our reports filed or submitted under the
Exchange Act are properly recorded, processed, summarized and reported within
the time periods required by the Commission’s rules and forms. Management
necessarily applied its judgment in assessing the costs and benefits of such
controls and procedures that, by their nature, can provide only reasonable
assurance regarding management’s control objectives. Management does not expect
that its disclosure controls and procedures will prevent all errors and fraud. A
control system, irrespective of how well it is designed and operated, can only
provide reasonable assurance, and cannot guarantee that it will succeed in its
stated objectives.


Page
28 of 33





Changes
in Internal Control Over Financial Reporting




There
were no changes in internal control over financial reporting that occurred
during the first six months of 2010 that have materially affected, or are
reasonably likely to affect materially, our internal control over financial
reporting.


Page
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OTHER
INFORMATION




Item 1.   Legal
Proceedings.




Exxon
Litigation





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.





Hyman
Litigation




On
November 11, 2008, Mr. Hyman, a former employee of KD Resources, filed a claim
against KD Resources and Platinum Energy stating that he was discharged from KD
Resources in violation of the Sarbanes-Oxley Act of 2002, Section 806,
Protection for Employees of Publicly Traded Companies Who Provide Evidence of
Fraud.  In December, 2008, the Department of Labor (“DOL”) dismissed
the complaint as not being timely filed.  On or about January 8, 2009, Mr.
Hyman appealed the ruling of the DOL. On January 16, 2009, the DOL filed an
Order to Show Cause whereby Mr. Hyman was ordered to show why his case should
not have been dismissed.  On February 14, 2009, Mr. Hyman filed his
response to the Order to Show Cause stating that he failed to file within the
required time because he was engaged in negotiations with the Respondents. 
On March 18, 2009, the Department of Labor dismissed Mr. Hyman’s claim for
failure to file within the 90-day filing period.   Mr. Hyman filed a
Petition for Review of the Decision and Order Dismissing Complaint issued March
18, 2009.  A Notice of the Appeal was filed April 10, 2009 which was
granted.  On March 31, 2010, in a split decision, the Administrative Review
Board Reversed the decision of the Administrative Law Judge and Remanded the
case for further consideration.  It is the Company's contention that Mr.
Hyman did not file his complaint within the time required by Sarbanes-Oxley, and
in any case, was never an employee of Platinum Energy Resources or any of its
subsidiaries; as such we are not liable for any issues between Mr. Hyman and his
employer, KD Resources.  It is the Company's further contention that the
only reason Platinum Energy is listed in this action is because it is a public
company and Mr. Hyman needs a public company in order to obtain his status under
the Sarbanes-Oxley Act.





Kovar
Litigation





On
December 3, 2008, Robert Kovar filed suit against Platinum alleging that he
“Resigned for Good Reason” according to his employment contract.  Mr.
Kovar is seeking a Declaration Judgment that he had “Good Reason” to resign his
employment at Platinum Energy and Maverick Engineering.  Mr. Kovar is
also requesting payment of the severance package, accelerated vesting of options
and accelerated payment of the Cash Flow Note (as described in the Platinum
Energy, Maverick Engineering Merger Agreement) as described in his employment
agreement, plus attorney fees and court costs.  It is our contention
that Mr. Kovar resigned his position without good reason and is therefore, not
entitled to severance or accelerated vesting of options.  It is our
additional conviction that the Cash Flow Note has been cancelled and that
Platinum Energy in no longer obligated to make any payments there under,
pursuant to the terms of Mr. Kovar’s employment agreement. We are currently in
the discovery phase of this matter.  We believe that Mr. Kovar’s claim
that he resigned with “Good Reason” is without merit and we intend to vigorously
defend ourselves against this claim.


