**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**




**FORM
      10-Q**





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




For
      the
      quarterly period ended September 30, 2008




or




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




For
      the
      transition period from ___________ to __________




Commission
      file number: **000-51553**




**PLATINUM
      ENERGY RESOURCES, INC.**




(Exact
      name of registrant as specified in its charter)




**Delaware**
            
            **14-1928384**(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)**11490
                Westheimer Road, Suite 1000**
              **Houston,
                Texas**
              (Address
                of principal executive offices)
            
            **77077**
              (Zip
                Code)


**(281)
      649-4500**


(Registrant's
      telephone number, including area code)




Indicate
      by check mark whether the Registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the Registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x No o




Indicate
      by check mark whether the Registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (check
      one).


Large
      Accelerated Filer o Accelerated
      Filer x Non-Accelerated
      Filer o





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





As
      of
      November 12, 2008, 24,068,675 shares of the registrant’s common stock, par value
      $0.0001 per share, were outstanding.








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


**Table
      of Contents**





PagePART
                I- FINANCIAL INFORMATIONItem
                1.
            Financial
                Statements
            3Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            33Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            46Item
                4.
            Controls
                and Procedures
            46PART
                II- OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            48Item
                1A.
            Risk
                Factors
            48Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            49Item
                3.
            Defaults
                Upon Senior Securities
            49Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            49Item
                5.
            Other
                Information
            49Item
                6.
            Exhibits
            49Signatures
            50





2


**FINANCIAL
      INFORMATION**




**Item
      1.**  **Financial
      Statements.**





PLATINUM
                ENERGY RESOURCES, INC. AND
                SUBSIDIARIESCONDENSED
                CONSOLIDATED BALANCE SHEETS




September
                30,
            
            December
                31,2008
            
            2007(Unaudited)
            
            *ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            4,562,067
            
            $
            16,429,619Accounts
                receivable, net of $161,000 allowance for doubtful
                accountsOil
                and gas sales
            
            
            4,530,152
            
            
            2,619,363Service
            
            
            4,460,901
            
            
            --Affililiates
                and other
            
            
            3,173
            
            
            668,216Inventory
            
            
            542,036
            
            
            88,556Prepaid
                expenses and other current assets
            
            
            853,751
            
            
            299,445Total
                Current Assets
            
            
            14,952,080
            
            
            20,105,199Property
                and equipment, at costOil
                and gas properties, full cost method
            
            
            200,177,423
            
            
            170,571,663Other
            
            
            5,389,822
            
            
            3,293,108Less
                accumulated depreciation, depletion and amortization
            
            
            (8,576,703
            )
            
            (1,253,026
            )Property
                and equipment, net
            
            
            196,990,542
            
            
            172,611,745Other
                assetsIntangible
                assets, net
            
            
            5,487,405
            
            
            376,164Goodwill
            
            
            5,912,611
            
            
            --Fair
                value of commodity derivatives
            
            
            --
            
            
            73,446Advance
                payment and costs, acquisition transactions
            
            
            --
            
            
            2,522,639Real
                estate held for development
            
            
            2,700,000
            
            
            2,700,000Total
                Assets
            
            $
            226,042,638
            
            $
            198,389,193LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIESAccounts
                payableTrade
            
            $
            2,571,417
            
            $
            1,132,725Oil
                and gas sales
            
            
            2,506,733
            
            
            1,074,222Fair
                value of commodity derivatives
            
            
            3,528,257
            
            
            3,116,542Asset
                retirement obligation - current
            
            
            --
            
            
            186,545Accrued
                liabilities and other
            
            
            2,185,113
            
            
            181,430Income
                taxes payable
            
            
            66,233
            
            
            254,960Current
                maturities of long-term debt and capital lease obligations
            
            
            1,243,159
            
            
            --Total
                Current Liabilities
            
            
            12,100,912
            
            
            5,946,424Revolving
                lines of credit
            
            
            9,008,767
            
            
            --Long-term
                debt and capital lease obligations, net of current portion
            
            
            5,080,342
            
            
            --Notes
                payable - Maverick acquisition
            
            
            3,126,767
            
            
            --Other
                accrued liabilities
            
            
            996,673
            
            
            --Fair
                value of commodity derivatives
            
            
            1,028,202
            
            
            --Asset
                retirement obligation
            
            
            4,092,131
            
            
            3,390,094Deferred
                income taxes
            
            
            51,666,961
            
            
            48,085,21574,999,843
            
            
            51,475,309COMMITMENTS
                AND CONTINGENCIESSTOCKHOLDERS'
                EQUITYPreferred
                stock, $.0001 par value, 1,000,000 authorized, 0 issued
            
            
            --
            
            
            --Common
                stock, $.0001 par value; 75,000,000 shares authorized; 24,068,675
                issued
                and outstanding in each period, respectively
            
            
            2,407
            
            
            2,407Additional
                paid-in capital
            
            
            155,072,442
            
            
            155,064,142Retained
                earnings (accumulated deficit)
            
            
            (471,502
            )
            
            1,562,375Treasury
                stock - 1,997,913 shares
            
            
            (15,661,464
            )
            
            (15,661,464
            )Total
                Stockholders' Equity
            
            
            138,941,883
            
            
            140,967,460Total
                Liabilities and Stockholders' Equity
            
            $
            226,042,638
            
            $
            198,389,193*
                Condensed from audited consolidated financial statements





*See
      notes to condensed consolidated financial statements.*




3








PLATINUM
                ENERGY RESOURCES, INC. AND
                SUBSIDIARIESCONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)




Three
                Months Ended September 30,
            
            Nine
                Months Ended September 30,2008
            
            2007
            
            2008
            
            2007RevenuesOil
                and gas Sales
            
            $
            10,907,763
            
            $
            -
            
            $
            28,736,638
            
            $
            -Service
                revenues
            
            
            6,219,904
            
            
            --
            
            
            11,276,586
            
            
            -17,127,667
            
            
            -
            
            
            40,013,224Costs
                and expensesLease
                and other operating expense
            
            
            4,169,678
            
            
            --
            
            
            9,490,589
            
            
            --Cost
                of service revenues
            
            
            7,042,055
            
            
            
            
            
            11,001,165
            
            
            --Marketing,
                general and administrative expense
            
            
            1,625,540
            
            
            97,793
            
            
            7,125,980
            
            
            396,998Depreciation,
                depletion and amortization expense
            
            
            3,118,105
            
            
            --
            
            
            7,759,268
            
            
            --Accretion
                of abandonment obligations
            
            
            74,296
            
            
            --
            
            
            185,284
            
            
            --Total
                costs and expenses
            
            
            16,029,674
            
            
            97,793
            
            
            35,562,286
            
            
            396,998Operating
                income (loss)
            
            
            1,097,993
            
            
            (97,793
            )
            
            4,450,938
            
            
            (396,998
            )OTHER
                INCOME (EXPENSES)Interest
                income, net of interest allocated to common stock subject to possible
                redemption of $0, $193.167, $0 and $559,278, respectively
            
            
            32,194
            
            
            773,150
            
            
            172,377
            
            
            2,238,512Interest
                expense
            
            
            (276,163
            )
            
            (7,383
            )
            
            (520,848
            )
            
            (30,832
            )Change
                in fair value of commodity derivatives
            
            
            17,884,342
            
            
            --
            
            
            (7,244,911
            )
            
            --Other
            
            
            (176,598
            )
            
            --
            
            
            329
            
            
            --Total
                other income (expense)
            
            
            17,463,775
            
            
            765,767
            
            
            (7,593,053
            )
            
            2,207,680Income
                (Loss) Before Income Taxes
            
            
            18,561,768
            
            
            667,974
            
            
            (3,142,115
            )
            
            1,810,682Provision
                (Benefit) For Income Taxes
            
            
            6,523,502
            
            
            52,000
            
            
            (1,108,238
            )
            
            118,000Net
                Income (Loss)
            
            $
            12,038,266
            
            $
            615,974
            
            $
            (2,033,877
            )
            $
            1,692,682WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES:Basic
            
            
            22,070,762
            
            
            15,121,440
            
            
            22,070,762
            
            
            15,121,440Diluted
            
            
            22,070,762
            
            
            18,075,806
            
            
            22,070,762
            
            
            17,948,381NET
                INCOME (LOSS) PER COMMON SHARE:Basic
            
            $
            0.55
            
            $
            0.04
            
            $
            (0.09
            )
            $
            0.11Diluted
            
            $
            0.55
            
            $
            0.03
            
            $
            (0.09
            )
            $
            0.09




*See
        notes to condensed consolidated financial
        statements.*


4








PLATINUM
                ENERGY RESOURCES, INC. AND
                SUBSIDIARIESCONDENSED
                CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY(Unaudited)




Common
                  stock
              
              Additional
                  paid-in
              
              Retained
                  earnings
              
              Treasury
                  Stock
              
              Total
                  stockholders'Shares
              
              Amount
              
              capital
              
              (deficit)
              
              Shares
              
              Amount
              
              equityBalance
                  at January 1, 2008
              
              
              24,068,675
              
              $
              2,407
              
              $
              155,064,142
              
              $
              1,562,375
              
              
              (1,997,913
              )
              $
              (15,661,464
              )
              $
              140,967,460Stock
                  based compensation
              
              
              --
              
              
              --
              
              
              8,300
              
              
              --
              
              
              --
              
              
              --
              
              
              8,300Net
                  loss for the nine months ended September 30, 2008
              
              
              --
              
              
              --
              
              
              --
              
              
              (2,033,877
              )
              
              --
              
              
              --
              
              
              (2,033,877
              )Balance
                  at September 30, 2008
              
              
              24,068,675
              
              $
              2,407
              
              $
              155,072,442
              
              $
              (471,502
              )
              
              (1,997,913
              )
              $
              (15,661,464
              )
              $
              138,941,883





*See
        notes to condensed consolidated financial
        statements.*


5








PLATINUM
                ENERGY RESOURCES, INC. AND
                SUBSIDIARIESCONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)




Nine
                Months Ended September 30, 2008
            
            Nine
                Months Ended September 30, 2007Cash
                Flows From Operating ActivitiesNet
                income (loss)
            
            $
            (2,033,877
            )
            $
            1,692,682Adjustments
                to reconcile net income (loss) to net cash provided byoperating
                activities:Depreciation,
                depletion and amortization
            
            
            7,759,268
            
            
            --Accretion
                of asset retirement obligation and debt discount
            
            
            278,051
            
            
            --Deferred
                income taxes
            
            
            (1,058,254
            )
            
            --Stock
                based compensation
            
            
            856,515
            
            
            --Unrealized
                change in fair value of derivatives
            
            
            2,521,928
            
            
            --Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (1,410,614
            )
            
            --Inventory
            
            
            (453,480
            )
            
            --Prepaid
                expenses and other current assets
            
            
            (397,003
            )
            
            73,263Accounts
                payable
            
            
            2,236,220
            
            
            (144,680
            )Accrued
                liabilities and other
            
            
            (199,316
            )
            
            --Due
                to related party
            
            
            --
            
            
            75,717Income
                taxes payable - State
            
            
            (188,727
            )
            
            118,000Commodity
                derivatives
            
            
            (1,008,566
            )
            
            --Net
                cash provided by operating activities
            
            
            6,902,145
            
            
            1,814,982Cash
                Flows From Investing ActivitiesAdditions
                to property and equipment
            
            
            (16,757,657
            )
            
            --Acquisition
                of other businesses - oil and gas properties
            
            
            (7,939,139
            )
            
            --Acquisition
                of Maverick, net of cash of $ 621,518
            
            
            (5,640,601
            )
            
            --Advance
                payment and costs, Pleasanton transaction
            
            
            2,522,639
            
            
            --Deposits
                to cash and cash equivalents held in trust fund
            
            
            --
            
            
            (2,797,790
            )Payment
                of deferred acquisition costs
            
            
            --
            
            
            (304,506
            )Net
                cash used in investing activities
            
            
            (27,814,758
            )
            
            (3,102,296
            )Cash
                Flows From Financing ActivitiesProceeds
                of revolving credit facilities
            
            
            9,225,090
            
            
            --Payments
                of long-term debt and capital leases
            
            
            (180,029
            )
            
            --Interest
                on cash held in trust allocated to commonstock
                subject to possible redemption
            
            
            --
            
            
            559,278Proceeds
                from notes payable-stockholder
            
            
            --
            
            
            778,000Net
                cash provided by financing activities
            
            
            9,045,061
            
            
            1,337,278Net
                Increase (Decrease) in Cash
            
            
            (11,867,552
            )
            
            49,964Cash
                - Beginning of the Period
            
            
            16,429,619
            
            
            --Cash
                - End of Period
            
            $
            4,562,067
            
            $
            49,964






*See
        notes to condensed consolidated financial
        statements.*


6




SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATIONCash
                paid during the period for:Interest
            
