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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------

For the quarterly period ended: June 30, 2008



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------

For the transition period from  to

Commission File Number: 000-52029





PLATINUM RESEARCH
ORGANIZATION, INC.

(Exact name of small business issuer as specified in its charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 20-2842514                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



|                                                |  |           
|----------------------------------------------- |  | ----------
|2777 Stemmons Freeway, Suite 1440, Dallas Texas |  | 75207     
|(Address of principal executive offices)        |  | (Zip code)

Issuers telephone number: (214) 271-9503





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

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 the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                             
|-------------------------- |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈        
|Non-accelerated filer   ̈   |  | Smaller reporting company  x

(Do not check if a smaller reporting company)

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

State the number of shares outstanding of each of
the issuers classes of common equity, as of the latest practicable date:

75,000,000 shares of common stock issued and outstanding
as of September 22, 2008









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TABLE OF CONTENTS



|                                                                                                             |  |         
|------------------------------------------------------------------------------------------------------------ |  | --------
|                                                                                                             |  | Page No.
|NOTE REGARDING FORWARD-LOOKING INFORMATION                                                                   |  | 1       
|                                                                                                             | 
|PART I: FINANCIAL INFORMATION                                                                                |  | 1       
|Item 1. Financial Statements (unaudited)                                                                     |  | 1       
|Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007                                        |  | 2       
|Consolidated Statements of Operations for the Three-Month and Six-Month Periods Ended June 30, 2008 and 2007 |  | 3       
|Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2008 and 2007                 |  | 4       
|Consolidated Statements of Changes in Shareholders Deficit                                                  |  | 5       
|Notes to Consolidated Financial Statements                                                                   |  | 6       
|Item 2. Managements Discussion and Analysis or Plan of Operation                                            |  | 26      
|Item 4T. Controls and Procedures                                                                             |  | 34      
|                                                                                                             | 
|PART II: OTHER INFORMATION                                                                                   |  | 34      
|Item 6. Exhibits                                                                                             |  | 34      
|                                                                                                             | 
|SIGNATURES                                                                                                   |  | 35      
|EXHIBIT INDEX                                                                                                |  | 36      



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NOTE CONCERNING FORWARD-LOOKING INFORMATION

The statements contained in this Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These include statements about our expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as
anticipate, expect, intend, plan, will, believe, management believes and similar words or phrases. The forward-looking statements are based on our current
expectations and are subject to certain risks, uncertainties and assumptions. Our actual results could differ materially from results anticipated in these forward-looking statements. All forward-looking statements included in this document are based
on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements.

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

The interim financial statements included herein are unaudited but reflect, in managements opinion, all adjustments, consisting only of normal
recurring adjustments necessary for a fair presentation of financial position and the results of our operations for the interim periods presented.

The interim financial statements should be read in conjunction with the financial statements of Platinum Research Organization, Inc. (the Company) and the notes thereto contained in the Companys audited financial
statements for the year ended December 31, 2007 presented in the Annual Report on Form 10-KSB that was filed with the Securities and Exchange Commission (the SEC) on April 15, 2008.

Interim results are not necessarily indicative of results for the full fiscal year.



1



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Balance Sheets

(Unaudited)



|                                                                |  |              |            |   |                  |   |            |  
|--------------------------------------------------------------- |  | ------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                |  | June 30,2008 |            |   | December 31,2007 |  
|                                                                |  | (Unaudited)  |            |   | (As Restated)    |  
|Assets                                                          |  |              |            |   |                  |   |            |  
|Current Assets                                                  |  |              |            |   |                  |   |            |  
|Cash and Cash Equivalents  unrestricted                        |  | $            | 119,252    |   |                  | $ | 251,859    |  
|Cash  restricted                                               |  |              | 1,410,000  |   |                  |   | 1,604,339  |  
|                                                                |  |              |            |   |                  |   |            |  
|Total Cash and Cash Equivalents                                 |  |              | 1,529,252  |   |                  |   | 1,856,198  |  
|Short-term Investments in Marketable Securities                 |  |              |           |   |                  |   | 1,200,000  |  
|Accounts Receivable                                             |  |              | 2,313      |   |                  |   | 4,941      |  
|Inventory                                                       |  |              | 49,232     |   |                  |   | 48,104     |  
|Prepaid Expenses                                                |  |              | 43,813     |   |                  |   |           |  
|                                                                |  |              |            |   |                  |   |            |  
|Total Current Assets                                            |  |              | 1,624,610  |   |                  |   | 3,109,243  |  
|                                                                |  |             
|Property, Plant and Equipment  net of accumulated depreciation |  |              | 123,686    |   |                  |   | 133,735    |  
|                                                                |  |             
|Other Assets                                                    |  |              |            |   |                  |   |            |  
|Loan Issuance Costs  net of accumulated amortization           |  |              | 78,328     |   |                  |   | 156,565    |  
|Intellectual Property  net of accumulated amortization         |  |              | 221,077    |   |                  |   | 166,874    |  
|Intellectual Property  non-amortizable                         |  |              | 302,024    |   |                  |   | 222,513    |  
|                                                                |  |              |            |   |                  |   |            |  
|Total Other Assets                                              |  |              | 601,429    |   |                  |   | 545,952    |  
|                                                                |  |              |            |   |                  |   |            |  
|Total Assets                                                    |  | $            | 2,349,725  |   |                  | $ | 3,788,930  |  
|                                                                |  |              |            |   |                  |   |            |  
|Liabilities and Shareholders Deficit                           |  |              |            |   |                  |   |            |  
|Current Liabilities                                             |  |              |            |   |                  |   |            |  
|Accounts Payable                                                |  | $            | 361,604    |   |                  | $ | 240,618    |  
|Deferred Revenue                                                |  |              | 12,300     |   |                  |   |           |  
|Accrued Interest                                                |  |              | 70,000     |   |                  |   | 70,000     |  
|Note payable                                                    |  |              |           |   |                  |   |           |  
|Preferred Dividend Payable                                      |  |              | 543,699    |   |                  |   | 318,699    |  
|                                                                |  |              |            |   |                  |   |            |  
|Total Current Liabilities                                       |  |              | 987,603    |   |                  |   | 629,317    |  
|                                                                |  |             
|Long Term Debt                                                  |  |              | 6,000,000  |   |                  |   | 6,000,000  |  
|                                                                |  |             
|Long Term Liabilities                                           |  |              |            |   |                  |   |            |  
|Mandatorily Redeemable Preferred Stock                          |  |              | 4,500,000  |   |                  |   | 4,500,000  |  
|Preferred Stock, Beneficial Conversion Discount                 |  |              | (3,412,604 | ) |                  |   | (3,866,302 | )
|Preferred Stock, Discount on Convertible Liability              |  |              | 216,740    |   |                  |   | 126,740    |  
|                                                                |  |              |            |   |                  |   |            |  
|Total Long Term Liabilities                                     |  |              | 1,304,136  |   |                  |   | 760,438    |  
|                                                                |  |             
|Shareholders Deficit                                           |  |              | (5,942,014 | ) |                  |   | (3,600,825 | )
|                                                                |  |              |            |   |                  |   |            |  
|Total Liabilities and Shareholders Deficit                     |  | $            | 2,349,725  |   |                  | $ | 3,788,930  |  
|                                                                |  |              |            |   |                  |   |            |  

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



2



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of
Operations

(Unaudited)



|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|------------------------------------------------------------------------------------ |  | ------------------ | ----------- | - | ------------ | - | ---------- | ---------------- |  | - | ------------ | - |  | ----------------------------------- | ----------- | - | ----------- | - | ---------- | - |  | - | -------- | - |  | - | ----------- | -
|                                                                                     |  | Three
Months Ended |             |   |              |   |            | Six Months Ended |  |   |              |   |  | Date ofInceptionthroughJune 30,2008 |            
|                                                                                     |  | June 30,2008       |             |   | June 30,2007 |   |            | Incr/(Decr)      |  |   | June 30,2008 |   |  | June 30,2007                        |             |   | Incr/(Decr) |   |           
|Sales                                                                                |  | $                  |            |   |              | $ |           |                  |  | $ |             |   |  | $                                   |            |   |             | $ |           |   |  | $ |         |   |  | $ |            |  
|Cost of Sales                                                                        |  |                    |            |   |              |   |           |                  |  |   |             |   |  |                                     |            |   |             |   |           |   |  |   |         |   |  |   |            |  
|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Gross Profit                                                                         |  |                    |            |   |              |   |           |                  |  |   |             |   |  |                                     |            |   |             |   |           |   |  |   |         |   |  |   |            |  
|                                                                                     |  |                    |             |   |              |   |           
|Selling, General and Administrative Expenses                                         |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Salaries                                                                             |  |                    | 308,993     |   |              |   | 244,185    |                  |  |   | 64,808       |   |  |                                     | 643,111     |   |             |   | 366,475    |   |  |   | 276,636  |   |  |   | 2,623,604   |  
|Travel                                                                               |  |                    | 13,006      |   |              |   | 40,081     |                  |  |   | (27,075      | ) |  |                                     | 27,054      |   |             |   | 69,240     |   |  |   | (42,186  | ) |  |   | 377,670     |  
|Product Evaluation/Technical Support                                                 |  |                    | 50,000      |   |              |   | 56,558     |                  |  |   | (6,558       | ) |  |                                     | 87,872      |   |             |   | 108,976    |   |  |   | (21,104  | ) |  |   | 882,610     |  
|Outside Legal and Professional Fees                                                  |  |                    | 325,759     |   |              |   | 395,494    |                  |  |   | (69,735      | ) |  |                                     | 541,348     |   |             |   | 526,121    |   |  |   | 15,227   |   |  |   | 2,518,155   |  
|Contribution Agreement                                                               |  |                    |            |   |              |   | 200,317    |                  |  |   | (200,317     | ) |  |                                     |            |   |             |   | 339,783    |   |  |   | (339,783 | ) |  |   | 339,783     |  
|Insurance                                                                            |  |                    | 22,945      |   |              |   | 61,438     |                  |  |   | (38,493      | ) |  |                                     | 42,101      |   |             |   | 78,036     |   |  |   | (35,935  | ) |  |   | 327,948     |  
|Rent                                                                                 |  |                    | 14,392      |   |              |   | 14,306     |                  |  |   | 86           |   |  |                                     | 30,183      |   |             |   | 23,283     |   |  |   | 6,900    |   |  |   | 142,751     |  
|Other                                                                                |  |                    | 35,834      |   |              |   | 22,560     |                  |  |   | 13,274       |   |  |                                     | 58,478      |   |             |   | 36,320     |   |  |   | 22,158   |   |  |   | 251,469     |  
|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Total Selling, General and Administrative Expenses                                   |  |                    | 770,929     |   |              |   | 1,034,939  |                  |  |   | (264,010     | ) |  |                                     | 1,430,147   |   |             |   | 1,548,234  |   |  |   | (118,087 | ) |  |   | 7,463,990   |  
|                                                                                     |  |                    |             |   |              |   |           
|Depreciation and Amortization                                                        |  |                    | 47,711      |   |              |   | 48,581     |                  |  |   | (870         | ) |  |                                     | 95,420      |   |             |   | 96,756     |   |  |   | (1,336   | ) |  |   | 644,495     |  
|                                                                                     |  |                    |             |   |              |   |           
|Other Income                                                                         |  |                    | 16,045      |   |              |   | 59,945     |                  |  |   | (43,900      | ) |  |                                     | 43,386      |   |             |   | 88,031     |   |  |   | (44,645  | ) |  |   | 505,545     |  
|Other Expense                                                                        |  |                    | 24,750      |   |              |   |           |                  |  |   | 24,750       |   |  |                                     | 24,751      |   |             |   |           |   |  |   | 24,751   |   |  |   | 24,751      |  
|Interest Expense                                                                     |  |                    | 486,041     |   |              |   | 450,794    |                  |  |   | 35,247       |   |  |                                     | 968,122     |   |             |   | 660,794    |   |  |   | 307,328  |   |  |   | 4,819,088   |  
|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Net Loss Before Taxes                                                                |  |                    | (1,313,386  | ) |              |   | (1,474,369 | )                |  |   | 160,983      |   |  |                                     | (2,475,054  | ) |             |   | (2,217,753 | ) |  |   | (257,301 | ) |  |   | (12,446,779 | )
|                                                                                     |  |                    |             |   |              |   |           
|Income Tax  Current                                                                 |  |                    |            |   |              |   |           |                  |  |   |             |   |  |                                     |            |   |             |   |           |   |  |   |         |   |  |   |            |  
|Income Tax  Deferred                                                                |  |                    |            |   |              |   |           |                  |  |   |             |   |  |                                     |            |   |             |   |           |   |  |   |         |   |  |   |            |  
|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Net Loss                                                                             |  |                    | (1,313,386  | ) |              |   | (1,474,369 | )                |  |   | 160,983      |   |  |                                     | (2,475,054  | ) |             |   | (2,217,753 | ) |  |   | (257,301 | ) |  |   | (12,446,779 | )
|                                                                                     |  |                    |             |   |              |   |           
|Dividends Declared on Preferred Stock                                                |  |                    | (112,500    | ) |              |   | (93,700    | )                |  |   | (18,800      | ) |  |                                     | (225,000    | ) |             |   | (93,700    | ) |  |   | (131,300 | ) |  |   | (543,699    | )
|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Net Loss Attributed to Common Shareholders                                           |  | $                  | (1,425,886  | ) |              | $ | (1,568,069 | )                |  | $ | 142,183      |   |  | $                                   | (2,700,054  | ) |             | $ | (2,311,453 | ) |  | $ | (388,601 | ) |  | $ | 12,990,478  |  
|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Per Share Amounts                                                                    |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Net Loss                                                                             |  | $                  | (0.01       | ) |              | $ | (0.02      | )                |  |   |              |   |  | $                                   | (0.02       | ) |             | $ | (0.04      | ) |  |   |          |   |  | $ | (0.25       | )
|Dividends Declared on Preferred Stock                                                |  |                    |            |   |              |   |           |                  |  |   |              |   |  |                                     |            |   |             |   |           |   |  |   |          |   |  |   | (0.01       | )
|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Net Loss Attributed to Common Shareholders                                           |  | $                  | (0.01       | ) |              | $ | (0.02      | )                |  |   |              |   |  | $                                   | (0.02       | ) |             | $ | (0.04      | ) |  |   |          |   |  | $ | (0.26       | )
|                                                                                     |  |                    |             |   |              |   |            |                  |  |   |              |   |  |                                     |             |   |             |   |            |   |  |   |          |   |  |   |             |  
|Weighted Average Number of Shares used in per share calculations  Basic and Diluted |  |                    | 102,500,000 |   |              |   | 68,571,429 |                  |  |   |              |   |  |                                     | 102,500,000 |   |             |   | 55,483,425 |   |  |   |          |   |  |   | 49,998,680  |  