Page
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Platinum v. Robert L. Kovar
Services, et al





On April
16, 2009, the Company received a written notice of acceleration from Robert L.
Kovar Services, LLC, as the stockholder representative, claiming that the
Company failed to make timely mandatory prepayments in the amount of $110,381
due under the terms of the Cash Flow Notes.  On April 29, 2009,
Maverick received a notice of acceleration (the “Acceleration Letter”) with
respect to the Notes governed by a Loan Agreement and related Security Agreement
originally dated April 30, 2005 and April 29, 2005, respectively. The
Acceleration Letter alleges that Maverick failed to comply with certain
covenants under the terms of the Loan Agreement and that Maverick failed to make
payments due under the Notes. The outstanding principal, accrued interest and
late charges alleged to be owed by Maverick in the Acceleration Letter total
$4,659,227. The Acceleration Letter also contends that interest continues to
accrue at the default rate of 18% per annum. In a separate letter, dated May 1,
2009, Robert L. Kovar Services, LLC, as the stockholder representative for the
sellers, purported to terminate the revolving credit facility under the Loan
Agreement and demanded turnover of all collateral securing indebtedness under
the Loan Agreement, including the Notes. The Company and Maverick have asserted
claims in litigation against the holders of the Notes, Robert L. Kovar Services,
LLC, Robert L. Kovar, individually, and others. These litigations are in its
early stages and, accordingly, the Company cannot predict the outcome of these
matters.





On May 3.
2009, Platinum and Maverick Engineering. Inc. filed suit against Robert L. Kovar
Services. LLC (“RKS”), Robert L. Kovar (“Kovar”), Rick J. Guerra (“Guerra”), and
Walker, Keeling, & Carroll. L.L.P. (“WKC”) collectively (the Defendants”)
alleging, among other things, a suit for declaratory judgment asking the court
to declare that Platinum and Maverick are entitled to indemnification from the
former Maverick stockholders, including Guerra and Kovar, for any damages they
suffer as a result of a default on any note contained in the Maverick and
PermSUB Merger Agreement. In addition, Platinum and Maverick have asked the
Court to declare that WKC has breached the merger agreement by not stepping down
as the Merger Escrow Agent.  Platinum and


Maverick
have also sued to recover costs of court and attorneys’ fees.





In
October, 2009, Platinum and Maverick Engineering filed a Second Amended Petition
with the following Causes of Action against the Defendants:  Kovar
fraudulently induced Platinum to enter into the Merger Agreement; Common-Law
Fraud; Statutory Fraud; Breach of Fiduciary Duty; Tortious Interference with
Merger Agreement; Civil Conspiracy; and Breach of Contract.   As
this case is still in the discovery phase of litigation, at this time, it is
impossible for us to provide an informed assessment of the likelihood of a
favorable or unfavorable outcome in this case.





Citgo
Litigation





On
October 14, 2009, Maverick Engineering filed suit in Harris County against CITGO
Refining & Chemical Company, LP for Breach of Contract.  According
to the Petition, Maverick provided engineering services to CITGO and CITGO has
refused to pay for those services.  Maverick is suing for $357,538.16
plus damages, costs, attorney fees, interest, and other relief.  While
Maverick has performed all terms, conditions, and covenants required under its
contract with CITGO, it is too early in this litigation to be able to predict
outcome.





Meier
Litigation





On
October 20, 2009, Lisa Meier filed suit for breach of her employment
contract.  According to the Petition, Ms. Meier resigned for “good
cause” and she is seeking severance pay.  On June 10, 2009, Ms. Meier
delivered to the Board of Directors of Platinum Energy Resources, her second
notice of intent to resign for “Good Reason.” Ms. Meier’s first notice was
submitted on October 23, 2008, less than three months after entering into her
employment agreement, and subsequently withdrawn.





The Board
of Directors accepted Ms. Meier’s resignation, but stated that “good reason” did
not exist.  This matter is currently is the early phase of
litigation.  We believe that Ms. Meier’s claims are without merit and
we intend to vigorously defend ourselves against these
claims.




Item 1A.   Risk Factors.




There
have been no material changes to the risk factors set forth in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009.





Item 2.   Unregistered Sales of Equity
Securities and Use of Proceeds.




None.




Item 3.   Defaults Upon Senior
Securities.




None.




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




Removed
and reserved.




Item 5.   Other
Information.




None.


Page
31 of 33




Item 6.   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
      Description31.1
                  
                  Section
      302 Certification of Principal Executive Officer31.2
                  
                  Section
      302 Certification of Principal Financial
Officer




Page
32 of 33





SIGNATURES




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




PLATINUM
      ENERGY RESOURCES, INC.Date:
      August 20, 2010
                  By:
                  /s/
      Al RahmaniAl
      RahmaniChief
      Executive Officer




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