            $
            239,391
            
            $
            16,639Income
                taxes - State
            
            $
            99,000
            
            $
            -Non-Cash
                Investing and Financing Activities:Issuance
                of notes payable - Pleasanton acquisition
            
            $
            550,000
            
            $
            -Adjustment
                of purchase price of oil and gas properties and deferred
                taxes
            
            $
            4,640,000
            
            $
            -Acquisition
                of oil and gas property - Pleasanton
            
            $
            550,000
            
            $
            -Issuance
                of Cash Flow Notes, net- Maverick transaction
            
            $
            3,034,000
            
            $
            -Acquisition
                of Maverick
            
            $
            3,034,000
            
            $
            -Deferred
                acquisition costs accrued and deferred
            
            $
            -
            
            $
            174,764Acquisition
                of Maverick:Cash
            
            $
            621,518Accounts
                receivable
            
            
            4,296,033Other
                current assets
            
            
            157,303Property
                and equipment
            
            
            1,510,052Goodwill
            
            
            5,912,611Intangible
                assets
            
            
            5,522,250Accounts
                payable
            
            
            (634,984
            )Accrued
                expenses
            
            
            (1,765,404
            )Accrued
                payroll
            
            
            (576,165
            )Term
                notes and revolving line of credit
            
            
            (5,223,086
            )Capitalized
                lease obligations
            
            
            (524,010
            )Total
                purchase price
            
            
            9,296,118Less:
                cash consideration paid to sellers
            
            
            (6,000,000
            )Less:
                transaction costs
            
            
            (262,118
            )Non-cash
                consideration issued to sellers - Cash Flow Notes, net
            
            $
            3,034,000





*See
        notes to condensed consolidated financial statements.*





7








**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**Note
      1 - Organization, Business and Operations and Basis of
      Presentation**




Platinum
      Energy Resources, Inc. and subsidiaries (the “Company” or “Platinum”) was
      incorporated in Delaware on April 25, 2005 as a blank check company for the
      purpose of effecting a business combination with an unidentified operating
      business in the global oil and natural gas industry. In October 2007, the
      Company acquired substantially all of the assets and assumed all of the
      liabilities of Tandem Energy Corporation described in Note 4 below. Prior
      to the Tandem transactions, the Company had no operations other than conducting
      an initial public offering and seeking a business combination. Effective on
      April 29, 2008, the Company acquired Maverick Engineering, Inc. (“Maverick”), an
      engineering services enterprise which was incorporated in December 1993 in
      the
      State of Texas, described in Note 4.





Subsequent
      to the Maverick acquisition, the Company considers itself to be in two lines
      of
      business as follows:





(i)
      The
      oil and gas division operations have approximately 37,000 acres under lease
      in
      relatively long-lived fields with well-established production histories, 21,000
      of which were acquired as part of the Tandem acquisition. The Company’s
      properties are concentrated primarily in the Gulf Coast region in Texas, the
      Permian Basin in Texas and New Mexico and the Fort Worth Basin in Texas; and





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





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America (“GAAP”) for interim financial statements and the
      instructions to Form 10-Q. Accordingly, the financial statements do not include
      all of the information and footnotes required by GAAP for complete financial
      statements. In the opinion of management, all adjustments considered necessary
      for a fair presentation have been included and such adjustments are of a normal
      recurring nature. These condensed consolidated financial statements should
      be
      read in conjunction with the consolidated financial statements for the year
      ended December 31, 2007 and notes thereto of Platinum Energy Resources, Inc
      (the “Company” or “Platinum”) included in the Annual Report on Form 10-K/A for
      the fiscal year ended December 31, 2007 filed with the Securities and
      Exchange Commission on April 15, 2008. The results of operations for the
      three and nine month periods ended September 30, 2008 are not necessarily
      indicative of the results for the full fiscal year ending December 31,
      2008.




**Note
      2 — Summary of Significant Accounting Policies**




*Principles
      of Consolidation*




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




*Estimates
      and Assumptions*




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of contingent assets and liabilities as of the
      date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. Actual results could differ from those
      estimates. The accounting policy most affected by management’s estimates and
      assumptions is the reliance on estimates of proved reserves to compute the
      provision for depreciation, depletion and amortization (“DD&A”), and the
      determination of any impairment of long-lived assets.








8


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      2 — Summary of Significant Accounting Policies**  **-
      continued**




*Oil
        and Gas Properties*


The
      Company uses the full cost method of accounting for exploration and development
      activities as defined by the Securities and Exchange Commission (“SEC”). Under
      this method of accounting, the costs of unsuccessful, as well as successful,
      exploration and development activities are capitalized as properties and
      equipment. This includes any internal costs that are directly related to
      exploration and development activities but does not include any costs related
      to
      production, general corporate overhead or similar activities. Gain or loss
      on
      the sale or other disposition of oil and gas properties is not recognized,
      unless the gain or loss would significantly alter the relationship between
      capitalized costs and proved reserves of oil and natural gas attributable to
      a
      country. The Company has defined a cost center by country. Currently, all of
      the
      Company’s oil and gas properties are located within the continental United
      States.




Properties
      and equipment may include costs that are excluded from costs being depreciated
      or amortized. Oil and gas costs excluded represent investments in unproved
      properties and major development projects in which the Company owns a direct
      interest. These unproved property costs include nonproducing leasehold,
      geological and geophysical costs associated with leasehold or drilling interests
      and exploration drilling costs. All costs excluded are reviewed at least
      quarterly to determine if impairment has occurred. The amount of any impairment
      is transferred to the capitalized costs being amortized in the DD&A
      pool.




*Depreciation,
      Depletion and Amortization*




The
      depreciable base for oil and gas properties includes the sum of capitalized
      costs net of accumulated DD&A, estimated future development costs and asset
      retirement costs not accrued in oil and gas properties, less costs excluded
      from
      amortization and salvage. The depreciable base of oil and gas properties and
      mineral investments are amortized using the unit-of-production method based
      on
      total proved oil and gas reserves. Properties and equipment carrying values
      do
      not purport to represent replacement or market values.




*Proved
      Oil and Gas Reserves*




In
      accordance with Rule 4-10(a) of SEC Regulation S-X, proved oil and gas reserves
      are the estimated quantities of crude oil, natural gas, and natural gas liquids
      which geological and engineering data demonstrate with reasonable certainty
      to
      be recoverable in future years from known reservoirs under existing economic
      and
      operating conditions, i.e., prices and costs as of the date the estimate is
      made. Prices include consideration of changes in existing prices provided only
      by contractual arrangements, but not on escalation based upon future
      conditions.







9


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      2 — Summary of Significant Accounting Policies -
      continued**





*Proved
      Oil and Gas Reserves, continued*




(i)
            Reservoirs
                are considered proved if economic producibility is supported by either
                actual production or conclusive formation tests. The area of a reservoir
                considered proved includes (A) that portion delineated by drilling
                and
                defined by gas-oil and/or oil-water contacts, if any; and (B) the
                immediately adjoining portions not yet drilled, but which can be
                reasonably judged as economically productive on the basis of available
                geological and engineering data. In the absence of information on
                fluid
                contacts, the lowest known structural occurrence of hydrocarbons
                controls
                the lower proved limit of the
                reservoir.




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




(iii)
            Estimates
                of proved reserves do not include the
                following:




(A)
            oil
                that may become available from known reservoirs but is classified
                separately as “indicated additional reserves”;(B)
            crude
                oil, natural gas, and natural gas liquids, the recovery of which
                is
                subject to reasonable doubt because of uncertainty as to geology,
                reservoir characteristics, or economic
                factors;




(C)
            crude
                oil, natural gas, and natural gas liquids, that may occur in undrilled
                prospects; and




(D)
            crude
                oil, natural gas, and natural gas liquids that may be recovered from
                oil
                shales, coal, gilsonite and other such
                sources.





*Ceiling
      Test*




Under
      the
      full cost method of accounting, a ceiling test is performed each quarter. The
      full cost ceiling test is an impairment test prescribed by SEC Regulation S-X
      Rule 4-10. The ceiling test determines a limit, on a country-by-country basis,
      on the book value of oil and gas properties. Currently, all of the Company’s
      operations are located in the United States. The capitalized costs of proved
      oil
      and gas properties, net of accumulated DD&A and the related deferred income
      taxes, may not exceed the estimated future net cash flows from proved oil and
      gas reserves, excluding future cash outflows associated with settling asset
      retirement obligations that have been accrued on the balance sheet, generally
      using prices in effect at the end of the period held flat for the life of
      production and including the effect of derivative instruments that qualify
      as
      cash flow hedges, discounted at 10%, net of related tax effects, plus the cost
      of unevaluated properties and major development projects excluded from the costs
      being amortized. If capitalized costs exceed this limit, the excess is charged
      to expense and reflected as additional accumulated DD&A.







10


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      2 — Summary of Significant Accounting Policies -
      continued**





*Asset
      Retirement Obligation*





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





*Income
      Taxes*




The
      Company follows the asset and liability method prescribed by SFAS No. 109, *Accounting
      for Income Taxes (“SFAS 109”).* Under
      this method of accounting for income taxes, deferred tax assets and liabilities
      are recognized for the future tax consequences attributable to differences
      between the financial statement carrying amounts of existing assets and
      liabilities and their respective tax bases. Deferred tax assets and liabilities
      are measured using enacted tax rates expected to apply to taxable income in
      the
      years in which those temporary differences are expected to be recovered or
      settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities
      of a change in enacted tax rates is recognized in income in the period that
      includes the enactment date.





Effective
      January 1, 2007, the Company adopted the provisions of Financial Accounting
      Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income
      Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies
      the accounting for uncertainty in income taxes recognized in the Company’s
      financial statements in accordance with SFAS 109, and prescribes a recognition
      threshold and measurement process for financial statement recognition and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on derecognition, classification, interest and
      penalties, accounting in interim periods, disclosure and
      transition.





Management
      has evaluated and concluded that there are no significant uncertain tax
      positions requiring recognition in the Company’s financial statements as of
      January 1, 2008. The evaluation was performed for the tax period April 25
      (inception) to December 31, 2005 and for the years ended December 31, 2006
      and
      2007, the tax years which remain subject to examination for federal and New
      Jersey State purposes as of September 30, 2008.





The
      Company’s policy is to classify assessments, if any, for tax related interest as
      interest expenses and penalties as marketing, general and administrative
      expenses.




*Property*





Property
      is recorded at cost. Improvements or betterments of a permanent nature are
      capitalized. Expenditures for maintenance and repairs are charged to expense
      as
      incurred. The cost of assets retired or otherwise disposed of and the related
      accumulated depreciation are eliminated from the accounts in the year of
      disposal. Gains or losses resulting from property disposals are credited or
      charged to operations currently. Depreciation is computed using the
      straight-line method over the estimated useful lives as follows:





Office
                equipment and furniture
            
            
            3 -
                15 yearsVehicles
            
            
            5 yearsDrilling
                Rigs
            
            
            10 yearsLeasehold
                improvements
            
            
            5
                yearsMachinery
                and equipment
            
            
            5
                -
                7 years








11


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      2 — Summary of Significant Accounting Policies -
      continued**





*Goodwill*





Goodwill
      represents the excess of cost over fair value of net assets acquired through
      acquisitions. The Company follows the provisions of Statement of Financial
      Accounting Standards (“SFAS”) No. 142, *Goodwill
      and Other Intangible Assets.* Goodwill
      recorded by the Company has not been amortized and will be evaluated on an
      annual basis, or sooner if deemed necessary, in connection with other long-lived
      assets, for potential impairment. Management performed an impairment assessment
      on goodwill as of September 30, 2008, which resulted in no impairment of
      goodwill. An annual assessment of goodwill will be assessed in the fourth
      quarter of each year.





*Stock-Based
      Compensation*




The
      Company has adopted SFAS No. 123(R) “Share Based Payment”
(“SFAS 123(R)”). This statement is a revision of SFAS Statement
      No. 123, and supersedes APB Opinion No. 25, and its related
      implementation guidance. SFAS 123(R) addresses all forms of share based
      payment (“SBP”) awards including shares issued under employee stock purchase
      plans, stock options, restricted stock and stock appreciation rights. Under
      SFAS 123(R), SBP awards are measured at fair value on the awards’
grant date, based on the estimated number of awards that are expected to vest
      and results in a charge to operations








*Non-Employee
      Stock Based Compensation*  **




The
      Company accounts for equity instruments issued to non-employees in accordance
      with the provisions of SFAS No. 123(R) and Emerging Issues Task Force
      (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments That are
      Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
      Goods or Services,” (“EITF 96-18”) which requires that such equity instruments
      be recorded at their fair value on the measurement date. The measurement of
      stock-based compensation is subject to periodic adjustment as the underlying
      equity instrument vests. No such instruments were issued in 2007 and 2008.
      In
      October 2007, the Company issued 178,572 shares of its common stock in
      connection with a consulting agreement as described in Note 5(d).