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



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Cash
Flows

(Unaudited)



|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|-------------------------------------------------------------------------- |  | ---------------- | ---------- | - | ----------------------------------- | - | ---------- | - |  | - | ----------- | -
|                                                                           |  | Six
Months Ended |            |   | Date ofInceptionthroughJune 30,2008 |  
|                                                                           |  | June 30,2008     |            |   | June 30,2007                        |   |           
|Cash Flow from Operating Activities                                        |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Net Loss for the Period                                                    |  | $                | (2,475,054 | ) |                                     | $ | (2,217,753 | ) |  | $ | (12,446,779 | )
|Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Depreciation and Amortization                                              |  |                  | 95,420     |   |                                     |   | 96,756     |   |  |   | 644,495     |  
|Option Expense                                                             |  |                  | 358,865    |   |                                     |   | 172,842    |   |  |   | 947,115     |  
|Interest Expense  Preferred Stock                                         |  |                  | 543,698    |   |                                     |   | 216,000    |   |  |   | 1,304,136   |  
|Loss on Sale of Short-Term Investments in Marketable Securities            |  |                  | 24,750     |   |                                     |   |           |   |  |   | 24,750      |  
|Changes in Assets and Liabilities                                          |  |                  |            |   |                                     |   |            |   |  |   |             |  
|(Increase) / Decrease in Accounts Receivable                               |  |                  | 2,628      |   |                                     |   | 94         |   |  |   | (579        | )
|(Increase) / Decrease in Inventory                                         |  |                  | (1,128     | ) |                                     |   |           |   |  |   | (49,232     | )
|(Increase) / Decrease in Prepaid Expenses                                  |  |                  | (43,813    | ) |                                     |   |           |   |  |   | (43,813     | )
|Increase / (Decrease) in Accounts Payable                                  |  |                  | 120,986    |   |                                     |   | 136,170    |   |  |   | 360,991     |  
|Increase / (Decrease) in Deferred Revenue                                  |  |                  | 12,300     |   |                                     |   |           |   |  |   | 12,300      |  
|Increase / (Decrease) in Accrued Interest                                  |  |                  |           |   |                                     |   |           |   |  |   | 547,681     |  
|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Net Cash Used in Operating Activities                                      |  |                  | (1,361,348 | ) |                                     |   | (1,595,891 | ) |  |   | (8,698,935  | )
|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Cash Flow From Investing Activities                                        |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Sale of Short-Term Investments in Marketable Securities                    |  |                  | 1,175,250  |   |                                     |   |           |   |  |   | (24,750     | )
|Purchase of Property, Plant and Equipment                                  |  |                  |           |   |                                     |   | (2,652     | ) |  |   | (140,455    | )
|Investment in Intellectual Property                                        |  |                  | (140,848   | ) |                                     |   | (57,580    | ) |  |   | (546,267    | )
|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Net Cash Provided by/(Used in) Investing Activities                        |  |                  | 1,034,402  |   |                                     |   | (60,232    | ) |  |   | (711,472    | )
|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Cash Flow From Financing Activities                                        |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Net Proceeds  Long Term Debt                                              |  |                  |           |   |                                     |   |           |   |  |   | 6,170,000   |  
|Net Proceeds  Note Payable                                                |  |                  |           |   |                                     |   | 4,500,000  |   |  |   |            |  
|Preferred Shares Issued for Cash                                           |  |                  |           |   |                                     |   |           |   |  |   | 4,500,000   |  
|Funds Received From Previously Controlled Entity                           |  |                  |           |   |                                     |   | 500,000    |   |  |   | 500,000     |  
|Capital Contributions                                                      |  |                  |           |   |                                     |   |           |   |  |   | 7,508       |  
|Distributions                                                              |  |                  |           |   |                                     |   |           |   |  |   | (4,960      | )
|Loan Issuance Costs/Other                                                  |  |                  |           |   |                                     |   |           |   |  |   | (232,889    | )
|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Net Cash Provided by Financing Activities                                  |  |                  |           |   |                                     |   | 5,000,000  |   |  |   | 10,939,659  |  
|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Increase (Decrease) in Cash and Cash Equivalents                           |  |                  | (326,946   | ) |                                     |   | 3,343,877  |   |  |   | 1,529,252   |  
|                                                                           |  |                  |           
|Cash and Cash Equivalents  Beginning of Period                            |  |                  | 1,856,198  |   |                                     |   | 1,739,167  |   |  |   |            |  
|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Cash and Cash Equivalents  End of Period                                  |  | $                | 1,529,252  |   |                                     | $ | 5,083,044  |   |  | $ | 1,529,252   |  
|                                                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Supplemental Disclosures:                                                  |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Cash Paid During the Period for:                                           |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Interest                                                                   |  | $                | 210,000    |   |                                     | $ | 444,794    |   |  | $ | 2,754,794   |  
|Income Tax                                                                 |  | $                |           |   |                                     | $ |           |   |  | $ |            |  
|Non-Cash Items                                                             |  |                  |            |   |                                     |   |            |   |  |   |             |  
|Preferred Stock Dividends                                                  |  | $                | 225,000    |   |                                     | $ | 93,700     |   |  | $ | 543,699     |  
|Loan Costs Netted Against Proceeds of Loan                                 |  | $                |           |   |                                     | $ |           |   |  | $ | 450,000     |  
|Interest Expense                                                           |  | $                | 543,698    |   |                                     | $ | 216,000    |   |  | $ | 1,304,136   |  

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



4



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Changes
in Shareholders Deficit



|                                                        |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  |                     |  |                    
|------------------------------------------------------- |  | ------------------------ |  | --------------------------- |  | ----------------------- |  | ------------- |  | --------------- |  | --------------------------------- |  | --------------------- |  | --------- |  | ------------------- |  | -------------------
|                                                        |  | NumberCommonSharesIssued |  | NumberPreferredSharesIssued |  | Number ofWarrantsIssued |  | CapitalStock$ |  | PreferredStock$ |  | Paid in Capitaland Distributions$ |  | SubscriptionsPayable$ |  | Warrants$ |  | AccumulatedDeficit$ |  | ShareholdersEquity$
|Balance at April 28, 2004  Date of Inception           |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  |                     |  |                    
|Forgiveness of Debt                                     |  |                          |  |                             |  |                         |  |               |  |                 |  | 1,097,682                         |  |                       |  |           |  |                     |  | 1,097,682          
|Capital Contributions  Cash                            |  |                          |  |                             |  |                         |  |               |  |                 |  | 4,484                             |  |                       |  |           |  |                     |  | 4,484              
|Distributions                                           |  |                          |  |                             |  |                         |  |               |  |                 |  | -145                              |  |                       |  |           |  |                     |  | -145               
|Net Loss for Period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -1,124,895          |  | 1,124,895          
|Balance at December 31, 2004                            |  |                          |  |                             |  |                         |  |               |  |                 |  | 1,102,021                         |  |                       |  |           |  | -1,124,895          |  | -22,874            
|Capital Contributions  Cash                            |  |                          |  |                             |  |                         |  |               |  |                 |  | 1,938                             |  |                       |  |           |  |                     |  | 1,938              
|Distributions                                           |  |                          |  |                             |  |                         |  |               |  |                 |  | -4,740                            |  |                       |  |           |  |                     |  | -4,740             
|Net Loss for Period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -1,850,412          |  | -1,850,412         
|Balance at December 31, 2005                            |  |                          |  |                             |  |                         |  |               |  |                 |  | 1,099,219                         |  |                       |  |           |  | -2,975,307          |  | -1,876,088         
|Capital Contributions  Cash                            |  |                          |  |                             |  |                         |  |               |  |                 |  | 1,086                             |  |                       |  |           |  |                     |  | 1,086              
|Distribution                                            |  |                          |  |                             |  |                         |  |               |  |                 |  | -75                               |  |                       |  |           |  |                     |  | -75                
|Net Loss for period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -2,047,908          |  | 2,047,908          
|Balance at December 31, 2006                            |  |                          |  |                             |  |                         |  |               |  |                 |  | 1,100,230                         |  |                       |  |           |  | -5,023,215          |  | -3,922,985         
|Capital Contribution  Cash                             |  |                          |  |                             |  |                         |  |               |  |                 |  | 268                               |  |                       |  |           |  |                     |  | 268                
|Earnings charge for options expense (Note 6)            |  |                          |  |                             |  |                         |  |               |  |                 |  | 36,359                            |  |                       |  |           |  |                     |  | 36,359             
|Net Loss for period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -743,384            |  | -743,384           
|Balance at March 31, 2007                               |  |                          |  |                             |  |                         |  |               |  |                 |  | 1,136,857                         |  |                       |  |           |  | -5,766,599          |  | -4,629,742         
|Capital Contributions  Cash                            |  |                          |  |                             |  |                         |  |               |  |                 |  | 269                               |  |                       |  |           |  |                     |  | 269                
|Shares Issued to PRO Transferors (Note 5)               |  | 55,000,000               |  |                             |  |                         |  | 55,000        |  |                 |  | -55,000                           |  |                       |  |           |  |                     |  |                    
|Preferred Equity raised (Note 7)                        |  |                          |  | 5,000,000                   |  |                         |  |               |  |                |  |                                   |  |                       |  |          |  |                     |  |                    
|Warrants Issued to Investa/Pineda (Note 5)              |  |                          |  |                             |  | 2,500,000               |  |               |  |                 |  |                                   |  |                       |  |           |  |                     |  |                    
|Earnings charge for options expense (Note 6)            |  |                          |  |                             |  |                         |  |               |  |                 |  | 136,484                           |  |                       |  |           |  |                     |  | 136,484            
|Preferred dividends payable                             |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  | -93,700               |  |           |  |                     |  | -93,700            
|Net Loss for Period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -1,474,370          |  | -1,474,370         
|Beneficial conversion option  Preferred Stock (Note 3) |  |                          |  |                             |  |                         |  |               |  |                 |  | 4,500,000                         |  |                       |  |           |  |                     |  | 4,500,000          
|Equity of PRO Inc. at 3/31/2007                         |  | 42,500,000               |  |                             |  |                         |  | 42,500        |  |                 |  | 435,097                           |  |                       |  |           |  |                     |  | 477,597            
|Change in PRO Inc. Equity 3/31-4/18/2007                |  | -22,500,000              |  |                             |  |                         |  | -22,500       |  |                 |  | 44,904                            |  |                       |  |           |  |                     |  | 22,404             
|                                                        |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  |                     |  |                    
|Equity of PRO Inc at 4/18/2007                          |  | 20,000,000               |  |                             |  |                         |  | 20,000        |  |                 |  | 480,001                           |  |                       |  |           |  |                     |  | 500,001            
|Balance at June 30, 2007                                |  | 75,000,000               |  | 5,000,000                   |  | 2,500,000               |  | 75,000        |  |                |  | 6,198,611                         |  | -93,700               |  |          |  | -7,240,969          |  | -1,061,058         
|Capital Contributions                                   |  |                          |  |                             |  |                         |  |               |  |                 |  | -6                                |  |                       |  |           |  |                     |  | -6                 
|Preferred Dividend payable                              |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  | -112,500              |  |           |  |                     |  | -112,500           
|Earnings charge for options expense (Note 6)            |  |                          |  |                             |  |                         |  |               |  |                 |  | 191,955                           |  |                       |  |           |  |                     |  | 191,955            
|Net Loss for period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -1,270,630          |  | -1,270,630         
|Balance at September 30, 2007                           |  | 75,000,000               |  | 5,000,000                   |  | 2,500,000               |  | 75,000        |  |                |  | 6,390,560                         |  | -206,200              |  |          |  | -8,511,599          |  | -2,252,239         
|Capital Contributions                                   |  |                          |  |                             |  |                         |  |               |  |                 |  | 588                               |  |                       |  |           |  |                     |  | 588                
|Preferred Dividend payable                              |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  | -112,500              |  |           |  |                     |  | -112,500           
|Earnings charge for options expense (Note 6)            |  |                          |  |                             |  |                         |  |               |  |                 |  | 223,452                           |  |                       |  |           |  |                     |  | 223,452            
|Net Loss for period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -1,460,126          |  | -1,460,126         
|Balance at December 31, 2007                            |  | 75,000,000               |  | 5,000,000                   |  | 2,500,000               |  | 75,000        |  |                |  | 6,614,600                         |  | -318,700              |  |          |  | -9,971,725          |  | -3,600,825         
|Capital Contributions                                   |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  |                     |  | 0                  
|Preferred Dividend payable                              |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  | -112,500              |  |           |  |                     |  | -112,500           
|Earnings charge for options expense (Note 6)            |  |                          |  |                             |  |                         |  |               |  |                 |  | 161,580                           |  |                       |  |           |  |                     |  | 161,580            
|Net Loss for period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -1,161,668          |  | -1,161,668         
|Balance at March 31, 2008                               |  | 75,000,000               |  | 5,000,000                   |  | 2,500,000               |  | 75,000        |  |                |  | 6,776,180                         |  | -431,200              |  |          |  | -11,133,393         |  | -4,713,413         
|Capital Contributions                                   |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  |                     |  | 0                  
|Preferred Dividend payable                              |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  | -112,500              |  |           |  |                     |  | -112,500           
|Earnings charge for options expense (Note 6)            |  |                          |  |                             |  |                         |  |               |  |                 |  | 197,285                           |  |                       |  |           |  |                     |  | 197,285            
|Net Loss for period                                     |  |                          |  |                             |  |                         |  |               |  |                 |  |                                   |  |                       |  |           |  | -1,313,386          |  | -1,313,386         
|Balance at June 30, 2008                                |  | 75,000,000               |  | 5,000,000                   |  | 2,500,000               |  | 75,000        |  |                |  | 6,973,465                         |  | -543,700              |  |          |  | -12,446,779         |  | -5,942,014         

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



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





|1. | Nature and Continuance of Operations
|-- | ------------------------------------

Platinum
Research Organization, Inc. (the Company) was incorporated in the State of Nevada on May 13, 2005, under the name NorthTech Corporation. The Company was originally formed to develop, expand and market two web-based
database programs for small business and community sports. The Company completed its initial public offering in March 2006. Efforts to implement this business plan were pursued, but ultimately the web-based software development business was
abandoned.