*Income
      (Loss) Per Share*




The
      Company follows the provisions of SFAS No. 128, “Earnings Per Share” (“SFAS No.
      128”). In accordance with SFAS No. 128, earnings (loss) per common share amounts
      (“basic EPS”) were computed by dividing earnings (loss) by the weighted
      average number of common shares outstanding for the period. Earnings per common
      share amounts, assuming dilution (“diluted EPS”), were computed by reflecting
      the potential dilution from the exercise of dilutive common stock purchase
      warrants. SFAS No. 128 requires the presentation of both basic EPS and diluted
      EPS on the face of the consolidated statements of operations.








12


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      2 — Summary of Significant Accounting Policies -
      continued**





*Income
      (Loss) Per Share, continued*





Reconciliations
      between the numerators and denominators of the basic and diluted EPS
      computations for each period where there was a dilutive effect are as
      follows:




Three Months Ended September 30, 2007Net Income
              (Numerator)
            
            Shares
              (Denominator)
            
            Per Share
              Amounts**Basic
                EPS**Net
                Income
            
            $
            615,974
            
            
            15,121,440
            
            $
            0.04**Effect
                of Dilutive Securities**Warrants
            
            $
            —
            
            
            2,954,366
            
            $
            (0.01
            )Net
                income attributable to common stock and assumed exercise of
                warrants
            
            $
            615,974
            
            
            18,075,806
            
            $
            0.03







Nine Months Ended September 30, 2007Net Income
              (Numerator)
            
            Shares
              (Denominator)
            
            Per Share
              Amounts**Basic
                EPS**Net
                Income
            
            $
            1,692,682
            
            
            15,121,440
            
            $
            0.11**Effect
                of Dilutive Securities**Warrants
            
            $
            —
            
            
            2,826,941
            
            $
            (0.02
            )Net
                income attributable to common stock and assumed exercise of
                warrants
            
            $
            1,692,682
            
            
            17,948,381
            
            $
            0.09




In
      2007,
      for the periods prior to the October 26, 2007 Tandem acquisition, common shares
      subject to possible conversion of 2,878,560 were excluded from the calculation
      of basic EPS since such shares if redeemed, would only participate in their
      pro-rata share of the trust asset earnings. In this acquisition, 1,802,205
      shares were actually converted and redeemed. Subsequent to the date of the
      Tandem acquisition, the remainder of 1,076,355 common shares subject to
      conversion but which were not redeemed were included in the determination of
      weighted average number of common shares outstanding for the three months and
      nine months ended September 30, 2008. The Company has determined that the
      warrants contained in the units sold in its initial public offering are dilutive
      for the 2007 periods, and accordingly included the effects of these warrants
      in
      diluted EPS using the treasury stock method in these periods. The Company has
      determined that their inclusion in 2008 would be antidilutive and thus excluded
      the effects of the warrants in these periods. An option to purchase 720,000
      units issued to the underwriters in the IPO and other stock options were
      excluded in the computation of diluted EPS because the option exercise
      prices exceeded the average market prices in all periods.




*Environmental
      Expenditures*




The
      Company is subject to extensive federal, state and local environmental laws
      and
      regulations. These laws regulate the discharge of materials into the environment
      and may require the Company to remove or mitigate the environmental effects
      of
      the disposal or release of petroleum or chemical substances at various sites.
      Environmental expenditures are expensed or capitalized depending on their future
      economic benefit.








13


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      2 — Summary of Significant Accounting Policies -
      continued**





*Environmental
      Expenditures, continued*





Expenditures
      that relate to an existing condition caused by past operations and that have
      no
      future economic benefits are expensed.





Liabilities
      for expenditures of a non-capital nature are recorded when environmental
      assessment and/or remediation is probable, and the costs can be reasonably
      estimated. Such liabilities are generally undiscounted unless the timing of
      cash
      payments for the liability or component is fixed or reliably
      determinable.




*Hedging
      Activities*




From
      time
      to time, the Company may utilize derivative instruments, consisting of swaps,
      floors and collars, to attempt to reduce its exposure to changes in commodity
      prices and interest rates. The Company accounts for its derivatives in
      accordance with SFAS No. 133, *Accounting
      for Derivative Instruments and Hedging Activities,* as
      amended. SFAS No. 133 requires that all derivative instruments be
      recognized as assets or liabilities in the balance sheet, measured at fair
      value. The accounting for changes in the fair value of
      a
      derivative depends on both the intended purpose and the formal designation
      of
      the derivative. Designation is established at the inception of a derivative,
      but
      subsequent changes to the designation are permitted.
      The Company has elected not to designate any of its derivative financial
      contracts as accounting hedges and, accordingly, has accounted for these
      derivative financial contracts using mark-to-market accounting. Changes in
      fair
      value of derivative instruments which are not designated as cash flow hedges
      are
      recorded in other income (expense) as changes in fair value of
      derivatives.




*Real
      Estate Held for Development*




The
      Company’s real estate held for development was recorded at fair market value
      when the Company completed its purchase of the assets of Tandem Energy
      Corporation on October 26, 2007 and relates to approximately 41 acres of
      undeveloped land located near Tomball, Texas.





*Revenue
      Recognition and Gas Balancing*




The
      Company utilizes the sales method of accounting for oil, natural gas and natural
      gas liquids revenues whereby revenues, net of royalties, are recognized as
      the
      production is sold to purchasers. The amount of gas sold may differ from the
      amount to which the Company is entitled based on its revenue interests in the
      properties. The Company did not have any significant gas imbalance positions
      at
      September 30, 2008 and December 31, 2007.




*Comprehensive
      Income*




SFAS
      No.
      130, *Reporting
      Comprehensive Income,* established standards for reporting and displaying comprehensive income and
      its
      components (revenue, expenses, gains and losses) in a full set of
      general-purpose financial statements. There were no differences between net
      income and comprehensive income.







14


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      2 — Summary of Significant Accounting Policies -
      continued**





*Accounts
      Receivable and Allowance for Doubtful Accounts*




*Oil
      and gas operations*





The
      Company’s trade receivables consist primarily of receivables from non-operators
      who own an interest in properties which the Company operates, and trade
      receivables associated with the operations of the Company’s wholly owned
      subsidiary, Red Iron Tool, Inc. Insofar as the receivables relate to oil and
      gas
      trade receivables, the Company has the ability and the right to withhold oil
      and
      gas revenues from any owner who is delinquent in their payments.





*Services*





Revenues
      are billed and accounts receivable recorded as services are performed. Most
      services revenues are derived from time and material projects. Unbilled
      receivables represent costs and estimated fees on work for which billings have
      not been presented to customers. When billed, these amounts are included in
      accounts receivable - trade. Unbilled accounts receivable include management’s
      best estimates of the amounts expected to be realized on the work that has
      been
      performed to date.




*Recent
      Accounting Pronouncements*




In
      September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
      No. 157, “Fair Value Measurements.” SFAS No. 157 establishes a single
      definition of fair value and a framework for measuring fair value, sets out
      a
      fair value hierarchy to be used to classify the source of information used
      in
      fair value measurements, and requires new disclosures of assets and liabilities
      measured at fair value based on their level in the hierarchy. This statement
      applies under other accounting pronouncements that require or permit fair value
      measurements. In February 2008, the FASB issued Staff Positions (FSPs)
      No. 157-1 and No. 157-2, which, respectively, remove leasing
      transactions from the scope of SFAS No. 157 and defer its effective date
      for one year relative to certain nonfinancial assets and liabilities. As a
      result, the application of the definition of fair value and related disclosures
      of SFAS No. 157 (as impacted by these two FSPs) was effective for the
      Company beginning January 1, 2008 on a prospective basis with respect to
      fair value measurements of (a) nonfinancial assets and liabilities that are
      recognized or disclosed at fair value in the Company’s financial statements on a
      recurring basis (at least annually) and (b) all financial assets and
      liabilities. This adoption did not have a material impact on the Company’s
      consolidated results of operations or financial condition. The remaining aspects
      of SFAS No. 157 for which the effective date was deferred under FSP
      No. 157-2 are currently being evaluated by the Company. Areas impacted by
      the deferral relate to nonfinancial assets and liabilities that are measured
      at
      fair value, but are recognized or disclosed at fair value on a nonrecurring
      basis. This deferral applies to such items as nonfinancial assets and
      liabilities initially measured at fair value in a business combination (but
      not
      measured at fair value in subsequent periods) or nonfinancial long-lived asset
      groups measured at fair value for an impairment assessment. The effects of
      these
      remaining aspects of SFAS No. 157 are to be applied to fair value
      measurements prospectively beginning January 1, 2009.





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





In
      April 2007, the FASB issued FASB Staff Position FIN 39-1, *Amendment
      of FASB Interpretation No. 39* .
      FSP FIN
      39-1 clarifies that a reporting entity that is party to a master netting
      arrangement can offset








15





**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      2 — Summary of Significant Accounting Policies -
      continued**





*Recent
      Accounting Pronouncements, continued*





fair
      value amounts recognized for the right to reclaim cash collateral (a receivable)
      or the obligation to return cash collateral (a payable) against fair value
      amounts recognized for derivative instruments that have been offset under the
      same master netting arrangement. FSP FIN 39-1 is effective for financial
      statements issued for fiscal years beginning after November 15,
      2007.





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





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





In
      March
      2008, the FASB issued Statement of Financial Accounting Standards No. 161,
      “Disclosures about Derivative Instruments and Hedging Activities—an amendment of
      FASB Statement No. 133” (“SFAS 161”). SFAS 161 changes the disclosure
      requirements for derivative instruments and hedging activities. Entities are
      required to provide enhanced disclosures about (a) how and why an entity uses
      derivative instruments, (b) how derivative instruments and related hedged items
      are accounted for under SFAS No. 133 and its related interpretations, and (c)
      how derivative instruments and related hedged items affect an entity’s financial
      position, financial performance and cash flows. The guidance in SFAS 161 is
      effective for financial statements issued for fiscal years and interim periods
      beginning after November 15, 2008, with early application encouraged. This
      Statement encourages, but does not require, comparative disclosures for earlier
      periods at initial adoption. At this time, management is evaluating the
      implications of SFAS 161 and its impact on the financial statements has not
      yet
      been determined.





In
      April
      2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of
      Intangible Assets”. FSP No. 142-3 amends the factors that should be considered
      in developing renewal or extension assumptions used to determine the useful
      life
      of a recognized intangible asset under FASB Statement No. 142, Goodwill and
      Other Intangible Assets. FSP No. 142-3 is effective for financial statements
      issued for fiscal years beginning after December 15, 2008. Early adoption is
      prohibited. The Company is currently evaluating the impact of the pending
      adoption of FSP No. 142-3 on its consolidated financial statements.





In
      June
      2008, the FASB ratified the consensus reached on EITF Issue No. 07-05,
“Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
      Entity’s Own Stock”. EITF Issue No. 07-05 clarifies the determination of whether
      an instrument (or an embedded feature) is indexed to an entity’s own stock,
      which would qualify as a scope exception under SFAS No. 133, Accounting for
      Derivative Instruments and Hedging Activities. EITF Issue No. 07-05 is effective
      for financial statement issued for fiscal years beginning after December 15,
      2008. Early adoption for an existing instrument is not permitted. The Company
      is
      currently evaluating the impact of the pending adoption of EITF Issue No. 07-05
      on its consolidated financial statements.








16


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      3 — Initial Public Offering**





On
      October 28, 2005, the Company sold to the public 14,400,000 units at an offering
      price of $8.00 per unit. Each unit consists of one share of the Company’s common
      stock, $0.0001 par value, and one redeemable common stock purchase warrant.
      Each
      warrant entitles the holder to purchase from the Company one share of common
      stock at an exercise price of $6.00 commencing on the later of the completion
      of
      a business combination with a target business or one year from the effective
      date of the offering and expiring four years from the effective date of the
      offering. The warrants will be redeemable, in whole or in part, upon written
      consent of the representative of the underwriters, at a price of $0.01 per
      warrant upon thirty days notice after the warrants become exercisable, only
      in
      the event that the last sale price of the common stock is at least $11.50 per
      share for any twenty trading days within a thirty trading day period ending
      on
      the third day prior to the date on which notice of redemption is given. Separate
      trading of the common stock and warrants comprising the units commenced on
      or
      about December 9, 2005.