Management reviewed various strategic alternatives, and on October 26, 2006, the Company entered into a Contribution
Agreement with Platinum Research Organization L.P., a Texas limited partnership (Platinum LP), Lubrication Partners, a joint venture and sole shareholder of Platinum IP Management, Inc., the general partner of Platinum LP, each holding a
limited partnership interest in Platinum LP, and Cork Jaeger as the representative of all former owners of Platinum LP and Steve Drayton as the representative of certain individual private placement investors in the Company.

The Company, at the time being NorthTech Corporation, merged with its wholly-owned subsidiary Platinum Research Organization, Inc., a Nevada
corporation (NV Sub), on October 31, 2006, in order to amend its charter documents, change its name to Platinum Research Organization, Inc. and effect a 5-for-1 forward split of its outstanding common stock. On
April 13, 2007, the Company completed another merger with its wholly-owned subsidiary, Platinum Research Organization, Inc., a Delaware corporation (DE Sub), to reincorporate the Company in Delaware. The name of the surviving
company remained Platinum Research Organization, Inc., and the certificate of incorporation and bylaws of DE Sub became the certificate of incorporation and bylaws of the Company. Both NV Sub and DE Sub were formed by the Company for the
sole purpose of effecting the aforementioned transactions in preparation for the consummation of the transactions contemplated by the Contribution Agreement. On April 18, 2007, the Company closed the Contribution Agreement (Note 7), which
resulted in our acquisition of Platinum LP and the appointment of a new slate of directors. As a result of our acquisition of Platinum LP, the Companys new business focus is the design, development and commercialization of patented
high-performance lubricants and coatings.

The acquisition of Platinum LP has been accounted for as a reverse acquisition application of the
purchase method of accounting by the Company (formerly known as NorthTech), with Platinum LP treated as the accounting acquirer. Accordingly, the assets and liabilities of the Company (formerly known as NorthTech) have been recorded at their
respective historical costs and added to those of Platinum LP, and the reported results of operations of the Company reflect the historical results of operations of Platinum LP.

As a result of the acquisitions, the Company now consists of three primary entities. Platinum Intellectual Property LP (PIP LP) owns and
maintains the intellectual property; Platinum LP provides the structure for daily operations; and Platinum Research Organization, Inc. is the owner of the other entities.

The Companys products will be marketed under the trade name TechroBond for automotive, aviation, and industrial aftermarkets. TechroBond is one of a series of product applications Platinum LP
developed based on its patented processes and technologies relating to a fluorinated thiophosphate and a new technique to react zinc dialkyl dithiophosphate (ZDDP) and poly tetra fluroethylene to yield new proprietary compounds that
enhance the anti-wear and extreme pressure capabilities of lubricants and coatings (individually and collectively, the PRO Technology). The resulting compounds have yielded significantly enhanced anti-wear and extreme pressure
capabilities when measured in bench laboratory tests at the University of Texas at Arlington (UTA), and, more importantly, suggest that the PRO Technology may be a replacement for ZDDP in engine and lubricating oils. Management believes
that this new technology will position the Company to penetrate several large, global markets for lubricants should the Company be successful in bringing its products that rely upon this new technology to market.



6



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





The Company is a development stage enterprise, as defined in the Statements of Financial Accounting
Standards (SFAS) No. 7, Accounting and Reporting by Development Stage Enterprises. The Company is currently devoting all of its present efforts to commercialization of its products and technologies. Accordingly, no revenue has been
realized to date.

The Companys financial statements at June 30, 2008 and for the unaudited three- and six-month periods then
ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company incurred a loss of $2,475,054 for the six months ended
June 30, 2008 and had unrestricted cash of $119,252 at June 30, 2008.

Management cannot provide assurance that the Company will
ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management is currently pursuing additional convertible debt funding; however, the Companys capital resources are not
adequate to continue operating and maintaining its business strategy for the next fiscal quarter. If the Company is unable to realize revenue from the commercialization of its products or is unable to raise additional capital in the future,
management expects that the Company will need to seek additional capital on less favorable terms and/or pursue other remedial measures. These financial statements do not include any adjustments related to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.



|2. | Significant Accounting Policies
|-- | -------------------------------

The following is a
summary of significant accounting policies used in the preparation of these financial statements.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared as of June 30, 2008, and for the three- and six-month periods ended
June 30, 2008 and 2007 in accordance with accounting principles generally accepted in the United States of America (GAAP) relating to the preparation of financial statements for interim periods. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three- and six-month periods ended June 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

These interim financial statements follow the same accounting policies and methods of their application as the most recent annual financial statements.
These interim financial statements should be read in conjunction with the audited financial statements of the Company as at December 31, 2007, as contained in the Companys Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission on April 15, 2008.

Restatements

On September 24, 2008, the Audit Committee of our Board determined that the value assigned to our intellectual property assets in previous financial
reports should be corrected. After further review of the April 29, 2004 accounting for the acquisition of intellectual property, the Audit Committee and Management determined that the Companys previous financial reports should be
restated.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





As discussed previously, the intellectual property was originally valued at $4,438,915, which was the
value of the note and accrued interest which was forgiven in exchange for rights to the intellectual property. Based upon further investigation, the fair value of the note should have been $0, since the note was in default for more than eleven
months prior to the forgiveness of debt and since there was no liquidity available to support future cash flows on the note. As a result of this adjustment, amortizable intellectual property should be reduced by $4,430,156 and non-amortizable
intellectual property should be reduced by $8,759 as of the April 29, 2004 exchange date. The effect of this restatement on the relevant financial statement lines as of December 31, 2007 and 2006 is as follows:



|                                                        |  |                         |            |   |                         |   |            |        |  |   |            |   |  |             |            |   |        |   |            |   |  |   |            |  
|------------------------------------------------------- |  | ----------------------- | ---------- | - | ----------------------- | - | ---------- | ------ |  | - | ---------- | - |  | ----------- | ---------- | - | ------ | - | ---------- | - |  | - | ---------- | -
|                                                        |  | As of December 31, 2007 |            |   | As of December 31, 2006 |  
|                                                        |  | As Filed                |            |   | As Restated             |   |            | Change |  |   | As Filed   |   |  | As Restated |            |   | Change |  
|Consolidated Balance Sheet Effects                      |  |                         |            |   |                         |   |            |        |  |   |            |   |  |             |            |   |        |   |            |   | 
|Intellectual Property  net of accumulated amortization |  |                         | 3,482,536  |   |                         |   | 166,874    |        |  |   | (3,315,662 | ) |  |             | 3,698,207  |   |        |   | 85,347     |   |  |   | (3,612,860 | )
|Intellectual Property  non-amortizable                 |  |                         | 231,272    |   |                         |   | 222,513    |        |  |   | (8,759     | ) |  |             | 133,490    |   |        |   | 124,731    |   |  |   | (8,759     | )
|Total Assets                                            |  |                         | 7,113,351  |   |                         |   | 3,788,930  |        |  |   | (3,324,421 | ) |  |             | 5,902,821  |   |        |   | 2,281,202  |   |  |   | (3,621,619 | )
|Shareholders Deficit                                   |  |                         | (276,404   | ) |                         |   | (3,600,825 | )      |  |   | (3,324,421 | ) |  |             | (301,366   | ) |        |   | (3,922,985 | ) |  |   | (3,621,619 | )
|                                                        |  |                         |            |   |                        
|Consolidated Statement of Operations Effects            |  |                         |            |   |                         |   |            |        |  |   |            |   |  |             |            |   |        |   |            |   | 
|Depreciation and Amortization expense                   |  |                         | 452,515    |   |                         |   | 155,317    |        |  |   | (297,198   | ) |  |             | 488,059    |   |        |   | 190,861    |   |  |   | (297,198   | )
|Net Loss                                                |  |                         | (5,245,708 | ) |                         |   | (4,948,510 | )      |  |   | 297,198    |   |  |             | (2,345,107 | ) |        |   | (2,047,909 | ) |  |   | 297,198    |  
|Net Loss Attributed to Common Shareholders              |  |                         | (5,564,407 | ) |                         |   | (5,267,209 | )      |  |   | 297,198    |   |  |             | (2,345,107 | ) |        |   | (2,047,909 | ) |  |   | 297,198    |  
|                                                        |  |                         |            |   |                        
|Per Share Amounts                                       |  |                         |            |   |                         |   |            |        |  |   |            |   |  |             |            |   |        |   |            |   | 
|Net Loss                                                |  | $                       | 0.08       |   |                         | $ | 0.07       |        |  | $ | (0.01      | ) |  | $           | 0.10       |   |        | $ | 0.08       |   |  | $ | (0.02      | )
|Net Loss Attributed to Common Shareholders              |  | $                       | 0.09       |   |                         | $ | 0.08       |        |  | $ | (0.01      | ) |  | $           | 0.10       |   |        | $ | 0.08       |   |  | $ | (0.02      | )

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, and PRO Operations, L.P. (formerly known as Platinum Research Organization
L.P.) and Platinum Intellectual Property, L.P., its wholly-owned subsidiaries. All material intercompany accounts and transactions are eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all short term, highly liquid investments, which
include short-term deposits with original maturities of three months or less from the date of purchase, and readily convertible into known amounts of cash, to be cash equivalents.



8



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





Restricted Cash

The Companys long-term debt agreement pursuant to a note with the Seattle City Employees Retirement System (SCERS) (see Note 4) requires a minimum restricted cash balance of $1,410,000. The
total amount of restricted cash at June 30, 2008 and December 31, 2007 was $1,410,000 and $1,604,339, respectively. Pursuant to the terms of the escrow agreement entered into in connection with the long-term debt agreement with SCERS, the
restricted cash will be released from escrow upon payment in full of principal and interest on the long-term debt.

Investments in
Marketable Securities

The investments in short-term marketable securities are accounted for in accordance with SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Management determines the appropriate classification of marketable securities at the time of purchase. At December 31, 2007, all marketable securities were classified as
available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in other comprehensive income. Our marketable securities are reviewed each reporting period for declines in value that are
considered to be other-than-temporary and, if appropriate, written down to their estimated fair value. Any realized gains or losses or declines in value judged to be other-than-temporary on available-for-sale securities are included in other
non-operating (income) expense in the consolidated statements of operations. The cost of securities sold is based on the specific identification method. Interest on securities classified as available-for-sale is included in interest income in the
consolidated statements of operations.

Short-term investments in marketable securities at December 31, 2007 consisted of high credit
quality (AAA) auction rate securities. Auction rate securities are variable rate bonds tied to short-term interest rates with maturities on the face of the securities in excess of 90 days and have interest rate resets through a modified Dutch
auction, at predetermined short-term intervals, usually every 7, 28 or 35 days. Auction rate securities generally trade at par and are callable at par on any interest payment date at the option of the issuer. Interest received during a given period
is based upon the interest rate determined through the auction process. Although these securities are issued and rated as long term bonds, they are priced and traded as short-term instruments because of the liquidity provided through the interest
rate reset. All short-term marketable securities either (1) have original maturities greater than 90 days but less than one year or (2) are auction rate securities expected to be liquidated within one year, are classified as
available-for-sale and are recorded at fair value with changes in fair value reflected in other comprehensive income. During the six-months ended June 30, 2007, $375,000 of the securities were redeemed through the auction process. Due to the
illiquidity of the auction markets, the Company sold the remaining $825,000 of the securities at 97% of their par value in a private sale. Accordingly, we have recognized a loss of $24,750 in the three-months ended June 30, 2008.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





The summary of our investment in marketable securities at June 30, 2008 and December 31,
2007 is as follows:



|                                                      |  |               |   |                       |   |               |  |           |   |                       |   |               |  |   |   |  |   |          
|----------------------------------------------------- |  | ------------- | - | --------------------- | - | ------------- |  | --------- | - | --------------------- | - | ------------- |  | - | - |  | - | ---------
|                                                      |  | June 30, 2008 |   | December 31, 2007    
|                                                      |  | CostBasis     |   | UnrealizedGain/(Loss) |   | CarryingValue |  | CostBasis |   | UnrealizedGain/(Loss) |   | CarryingValue
|Auction rate securities                               |  | $             |  |                       | $ |              |  | $         |  |                       | $ | 1,200,000     |  | $ |  |  | $ | 1,200,000
|                                                      |  |               |   |                       |   |               |  |           |   |                       |   |               |  |   |   |  |   |          
|Total Short-Term Investments in Marketable Securities |  | $             |  |                       | $ |              |  | $         |  |                       | $ | 1,200,000     |  | $ |  |  | $ | 1,200,000
|                                                      |  |               |   |                       |   |               |  |           |   |                       |   |               |  |   |   |  |   |          

Accounts Receivable

In the normal course of business, the Company extends credit to its customers with payment terms generally at prevailing market rates and terms.
Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customers financial condition, credit history and current economic conditions. Trade receivables are written
off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. In the event of complete nonperformance by the Companys customers, the maximum exposure to the Company is the outstanding
accounts receivable balance at the date of nonperformance. Due to the Company being in the development stage, accounts receivable are minimal.

Inventories

Inventories are valued at the lower of cost or market, determined on a first-in, first-out basis, and includes
the cost of raw materials. We continually evaluate the carrying value of our inventories and when, in the opinion of Management, factors indicate that impairment has occurred, either a reserve is established against the inventories carrying
value or the inventories are completely written off. We base these decisions on the level of inventories on hand in relation to our estimated forecast of product demand.

Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation.
Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives by both accelerated and straight line methods.

Major repairs or replacements of property and equipment are capitalized. Maintenance, repairs and minor replacements are charged to operations as
incurred. When units of property are retired or otherwise disposed of, their cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations.

Property and equipment consisted of the following at June 30, 2008 and December 31, 2007.



|                               |  |                      |  |              |         |   |                  |   |         |  
|------------------------------ |  | -------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                               |  | EstimatedUseful Life |  | June 30,2008 |         |   | December 31,2007 |  
|Furniture and Equipment        |  | 5-7 years            |  | $            | 140,456 |   |                  | $ | 140,456 |  
|Less: Accumulated Depreciation |  |                      |  |              | (16,770 | ) |                  |   | (6,721  | )
|                               |  |                      |  |              |         |   |                  |   |         |  
|                               |  |                      |  | $            | 123,686 |   |                  | $ | 133,735 |  
|                               |  |                      |  |              |         |   |                  |   |         |  



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





Depreciation expense was $5,025 and $10,050 for the three and six months ended June 20, 2008,
and $302 and $426 for the three and six months ended June 30, 2007, respectively

Loan Issuance Costs

Loan issuance costs are amortized over the term of the loan agreement on a straight-line basis and are shown net of accumulated amortization.