In
      connection with the offering, the Company issued an option (the “Units Purchase
      Option” or “UPO”), for $100.00, to the representative of the underwriters to
      purchase up to 720,000 units at an exercise price of $10.00 per unit. The units
      issuable upon exercise of this option are identical to those described in the
      preceding paragraph, except that the warrants underlying the units will be
      exercisable at $7.50 per share. This option is exercisable at $10.00 per unit
      commencing on the later of the consummation of a business combination or one
      year from the date of the prospectus relating to the offering (October 24,
      2005)
      and expiring five years from such date. The option may be exercised for cash
      or
      on a “cashless” basis, at the holder’s option, such that the holder may use the
      appreciated value of the option (the difference between the exercise prices
      of
      the option and the underlying warrants and the market price of the units and
      underlying securities) to exercise the option without the payment of any cash.
      The option and the 720,000 units, the 720,000 shares of common stock and the
      720,000 warrants included in such units, and the 720,000 shares of common stock
      underlying such warrants, were deemed compensation by the National Association
      of Securities Dealers (“NASD”). The option grants to holders demand and
“piggy back” rights for periods of five and seven years, respectively, from the
      date of the offering with respect to the registration under the Securities
      Act
      of the securities directly and indirectly issuable upon exercise of the option.
      The Company would be obligated to bear all fees and expenses attendant to
      registering the securities.





The
      exercise price and number of units issuable upon exercise of the option may
      be
      adjusted in certain circumstances including in the event of a stock dividend,
      or
      a recapitalization, reorganization, merger or consolidation. However, the option
      will not be adjusted for issuances of common stock at a price below its exercise
      price.





S hould
      the
      Company be unable to deliver shares of its common stock underlying the exercise
      of the warrants included in the units and shares of its common stock underlying
      the exercise of the underwriters’ unit purchase option as a result of the
      absence of an effective registration statement with respect to these securities,
      then these warrants and the UPO would not be exercisable and the Company will
      have no obligation to pay holders of the warrants and UPO any cash or otherwise
      “net cash settle” these warrants or the UPO. In this event, the warrants and UPO
      may expire worthless.





**Note
      4 — Business Combinations**


****


On
      October 26, 2007, Platinum consummated the Tandem acquisition pursuant to the
      related acquisition agreement. Among other terms and conditions, the Company
      filed a registration statement with the Securities and Exchange Commission
      with
      respect to the approximately 7.7 million Platinum common shares issued in
      connection with the acquisition. This registration statement became effective
      on
      August 7, 2008. In connection with the asset acquisition agreement, the Company
      entered into a finder’s agreement and a consulting agreement with Mr. Lance
      Duncan, an individual with prior affiliations with Tandem, who had been given
      limited authority by Tandem management to act on its behalf.








17


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      4 — Business Combinations - continued**





In
      December 2007, Platinum, through a wholly owned subsidiary acquired a 50%
      working interest in the La Rosa field for approximately $5.3 million. Although
      the La Rosa field is a producing field of approximately 3,800 acres in Refugio
      County, Texas, actual production was minimal. The primary focus of


the
      acquisition is related to its recompletion and re-entry potential. The entire
      purchase price was allocated to oil and gas properties. In March 2008 an
      additional related working interest was acquired for $461,500.





In
      January 2008, the Company acquired a 70% working interest in the Pleasanton
      field for approximately $6.3 million. $2.5 million of the purchase price was
      paid in December 2007 and recorded as a deposit on the December 31, 2007 balance
      sheet. An additional $2.5 million of the purchase price was paid in January
      2008. In addition, the Company paid an additional $200,000 to the seller in
      October 2008 in final settlement of certain disputes, which is included as
      a
      liability in the accompanying September 30, 2008 unaudited balance sheet. See
      Note 6 for a further description of other additional consideration paid.





The
      Pleasanton Field is a non-producing field of approximately 4,200 acres in
      Atascosa County, Texas. The field contains previously drilled and abandoned
      wells. The entire purchase price was allocated to the fair value of oil and
      gas
      properties.





In
      April,
      2008 the Company purchased a 100% working interest in producing leases (Quantum
      prospect) in Atascosa County, Texas for $750,000. The leases consist of 12
      producing wells, 2 shut in wells, 2 injection wells and 1 salt water disposal
      well. The Company will operate this lease.





In
      May,
      2008 the Company purchased a 70% working interest in an acreage position (Lieke
      prospect) in Atascosa County, Texas for $600,000, with the initial goal of
      re-entering an abandoned well bore and attempting a completion in the Edwards
      formation. The Company will operate this lease.





In
      June,
      2008 the Company purchased a 25% non-operated working interest in an acreage
      position (Lacy prospect) in Nueces County, Texas for $400,000. The agreement
      contains a requirement for the drilling of the initial test well to a depth
      of
      9,500 feet.





On
      April
      29, 2008, the Company completed the acquisition of Maverick pursuant to an
      agreement and plan of merger entered into on March 18, 2008 among the Company,
      a
      wholly-owned subsidiary, Maverick, and Robert L. Kovar Services, LLC, as the
      stockholder representative. Maverick is a provider of project management,
      engineering, procurement, and construction management services to both the
      public and private sectors, including the oil and gas business in which the
      Company is engaged. Maverick is based in south Texas with offices in Corpus
      Christi, Victoria, and Houston. Maverick provides complimentary services to
      the
      Company which would otherwise be procured from third parties. The aggregate
      consideration paid in the merger was $6 million in cash and $5 million to be
      paid over the next 6 years pursuant to non-interest bearing cash flow notes,
      subject to certain escrows, holdbacks and post-closing adjustments. The cash
      flow notes are payable quarterly at the rate of 50% of pre-tax net income,
      as it
      is defined in the merger agreement, generated by the Maverick business on a
      stand-alone basis in the preceding quarter. Payment can be accelerated by
      certain events, including change in control of the Company. The purchase price
      was subject to adjustment for any change in working capital as defined in the agreement,
      between October 31, 2007 and the closing date, as well as other adjustments
      associated with changes in indebtedness. The balance of the cash flow notes
      remaining unpaid upon maturity, if any, will be converted into a 12 month
      self-amortizing note bearing interest at the annual rate of 2% over the bank's
      prime rate at the time. The cash flow notes were reduced by the amount of the
      working capital post closing adjustment which was determined by the Company
      to
      be $645,596. This amount may be subject to modification as may be agreed between
      the parties. In addition, a discount to present value in the amount of
      $1,320,404 has been recorded in the accompanying financial statements and
      deducted from the cash flow notes as these notes are non-interest bearing for
      the initial 5 years of their term. As a result, the net book value of the notes
      on April 29, 2008 was $3,034,000 and $3,126,767 after the accretion of the
      discount in the amount of $92,767 in the period from April 29, 2008 though
      September 30, 2008.





18


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      4 — Business Combinations - continued**




In
      addition, the sellers agreed to satisfy and assume Maverick's bank indebtedness
      in the aggregate amount of $4,889,538 consisting of a $2,960,155 revolving
      line
      of credit maturing April 2008, a $1,584,375
      term note due April 2011, and $345,008 oil and gas note due May 2009, using
      a
      portion of the cash received by them at closing. Following the closing, the
      Company was indebted to the sellers for these amounts under the identical terms
      of the bank loan agreements. On April 30, 2008, Maverick entered into extension
      and modification agreements with the sellers pursuant to which sellers agreed
      to
      defer principal payments of the $1.6 million term loan for six months and extend
      the maturity date to April 2013. The sellers also agreed to extend the maturity
      dates of the revolving line of credit and oil and gas note to 2010 and 2013,
      respectively. In addition, as of September 30, 2008, Maverick was not in
      compliance with the debt service coverage ratio contained in the loan
      agreements. On August 14, 2008, the sellers waived the Company's obligation
      to
      maintain this ratio through September 30, 2009.





The
      aggregate purchase price for Maverick reflected in the financials, including
      legal and other items, was $9,296,118. The results of operations of Maverick
      are
      included for the period from April 29, 2008 (the date of acquisition) to
      September 30, 2008 and for the three months ended September 30,
      2008.





The
      following table details the allocation of the purchase price of the Maverick
      acquisition (stated in thousands).





**Consideration:**Cash,
                including costs
            
            $
            6,262Cash
                Flow Notes - net of discount
            
            
            3,034$
            9,296**Recognized
                amount of assets acquired and liabilities assumed (stated in
                thousands):****Assets
                Acquired:**Cash
            
            $
            622Accounts
                receivable
            
            
            4,296Other
                current assets
            
            
            157Property
                and equipment
            
            
            1,510Goodwill
            
            
            5,912Intangible
                assets
            
            
            5,52218,019**Liabilities
                Assumed:**Accounts
                payable
            
            
            (635
            )Accrued
                expenses
            
            
            (1,765
            )Accrued
                payroll
            
            
            (576
            )Term
                notes and revolving line of credit
            
            
            (5,223
            )Capitalized
                lease obligations
            
            
            (524
            )(8,723
            )**Total
                net assets acquired**
            
            $
            9,296







19





**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      4 — Business Combinations - continued**





***Unaudited
      Pro-Forma Financial Information***




The
      following unaudited pro forma consolidated results of operations assume that
      the
      Maverick acquisition was completed as of January 1, 2008 for the periods shown
      below (stated in thousands, except for per share amount):





Pro Forma Consolidated Results of OperationsRevenue
            
            (Loss)
              Before
              Income
              Taxes
            
            Net
                (Loss)
            
            (Loss)
              Per
                ShareNine
                Months Ended September 30,Pro
                forma 2008
            
            $
            50,947
            
            $
            (3,804
            )
            $
            (2,560
            )
            $
            (0.12
            )





Results
      of operations included Maverick for the full three month period ended September
      30. 2008.





The
      pro
      forma combined results are not necessarily indicative of the results that
      actually would have occurred if the Maverick acquisition had been completed
      as
      of the beginning of 2008, nor are they necessarily indicative of future
      consolidated results. The impact on pro forma results of other transactions
      entered into by the Company other than Maverick was immaterial.





The
      assets and liabilities related to the foregoing acquisitions were recorded
      in
      the Company’s consolidated balance sheet at their estimated fair values at the
      date of acquisition in accordance with the provisions of SFAS No. 141, “Business
      Combinations” and may be adjusted based upon third party fair value studies
      within one year of the date of acquisition.





**Note
      5 - Commitments**





a.
      The
      Company has engaged Casimir Capital LP (“CCLP”), the representative of the
      underwriters, on a non-exclusive basis, as its agent for the solicitation of
      the
      exercise of the warrants included in the units sold to the public. To the extent
      not inconsistent with the guidelines of the NASD and the rules and regulations
      of the SEC, the Company has agreed to pay CCLP for bona fide services rendered,
      a commission equal to 5% of the exercise price for each warrant exercised more
      than one year after the date of an effective prospectus if the exercise was
      solicited by the underwriters. In addition to soliciting, either orally or
      in
      writing, the exercise of the warrants, the representative’s services may also
      include disseminating information, either orally or in writing, to warrant
      holders about the Company or the market for its securities, and assisting in
      the
      processing of the exercise of the warrants. No compensation will be paid to
      the
      representative upon the exercise of the warrants if:





·
            the
                market price of the underlying shares of common stock is lower than
                the
                exercise price;





·
            the
                holder of the warrants has not confirmed in writing that the underwriters
                solicited the exercise;





·
            the
                warrants are held in a discretionary
                account;





·
            the
                warrants are exercised in an unsolicited transaction;
                or





·
            the
                arrangement to pay the commission is not disclosed in the prospectus
                provided to warrant holders at the time of
                exercise.








20





**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      5 - Commitments - continued**





b.
      On
      March 20, 2006, the Board of Directors of the Company approved its 2006
      Long-Term Incentive Plan. Pursuant to the plan, the Company may grant incentive
      and non-qualified stock options, stock appreciation rights, performance units,
      restricted stock awards and performance bonuses, or collectively, awards, to
      officers and key employees. In addition, the plan authorizes the grant of
      non-qualified stock options and restricted stock awards to directors and to
      any
      independent contractors and consultants. Generally, all classes of employees
      are
      eligible to participate in the plan.




The
      Company has reserved a maximum of 4 million shares of its authorized common
      stock for issuance upon the exercise of awards to be granted pursuant to the
      plan.




*c.
      Stock Repurchase Program*





In
      November 2006, the Company’s board approved a share repurchase program to
      repurchase shares of Company common stock in open market transactions in an
      amount up to $80 million, following the consummation of a the Tandem
      acquisition. On November 1, 2007, the board of directors instituted the initial
      open market stage of this share repurchase program and established a plan
      in conformity with the provisions of Rule 10b5-1 to purchase up to 2,000,000
      shares of Platinum common stock in open market transactions during the month
      of
      November 2007, subject to the broker, volume, price and timing restrictions
      of
      Rule 10b-18 under the Securities Exchange Act of 1934. Pursuant to the plan,
      in
      November 2007 the Company purchased 1,997,913 of its common shares for an
      aggregate of $15,661,464 under the repurchase program. On October 26, 2007,
      the
      Company redeemed 1,802,205 shares of its common stock for a total purchase
      price
      of $14,057,199. The initial stage of the repurchase plan expired
      November 30, 2007. The Company may resume repurchases in the future, pursuant
      to
      the share repurchase program, for up to the remaining amount of $50.3
      million.