Loan issuance costs consisted of the following at June 30, 2008 and December 31, 2007.



|                               |  |              |          |   |                  |   |          |  
|------------------------------ |  | ------------ | -------- | - | ---------------- | - | -------- | -
|                               |  | June 30,2008 |          |   | December 31,2007 |  
|Loan Issuance Costs            |  | $            | 682,888  |   |                  | $ | 682,888  |  
|Less: Accumulated Amortization |  |              | (604,560 | ) |                  |   | (526,323 | )
|                               |  |              |          |   |                  |   |          |  
|                               |  | $            | 78,328   |   |                  | $ | 156,565  |  
|                               |  |              |          |   |                  |   |          |  

Future amortization costs for loan issuance costs are as follows for the years ended
December 31:



|     |  |   |       
|---- |  | - | ------
|2008 |  | $ | 78,237
|2009 |  |   | 91    
|2010 |  |   |      
|2011 |  |   |      
|     |  |   |       
|     |  | $ | 78,328
|     |  |   |       

Amortization expense relating to loan costs was $78,237 and $39,119 for the three and six months
ended June 30, 2008 and $42,672 and $85,346 for the three and six months ended June 30, respectively.

Intellectual Property

Intellectual property consists of amortizable and non-amortizable patents, trademarks and patent applications. Patents, trademarks and
patent applications are recorded at cost and amortized over the remaining life of the intellectual property once the patient or trademark is issued. Prior to the issuance of patents and trademarks, the accumulated costs are carried at cost and
evaluated for impairment. If the patent or trademark is denied or abandoned, the associated costs are written off. Legal costs of obtaining and defending intellectual property are capitalized and amortized once the patent for the intellectual
property is issued. Research and development costs for internally developed intellectual property are expensed when incurred.

The
Companys impairment testing methodology involves managements annual testing of the carrying amount of its intellectual property assets compared to the undiscounted cash flows from the Companys estimated operations (excluding
interest).

At December 31, 2007, the Companys impairment testing revealed that the sum of the undiscounted cash flows for the
applicable testing period exceeded the carrying values of amortizable intellectual property. Based on this analysis, the Company expected that sufficient profit will be realized from these sales to recover the balance of intellectual property on its
books, and therefore did not believe that any impairment of its intellectual property existed at December 31, 2007. As such, no impairment adjustment was recorded. During the six months ended June 30, 2008, no event occurred which would
impact the impairment analysis performed as of December 31, 2007.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





On April 29, 2004, the Company entered into an agreement with Platinum Research Development,
L.L.C. (a non-related entity) to purchase substantially all of its assets by assuming $3,000,000 in outstanding debt along with $1,438,915 in accrued interest owed to Lubrication Partners, Joint Venture, one of the Companys largest
stockholders. At the time of the agreement, the outstanding debt was in default and the fair value of the outstanding debt was $0. The Company therefore, valued the acquired intellectual property at April 29, 2004 at $0, the fair value of the
outstanding principal and accrued interest on the note assumed.

Amortizable Intellectual Property.At June 30, 2008, the
Company had $221,077 in net amortizable intellectual property that consisted principally of capitalized patent costs related to the Companys five patents. These patents are being amortized over their useful remaining life and have a weighted
average amortization period of 15 years.

Non-amortizable Intellectual Property.At June 30, 2008, the Company had $302,024 in
non-amortizable intellectual property that consisted of capitalized trademark costs and pending patent costs.

Intellectual Property
consisted of the following at June 30, 2008 and December 31, 2007.



|                                      |  |                    |  |              |         |   |                  |   |         |  
|------------------------------------- |  | ------------------ |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                      |  | AmortizationPeriod |  | June 30,2008 |         |   | December 31,2007 |  
|Amortizable intellectual property     |  | 15 years           |  | $            | 244,242 |   |                  | $ | 182,906 |  
|Less: accumulated amortization        |  |                    |  |              | (23,165 | ) |                  |   | (16,032 | )
|                                      |  |                    |  |              |         |   |                  |   |         |  
|                                      |  |                    |  | $            | 221,077 |   |                  | $ | 166,874 |  
|Non-amortizable intellectual property |  |                    |  |              | 302,024 |   |                  |   | 222,513 |  
|                                      |  |                    |  |              |         |   |                  |   |         |  
|                                      |  |                    |  | $            | 523,101 |   |                  | $ | 389,387 |  
|                                      |  |                    |  |              |         |   |                  |   |         |  

Future amortization costs for intellectual property are as follows for the years ended
December 31:



|       |  |   |        
|------ |  | - | -------
|2008   |  | $ | 7,133  
|2009   |  |   | 14,266 
|2010   |  |   | 14,266 
|2011   |  |   | 14,266 
|2012   |  |   | 14,266 
|beyond |  |   | 156,880
|       |  |   |        
|       |  | $ | 221,077
|       |  |   |        

Amortization expense relating to intellectual property was $3,566 and $7,133 for the three and six
months ended June 30, 2008 and $5,493 and $10,984 for the three and six months ended June 30, 2007, respectively.

The
Companys success will depend, in part, on its ability to obtain and enforce intellectual property protection for its technology in both the United States and other countries. The Company has filed patent applications in the United States
Patent and Trademark Office and international counterparts of applications in the United States Receiving Office under the Patent Cooperation Treaty. The Company cannot provide any assurance that patents will issue from these applications or that,
with respect to any patents, issued or pending, the claims allowed are, or will be, sufficiently broad to protect the key aspects of the Companys technology, or that the patent laws will provide effective legal or injunctive remedies to stop
any infringement of the Companys patents. In addition, the Company cannot provide any assurance that any owned patent rights will not be challenged invalidated or circumvented, that the rights granted under patents will provide competitive
advantages, or that competitors will not independently develop or patent technologies that are substantially equivalent or superior to the Companys technology. The Company has acquired patent protection insurance from Gotham Insurance Company.
The Company cannot provide any assurance that such protection will withstand all challenges. Furthermore, if an action is brought, a court may find that the Company has infringed on the patents owned by others. The Company may have to go to court to
defend its patents, to prosecute infringements, or to defend infringement claims made by others.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

Note Payable

During the six months
ended June 30, 2008, the Company borrowed $485,000 against the Companys investments in marketable securities. Upon the liquidation of the Companys investments in marketable securities, this borrowing was repaid in full.

Revenue Recognition

The Company
has not yet recognized any revenues. Revenues will be recognized once they are earned, specifically when: (a) services are provided or products are delivered to customers; (b) there is clear evidence that the arrangement exists;
(c) amounts receivable by the Company are fixed or can be determined; and (d) the Companys ability to collect such amounts is reasonably assured. At June 30, 2008, the Company had shipped, billed and received payment for $12,300
of TechroBond 280. This amount is recorded as deferred revenue at June 30, 2008, since the transaction is fully refundable.

Financial Instruments

The carrying value of cash, accounts receivable, accounts payable and accrued liabilities,
approximates their fair value because of the short maturity of these instruments. Our investments in short-term marketable securities are recorded at fair value. Prior to April 2007, the Companys operations were located in Canada, and
virtually all of its assets and liabilities gave rise to significant exposure to market risks from changes in foreign currency rates. The Companys financial risk was the risk that arose from fluctuations in foreign exchange rates and the
degree of volatility of these rates. Subsequent to March 2007, the Companys operations are located in the United States, and foreign currency transactions are not prevalent. Currently, the Company does not use derivative instruments to reduce
its exposure to foreign currency risk.

Derivative Financial Instruments

The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Research and Development

The Companys research and development efforts are conducted primarily by UTA. All such expenses are expensed as incurred. Research and development expenditures consist primarily of researcher salaries and materials consumed in the
testing and evaluation process. The Companys research and development expenditures were $50,000 and $87,872 for the three and six months ended June 30, 2008 and $56,558 and $108,976 for the three and six months ended June 30, 2007,
respectively. Research and development expenses are included in the Product Evaluation and Technical Support line item of Selling, General and Administrative expenses.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





Income Taxes

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with SFAS No. 109,
Accounting for Income Taxes, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization
is more likely than not. As of June 30, 2008 and December 31, 2007, the net deferred tax asset has been offset by a valuation allowance.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the
position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will
be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are
measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount
measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The liability
for unrecognized tax benefits is zero at June 30, 2008 and December 31, 2007.

Interest and penalties associated with unrecognized
tax benefits are classified as additional income taxes in the statement of income.

Basic and Diluted Net Loss Per Share

The Company computes net loss per share in accordance with SFAS No. 128, Earnings per Share(SFAS 128). SFAS 128 requires
presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing
diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is
anti-dilutive.

Comprehensive Loss

SFAS No. 130, Reporting Comprehensive Income, establishes standards for the reporting and display of comprehensive income (loss) and its components in the financial statements. As of June 30, 2008,
the Company had no items that represented a comprehensive income (loss) and, therefore, has not included a schedule of comprehensive income (loss) in the financial statements.

Segments of an Enterprise and Related Information

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information(SFAS 131), supersedes SFAS No. 14, Financial Reporting for Segments of a Business Enterprise. SFAS
131 establishes standards for the way that public companies report information about operating segments in annual financial



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes
standards for disclosures regarding products and services, geographic areas and major customers. SFAS 131 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has evaluated SFAS 131 and does not believe it is applicable at this time.

Start-up Expenses

The Company has
adopted Statement of Position No. 98-5, Reporting the Costs of Start-up Activities, which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Companys
formation have been included in the Companys expenses for the period from the date of inception on April 28, 2004 to June 30, 2008.

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 amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenditures during the reporting period. Actual results could differ from these estimates.

Advertising Costs

Advertising costs are expensed in the period incurred. Advertising expense was $0 and $(3,168) for the three and six months ended
June 30, 2008 and $16,193 and $27,671 for the three and six months ended June 30, 2007, respectively.

Recent Accounting
Pronouncements

In February 2007, the Financial Accounting Standards Board (the FASB) issued SFAS No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 allows the Company to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. After reviewing SFAS 159 and 157, the Company has elected not to measure financial assets and
liabilities at fair value.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement (SFAS 157).
The Statement provides guidance for using fair value to measure assets and liabilities. The Statement also expands disclosures about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair
value, and the effect of fair value measurement on earnings. This Statement applies under other accounting pronouncements that require or permit fair value measurements. This Statement does not expand the use of fair value measurements in any new
circumstances. Under this Statement, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. SFAS 157
is effective for the Company for fair value measurements and disclosures made by the Company in its fiscal year beginning on January 1, 2008. After reviewing SFAS 159 and 157, the Company has elected not to measure financial assets and
liabilities at fair value.

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instruments, which amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and SFAS



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





No. 140. SFAS No. 155 permits fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would
require bifurcation, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or hybrid financial instruments containing embedded derivatives. The adoption of SFAS
No. 155 is not expected to have a material impact on the Companys financial position, results of operations or cash flows.

In
July 2006, the FASB issued FASB interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 provides guidance on the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that we recognize in the financial statements the impact of a tax position if that position more likely than not will be sustained on an
audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition provisions. The transition adjustment
recognized on the date of adoption is recorded as an adjustment to retained earnings as of the beginning of the adoption period. After reviewing FIN 48, the Company does not believe that adoption of FIN 48 will have a material impact on
the Companys financial statements.

Comparative Figures

Certain comparative figures have been adjusted to conform to the current periods presentation.

Accounting for Equity Based Compensation

Effective January 1, 2006, the Company adopted SFAS No. 123R, Share-Based Payment, which requires entities to recognize the cost of employee services in exchange for awards of equity instruments based on the grant-date fair
value of those awards (with limited exceptions). That cost, based on the estimated number of awards that are expected to vest, will be recognized over the period during which the employee is required to provide the service in exchange for the award.
No compensation cost is recognized for awards for which employees do not render the requisite service. Upon adoption, the grant-date fair value of employee equity options and similar instruments was estimated using the Black-Scholes valuation model.



|3. | Long Term Liabilities
|-- | ---------------------

On April 18, 2007, the
Company issued a total of 5,000,000 authorized shares designated as Series A Convertible Preferred Stock (Series A Preferred), which are convertible into shares of the Companys common stock at a rate of five common shares for each
share of Series A Preferred at any time by the holder or by the Company under certain conditions. The Series A Preferred is also subject to mandatory conversion on the last day of any period of twenty consecutive trading days ending on or after the
sale of the underlying shares of common stock are registered with the Securities and Exchange Commission in which the volume weighted average of the daily market price of the Companys common stock equals or exceeds 200% of the adjusted
conversion price of the Series A Preferred. The Series A Preferred is also subject to mandatory redemption upon the occurrence of certain redemption events at the redemption amounts specified in the Certificate of Designation.

The terms of the Series A Preferred entitle the holder to annual cumulative dividends of $0.09 per share, payable quarterly at the discretion of the
Companys Board of Directors in cash, common shares or both. The annual cumulative dividend will be reduced to $0.045 per share upon the Company entering into a commercial agreement(s) that increases the Companys aggregate revenues to
$40,000,000 per annum and to $0.018 per share upon the Company recording net revenues equal to or greater than $1,000,000 per quarter. So long as any Series A Preferred are outstanding, dividends, distributions of cash or other property are
restricted unless full cumulative dividends have been authorized, declared and paid on the Series A Preferred.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





In the event of liquidation, dissolution or winding up of the Company, the Series A Preferred
shareholders are entitled to receive $.90 per share plus an amount equal to all dividends accumulated, accrued and unpaid.

The Company has
initially reserved 25,000,000 shares of its authorized but unissued common stock for issuance upon conversion of the Series A Preferred. The reserved amount shall at all times be sufficient to provide for the full conversion of all of the Series A
Preferred (including and dividends payable) outstanding.

The Series A Preferred has a maturity date of five years from the date of closing
of the Contribution Agreement (please see Note 7) and is subject to mandatory redemption on the maturity date. The holders of the Series A Preferred are entitled to vote on an as converted basis on all matters submitted to a vote of the
shareholders of the Company and have rights that may restrict the Companys ability to take corporate actions.

At June 30, 2008
the Company had 5,000,000 shares of Series A Convertible Preferred outstanding. The shares were issued at $0.90 per share. The Certificate of Designation for the Series A Preferred includes a mandatory redemption requirement on the maturity date of
April 18, 2012 that requires the Company to redeem all of the outstanding shares of its Series A Preferred, to the extent it has funds legally available at the time, and to the extent that the shares of Series A Preferred have not been
converted to common shares, at a redemption price of $1.08 per share. As a result of the mandatory redemption requirement, these Series A Preferred shares have been classified as a long-term liability pursuant to SFAS 150. Additionally, the $0.18
per share discount (redemption price of $1.08 less issued price of $0.90) will be recorded as interest expense of $900,000 ($0.18 x 5,000,000 shares) over the five-year period from April 18, 2007 to April 18, 2012. Accordingly, $45,000 and
$90,000 has been recorded as interest expense in the three and six months ended June 30, 2008 and $36,000 was recorded as interest expense in both the three and six months ended June 30, 2007, respectively. This item is a non-cash item.

The Series A Preferred shares are convertible to common shares at a value of $0.18 per common share at the option of the holder. This price
was less than the fair market value of the underlying common stock when the Series A Preferred shares were issued on April 18, 2007. The conversion price is subject to adjustments by the Company under certain conditions. In accordance with EITF
98-5, this price differential generated a Beneficial Conversion Feature that is recognized as a discount against the long term liability and an increase to additional paid in capital, since the conversion would be accomplished through the issuance
of shares of common stock. The amount of the discount is limited to the proceeds received from the issuance of the Series A Preferred shares ($4,500,000). In accordance with EITF 00-27, the discount will be accreted to interest expense over the
five-year period from the issuance date to the mandatory redemption date of the Series A Preferred shares. For the three and six months ended June 30, 2008, discount accretion of $226,849 and $453,698, respectively, was recognized as additional
interest expense. Discount accretion of $180,000 was recognized as additional interest expense for both the three and six months ended June 30, 2007.



|4. | Long Term Debt
|-- | --------------

As of June 30, 2008 and
December 31, 2007, the Company had $6,000,000 in long term debt due under a note with SCERS. The principal amount outstanding under this note bears interest at a fixed rate equal to 14% per annum, which will increase to 19% per annum
following any event of default under the note. Accrued interest on the outstanding principal is payable on a quarterly basis, and all outstanding principal and interest is due and payable on February 28, 2011, extended from an original due date
of December 4, 2008 on January 9, 2007. As additional consideration for making the loan, SCERS will receive quarterly participation payments at the end of each fiscal quarter that are equal to the greater of (i) 5% of the
Companys gross revenues on a consolidated basis, or (ii) 20% of the Companys consolidated net income, for such quarter.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





The participation payments will continue until SCERS is paid all of the principal and accrued interest under the note, plus an aggregate $6,000,000 in
participation payments. SCERS has received no participation payments through June 30, 2008. The note is secured by all of the assets of the Company.

The SCERS note subjects the Company to certain financial covenants and restrictions, including limitations on incurring indebtedness or granting liens, mergers or consolidations, distributions, expenditures in excess
of budgeted amounts, leases, compensation of management, sale of assets and capital expenditures. If the Company issues or sells any new promissory note while the term loan is outstanding, which are on terms that are more favorable than those under
the term loan, as determined in SCERSs sole discretion, then the term loan will automatically be amended such that those more favorable terms will apply to the term loan to the same extent as they are to apply under the new promissory note.
The Company may issue one or more new promissory notes having an aggregate principal amount of no more than $9,000,000, and SCERS will take any actions that are necessary in order to permit the purchasers of such notes to have a security interest
and lien that is equal with SCERS interests in the collateral securing the term loan. Any amounts borrowed by the Company that are in excess of the $9,000,000 limit shall be subordinate to the term loan.



|5. | Capital Stock
|-- | -------------

Authorized

As of December 31, 2007, the Companys total authorized capital was 400,000,000 common shares, with a par value of $0.001 per common share, and
100,000,000 preferred shares, with a par value of $0.001 per preferred share. The Company has designated 5,000,000 preferred shares as Series A Preferred shares.

Issued and Outstanding

Under the terms of the Contribution Agreement (please see Note 7), on
April 18, 2007, the Company:



| | a) | issued to the former owners of Platinum LP 55,000,000 unregistered shares of Company common stock;
| | -- | --------------------------------------------------------------------------------------------------



| | b) | issued to certain outside investors 5,000,000 shares of Series A Preferred;
| | -- | ---------------------------------------------------------------------------



| | c) | issued to Investa Corporation and Ms. Cecelia Pineda 2,500,000 warrants to purchase shares of common stock at a price of $0.26 per share; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | d) | cancelled 22,500,000 shares of Company common stock held by Ms. Pineda.
| | -- | -----------------------------------------------------------------------

As of June 30, 2008, the Companys total issued and outstanding capital stock consisted of 75,000,000 common shares, 5,000,000 shares of Series A Preferred and warrants to acquire 2,500,000 common shares.

On February 8, 2007, the Company issued 10,000,000 common shares upon the exercise of previously outstanding share purchase warrants
at a price of $0.05 per share issued March 30, 2006. As of December 31, 2007, no share purchase warrants in this series were outstanding.

On March 30, 2006, 10,000,000 Units of the Company were issued for cash proceeds of $100,000. Each Unit consisted of one common share of the Company and one fifth of one purchase warrant share. Each full purchase warrant share entitled
the holder to purchase an additional five common shares of the Company at a price of $0.25 per common share expiring March 30, 2009.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





Warrants

The following is a summary of warrant activities for the period ended June 30, 2008.



|                                                  |  |                   |   |  |                               |     
|------------------------------------------------- |  | ----------------- | - |  | ----------------------------- | ----
|                                                  |  | Number ofwarrants |   |  | Weightedaverageexercise price
|Outstanding and exercisable at December 31, 2006  |  | 2,000,000         |   |  | $                             | 0.25
|Exercised                                         |  | (2,000,000        | ) |  | $                             | 0.25
|                                                  |  |                   |   |  |                               |     
|Outstanding and exercisable at March 31, 2007     |  |                  |   |  |                               |    
|                                                  |  |                   |   |  |                               |     
|Granted                                           |  | 2,500,000         |   |  | $                             | 0.26
|                                                  |  |                   |   |  |                               |     
|Outstanding and exercisable at June 30, 2007      |  | 2,500,000         |   |  | $                             | 0.26
|                                                  |  |                   |   |  |                               |     
|Outstanding and exercisable at September 30, 2007 |  | 2,500,000         |   |  | $                             | 0.26
|                                                  |  |                   |   |  |                               |     
|Outstanding and exercisable at December 31, 2007  |  | 2,500,000         |   |  | $                             | 0.26
|                                                  |  |                   |   |  |                               |     
|Outstanding and exercisable at March 31, 2008     |  | 2,500,000         |   |  | $                             | 0.26
|                                                  |  |                   |   |  |                               |     
|Outstanding and exercisable at June 30, 2008      |  | 2,500,000         |   |  | $                             | 0.26
|                                                  |  |                   |   |  |                               |     



|6. | Equity
|-- | ------

Effective January 1, 2006, the Company
adopted SFAS No. 123R, Share Based Payment, under the modified prospective method described therein. Compensation expense recognized in the three and six months ended June 30, 2008 and 2007 includes compensation expense for all
stock-based payments granted, modified or vested since adoption of SFAS No. 123R based on the grant date fair value. Stock-based compensation is included in Selling, General and Administrative Expenses and totaled $197,285 and $358,865 for the
three and six months ended June 30, 2007, respectively. Stock-based compensation was $172,842 for both the three and six months ended June 30, 2007.

Prior to the consummation of the transactions contemplated by the Contribution Agreement (see Note 7), Platinum LP had issued to key executive officers and consultants, options to acquire up to 18.685% of the limited
partnership partner interests in Platinum LP. Following the completion of the transactions contemplated in the Contribution Agreement, the Company issued options to acquire 23,292,184 shares of common stock to holders of the Platinum LP options, in
substitution for, and following the cancellation of, the Platinum LP options. The substitution of the Company options for the Platinum LP options complied with Sections 409A and 424 of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations proposed and issued thereunder. Accordingly, and in addition to the satisfaction of other requirements under these provisions, the ratio of the exercise price to the fair market value of the shares subject to the Company options issued
in substitution of the Platinum LP options immediately following the consummation of the transactions contemplated by the Contribution Agreement was not greater than the ratio of the exercise price to the fair market value of the canceled Platinum
LP options immediately prior to the transaction. Additionally, the excess of the fair market value of the Company options issued in substitution of the Platinum LP options over their respective strike prices did not exceed the fair market value of
the Platinum options over their respective strike prices.



|7. | Contribution Agreement
|-- | ----------------------

On October 26, 2006,
the Company entered into a contribution agreement (the Contribution Agreement) with Platinum LP, Lubrication Partners, joint venture (GP Transferor) and sole shareholder of Platinum IP Management, Inc., the general partner of
Platinum LP (PRO GP), each holding a limited partnership



19



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





interest in Platinum LP (each, a Limited Partner and collectively, the PRO Transferors) and John T. (Cork) Jaeger as the
representative of all PRO Transferors (the PRO Transferor Representative), and Steve Drayton as the representative (the Investor Representative) of all certain individuals who invested in the Company (other than the PRO
Transferors) (the Investors) in a private placement completed in conjunction with the Contribution Agreement.

Under the terms
of the Contribution Agreement, GP Transferor contributed to the Company all of the capital stock of PRO GP, each Limited Partner contributed to the Company all of the outstanding limited partner partnership interests of Platinum LP, and the
Investors contributed to the Company an aggregate minimum cash amount of $4,500,000.

At the Companys Special Meeting held on
April 12, 2007, stockholders approved the completion of the proposed Contribution Agreement transaction with Platinum LP et al. The closing of the Contribution Agreement transaction became effective April 18, 2007.

In connection with the Contribution Agreement, the Company completed the following:



| | a) | Issued to the PRO Transferors 55,000,000 unregistered shares of common stock of the Company;
| | -- | --------------------------------------------------------------------------------------------



| | b) | Issued to the Investors 5,000,000 shares Series A Preferred and 2,500,000 share purchase warrants (the Warrants). Each Warrant is exercisable for one common share of the
Company at an exercise price of $0.26 per share for a three-year period from date of closing; and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | Entered into a bridge loan agreement (the Loan Agreement) with Platinum LP, pursuant to which the Company loaned Platinum LP $1,000,000 (the Platinum LP
Note). The Platinum LP Note bore regular interest at an annual rate of 10% per annum, was due and payable six months from the date of issuance, and was secured by a second lien on all of the assets of Platinum LP. On January 17,
2007, the Company advanced $1,000,000 to Platinum LP under the terms of the Loan Agreement. The Loan Agreement was satisfied on the April 18, 2007 closing date upon the conversion of the promissory note evidencing the loan into shares of Series
A Preferred. All interest incurred under this borrowing was eliminated in consolidation.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the second quarter of fiscal
2007, the Company also entered into an amending agreement whereby the Company assumed certain general security obligations upon closing of the Contribution Agreement.



|8. | Commitments
|-- | -----------

Leases

On June 20, 2007, the Company signed a five-year lease for office space at a rate of approximately $60,000 per year, effective September 1,
2007. The Company had previously leased office space from EFO Holdings, a related party to Lubrication Partners, L.P. and Lubrication Partners Joint Venture, our two largest stockholders.

Letter of Credit

On July 3,
2007, the Company entered into a $60,000 standby letter of credit agreement with Crescent Real Estate Funding VIII LP as a condition of an office lease, also with Crescent Real Estate Funding VIII LP, entered into on June 20, 2007.



20



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





Long-Term Debt Monitoring Fee

As part of the long-term debt agreement with SCERS, the Company agreed to pay Newlight Capital LLC (Newlight), a quarterly monitoring fee over
the term of the note. In consideration for those services, Newlight receives $120,000 in annual monitoring fees. Newlight received options for 1,909,938 shares of the Companys common stock. Newlight also serves as a consultant to the Company
in connection with its intellectual property commercialization efforts as well as in raising additional capital. Newlight receives a percentage of the total additional capital raised or revenues generated from intellectual property commercialization
as compensation for such consulting services.

Major Supplier

The Company currently contracts with a single, outside specialty chemical manufacturing company for the production and supply of 100% of its product
needs. The Company is thus exposed to product supply disruptions caused by adverse business circumstances with this supplier, raw material shortages, plant breakdowns and other situations affecting the supply of products from this supplier.



|9. | Credit Risk
|-- | -----------

Financial instruments which
potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents, and short-term investments in marketable securities. In the normal course of business, the Company maintains cash balances at financial
institutions located in the Dallas, Texas. Accounts at each financial institution are insured by the Federal Deposit Insurance Corporation up to $100,000. The Company has not experienced any losses in such accounts and believes it is not exposed to
significant credit risk on cash and cash equivalents.



|10. | Stock Based Incentive Plan
|--- | --------------------------

The Platinum Research
Organization, Inc. Stock Incentive Plan (the Plan), which was approved by the Companys stockholders on April 12, 2007, is an unfunded Plan which provides for the granting of incentive stock options, nonstatutory stock options,
stock appreciation rights and restricted shares to employees, directors and consultants of the Company.