*d.*  *Consulting
      Agreement*





Effective
      with the Tandem acquisition on October 26, 2007, the Company entered into a
      consulting agreement with Mr. Lance Duncan, for consulting services, including
      investigation and evaluation of possible future acquisitions for the Company.
      Under the terms of the consulting agreement, the Company valued such services
      at
      $5 million and agreed to issue to Mr. Duncan a total of 714,286 shares (based
      upon a $7 per share valuation at that date) of the Company’s restricted common
      stock as consideration over the period of service. These shares are fixed in
      number (except for stock splits or other recapitalizations). These shares are
      to
      be issued in semi-annual installments over the eighteen month term of the
      agreement beginning with the closing of the Tandem acquisition.





On
      October 26, 2007, the first installment of 178,572 of irrevocable shares was
      issued to Mr. Duncan. The Company was required to issue the second installment
      of 178,572 shares of its common stock on April 26, 2008. The Company has not
      issued these shares due to a dispute between the Company and Duncan with respect
      to other claims that Duncan has raised. In
      a
      letter addressed to the Company dated October 10, 2008, Duncan demanded
      payment of $7.7 million relating to all such claims, including payment in cash
      for shares for which he is not yet entitled at a
      valuation not provided for in the consulting agreement and significantly
      above current market price. The
      Company believes that these claims have no merit and will vigorously defend
      its
      position. Stock
      compensation expense in the amount of $848,215, based upon a closing price
      of
      $4.75 per share of the Company’s common stock on April 26, 2008 as quoted on the
      Electronic Bulletin Board, is included in marketing, general and administrative
      expense for the nine months ended September 30, 2008 and in other accrued
      liabilities on the balance sheet as of September 30, 2008.







21





**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      5 - Commitments - continued**





*e.
      Employment Agreements*





The
      Company is obligated for minimum salaries pursuant to all executive and
      non-executive employment agreements as follows. This table excludes the cost
      of
      employee health benefits, payments of bonuses that are either discretionary
      or
      contingent upon performance criteria and stock based compensation arrangements:





Year
                Ending September 30:2009
            
            $
            1,053,0002010
            
            
            992,0002011
            
            
            684,0002012
            
            
            550,0002013
            
            
            278,000$
            3,557,000




The
      company has entered into the following executive officer employment
      agreements:





·
            In
                connection with completion by the Company of its acquisition of Maverick
                on April 29, 2008, as discussed in Note 4, the Company entered into
                an employment agreement with Robert Kovar pursuant to which Mr. Kovar
                was
                appointed as Chief Operating Officer of the Company and President
                of
                Maverick, a wholly-owned subsidiary. Mr. Kovar was Maverick’s founder and
                its president and chief executive officer prior to the acquisition.
                The
                employment agreement provides for an initial term of five years.
                Pursuant
                to the terms of the employment agreement, Mr. Kovar will be paid
                a
                $200,000 base annual salary and will be eligible for annual performance
                bonuses in such amount and at such times as determined by the Board
                or the
                compensation committee, in their sole discretion. In addition, pursuant
                to
                the employment agreement, Mr. Kovar was granted 50,000 options to
                purchase
                shares of Platinum’s common stock with an exercise price of $5.15 per
                share, the closing price on the date of grant, and will be granted
                an
                additional 50,000 stock options on each of the four succeeding
                anniversaries of the effective date of the employment agreement at
                the
                closing price on each anniversary date. The stock compensation expense
                of
                these options, using the Black-Scholes option pricing model to determine
                their fair market value, for the period from April 29, 2008 to September
                30, 2008. All options will be issued pursuant to the Company’s 2006 Long
                Term Incentive





Plan
      and
      will be subject to a 5 year vesting schedule, with one-fifth of such options
      vesting on each anniversary of the date of grant, beginning April 29, 2009.
      Upon
      a change in control of the Company, the employment agreement provides that
      all
      options granted to Mr. Kovar will immediately vest.  Pursuant to the
      employment agreement, if Mr. Kovar’s employment is terminated by the Company
      without cause or Mr. Kovar terminates his employment for good reason, he will
      receive an 18 month severance package and his cash flow note (as defined in
      Note
      4) will become immediately due and payable. If, however, Mr. Kovar’s employment
      is terminated for cause or Mr. Kovar terminates his employment without good
      reason, he will receive no severance package and his cash flow note will be
      cancelled. Mr. Kovar has also agreed that during the term of his employment
      with
      the Company and for an 18 month period thereafter, he will not compete with
      nor
      solicit employees of the Company. If Mr. Kovar breaches any of these
      obligations, he would forfeit his right to any severance payments and benefits
      to which he otherwise would be entitled.





22




**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**Note
          5 - Commitments - continued**


On
      August
      11, 2008, the Company entered into a five year employment agreement with Lisa
      Meier pursuant to which Ms. Meier was appointed as chief financial officer
      and
      treasurer of the Company. Pursuant to the terms of the employment agreement,
      Ms.
      Meier will be paid a $250,000 base annual salary, increasing by 5% annually.
      Ms.
      Meier will be eligible for an annual bonus as determined by the Board or a
      compensation committee of the Board which, in the event the Company has positive
      cash flow, will be at least $50,000. In addition, Ms. Meier will be eligible
      for
      a performance bonus based on certain predetermined budgeted goals. The target
      bonus for this purpose will be 50% of base salary. In addition, pursuant to
      the
      employment agreement, Ms. Meier was granted 50,000 incentive stock options
      to
      purchase shares of the Company’s common stock with an exercise price equal to
      the closing price on August 11, 2008, the date of grant, and will be granted
      an
      additional 50,000 stock options each year thereafter during the term of her
      employment. All options will be issued pursuant to the Company’s 2006 Long Term
      Incentive Plan and will be subject to a four year vesting schedule, with
      one-quarter of such options vesting on each anniversary of the date of grant,
      beginning August 11, 2009. Upon a change in control of the Company, the
      employment agreement provides that all options granted to Ms. Meier will
      immediately vest. Pursuant to the employment agreement, if Ms. Meier’s
      employment is terminated by the Company without cause or Ms. Meier terminates
      her employment for good reason, she will receive an 18 month severance package.
      If, however, Ms. Meier’s employment is terminated by the Company for cause or
      Ms. Meier terminates her employment without good reason, she will receive
      no severance package. Ms. Meier has also agreed that during the term of her
      employment with the Company and for an 18 month period thereafter, she will
      not
      compete with the Company nor solicit employees of the Company. If Ms. Meier
      breaches any of these obligations, she would forfeit her right to any severance
      payments and benefits to which she otherwise would be entitled.




·
            *Platenergy
                Services and Infrastructure*




Platenergy
      Services and Infrastructure (“PSI”) is a proposed new business that Ms.
      Meier will help develop in the oilfield services industry.  Pursuant to the
      employment agreement, Ms. Meier will also be appointed President of PSI. PSI’s
      business plan is to develop products, services and solutions to optimize
      customer performance in a safe and environmentally sound manner. PSI has entered
      into a restricted stock agreement with Ms Meier pursuant to which Ms. Meier
      will
      be issued 50 restricted shares of PSI’s common stock, representing 5% of
      the outstanding
      shares of PSI common stock on the date of the agreement. Under the agreement,
      and assuming continued employment under her employment agreement, the
      shares will be subject to a four year vesting schedule, with one-quarter of
      such shares to be released on each anniversary of the date of
      issue.   All shares will be released from restriction upon a sale
      of the PSI business.




23


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
        5 - Commitments - continued**





*f.
      Operating leases*





The
      Company leases its general office space and equipment under non-cancellable
      operating leases that expire through August 2012. The obligations presented
      below include the operating leases associated with the Maverick acquisition
      (stated in thousands):





For
                the Year Ending September 30:2009
            
            $
            9072010
            
            
            9192011
            
            
            9352012
            
            
            760$
            3,521




Rent
      expense amounted to approximately $385,000 for the period ending September
      30,
      2008.





*g.
      Capitalized leases*





Maverick
      leases office equipment and vehicles under capital lease agreements.
      Depreciation expense for capital leases is included with depreciation on
      property.





The
      cost
      and accumulated depreciation of capital leases, included in property and
      equipment at September 30, 2008, is as follows (stated in
      thousands):





For
                the Year Ending September 30, 2008:Office
                equipment and furniture
            
            $
            885Vehicles
            
            
            3721,257Less:
                Accumulated depreciation
            
            
            730$
            527











24


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**Note
        5 - Commitments - continued**
  *g.
          Capitalized leases*




The
      following is a schedule of future minimum lease payments under capitalized
      leases together with the present value of the net minimum lease payments at
      September 30, 2008 (stated in thousands):





For
                the Year Ending September 30:2009
            
            $
            2572010
            
            
            1682011
            
            
            1212012
            
            
            61Total
                minimum lease payments
            
            
            607Less:
                Amount representing interest
            
            
            119Current
                value of minimum lease payments
            
            
            488Less:
                Current maturities
            
            
            217$
            271




The
      effective interest rate on capitalized leases ranges from 5% - 27%.




**Note
      6 - Long-Term Debt**




On
      March 14, 2008, two operating subsidiaries of the Company entered into a new
      credit facility with a bank, establishing a revolving line of credit with an
      initial borrowing base of $35 million. The revolving line of credit is secured
      by the co-borrowers’ oil and gas properties and will be used to facilitate the
      execution of the two entities’ drilling and acquisition programs. The line bears
      interest at the bank’s base rate
      or
      LIBOR, plus a margin which varies with the ratio of the co-borrowers’
outstanding borrowings against the defined borrowing base, ranging from 1.5%
      to
      2.25 %. The co-borrowers’ can choose periodically to change the interest rate
      base which applies to outstanding borrowings. Under the terms of revolving
      line
      of credit agreement, the co-borrowers must maintain certain financial ratios,
      must repay any amounts due in excess of the borrowing base, and may not declare
      any dividends or enter into any transactions resulting in a change in control,
      without the bank’s consent. The Company, as the parent company, is not a
      co-borrower or guarantor of the line, and transfers from the co-borrowers to
      the
      parent company are limited to (i) $1 million per fiscal year to the parent
      for
      management fees, and (ii) the repayment of up to $2 million per fiscal year
      in
      subordinate indebtedness owed to the parent. As of September 30, 2008 there
      was
      approximately $9 million outstanding under the revolving line of credit, bearing
      interest at the bank’s base rate, which was 4.5 %. The entire $9 million
      outstanding balance is classified as long term debt in the accompanying
      financial statements. The facility expires in March, 2012. In conjunction with
      the execution of the new line of credit and as required under the terms of
      the
      new credit facility, the Company novated its existing hedge positions from
      its
      existing counterparty over to the bank under terms satisfactory to the Company.
      In connection with establishing the line of credit, the bank received a
      commitment fee of $87,500 and a fee of $60,229 for its expenses in connection
      with the aforementioned
      novation. In addition, the co-borrowers are obligated to the bank for a monthly
      fee of any unused portion of the line of credit at the rate of 0.25% per
      annum.





25


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**





**Note
      6 - Long-Term Debt - continued**





In
      conjunction with and simultaneous to the establishment of the new bank credit
      facility, the previously existing $5 million line of credit with another bank
      was terminated. No outstanding borrowings existed at the time of the termination
      of this previous arrangement.





In
      connection with the Pleasanton acquisition as more fully described in Note
      4,
      the Company entered into a settlement agreement for $1,000,000 in order to
      secure clear title to the properties acquired, of which it paid $450,000 cash
      and issued its note for the balance in the amount of $550,000. The note bears
      interest at 12% per annum, and is subject to monthly payments beginning June
      1,
      2008 of an amount equal to 1⁄2 of the net proceeds from production attributable to
      the Company’s interest in the purchased leasehold or $30,000, whichever is
      greater, until the note is paid in full. The long term portion of the note
      at
      September 30, 2008 was approximately $106,000.





The
      following table sets forth the Company’s long-term debt position as of September
      30, 2008 (stated in thousands):





Oil
                and gas revolving line of credit
            
            
            
            
            $
            9,009Notes
                payable, Pleasanton agreement
            
            
            
            
            
            432Revolving
                line of credit to former shareholders - Maverick
            
            
            (a)
            
            
            3,249Term
                note to former shareholders - Maverick
            
            
            (b)
            
            
            305Second
                term note to former shareholders - Maverick
            
            
            (c)
            
            
            1,544Notes
                payable to third party - Maverick
            
            
            (d)
            
            
            305$
            14,844Less:
                Current maturities
            
            
            
            
            
            1,026Long-term
                debt
            
            
            
            
            $
            13,818




(a)
      $3,250,000 revolving line of credit, payable to the Maverick former shareholders
      in monthly interest payments at prime plus .25%, principal and unpaid interest
      due at maturity in September 2010.