The Company uses the Black-Scholes
option pricing model to determine the fair value of all stock option grants. Stock option grants to purchase 910,127 shares of common stock were issued during the three months ended June 30, 2008. No stock option grants were issued in the three
months ended March 31, 2008. The Company recognized compensation expense of $197,285 and $358,865 for the three and six months ended June 30, 2008, respectively. Stock based compensation expense of $172,842 was recognized for both the
three and six months ended June 30, 2007.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





The status of our stock options are as follows:



|                                 |  |            |  |                          |      |        |            |                          |   |     
|-------------------------------- |  | ---------- |  | ------------------------ | ---- | ------ | ---------- | ------------------------ | - | ----
|                                 |  | 2008       |  | 2007                    
|                                 |  | Shares     |  | WeightedAvgExercisePrice |      | Shares |            | WeightedAvgExercisePrice
|Outstanding at beginning of year |  | 27,722,879 |  | $                        | 0.19 |        |           |                          | $ |    
|Options substituted              |  |           |  | $                        |     |        | 23,292,184 |                          | $ | 0.09
|Grants                           |  | 910,127    |  | $                        | 0.15 |        | 3,116,428  |                          | $ | 1.35
|Cancelled                        |  | 4,154,822  |  | $                        | 0.62 |        |           |                          | $ |    
|Exercised                        |  |           |  | $                        |     |        |           |                          | $ |    
|Forfeited                        |  |           |  | $                        |     |        |           |                          | $ |    
|                                 |  |            |  |                          |      |        |            |                          |   |     
|Outstanding at March 31,         |  | 24,478,184 |  | $                        | 0.12 |        | 26,408,612 |                          | $ | 0.24

Our outstanding options as of June 30, 2008 are as follows:



|                         |  |                                                    |  |                                                 |  |                          |      |                                                    |           |                           |   |     
|------------------------ |  | -------------------------------------------------- |  | ----------------------------------------------- |  | ------------------------ | ---- | -------------------------------------------------- | --------- | ------------------------- | - | ----
|                         |  | Options Outstanding                                |  | Options Outstanding                            
|Range of Exercise Prices |  | SharesUnderlyingOptionsOutstanding atJune 30, 2008 |  | Weighted AvgRemainingContractual Life(in
years) |  | WeightedAvgExercisePrice |      | SharesUnderlyingOptionsExercisable atJune 30, 2008 |           | Weighted AvgExercisePrice
|$0.07 - $0.099           |  | 12,465,712                                         |  | 8.2                                             |  | $                        | 0.07 |                                                    | 2,077,619 |                           | $ | 0.07
|$0.10 - $0.129           |  | 9,763,148                                          |  | 8.4                                             |  | $                        | 0.11 |                                                    | 4,085,408 |                           | $ | 0.11
|$0.13 - $0.29            |  | 935,058                                            |  | 9.9                                             |  | $                        | 0.15 |                                                    | 498,452   |                           | $ | 0.15
|$0.57                    |  | 1,289,335                                          |  | 9.2                                             |  | $                        | 0.57 |                                                    | 0         |                           |   |    
|$0.79                    |  | 24,931                                             |  | 9.1                                             |  | $                        | 0.79 |                                                    | 0         |                           |   |    
|                         |  |                                                    |  |                                                 |  |                          |      |                                                    |           |                           |   |     
|                         |  | 24,478,184                                         |  | 8.4                                             |  | $                        | 0.12 |                                                    | 6,661,479 |                           | $ | 0.10

Restricted Stock

We may also grant restricted stock to compensate certain employees under the Plan. As of June 30, 2008, there were no restricted shares outstanding.



|11. | Earnings Per Share
|--- | ------------------

Basic earnings per share are
computed by dividing net earnings less dividends on Series A Preferred Stock by the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed similarly to basic earnings per share, except the
denominator is increased by including the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued. This Diluted Earnings per Share calculation is not done for periods with a Net Loss,
as this would be antidilutive. Shares underlying options at June 30, 2008 were excluded as their effect would be antidilutive.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





|                                             |  |                    |             |   |                  |   |            |               |  |   |               |   |  |                                                         |            |   |  |   |             |  
|-------------------------------------------- |  | ------------------ | ----------- | - | ---------------- | - | ---------- | ------------- |  | - | ------------- | - |  | ------------------------------------------------------- | ---------- | - |  | - | ----------- | -
|                                             |  | Three Months Ended |             |   | Six Months Ended |   |            |               | 
|                                             |  | June 30, 2008      |             |   | June 30, 2007    |   |            | June 30, 2008 |  |   | June 30, 2007 |   |  | For the Periodfrom Date ofInceptionThroughJune 30, 2008 |           
|Numerator                                    |  |                    |             |   |                  |   |            |               |  |   |               |   |  |                                                         |            |   |  |   |             |  
|Net Income (Loss)                            |  | $                  | (1,313,386  | ) |                  | $ | (1,474,369 | )             |  | $ | (2,475,054    | ) |  | $                                                       | (2,217,753 | ) |  | $ | (12,446,779 | )
|Dividends Declared on Preferred Stock        |  |                    | (112,500    | ) |                  |   | (93,700    | )             |  |   | (225,000      | ) |  |                                                         | (93,700    | ) |  |   | (543,699    | )
|                                             |  |                    |             |   |                  |   |            |               |  |   |               |   |  |                                                         |            |   |  |   |             |  
|Net Loss Attributable to Common Shareholders |  | $                  | (1,425,886  | ) |                  | $ | (1,568,069 | )             |  | $ | (2,700,054    | ) |  | $                                                       | (2,311,453 | ) |  | $ | (12,990,478 | )
|                                             |  |                    |             |   |                 
|Denominator                                  |  |                    |             |   |                  |   |            |               |  |   |               |   |  |                                                         |            |   |  |   |             |  
|Basic Weighted Average Shares Outstanding    |  |                    | 102,500,000 |   |                  |   | 68,571,429 |               |  |   | 102,500,000   |   |  |                                                         | 55,483,425 |   |  |   | 49,998,680  |  
|                                             |  |                    |             |   |                 
|Basic Earnings per Share                     |  | $                  | (0.01       | ) |                  | $ | (0.02      | )             |  | $ | (0.02         | ) |  | $                                                       | (0.04      | ) |  | $ | (0.26       | )



|12. | Liquidity and Capital Resources
|--- | -------------------------------

The Company is a
development stage company, and since inception, the Company has incurred significant net losses. The Company has reported a net loss of $11,285,111 from the date of inception on April 28, 2004 through June 30, 2008. For the fiscal year
ended December 31, 2007, and the six months ended June 30, 2008, the Company reported net losses of $4,948,510 and $2,475,054, respectively. The Company expects to continue to incur net losses and negative cash flow in the near future. The
size of these losses will depend, in large part, on the Companys ability to realize product sales revenue from marketing its products. To date, the Company has not had any operating revenue from the sale of its products. The Companys
ability to generate revenues will be dependent upon, among other things, the successful negotiation of marketing and distribution agreements, conclusive and definitive test results demonstrating the benefits of the Companys products and the
acceptance of the Companys technology and products by potential customers. Because the Company does not yet have a material, recurring revenue stream resulting from product sales, there can be no assurance that the Company will be successful
in its sales efforts. The Company expects its operating expenses to increase, reflecting increased testing and marketing expenses in the short term which will necessitate higher levels of revenue for profitability when and if the Company begins to
generate recurring revenues. Should the Company achieve profitability, there is no assurance the Company can maintain or increase profitability levels in the future.

On September 22, 2008, the Company executed a $1,500,000 secured convertible promissory note with an affiliate of our largest stockholder. The additional funding will provide sufficient resources for operations
into the fourth quarter of 2008. Failure to achieve significant, sustained sales and revenues from the Companys TechroBond 280 product in the industrial grease market by the end of such period will require the Company to seek additional
financing and the Company can give no assurances that these efforts will be successful. The Companys budget for the next twelve months emphasizes the continued development and marketing of its products. Cash needs during the next twelve-month
period are expected to average approximately $275,000 per month. In addition, changes may occur in the Companys current operations that would use available cash resources sooner than anticipated. If the anticipated product sales do not
materialize, or are significantly less than anticipated, the Company will have to raise additional funds to continue product development and commercialization activities. If this future financing is not available, investors may lose a substantial
portion, or all, of their investment, and the Companys business may fail. The Company currently has no immediate means for obtaining any additional financing. Consequently, the Company cannot assure that additional financing, if necessary,
will be available to the Company on acceptable terms, or at all.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





The Companys ability to generate sufficient cash flow from operations to make scheduled
payments on its debt depends on a range of economic, competitive and business factors, many of which are outside its control. Based on an average interest rate of 14% at June 30, 2008, and outstanding borrowings at that date of $6,000,000, the
Companys annual interest expense would be $840,000. The Companys business may not generate sufficient cash flow from operations to service its debt obligations, particularly if projected sales and revenues are not realized on schedule or
at all. If the Company is unable to service its debt obligations, the Company may need to refinance all or a portion of its indebtedness on or before maturity, reduce or delay capital expenditures, sell assets or raise additional equity. The Company
may not be able to refinance any of its indebtedness, sell assets or raise additional equity on commercially reasonable terms or at all, which could cause it to default on its obligations and impair its liquidity. The Companys inability to
generate sufficient cash flow to satisfy its debt obligations, or to refinance its obligations on commercially reasonable terms, could have a material adverse effect on the Companys business and financial condition.



|13. | Subsequent Events
|--- | -----------------

On September 22, 2008, the
Company completed the sale and issuance of a secured convertible promissory note in the principal amount of $1,500,000 (the Note) to Alpina Lending, L.P., a Nevada limited partnership (Alpina), on its own behalf and as agent
for certain other lenders. Alpina and certain other lenders are related parties to the Company.

The Note provides for two tranches of
advances. The initial advance of $750,000 (less previous advances of $192,775 and accrued interest) is payable upon execution of the Note. The second tranche of $750,000 is payable at the request of the Company, subject to the usual and customary
conditions. The Note is due and payable on February 11, 2011. The note bears interest at the rate equal to the variable prime rate from time to time published in the Money Rates column of The Wall Street Journal plus 3% per
annum. All or part of the principal outstanding balance and all or part of the accrued but unpaid interest thereon may at anytime, starting six months after the date of the Note, at the discretion of Alpina be converted into common stock of the
Company at a conversion price equal to $0.18 per share. The principal amount received under the Note will be used for working capital and other general corporate purposes.

On September 22, 2008, in connection with the Note, the Partnerships entered into a Security Agreement with Alpina on its own behalf and as agent for certain other lenders. The Security Agreement provides that in
order to secure the payment and performance of the Note, the Security Agreement and other instruments, the Partnerships grant to Alpina, as the secured party, a first priority security interest subject to certain permitted liens on all personal and
fixture property of the Partnerships. The first priority security interest granted by the Security Agreement is pari passu with a prior security interest granted by Platinum Intellectual Property L.P. to the Seattle City Employees Retirement
System on December 3, 2004 for a $6,000,000 loan. Upon the satisfaction of all of the Partnerships obligations under the Note and the Security Agreement, the security interest shall terminate.

Also on September 22, 2008, the Company entered into a Second Omnibus Amendment (the Second Omnibus Amendment) among Newlight Capital,
LLC (Newlight), SCERS and JPMorgan Chase Bank N.A. The Second Omnibus Amendment amends certain terms of the senior secured note purchase agreement as well as certain other related loan documents, each dated as of December 3, 2004,
as well as the Omnibus Amending Agreement dated January 9, 2007 (collectively, the SCERS Loan Documents) concerning a loan by SCERS to Platinum Intellectual Property, L.P. in the Principal amount of $6,000,000 (the SCERS
Loan.).

The amendments set out in the Omnibus Agreement provide for the release of $1,410,000 restricted cash in escrow and allows
the Company and reduces the amount of the note payable to SCERS from $6,000,000 to $4,590,000.



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##### Table of Contents

Platinum Research Organization, Inc. and Subsidiaries

(A Development Stage Company)

Notes to Consolidated Financial
Statements

June 30, 2008





The SCERS Loan Documents provide for certain participation payments to SCERS based upon the
Companys gross revenues and consolidated net income. The participation payments previously provided for in the SCERS loan Documents have been reduced from $6,000,000 to $4,590,000 and are convertible into Company common stock at $0.18 per
share under certain conditions.



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##### Table of Contents

Item 2. Managements Discussion and Analysis or Plan of Operation.

All statements other than statements of historical facts contained in this report, including statements regarding our future financial position,
business strategy, budgets, projected costs and plans and objectives of management for future operations, are considered to be forward-looking statements. We express our expectations, beliefs and projections in good faith and believe our
expectations reflected in these forward-looking statements are based on reasonable assumptions; however, we cannot assure you that these expectations, beliefs or projections will prove to have been correct.

Readers are referred to the caption Risk Factors appearing at the end of Item 1 of our latest Annual Report on Form 10-KSB for
additional factors that may affect our forward-looking statements. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur. We undertake no obligation to update or revise our
forward-looking statements, whether as a result of new information, future events or otherwise.

Plan of Operation

On April 18, 2007, the Company closed the Contribution Agreement, which resulted in the acquisition of Platinum LP and the appointment of a new slate
of directors. Under the terms of the Contribution Agreement:



| |  |  | Lubrication Partners, joint venture (GP Transferor) contributed all of the capital stock of Platinum IP Management, Inc., the general partner of
Platinum LP (PRO GP) (the PRO GP Capital Stock), free and clear of all liens, to the Company;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | each limited partner of Platinum LP contributed all of the outstanding limited partner partnership interests of Platinum LP (collectively, the Partnership
Interests) held by such limited partner, free and clear of all liens, to the Company; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | certain individuals who invested in the Company (the Investors) contributed $4,500,000 in new capital by way of private placement to the Company. This
private placement included the conversion of the convertible promissory notes totaling $1,000,000 held by two Investors.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In return, the Company issued the aggregate total of:



| |  |  | 55,000,000 unregistered shares of its common stock to GP Transferor for the PRO GP Capital Stock and for the Partnership Interests;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | 5,000,000 unregistered shares of Series A Preferred to the Investors; and
| | - |  | -------------------------------------------------------------------------



| |  |  | 2,500,000 unregistered common stock share purchase warrants to Investa Corporation and Ms. Cecelia Pineda.
| | - |  | ----------------------------------------------------------------------------------------------------------

Concurrent with the closing of the Contribution Agreement, Ms. Pineda returned to the Companys treasury 22,500,000 shares of common stock of
the Company held in her name.

The Companys acquisition of Platinum LP has been accounted for as a reverse acquisition application of
the purchase method of accounting by the Company, with Platinum LP being treated as the accounting acquirer. Accordingly, the assets and liabilities of the Predecessor were recorded at their respective historical costs and added to those of Platinum
LP, and the reported results of operations of the Company now and going forward reflect the historical financial and operating results of Platinum LP.

After the foregoing transactions, the Pro Transferors owned 73.33% of the issued and outstanding shares of common stock of the Company on a non-diluted basis and 53.66% of the Companys common stock on a
fully-diluted basis.



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##### Table of Contents

As a result of the acquisitions, the Company now consists of three primary entities. Platinum
Intellectual Property LP (PIP LP) owns and maintains the intellectual property; Platinum LP provides the structure for daily operations; and Platinum Research Organization, Inc. is the owner of the other entities.

Following our acquisition of Platinum LP, the Companys business focus is the design,
development and commercialization of patented high-performance lubricants and coatings. The Companys products will be marketed under the trade name TechroBond for automotive, aviation, industrial and consumer aftermarkets. TechroBondTMis one of a series of product applications Platinum LP developed based on its patented processes and technologies relating to a fluorinated
thiophosphate and a new technique to react zinc dialkyl dithiophosphate (ZDDP) and poly tetra fluroethylene to yield new proprietary compounds that enhance the anti-wear and extreme pressure capabilities of lubricants and coatings
(individually and collectively, the PRO Technology). The resulting compounds have yielded significantly enhanced anti-wear and extreme pressure capabilities when measured in bench laboratory tests at the University of Texas at Arlington
(UTA), and, more importantly, suggest that the PRO Technology may be a replacement for ZDDP in engine and lubricating oils. Management believes that this new technology will position the Company to penetrate several large, global markets
for lubricants should the Company be successful in bringing its products that rely upon this new technology to market.