(b) Term
      note, payable to the Maverick former shareholders in monthly principal and
      interest payments of $10,280 with interest at prime plus .75%, unpaid principal
      and interest due at maturity in April 2011.





(c)
      Second term note, payable to the Maverick former shareholders in monthly
      interest payments at prime plus .50% beginning in April 2008 and beginning
      in
      October 2008, principal payments of $23,390 plus interest until maturity in
      April 2013.





(d)
      Note
      payable to a third party in monthly installments, with interest paid at 12%,
      principal due at maturity in September 2009, collateralized by the guaranty
      of
      the Maverick former majority stockholder and substantially all assets. These
      notes are collateralized by accounts receivable, a $4,000,000 life insurance
      policy on the former majority stockholder, and general and limited oil and
      gas
      partnership interests owned by the Maverick former majority
      stockholder.





26


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**





**Note
      6 - Long-Term Debt - continued**





Annual
      maturities of indebtedness included in this Footnote 6 at September 30, 2008
      are
      as follows (stated in thousands):





For
                the Year Ending September 30,2009
            
            $
            1,0262010
            
            
            3,7472011
            
            
            3602012
            
            
            9,2902013
            
            
            421$
            14,844




**Note
      7 - Marketing Arrangements and Segment Information**




With
      the
      consummation of the Maverick acquisition, in accordance with Statement of
      Financial Accounting Standards No. 131, *Disclosures
      about Segments of an Enterprise and Related Information* ,
      the
      Company considers itself to be in two lines of business - (i) as an independent
      oil and gas exploration and production company and (ii) as an engineering
      services company.




(i)
      The
      Company sells substantially all of its crude oil production under short-term
      contracts based on prices quoted on the New York Mercantile Exchange (“NYMEX”)
      for spot West Texas Intermediate contracts, adjusted by agreed-upon increases
      or
      decreases which vary by grade of crude oil. The majority of the Company’s
      natural gas production is sold under short-term contracts based on pricing
      formulas which are generally market responsive. From time to time, the Company
      may also sell a portion of the gas production under short-term contracts at
      fixed prices. The Company believes that the loss of any of its oil and gas
      purchasers would not have a material adverse effect on its results of operations
      due to the availability of other purchasers.


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





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


.


**Exploration**
            
            
            
            
            
            **Intercompany**
            
            **Consolidated****and Production**
            
            **Engineering**
            
            **Parent**
            
            **Eliminations**
            
            **Total****For
                the Three Months Ended****September
                30, 2008:**Revenues
            
            $
            10,957
            
            $
            7,131
            
            $
            -
            
            $
            (960
            )
            $
            17,128Intersegment
                revenues
            
            
            -
            
            
            (960
            )
            
            -
            
            
            960
            
            
            -Total
                revenues
            
            $
            10,957
            
            $
            6,171
            
            $
            -
            
            $
            -
            
            $
            17,128Income
                (loss) before income taxes
            
            $
            18,225
            
            $
            (621
            )
            $
            828
            
            $
            130
            
            $
            18,562**For
                the Nine Months Ended****September
                30, 2008:**Revenues
            
            $
            28,961
            
            $
            12,300
            
            $
            -
            
            $
            (1,248
            )
            $
            40,013Intersegment
                revenues
            
            
            -
            
            
            (1,248
            )
            
            -
            
            
            1,248
            
            
            -Total
                revenues
            
            $
            28,961
            
            $
            11,052
            
            $
            -
            
            $
            -
            
            $
            40,013Income
                (loss) before income taxes
            
            $
            853
            
            
            (863
            )
            $
            (2,897
            )
            $
            (235
            )
            $
            (3,142
            )**As
                of September 30, 2008:**Total
                assets
            
            $
            207,218
            
            $
            16,866
            
            $
            143,102
            
            $
            (141,143
            )
            $
            226,043**As
                of December 31, 2007:**Total
                assets
            
            $
            180,687
            
            $
            -
            
            $
            144,674
            
            $
            (126,972
            )
            $
            198,389








27





**PLATINUM
        ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**Note
          7 - Marketing Arrangements and Segment Information -
          continued**


The
      Company reported no oil and gas or service operations in 2007 interim
      periods.





**Note
      8 - Price, Interest Rate and Credit Risk Management
      Activities**





The
      Company engages in price risk management activities from time to time. These
      activities are intended to manage the Company’s exposure to fluctuations in
      commodity prices for natural gas and crude oil. The Company utilizes derivative
      financial instruments, primarily price collars, puts and calls, as the means
      to
      manage this price risk. In addition to these financial transactions, the Company
      is a party to various physical commodity contracts for the sale of hydrocarbons
      that cover varying periods of time and have varying pricing provisions. Under
      SFAS No. 133, *Accounting
      for Derivative Instruments and Hedging Activities,* as
      amended by SFAS Nos. 137, 138, 149 and 157, these various physical commodity
      contracts qualify for the normal purchases and normal sales exception and
      therefore, are not subject to hedge accounting or mark-to-market accounting.
      The
      financial impact of these various physical commodity contracts is included
      in
      revenues at the time of settlement, which in turn affects average realized
      hydrocarbon prices. The Company has elected not to designate any of its
      derivative financial contracts as accounting hedges and, accordingly, has
      accounted for these derivative financial contracts using mark-to-market
      accounting.





In
      accordance with SFAS No. 157, the Company has categorized its
      derivative financial instruments, based on the priority of the inputs to the
      valuation technique, into a three-level fair value hierarchy. The fair value
      hierarchy gives the highest priority to quoted prices in active markets for
      identical assets or liabilities (Level 1); the next highest priority inputs
      include quoted prices for similar assets or liabilities in active markets,
      quoted prices for identical or similar assets or liabilities in markets that
      are
      not active, and inputs (other than quoted prices) that are observable for the
      asset or liability, either directly or indirectly (Level 2); and the lowest
      priority to unobservable inputs (Level 3). The Company uses Level 1
      valuation techniques to value its derivatives.





Presented
      below is a summary of the Company’s crude oil and natural gas derivative
      financial contracts at September 30, 2008 and December 31, 2007, with crude
      oil
      prices expressed in dollars per barrel of crude oil and notional crude oil
      volumes in barrels of crude oil per year; and natural gas prices expressed
      in
      dollars per million British thermal units ($/MMBtu) and notional natural gas
      volumes in million British thermal units per year (MMBtuy). As indicated, The
      Company does not have any financial derivative contracts that extend beyond
      December 2012.





The
      total
      fair value of the crude oil and natural gas financial derivative contracts at
      September 30, 2008, was a liability of approximately $4.6 million as
      follows:





28


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**




**Note
        8 - Price, Interest Rate and Credit Risk Management Activities -
        continued**


**Period
                Ended**
              **September
                30,**
            
            **Instrument
                Type**
            
            **Total
                Volumes(MMBTU/BBL)**
            
            **Weighted
                Average(Floor/Ceiling)**
            
            **Fair
                Value Asset/(Liability) (stated in**
              **thousands)**2009
            
            
            Gas
                Collar
            
            
            6,462
            
            
            5.00/11.02
            
            $
            0Gas
                Call Option Sold
            
            
            6,462
            
            
            9.10
            
            
            0Gas
                Call Option Purchased
            
            
            6,462
            
            
            12.00
            
            
            0Gas
                Put Option Sold
            
            
            6,462
            
            
            5.00
            
            
            0Gas
                Put Option Purchased
            
            
            6,462
            
            
            6.00
            
            
            0Oil
                Collar
            
            
            22,500
            
            
            40.00/72.10
            
            
            (674
            )Oil
                Call Option Sold
            
            
            25,000
            
            
            67.00
            
            
            (874
            )Oil
                Call Option Purchased
            
            
            25,000
            
            
            72.10
            
            
            749Oil
                Swaps
            
            
            90,000
            
            
            71.00
            
            
            (2,729
            )2010
            
            
            Oil
                Swaps
            
            
            120,000
            
            
            71.00/95.50
            
            
            (1,717
            )Oil
                Put Option Purchased
            
            
            180,000
            
            
            75.00/85.00
            
            
            1,3482011
            
            
            Oil
                Swaps
            
            
            120,000
            
            
            95.25/95.50
            
            
            (1,086
            )Oil
                Put Option Purchased
            
            
            200,000
            
            
            75.00/80.00/85.00
            
            
            1,5572012
            
            
            Oil
                Swaps
            
            
            120,000
            
            
            95.25/95.00
            
            
            (1,102
            )Oil
                Put Option Purchased
            
            
            30,000
            
            
            80.00
            
            
            2472013
            
            
            Oil
                Swaps
            
            
            30,000
            
            
            95.00
            
            
            (275
            )Total
                fair value liability$
            (4,556
            )




The
                fair value of Platinum's financial derivate contracts at September
                30,
                2008 are shown in the
              accompanying
                financial statements as follows (in thousands):




Fair
                value of commodity derivative:Current
                portion
            
            $
            (3,528
            )Long-term
                portion
            
            
            (1,028
            )Total
                fair value liability
            
            $
            (4,556
            )





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




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








29


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      8 - Price, Interest Rate and Credit Risk Management Activities -
      continued**





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





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





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





The
      following table summarizes the estimated fair value of financial instruments
      and
      related transactions September 30, 2008 and December 31, 2007 (stated in
      thousands): (The carrying amount and the fair value (1) are the same for each
      period reported.)




**September
                30,**
              **2008**
            
            **December**
              **31,
                2007**NYMEX-Related
                Commodity DerivativeMarket
                Positions (1)
            
            $
            (4,556
            )
            $
            (3,043
            )




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







30


**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**





**Note
      9 - Oil and Gas Properties**


****


The
      following table sets forth the Company’s costs incurred in oil and gas property
      acquisition, exploration and development activities for the period from January
      1, 2008 through September 30, 2008 (stated in thousands):





Balance
                at January 1, 2008:
            
            $
            170,572Acquisition
                of propertiesProved
            
            
            7,489Unproved
            
            
            1,000Adjustment
                to purchase price of oil and gas properties
            
            
            4,640Exploration
                Costs
            
            
            1,025Development
                Costs
            
            
            15,451Balance
                at September 30, 2008:
            
            $
            200,177




The
      following table sets forth the Company’s capitalized costs relating to oil and
      gas producing activities at September 30, 2008 (stated in
      thousands):




Proved
                oil and gas properties
            
            $
            199,177Unproved
                oil and gas properties
            
            
            1,000200,177Accumulated
                depletion
            
            
            (8,045
            )Net
                capitalized costs  at September 30, 2008
            
            $
            192,132




**Note
      10 — Litigation**





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





31





**PLATINUM
          ENERGY RESOURCES, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS**


**Note
      11 - Benefit Plan**





Prior
      to
      its acquisition by the Company, Maverick adopted a defined contribution plan
      under Section 401(k) of the Internal Revenue Code for the benefit of all
      employees who have met certain length-of-service requirements. Under this plan,
      Maverick employees may elect to make contributions pursuant to a salary
      reduction agreement. Each year, Maverick may make a matching contribution to
      the
      plan on behalf of the participating employees. Employer contributions to the
      plan are discretionary. For the period from April 29, 2008 to September 30,
      2008
      and for the three months ended September 30, 2008, employer contributions
      charged to operations totaled approximately $286,000 and 173,000,
      respectively.





**Note
      12 - Subsequent Events**





·
            In
                connection with the Pleasanton transaction (see Note 4), in October
                2008,
                the Company paid $200,000 to the seller as additional purchase price
                in
                connection with the Pleasanton transaction. This payment represented
                a
                final compromise of certain disputes related to title issues and
                relieved
                the Company of the obligation to pay an additional $300,000 that
                would
                otherwise would have been payable. See Notes 4 and 6 for a description
                of
                these matters. This payment was accrued and included in current
                liabilities in the accompanying balance sheet as of September 30,
                2008





·
            On
                October 23, 2008, Robert Kovar, Chief Operating Officer, delivered
                to the
                Company a written notice pursuant to his Employment Agreement with
                the
                Company dated as of April 29, 2008, which the Company believes constitutes
                notice of his intention to terminate his employment with the
                Company.





·
            On
                October 23, 2008, Lisa Meier, Chief Financial Officer, Treasurer
                and
                Secretary, delivered to the Company a communication indicating her
                intention to resign her employment with the Company. On November
                13, 2008
                Ms. Meier delivered a subsequent communication to the Company indicating
                her election to remain with the Company in her current
                positions.




32





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





This
      Quarterly Report on Form 10-Q includes forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. We have based these
      forward-looking statements on our current expectations and projections about
      future events. These forward-looking statements are subject to known and unknown
      risks, uncertainties and assumptions about us that may cause our actual results,
      levels of activity, performance or achievements to be materially different
      from
      any future results, levels of activity, performance or achievements expressed
      or
      implied by such forward-looking statements. In some cases, you can identify
      forward-looking statements by terminology such as “may,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or
      the negative of such terms or other similar expressions. Factors that might
      cause or contribute to such a discrepancy include, but are not limited to,
      those
      described in our other Securities and Exchange Commission filings.





On
      October 26, 2007, we acquired substantially all of the assets and assumed
      substantially all of the liabilities of Tandem. Prior to that time, we were
      a
      blank check company with no operations and no net revenues. On April 29, 2008
      we
      acquired 100% of the stock of Maverick Engineering, Inc. (Maverick), a
      full-service engineering services company.





Set
      forth
      below are:





(A)
        A discussion of the results of operations for Platinum for the three
      months and nine months ended September 30, 2008 as compared to the three months
      and nine months ended September 30, 2007. Included within the results of
      operations for the comparative periods are the results of operations of the
      oil
      and gas properties we purchased, as well as the operations of Maverick, from
      their respective dates of acquisition




(B)
      A
      comparison of certain summarized historical information of our oil and gas
      subsidiaries for the quarter ended September 30, 2008 with the quarters ended
      June 30, 2008 and March 31, 2008, in order to provide the reader with certain
      meaningful analytical data.





(C)
      A
      discussion of the engineering services company (Maverick) for the period from
      the date of acquisition (April 29, 2008) through June 30, 2008 and the quarter
      ended September 30, 2008.





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




**Overview**





With
      the
      consummation of the Maverick acquisition, we consider ourselves to be in two
      lines of business - (i) as an independent oil and gas exploration and production
      company and (ii) as an engineering services company.





i)
            In
                our oil and gas operations, we conduct oil and natural gas exploration,
                development, acquisition, and production. Our basic business model
                is to
                find and develop oil and gas reserves through development activities,
                and
                sell the production from those reserves at a profit. To be successful,
                we
                must, over time, be able to find oil and gas reserves and then sell
                the
                resulting production at a price that is sufficient to cover our finding
                costs, operating expenses, administrative costs and interest expense,
                plus
                offer an acceptable rate of return on our capital investment. We
                sell
                substantially all of our crude oil production under short-term contracts
                based on prices quoted on the New York Mercantile Exchange (“NYMEX”) for
                spot West Texas Intermediate contracts, less agreed-upon deductions
                which
                vary by grade of crude oil. The majority of our natural gas production
                is
                sold under short-term contracts based on pricing formulas which are
                generally market responsive. From time to time, we may also sell
                a portion
                of the gas production under short-term contracts at fixed prices.








33











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





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





We
      believe that the economic climate in the domestic oil and gas industry continues
      to be suitable for our business model. As has been demonstrated by recent market
      events, oil and gas prices are typically volatile and are subject to market
      fluctuations. We continue to believe, however, that supply and demand
      fundamentals in the energy marketplace provide us with the economic incentives
      necessary for us to assume the risks we face in our search for oil and gas
      reserves. While profit margins remain currently favorable at today’s prices, we
      cannot guarantee that rising finding costs, production costs, and depletion
      expense will not affect our future success. With the recent decline in market
      prices of oil and natural gas and increases in these costs may have an even
      greater impact on our profit margins. Specifically, our revenue, cash flow
      from
      operations and future growth depend substantially on many factors, including
      those beyond our control, such as economic, political and regulatory
      developments and competition from other sources of energy. Because of these
      factors, we continuously seek ways to reduce exposure to the volatility in
      oil
      and natural gas prices. Our strategy is to hedge a portion of our expected
      future oil and natural gas production, using a mixture of calls, puts, forward
      contracts and other derivative instruments, to reduce our exposure to
      fluctuations in commodity price. In April 2008, we entered into derivative
      transactions to put 360,000 barrels of oil to the counter party at the rate
      of
      10,000 barrels per month in the period January 2010 through December 2012 at
      prices between $95.00 to $95.50 per barrel. As of November 10, 2008 the price
      of
      a barrel of oil was $62.41, representing an unrealized gain of approximately
      $16.6 million since September 30, 2008. The actual price of oil upon
      delivery over the future periods which will be determinant of the actual gain
      of
      loss to be realized by the Company cannot be predicted at this
      time.





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





34





**(A)
      - Results of Operations - Platinum**





**For
      the three and nine month periods ended September 30, 2008 as compared to the
      three month and nine month periods ended September 30,
      2007**





We
      were a
      blank check company for the periods ended in 2007 and consequently had no
      operations and no net operating results. For the three months and nine months
      ended September 30, 2008 , our results of operations included those of the
      oil
      and gas entities acquired on and subsequent to October 26, 2007 for the 2008
      periods and those of our engineering services business, Maverick, from its
      dates
      of acquisition on April 29, 2008 through September 30, 2008. See “Business -
      Growth Strategy” beginning on page 5 and Note 4 to the consolidated
      financial statements on page F1-14 in our Form 10K/A for the year ended December
      31, 2007 filed on April 15, 2008 and Note 4 included elsewhere herein.. For
      a
      comparison of results of operations relating to our oil and natural gas assets,
      see “Results of Operations - Oil and Gas” below.





With
      respect to our results of operations excluding our oil and natural gas assets
      and the engineering services business (Maverick), we had no net operating
      revenues during the 2008 or 2007 periods. Our general and administrative
      expenses other than those attributable to our oil and natural gas assets and
      our
      engineering services business for the three and nine month periods ended
      September 30, 2008 was $841,000 and $3,074,000 (of the $1.625 million and $7.126
      million of general and administrative expenses included in our condensed
      consolidated results for the corresponding periods) as compared to approximately
      $98,000 and $397,000 in the three and nine month periods ended September 30,
      2007





For
      the
      nine months ended September 30, 2008, we were the parent of an operating
      business, while we had no such operation in the comparable period of the
      preceding year resulting in a general significant increase in expenses, as
      discussed in the following sentences. The increase of $ 743,000 and $2,646,000
      in such expenses for the three and nine month periods ended September 30, 2008,
      respectively as compared to the three and nine month periods ended September
      30,
      2007 is attributable to (i) an increase of $ 0 and $848,000 in stock
      compensation expense incurred in the three and nine month periods ended
      September 30, 2008 as compared to comparable periods of 2007 related to a
      consulting arrangement and an employment agreement (See Note 5 to the condensed
      consolidated financial statements) and (ii), officers’ and other salaries
      (including the CEO, COO, CFO, controller and IT employee hired in the period)
      of
      $287,000 and $518,000 as compared to $0 and $0 for the comparable periods of
      the
      preceding year; legal and accounting (including independent auditors and other
      accounting services) of $317,000 and $1,236,000 in the three and nine month
      periods ended September 30, 2008 as compared to $38,000 and $206,000 for the
      comparable periods of the preceding year. A general increase of other
      administrative expenses for investor relations, travel and entertainment,
      transfer agent fees, postage, printing and miscellaneous, partially offset
      by
      the elimination of sponsor allocated costs incurred in 2007 also contributed
      to
      the increase. Results of operations for the three months and nine months ended
      September 30, 2008 included interest income of $10,000 and $127,000,
      respectively as compared to $773,000 and $2,238,000 in the comparable periods
      of
      the preceding year. In 2007 substantial interest was earned on funds held trust
      for the benefit of public shareholders prior to the closing of the Tandem
      Acquisition. The use of funds for the Tandem and other acquisitions, and towards
      operating expenses resulted in a substantial decrease in cash at September
      30,
      2008 as compared to earlier periods. We incurred a noncash charge for interest
      expense of $93,000 in 2008 related to the accretion of debt discount on the
      cash
      flow notes issued in the Maverick acquisition (see Note 4).





We
      also
      incurred unrealized gains of $1,715,000 and $142,000 for the three and nine
      month periods ended September 30, 2008, respectively, as compared to $0 in
      comparable periods of 2007 on the increase in the value of certain put options
      on crude oil we purchased in December 2007 and January 2008 for an aggregate
      of
      $3,035,000. We have experienced great volatility in the value of these
      derivative instruments as a result of the fluctuation in the price of crude
      oil.




35


**(B)
      - Results of Operations - Oil and Gas**




The
      following summary of oil and gas revenues and lease and other operating expenses
      for the periods indicated is provided for comparative purposes. These
      comparative results are for the three month periods ended September 30, 2008,
      June 30, 2008 and March 31, 2008. As indicated in the preceding paragraph,
      since
      our results for each of the three months ended in the nine month period ended
      September 30, 2007 are not in any way comparable to the comparable periods
      in,
      we believe that the comparison of our current operating data to the immediately
      preceding period would provide more relevant information to assist in evaluating
      our Company.





*Comparison
      of the Three Months Ended September 30, 2008 to the Three Months Ended June
      30,
      2008 and to the Three Months ended March 31, 2008*





Any
      reference in this comparison to the third quarter relates to the three months
      ended September 30, 2008, any reference to the second quarter relates to the
      three months ended June 30, 2008 and any reference to the first quarter relates
      to the three months ended March 31, 2008, unless otherwise
      indicated.





Our
      revenues from oil and natural gas sales for the three months ended September
      30,
      2008 were $10.9 million; for the three months ended June 30, 2008 were $10.7
      million and for the three months ended March 31, 2008 were $7.1 million. The
      modest increase in oil and gas revenues in the third quarter as compared to
      the
      second quarter resulted from an increase in production on a Boe basis offset
      by
      a decrease in commodity prices. The 50% increase in oil and gas revenues in
      the
      second quarter as compared to the first quarter was due to an increase in
      commodity prices as well as to an increase in production on a Boe basis during
      the second quarter. The average gas prices for the third, second, and first
      quarters were $9.53, $11.11, and $8.19 per Mcf, respectively. Production on
      a
      Boe basis during each of the third, second, and first quarters was 115,038,
      110,831 and 88,239, respectively. This represents a 14% increase in each of
      the
      second and third quarters over the previous quarter. The production increase
      is
      due primarily to our active drilling programs in our Batson and Ballard fields.
      Although drilling activity has slowed in the latest quarter, we have been able
      to maintain our production by re-working older well bores, and upgrading our
      equipment and facilities.





Oil
      and
      gas production costs in the form of lease operating expense on a Boe basis
      increased 26% from $28.68 per Boe during the second quarter to $36.25 per Boe
      during the third quarter and increased 4.2% from $27.53 per Boe during the
      first
      quarter to $28.68 per Boe during the second quarter. The increase can be
      attributable to several factors. We continue to expend resources related to
      environmental clean-up efforts across our assets. Additionally, and in order
      to
      increase production, we have been concentrating resources to bring back wells
      that have been offline for mechanical reasons, and have ramped up our chemical
      treating program in an effort to extend the life of our down-hole equipment
      and
      facilities. The increase on a Boe basis would have been higher, except that
      our
      previously discussed drilling, workover and maintenance operations have resulted
      in an increase in production. Other factors outside management control, such
      as
      third party service availability and the availability of adequate technical
      and
      field staff, could have an adverse effect on lease operating costs in the
      future.





Depletion
      expense for oil and gas properties increased approximately $400,000, or 14%,
      during the third quarter as compared to the second quarter and $250,000, or
      14%,
      during the second quarter compared to the first quarter. The increase during
      the
      second quarter was attributable to property additions, increased production,
      which converts to a higher depletion rate, and a significant increase in the
      future development costs related to our proved undeveloped locations revised
      as
      of June 30, and primarily to property additions in the third quarter.








36





General
      and administrative costs for the oil and gas entities increased approximately
      $390,000, or 35%, during the third quarter as compared to the second quarter
      and
      decreased approximately $50,000, or 5%, during the second quarter compared
      to
      the first quarter. The third quarter increase was due primarily to an increase
      in our staff to facilitate an anticipated aggressive growth scenario along
      with
      additional staff to accommodate our safety and environmental focus.





We
      also
      incurred a net gain of approximately $16.2 million for the third
      quarter 2008 as compared to approximately $21.5 million in losses during the
      second quarter 2008 resulting from the changes in the fair value of
      certain hedge contracts on crude oil and natural gas. We incurred
      approximately $2 million in hedging losses during the first quarter 2008.