The Companys
intellectual property, including its patents, licenses and trademarks, is an important component of its business. The Company actively protects its inventions, new technologies and product developments by filing patent applications or maintaining
trade secrets. The Companys research and development efforts have resulted in proprietary formulations and processes protected by five issued U.S. patents, four U.S. patent applications pending, five U.S. continuation-in-part applications and
several trade secrets. The Company has filed these patents or patent applications in key jurisdictions in the international market, and the U.S. patent applications are protected under patent, copyright and trademark filings. These proprietary
formulations and processes use specific chemical compounds that can act as a catalyst, a reactant or both to provide surface and substrate modification in both liquid and solid lubricants to wear surfaces such as iron, steel and aluminum.

The Company intends to develop three primary product lines within the lubricant additive industry, including greases, industrial oils and
engine oils, as well as to develop specialty coatings. A more detailed description of the business of the Company and associated risk factors is contained in the Annual Report on Form 10-KSB that was filed with the SEC on April 15, 2008.

Results of Operations

Three Months Ended
June 30, 2008 Compared to Three Months Ended June 30, 2007

Net Sales and Gross Profit. Net sales and gross profit for both the
three-month periods ended June 30, 2008 and June 30, 2007 were $0. The Company is a development stage company and continues to focus its efforts on the marketing and commercialization of the Companys products and technologies, the
registration of its products with the Environmental Protection Agency (the EPA), in Europe, Japan and the Far East and on further developing its relationships with key business partners in the Engine Oil, Grease, Industrial Oil and
Coatings markets.

Selling, General and Administrative Expenses.The Companys total SG&A expenses for the three-month period ended
June 30, 2008 were $770,929, a decrease of $264,010 over total SG&A expenses of $1,034,939 for the three-month period ended June 30, 2007. Total SG&A expense for the six-month period ended June 30, 2008 were $1,430,147, a
decrease of $118,087 from total SG&A expenses of $1,548,234 for the six-month period ended June 30, 2007

Salaries expense for the
three-month period ended June 30, 2008 was $308,993, an increase of $64,808 over salaries expense of $244,185 for the three-month period ended June 30, 2007. This increase was primarily due to non-cash expenses incurred relating to the
expensing of stock options pursuant to SFAS 123R. Of the total salaries increase, $60,801 was related to expensing of stock options. For the six-month period salaries expense increased $276,636 to $643,111 for the period ended June 30, 2008,
compared to $366,475 for the period ended June 30, 2007. The increase results from increased stock compensation expense of $186,022 and increased payroll expenses of $107,114.



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Travel expense for the three-month period ended June 30, 2008 was $13,006, a decrease of $27,075
over travel expense of $40,081 for the three-month period ended June 30, 2007. This decrease was primarily due to increased travel expenses as a result of the merger finalized in the three-month period ended June 30, 2007. Decreased travel
as a result of the merger also resulted in travel expense decreases of $42,186 to $27,054 for the six months ended June 20, 3008 compared to $69,240 for the six months ended June 30, 2007.

Product evaluation and technical support expenses for the three-month period ended June 30, 2008 were $50,000, a decrease of $6,558 over product
evaluation and technical support expenses of $56,558 for the three-month period ended June 30, 2007. This decrease was due to a change in the timing of invoicing for testing and research efforts conducted at UTA related to the Companys
products and technologies and costs associated with registering the companys products in foreign countries. Product evaluation and technical support expenses decreased $21,104 from $108,976 for the six months ended June 30, 2007 to
$87,872 for the six months ended June 30, 2008, primarily due to timing of invoices from UTA.

Outside legal and professional fees for
the three-month period ended June 30, 2008 were $325,759, a decrease of $69,735 over outside legal and professional fees of $395,494 for the three-month period ended June 30, 2007. This decrease was due to decreased product and technology
consultancy costs; decreased public and investor relations costs; and increased public company compliance costs associated with the 2007 annual audit, SEC filings and the filing of a registration statement to register the shares of common stock
underlying the Series A Preferred. Outside legal and professional fees increased $15,227 to $541,348 for the six months ended June 30, 2008 from $526,121 for the six months ended June 30, 2007. This decrease primarily reflects the
increased public company compliance costs in 2008 compared to 2007.

The Company incurred $200,317 of expense in the three-month period
ended June 30, 2007 and $339,783 in the six-month period ended June 30, 2007 related to the Contribution Agreement. No such costs were incurred during the same period in 2008. These costs consisted of outside legal, accounting and audit
work related to the Contribution Agreement and related transactions.

Insurance costs for the three-month period ended June 30, 2008
were $22,945, a decrease of $38,493 over insurance costs of $61,438 for the three-month period ended June 30, 2007. For the six-month period, insurance costs decreased $35,935 from $78,036 in 2007 to $42,101 in 2008. This decrease was
principally due the timing of initial premiums in 2007 associated with intellectual property coverage and directors and officers coverage.

Other SG&A expenses for the three-month period ended June 30, 2008 were $35,834, an increase of $13,274 over other SG&A expenses of $22,560 for the three-month period ended June 30, 2007. For the
six-month period ended June 30, 2008, other SG&A increased $22,158 to $58,478 from $36,320 in the six-month period ended June 30, 2007. This increase was due to increased Board of Director related costs.

Depreciation and Amortization.Depreciation and Amortization for the three-month period ended June 30, 2008 was $47,711, a decrease of $870 over depreciation
and Amortization of $48,581 for the three-month period ended June 30, 2007. Depreciation and amortization also decreased $1,335 from $96,756 for the six-month period ended June 30, 2007 to $95,241 for the six-month period ended
June 30, 2008 These decreases relate principally to the amortization of loan issuance costs for debt with the Seattle City Employees Retirement System (SCERS), the amortization of capitalized patent expenses and the
depreciation of office and testing equipment.

Interest Expense.Interest expense for the three-month period ended June 30, 2008 was $486,041,
an increase of $35,247 compared to interest expense of $450,794 for the three-month period ended June 30, 2007. Interest expense for the three-month period of 2008 was primarily comprised of $210,000 of interest related to $6,000,000 of
long-term debt with SCERS and $259,192 of interest related to the amortization of a beneficial conversion discount and the amortization of a mandatory redemption premium, both of which are related to the Companys Series A Preferred. Both items
are non-cash items (please see Note 4 to the Companys Consolidated Financial Statements under Item 1). Interest expense for the six-month period ended June 30, 2008 was $968,122, an increase of $307,328 from the interest expense of
$660,794 in the six-month period ended June 30, 2007. This increase reflects the shorter amortization for the six months ended June 30, 2007 resulting from the issuance of the Series A Preferred in April 2007.



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Other Income. Other income for the three-month period ended June 30, 2008 was $16,045, a decrease of $43,900
from other income of $59,945 for the three-month period ended June 30, 2007. Other income decreased $44,645 to $43,386 for the six months ended June 30, 2008 from $88,031 for the six months ended June 30, 2007. This decrease was due
primarily to interest income from decreased cash on hand.

Other Expense. Other expense for the three- and six-month periods ended June 30,
2008 was $24,750, compared to $0 for the three- and six-month period ended June 30, 2007. This current period expense reflects the $24,750 loss on the sale of marketable securities during the current period.

Research and Development

The Companys R&D
expenditures for the three- and six-month period ended June 30, 2008 were $50,000 and $87,872, respectively, compared to $56,558 and $108,976 for the three- and six-month periods ended June 30, 2007, respectively. The R&D expenditures
are primarily comprised of research staff salaries and materials consumed in the testing and evaluation process. The Company has established an alliance with UTA to collaborate on research, development, testing and commercialization efforts. The
number of personnel for each project is reviewed and agreed upon annually by the Company and UTA as a part of the budgeting process. The Company is then billed monthly per the budgeting contract. The Company also utilizes a number of mechanical
testing laboratories equipped with a variety of gasoline and diesel engines, driveline and other mechanical equipment to evaluate the performance of additives for lubricants and fuels. The Company expenses all such R&D expenditures as incurred.

For the calendar year of 2008, there are five key projects, as identified and described below, that comprise the Companys R&D
budget. All of the listed projects are currently active and have research personnel assigned. Company management reviews the project progress on a monthly basis. All of the identified key projects are in progress, and are expected to continue for
the next 6-12 months. As such, the Company is unable to estimate completion dates with any reasonable certainty. The Companys inability to successfully complete, fund these projects, or attract a development partner could have a material
adverse impact on the Companys ability to execute its business plan.

Grease

The Companys Grease project consists of research into anti-wear and extreme pressure
enhancements for lubrication greases. Product development for the Companys original Grease product, TechroBondTM280, is complete. As
TechroBondTM280 utilizes existing registered materials in its composition, no additional product registration is necessary. The suppliers of raw
materials and a contract manufacturer for manufacturing the material have been contracted by the Company. The Companys ongoing research and development in the Grease project is focused on enhancing the existing TechroBondTM280 product and ensuring its compatibility with customers products.

Engine Oil (Improved Lubrication in Engine Oils)

The Companys Engine Oil Improved Lubrication project consists of research into improved lubrication in engine oils. Product development for this projects product, TechroBondTM240, is in the final stages and the products materials have been registered with the EPA. Manufacturing processes have been defined, and a contract
manufacturer has been identified for the manufacture of the product. Actual engine tests utilizing the product are currently being performed and will continue through the remainder of 2008.

Testing of Interaction of Anti-Oxidants with F-ZDDP

This project consists of testing the interaction of anti-oxidants and F-ZDDP, as its name suggests. Product development in this project is in the intermediate stages, with registration of the base materials currently underway (see the
Engine Oil (Improved Lubrication in Engine Oils) project description above). This projects product is currently undergoing bench oxidation tests to determine interactions and compatibility with existing engine oil additive packages.



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Engine Oil (Use of ZDDP in HD Oil Applications)

The Companys Engine Oil ZDDP Applications project consists of testing the use of fluorinated ZDDP in heavy duty engine oil applications. Product
development for this project is in the intermediate stages, and registration of the base materials is currently underway. Product testing is currently focused on bench wear testing as part of defining the proper blend to be used in a marketable
product.

Coatings

The
Companys Coatings project consists of research into anti-fouling paints and anti-corrosion coatings and testing of products to be used in anti-graffiti or other anti-fouling media applications. Product development for this project is still in
the early stages, and no registration of the product or product approvals from regulatory agencies has occurred. Proof of concept testing is currently underway, using a variety of approaches and materials. The early results of the Companys
product testing are promising, but no marketable product has been developed, and there is no assurance that the products can be developed into a marketable product.

Liquidity and Capital Resources

As of June 30, 2008, the Company cash on hand of $1,592,252, of
which $1,410,000 was restricted cash. Cash needs during the next twelve months are expected to average approximately $275,000 per month. On September 22, 2008, the Company executed a new $1,500,000 convertible note funding. Under the terms of
the convertible note, the Company could draw two tranches of $750,000 each, based upon satisfying certain conditions. Interest would accrue on the note at Prime plus 3% and be payable (along with all principal) in February, 2011. During July and
August 2008, the Company received advances of approximately $192,775 to fund continuing operations. With the funding of the $1,500,000 convertible note, the Company should have sufficient liquidity to fund operations through December 2008.

Cash flows used in operating activities for the six-month period ended June 30, 2008 were $1,361,348, compared to $1,595,891 used in
operating activities for the six-month period ended March 31, 2007.

Net cash
provided by investing activities consists primarily of $1,175,250 from the liquidation and sale of short-term investments in marketable securities. Short-term investments in marketable securities consisted of high credit quality (AAA) auction rate
securities, which were variable rate bonds tied to short-term interest rates with maturities on the face of the securities in excess of 90 days and had interest rate resets through a modified Dutch auction, at predetermined short-term intervals,
usually every 7, 28 or 35 days. As of June 30, 2008, the Company did not have any material commitments for capital expenditures. Capital expenditure requirements, which are principally comprised of manufacturing related capital expenditures,
for the next five years are estimated by the Company to be $1 million for 2008, $2 million in 2009, $0 in 2010, $4 million in 2011 and $4 million in 2012. The Company is currently working with a manufacturer in Tulsa, Oklahoma to evaluate the
manufacturing process and required capital to produce TechroBondTM240.

Net cash provided by financing activities was $0 and $5,000,000 for the six months ended June 30, 2008 and 2007, respectively. The funds received in
2007 represent the proceeds from the issuance of the Series A Preferred and the issuance of the warrants related to the Contribution Agreement.

Contribution Agreement

Immediately following the closing of the Contribution Agreement, Platinum LP became the sole
operating subsidiary of the Company, holding substantially all of the Companys operating assets, other than (i) the intellectual property used by the Company, which is held by Platinum Intellectual Property L.P. (PIP), a
wholly-owned subsidiary of Platinum LP, and (ii) the proceeds of the Series A Preferred offering completed as part of the Contribution Agreement, which are held by the Company directly. On December 3, 2004, the Company and PIP entered into
a secured note purchase agreement, which provided for PIP to obtain a $6.0 million term loan from SCERS.



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In connection with the Contribution Agreement, SCERS, the Company, Platinum LP, PIP, Newlight Capital LLC
(Newlight) and JPMorgan Chase Bank, N.A. entered into an amendment of the SCERS note on January 9, 2007, which became effective upon the closing of the Contribution Agreement on April 18, 2007. The SCERS note is governed by a
senior secured note issued by PIP to SCERS. The principal amount outstanding under the SCERS note will continue to bear interest at a fixed rate equal to 14% per annum, which will increase to 19% per annum following any event of default
under the senior secured note. Accrued interest on the outstanding principal is payable on a quarterly basis, and all outstanding principal and interest is due and payable on February 28, 2011. As additional consideration for making the loan,
SCERS will receive quarterly participation payments at the end of each fiscal quarter that are equal to the greater of (i) 5% of the Companys gross revenues on a consolidated basis, or (ii) 20% of the Companys consolidated net
income, for such quarter. The participation payments will continue until SCERS is paid all of the principal and accrued interest under the SCERS note, plus an aggregate $6.0 million in participation payments. SCERS has received no participation
payments through June 30, 2008.

PIPs performance under the SCERS note is secured by all of the assets of PIP, including all of the
registered intellectual property used in the Companys business. In addition, approximately $1.4 million of the loan proceeds were placed in escrow, representing 18 months of estimated interest expense, in the amount of $1.25 million, and
$150,000 of certain estimated fees that are payable in connection with the SCERS note.

The Company entered into a Second Omnibus Amendment
dated September 22, 2008 (the Second Omnibus Amendment) among Newlight, SCERS and JPMorgan Chase Bank N.A. The Second Omnibus Amendment amends certain terms of the senior secured note purchase agreement as well as certain other
related loan documents, each dated as of December 3, 2004, as well as the Omnibus Amending Agreement dated January 9, 2007 (collectively, the SCERS Loan Documents) concerning the loan by SCERS to PIP.

The amendments set out in the Omnibus Agreement provide for the release of $1,410,000 restricted cash in escrow and allows the Company to use the escrow
funds to reduce the amount of the note payable to SCERS from $6,000,000 to $4,590,000. The amendments also reduce the SCERS participation payments from $6,000,000 to $4,590,000 and are convertible into Company common stock at $0.18 per share under
certain conditions.

As amended, the SCERS note subjects the Company to certain financial covenants and restrictions, including limitations
on incurring indebtedness or granting liens, mergers or consolidations, distributions, expenditures in excess of budgeted amounts, leases, compensation of management, sale of assets and capital expenditures, which apply equally to PIP, Platinum LP
and the Company. If PIP issues or sells any new promissory note while the SCERS note is outstanding that are on terms that are more favorable than those under the SCERS note, as determined in SCERSs sole discretion, then the SCERS note will
automatically be amended such that those more favorable terms will apply to the SCERS note to the same extent as they are to apply under the new promissory note. PIP may issue one or more new promissory notes having an aggregate principal amount of
no more than $9.0 million, and SCERS will take any actions that are necessary in order to permit the purchasers of such notes to have a security interest and lien that is pari passu with SCERS interests in the collateral securing the SCERS note. Any
amounts borrowed by PIP that are in excess of the $9.0 million limit shall be subordinate to the SCERS note.

Newlight serves as the
monitoring agent on behalf of SCERS. In consideration for those services, Newlight received a placement fee of $450,000 at the initial funding and continues to receive $120,000 in annual monitoring fees after the closing of the Contribution
Agreement. Newlight received substitution options for 1,909,938 shares of the Companys common stock upon closing of the Contribution Agreement, representing approximately 1.50% of the Companys outstanding shares, on a fully-diluted
basis, after the closing of the Contribution Agreement. Newlight also serves as a consultant to the Company in connection with its intellectual property commercialization efforts as well as in raising additional capital. Newlight receives a
percentage of the total additional capital raised or revenues generated from intellectual property commercialization as compensation for such consulting services.

Registration Rights Agreement

In connection with the transactions contemplated by the Contribution Agreement, on
April 18, 2007 the Company entered into a Registration Rights Agreement with the selling stockholders whereby the Company agreed to file the registration statement on Form S-1 of which this prospectus is a part to register for resale the shares
of common stock underlying the Series A Preferred and the warrants following the closing date. Under the terms of



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the Registration Rights Agreement, warrants to acquire common stock are issuable by the Company to the holders of the Series A Preferred as the sole remedy
under certain circumstances, including the failure of the Company to have the registration statement registering the resale of the underlying shares of common stock declared effective within 180 days after the closing date of April 18, 2007
(i.e., October 15, 2007) and remain effective through the expiration of the Registration Period, as defined in the Registration Rights Agreement. Penalty warrants accruing pursuant to this provision of the Registration Rights
Agreement would not begin to be issued until the end of the first 30-day period occurring after 180 days from the issuance date of the Series A Preferred. The issuance of penalty warrants would have been issued at the end of each 30-day period
through the end of the Registration Period, which expired on April 18, 2008 pursuant to the provisions of the Registration Rights Agreement due to the provisions of Rule 144 of the Securities Act of 1933.

At the end of each 30-day period, 500,000 warrants (5,000,000 shares of Series A Preferred * 5 to 1 conversion ratio * 2% penalty rate) could be issued
under the terms of the Registration Rights Agreement. The aggregate value of such warrants, if issued, would be as follows:



|             |  |                 |  |               |      |                  |   |           
|------------ |  | --------------- |  | ------------- | ---- | ---------------- | - | ----------
|Warrant Date |  | PenaltyWarrants |  | ExercisePrice |      | Value ofWarrants
|14-Nov-07    |  | 500,000         |  | $             | 0.24 |                  | $ | 77,684.79 
|14-Dec-07    |  | 500,000         |  | $             | 0.24 |                  | $ | 120,566.76
|13-Jan-08    |  | 500,000         |  | $             | 0.24 |                  | $ | 92,788.64 
|12-Feb-08    |  | 500,000         |  | $             | 0.24 |                  | $ | 79,141.90 
|13-Mar-08    |  | 500,000         |  | $             | 0.24 |                  | $ | 21,014.05 
|12-Apr-08    |  | 500,000         |  | $             | 0.24 |                  | $ | 23,334.36 
|12-May-08    |  | 500,000         |  | $             | 0.24 |                  | $ | 23,048.87 
|11-Jun-08    |  | 500,000         |  | $             | 0.24 |                  | $ | 6,928.98  
|             |  |                 |  |               |      |                  |   |           
|TOTAL        |  | 4,000,000       |  |               |      |                  | $ | 444,508.34
|             |  |                 |  |               |      |                  |   |           

The Company does not believe the issuance of the above penalty warrants is probable.

Capital Requirements

Management cannot
provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Companys capital resources should be adequate to
continue operating and maintaining its business strategy into the fourth quarter of 2008. However, if the Company is unable to realize revenue from the commercialization of its products or is unable to raise additional capital in the future,
management expects that the Company will need to seek additional capital on less favorable terms and/or pursue other remedial measures. The financial statements included in this Quarterly Report on Form 10-Q do not include any adjustments related to
the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Accounting Policies  Intangible Assets

The Company evaluates annually the carrying value of
its intellectual property for recoverability by analyzing the expected sales and profits of its products in the grease, engine oil and industrial oil markets over the next five years. In conducting its impairment analysis, the Company only tests
intellectual property being amortized per SFAS 144; non-amortizable intellectual property is excluded. Net amortizable intellectual property was $221,077 as of June 30, 2008.



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The Companys impairment testing methodology involves testing the carrying amount of its
intellectual property assets compared to the undiscounted cash flows from the Companys estimated operations (excluding interest) for the years 2008 through 2012. While the Company recognizes that the useful lives of its patents extend beyond
2012 and in some case to the year 2020, the Companys planning period is five years, and forecast data is not available for years beyond 2012.

At December 31, 2007, the Companys impairment testing revealed that the sum of the undiscounted cash flows for the applicable testing period exceeded the carrying values of amortizable intellectual property. Based on this
analysis, the Company expected that sufficient profit will be realized from these sales to recover the balance of intellectual property on its books, and therefore did not believe that any impairment of its intellectual property existed at
December 31, 2007, and no changes have occurred in the current year which would negatively impact the impairment testing. As such, no impairment adjustment was recorded at that date and no impairment adjustment has been recorded in the three or
six months ended June 30, 2008.

Critical Accounting Policies and Significant Judgments and Estimates

On September 24, 2008, the Audit Committee for the Company determined that the value assigned to the Companys intellectual property assets in an
April 29, 2004 acquisition transaction should be corrected. As a result, the Audit Committee, in consultation with management and Lane Gorman Trubitt, L.L.P., the Companys independent registered public accounting firm, concluded that the
Companys annual financial statements included in Form 10-KSB for the period ended December 31, 2007 and the quarterly financial statements included in Forms 10-QSB for the periods ended June 30, 2007; September 30, 2007; and March 31, 2008
should no longer be relied upon and should be restated.

The intellectual property was originally valued at $4,438,915 and was acquired
from a predecessor company on April 18, 2007. At the time of its acquisition, the Company adopted the valuation of the intellectual property utilized by the predecessor company. This prior valuation was based upon the value of a note and accrued
interest that was forgiven in exchange for the intellectual property. Based upon further investigation, the fair value of the note should have been $0, since the note was in default for more than eleven months prior to the forgiveness of debt and
since there was no liquidity available to support future cash flows on the note. As a result of this adjustment, amortizable intellectual property should be reduced by $4,430,156 and non-amortizable intellectual property should be reduced by $8,759
as of the April 29, 2004 exchange date. The effect of this restatement on the relevant financial statement lines as of December 31, 2007 and 2006 is as follows:



|                                                        |  |                         |            |   |                         |   |            |        |  |   |            |   |  |             |            |   |        |   |            |   |  |   |            |  
|------------------------------------------------------- |  | ----------------------- | ---------- | - | ----------------------- | - | ---------- | ------ |  | - | ---------- | - |  | ----------- | ---------- | - | ------ | - | ---------- | - |  | - | ---------- | -
|                                                        |  | As of December 31, 2007 |            |   | As of December 31, 2006 |  
|                                                        |  | As Filed                |            |   | As Restated             |   |            | Change |  |   | As Filed   |   |  | As Restated |            |   | Change |  
|Consolidated Balance Sheet Effects                      |  |                         |            |   |                         |   |            |        |  |   |            |   |  |             |            |   |        |   |            |   | 
|Intellectual Property  net of accumulated amortization |  |                         | 3,482,536  |   |                         |   | 166,874    |        |  |   | (3,315,662 | ) |  |             | 3,698,207  |   |        |   | 85,347     |   |  |   | (3,612,860 | )
|Intellectual Property  non-amortizable                 |  |                         | 231,272    |   |                         |   | 222,513    |        |  |   | (8,759     | ) |  |             | 133,490    |   |        |   | 124,731    |   |  |   | (8,759     | )
|Total Assets                                            |  |                         | 7,113,351  |   |                         |   | 3,788,930  |        |  |   | (3,324,421 | ) |  |             | 5,902,821  |   |        |   | 2,281,202  |   |  |   | (3,621,619 | )
|Shareholders Deficit                                   |  |                         | (276,404   | ) |                         |   | (3,600,825 | )      |  |   | (3,324,421 | ) |  |             | (301,366   | ) |        |   | (3,922,985 | ) |  |   | (3,621,619 | )
|                                                        |  |                         |            |   |                        
|Consolidated Statement of Operations Effects            |  |                         |            |   |                         |   |            |        |  |   |            |   |  |             |            |   |        |   |            |   | 
|Depreciation and Amortization expense                   |  |                         | 452,515    |   |                         |   | 155,317    |        |  |   | (297,198   | ) |  |             | 488,059    |   |        |   | 190,861    |   |  |   | (297,198   | )
|Net Loss                                                |  |                         | (5,245,708 | ) |                         |   | (4,948,510 | )      |  |   | 297,198    |   |  |             | (2,345,107 | ) |        |   | (2,047,909 | ) |  |   | 297,198    |  
|Net Loss Attributed to Common Shareholders              |  |                         | (5,564,407 | ) |                         |   | (5,267,209 | )      |  |   | 297,198    |   |  |             | (2,345,107 | ) |        |   | (2,047,909 | ) |  |   | 297,198    |  
|                                                        |  |                         |            |   |                        
|Per Share Amounts                                       |  |                         |            |   |                         |   |            |        |  |   |            |   |  |             |            |   |        |   |            |   | 
|Net Loss                                                |  | $                       | 0.08       |   |                         | $ | 0.07       |        |  | $ | (0.01      | ) |  | $           | 0.10       |   |        | $ | 0.08       |   |  | $ | (0.02      | )
|Net Loss Attributed to Common Shareholders              |  | $                       | 0.09       |   |                         | $ | 0.08       |        |  | $ | (0.01      | ) |  | $           | 0.10       |   |        | $ | 0.08       |   |  | $ | (0.02      | )

Other than the change noted above, there have been no material changes in our critical accounting
policies or critical accounting estimates since the filing of our Annual Report on Form 10-KSB, nor have we adopted any accounting policy that has or will have a material impact on our consolidated financial statements. For further discussion of our
accounting policies see Note 2, Significant Accounting Policies in the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q and the Notes to Consolidated Financial Statements in our Annual Report on Form
10-KSB for the fiscal year ended December 31, 2007.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to its stockholders.



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Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our CEO and CFO have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to
ensure that information that is required to be included in our filings with the SEC is recorded, processed, summarized and reported within the time periods specified by the SEC, and that such information is accumulated and communicated to our
management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, they have concluded that our current disclosure controls and procedures were not effective as of the end of the
period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control Over Financial Reporting

Other than that described above, there has not been any change in our internal control over financial reporting, that occurred during the fiscal quarter
covered by this Quarterly Report on Form 10-Q, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II  OTHER INFORMATION

Item 6. Exhibits.

A list of the exhibits required by Item 601 of Regulation S-B and filed as part of this report is set forth in the Index to Exhibits on page 36, which
immediately precedes such exhibits.



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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



|                         |  |                                      |  |                                                                        
|------------------------ |  | ------------------------------------ |  | -----------------------------------------------------------------------
|                         |  | PLATINUM RESEARCH ORGANIZATION, INC.
|                         |  |                                     
|Date: September 24, 2008 |  | By:                                  |  | /s/ John T. Jaeger, Jr.                                                
|                         |  |                                      |  | John T. Jaeger, Jr.                                                    
|                         |  |                                      |  | President, Chief Executive Officer and Member of the Board of Directors
|                         |  |                                     
|Date: September 24, 2008 |  | By:                                  |  | /s/ David A. Hart                                                      
|                         |  |                                      |  | David A. Hart                                                          
|                         |  |                                      |  | Senior Vice President and Interim Chief Financial Officer              



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                               
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                   
|3.1         |  | Certificate of Incorporation of Platinum Research Organization, Inc. (Incorporated by reference to the exhibits in the Registrants Quarterly Report on Form 10-QSB filed on August 14,
2007.)
|            | 
|3.2         |  | Bylaws of Platinum Research Organization, Inc. (Incorporated by reference to the exhibits in the Registrants Quarterly Report on Form 10-QSB filed on August 14, 2007.)                      
|            | 
|31.1        |  | Certificate of CEO as Required by Rule 13a-14(a)/15d-14.                                                                                                                                      
|            | 
|31.2        |  | Certificate of CFO as Required by Rule 13a-14(a)/15d-14.                                                                                                                                      
|            | 
|32.1        |  | Certificate of CEO and CFO as Required by Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code.                      



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