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




Revenues
      for the three months ended September 30, 2008 and for the period since the
      acquisition (April 29, 2008 - September 30, 2008) were $7.1 million
      and 12.3 million respectively. Gross margin performance for these periods
      was 1.2% and 10.6%, respectively. Declining gross margin performance for these
      periods’ results from an unusual convergence of contemporaneous weakness in all
      of our business segments for unrelated reasons. The oil and gas business is
      feeling the full impact of project deferrals and slowdowns in work from some
      our
      traditional clients, which started to become evident earlier this year. The
      industrial division was adversely impacted by capital budget cuts in the
      refining market plus the decision by Valero to seek strategic alternatives
      for
      its Aruba refinery, with a resulting deferral of some project work there. The
      infrastructure business was adversely impacted by a four-month delay in
      commencement of a major road project, and elimination of all of our TxDOT survey
      business due to state government fiscal concerns. Overall third quarter results
      were negatively affected by Hurricane Ike as a result of lost or deferred
      business and the continuation of compensation to our employees during this
      period. Engineering services reported pretax losses of $621,000 and $863,000
      in
      the three months ended September 30, 2008 and for the period April 29, 2008
      to
      September 30, 2008, including amortization expense of $213,000 and $354,000
      for
      these periods, respectively, associated with the intangible assets
      acquired.





**Liquidity
      and Capital Resources**





In
      connection with our initial public offering consummated on October 28, 2005,
      we
      sold (i) 14,400,000 units to the public, with each unit consisting of one share
      of our common stock, $0.0001 per share, and one warrant expiring October 28,
      2009 to purchase one share of common stock at an exercise price of $6.00 per
      share and (ii) to the representatives of the underwriters a five year option
      to
      purchase up to a total of 720,000 units in the aggregate at a per unit price
      of
      $10.00. The units issuable upon exercise of this option are identical to those
      offered in the public offering except that the warrants included in the option
      have an exercise price of $7.50. The underwriters’ unit purchase option may be
      exercised for cash or on a “cashless” basis, at the holder’s option, such that
      the holder may use the appreciated value of the option (the difference between
      the exercise prices of the option and the underlying warrants and the market
      price of the units and underlying securities) to exercise the option without
      the
      payment of any cash. If circumstances warrant and in the event that any holders
      of the unit purchase option choose to exercise all or a portion of the unit
      purchase option on a cashless basis, we will receive no cash proceeds but would
      be required to issue additional units. In addition we can give no assurance
      that
      any of the warrants included in the units sold to the public will be exercised
      and result in any proceeds to us.





The
      following additional events occurred or had an impact during the nine months
      ended September 30, 2008 or may have an impact on our liquidity in future
      periods:





a.
 
      In November 2006, the Company’s board approved a share repurchase program to
      repurchase shares of Company common stock in an amount up to $80 million
      (including shares that may be redeemed in connection with stockholders
      conversion rights upon consummation of the Tandem acquisition). On October
      26,
      2007, we redeemed 1,802,205 shares of our common stock for a total cash purchase
      price of $14,057,199 pursuant to such conversion rights.





37








b.
      On
      November 1, 2007, the Company announced the initial stage of the share
      repurchase program and adopted a share repurchase plan for the month of November
      2007. In the period from November 1 through November 30, 2007, we purchased
      1,997,913 shares for an aggregate of $15,661,464. We financed these purchases
      with available cash. The initial share repurchase plan expired November 30,
      2007, but the Company may resume repurchases in the future, pursuant to our
      current share repurchase program, under which approximately $50 million may
      be
      used to acquire additional shares.





c.
      As
      part of our overall business strategy (See Note 4, Business Combinations to
      the
      condensed consolidated financial statements), we continued our program of
      strategic acquisitions and investment opportunities that complement our existing
      business. We made various acquisitions of oil and gas properties and businesses
      in the nine month period ended September 30, 2008, summarized as
      follows:





·
            In
                December 2007, Platinum, through a wholly owned subsidiary acquired
                a 50%
                working interest in the La Rosa field for approximately $5.3 million.
                Although the La Rosa field is a producing field of approximately
                3,800
                acres in Refugio County, Texas, actual production was minimal. The
                primary
                focus of the acquisition is related to its recompletion and re-entry
                potential. The entire purchase price was allocated to oil and gas
                properties. In March 2008 an additional related working interest
                to our
                December 2007 La Rosa field acquisition was acquired for
                $461,500;




·
            In
                January 2008, we acquired a 70% working interest in the Pleasanton
                field for approximately $6.3 million (including all subsequent payment
                described. $2.5 million of the purchase price was paid in December
                2007
                and recorded as a deposit on the December 31, 2007 balance sheet.
                An
                additional $2.5 million of the purchase price was paid in January
                2008,
                including direct transaction costs.. The Pleasanton Field is a
                non-producing field of approximately 4,200 acres in Atascosa County,
                Texas. The field contains previously drilled and abandoned wells.
                In
                connection with the Pleasanton acquisition, in April 2008 we entered
                into
                a settlement agreement for $1,000,000 in order to secure clear title
                to
                the properties acquired, of which we paid $450,000 cash and issued
                our
                note for the balance in the amount of $550,000. See Note 6 for a
                further description of consideration paid. The note bears interest
                at 12%
                per annum, and is subject to monthly payments beginning June 1, 2008
                of an
                amount equal to 1⁄2 of the net proceeds from production attributable to our
                interest in the purchased leasehold or $30,000, whichever is greater,
                until the note is paid in full. In addition, the Company paid an
                additional $200,000 to the seller in October 2008 in final settlement
                of
                certain disputes, which is included as a liability in the accompanying
                September 30, 2008 unaudited balance
                sheet;




·
            In
                April, 2008 we purchased a 100% working interest in producing leases
                (Quantum prospect) in Atascosa County, Texas for $750,000. The leases
                consist of twelve producing wells, two shut in wells, two injection
                wells
                and one salt water disposal well. We will operate this
                lease;




·
            In
                May, 2008 we purchased a 70% working interest in an acreage position
                (Lieke prospect) in Atascosa County, Texas for $600,000, with the
                initial
                goal of re-entering an abandoned well bore and attempting a completion
                in
                the Edwards formation. We will operate this lease;




·
            In
                June, 2008 we purchased a 25% non-operated working interest in an
                acreage position (Lacy prospect) in Nueces County, Texas for $400,000.
                The
                agreement contains a requirement for the drilling of the initial
                test well
                to a depth of 9,500.








38








d.
 
      On March 14, 2008, two of our oil and natural gas operating subsidiaries, Tandem
      Energy Corporation and PER Gulf Coast, Inc. entered into a new credit facility
      with the Bank of Texas, establishing a revolving line of credit with an initial
      borrowing base of $35 million. The revolving line of credit is secured by the
      oil and gas properties and will be used to facilitate the execution of our
      drilling and acquisition programs. The line bears interest at the bank’s base
      rate or LIBOR, plus a margin which varies with the ratio of the outstanding
      borrowings against the defined borrowing base, ranging from 1.50% to 2.25%.
      These oil and gas subsidiaries can choose periodically to change the interest
      rate base which applies to outstanding borrowings. Under the terms of revolving
      line of credit agreement, they must maintain certain financial ratios, must
      repay any amounts due in excess of the borrowing base, and may not declare
      any
      dividends or enter into any transactions resulting in a change in control,
      without the bank’s consent. As the parent company, we are not a co-borrower or
      guarantor of the line, and transfers from the oil and gas operations to us
      are
      limited to (i) $1 million per fiscal year for management fees, and (ii) the
      repayment of up to $2 million per fiscal year in subordinate indebtedness owed
      to us. As of September 30, 2008, there was approximately $9 million
      outstanding under the revolving line of credit. In conjunction with the
      execution of the new line of credit, and as required under the terms of the
      new
      credit facility, we novated our existing hedge positions from our existing
      counterparty over to the Bank of Texas under terms satisfactory to us. In
      addition, there is an obligation to the bank for a monthly fee for any unused
      portion of the line of credit at the rate of 0.25% per annum. The unused portion
      of this revolving line of credit of approximately $26 million remains available.
      As of November 10, 2008, the indebtedness to the banks has increased to
      approximately $11 million. The unused portion of this revolving line of credit
      of approximately $24 million remains available.





e. On
      April 29, 2008, we completed the acquisition of Maverick. The aggregate
      consideration paid in the merger was $6 million in cash and $5 million to be
      paid over the next 6 years pursuant to non-interest bearing cash flow notes,
      subject to certain escrows, holdbacks and post-closing adjustments. Provisions
      of the cash flow notes require quarterly payments commencing in June 2008 to
      the
      noteholders pro rata equal to 50% of the pre-tax net income, as defined,
      generated by the Maverick business on a stand alone basis in the prior quarter.
      Payment of the cash flow notes can be accelerated by certain events, including
      a
      change in control. The balance of the cash flow notes remaining unpaid upon
      maturity, if any, will be converted into a 12 month self amortizing note bearing
      interest at the annual rate of 2% over the bank’s prime rate. In addition, we
      will assume Maverick’s indebtedness under certain bank and loan arrangements,
      which aggregate balances approximated $4.5 million at January 31, 2008. In
      addition, the sellers agreed to satisfy and assume Maverick's bank indebtedness
      in the aggregate amount of $4.9 million consisting of a $3 million revolving
      line of credit maturing April 2008, a $1.6 million term note due April 2011,
      and
      $.3 million oil and gas note due May 2009, using a portion of the cash received
      by them at closing. Following the closing, the Company was indebted to the
      sellers for these amounts under the identical terms of the bank loan agreements.
      On April 30, 2008, Maverick entered into extension and modification agreements
      with the sellers pursuant to which sellers agreed to defer principal payments
      of
      the $1.6 million term loan for six months and extend the maturity date to April
      2013. The sellers also agreed to extend the maturity dates of the revolving
      line
      of credit and oil and gas note to 2010 and 2013, respectively. In addition,
      as
      of Maverick has received waivers of its noncompliance with the debt service
      coverage ratio contained in the loan agreements. The sellers waived the
      Company's obligation to maintain this ratio through September 30,
      2009.





The
      cash
      flow notes will be payable quarterly at the rate of 50% of pre-tax net income,
      as defined, generated by the Maverick business on a stand-alone basis in the
      preceding quarter. No such payment was required through September 30, 3008.
      Payment can be accelerated by certain events, including change in control of
      the
      Company, separation of Robert Kovar or a change in the corporate structure
      of
      Maverick. See Note 12. As of September 30, 2008, the cash flow notes were
      reduced by the amount of the working capital post closing adjustment which
      was
      determined by the Company to be $645,596. This amount may be subject to
      modification as may be agreed between the parties. In addition, on the date
      of
      acquisition, a discount to present value in the amount of $1,320,404 has been
      recorded in the accompanying financial statements and deducted from the cash
      flow notes as these notes are non-interest bearing for the initial 5 years
      of
      their term. As a result, the net book value of the notes on April 29, 2008
      and
      September 30, 2008 was $3,034,000 and $3,126,767, respectively, after the
      accretion of the debt discount in the amount of $92,767 in the period from
      April
      29, 2008 though September 30, 2008.





39








In
      connection with the acquisition of Maverick, we entered into an employment
      agreement with Mr. Kovar to serve as chief operating officer of Platinum. The
      employment agreement provides for an initial term of five years. Pursuant to
      the
      terms of the employment agreement, Mr. Kovar will be paid a $200,000 base annual
      salary and will be eligible for annual performance bonuses in such amount and
      at
      such times as determined by the Board or the compensation committee, in their
      sole discretion. In addition, pursuant to the employment agreement, Mr. Kovar
      was granted 50,000 options to purchase shares of the Company’s common stock with
      an exercise price of $5.15 per share, the closing price on the date of grant,
      and will be granted an additional 50,000 stock options on each of the four
      succeeding anniversaries of the effective date of the employment agreement.
      All
      options will be issued pursuant to the Company’s 2006 Long Term Incentive Plan
      and will be subject to a 5 year vesting schedule, with one-fifth of such options
      vesting on each anniversary of the date of grant, beginning April 29, 2009.
      In
      the event of a change in control of the Company, the employment agreement
      provides that all options granted to Mr. Kovar will immediately
      vest.




Pursuant
      to the employment agreement, if Mr. Kovar’s employment is terminated by us
      without cause or Mr. Kovar terminates his employment for good reason (as defined
      in the agreement), he will receive an 18 month severance package and his cash
      flow note will become immediately due and payable. If, however, Mr. Kovar’s
      employment is terminated by us for cause or Mr. Kovar terminates his employment
      without good reason, he will receive no severance package and his cash flow
      note
      will be cancelled.





On
      October 23, 2008, Robert Kovar, Chief Operating Officer, delivered to us a
      written notice pursuant to his employment agreement, which we believe
      constitutes notice of his intention to terminate his employment with
      us.





f.
      On
      August 11, 2008, we entered into an employment agreement with Lisa Meier
      pursuant to which Ms. Meier was appointed as chief financial officer and
      treasurer of the Company. Ms. Meier is a certified public accountant. Ms. Meier
      earned a Bachelor of Business Administration from the University of Texas at
      Austin and a Master of Professional Accountancy from the University of Texas
      at
      Austin in 1996. The employment agreement provides for an initial five year
      term.
      Pursuant to the terms of the employment agreement, Ms. Meier will be paid a
      $250,000 base annual salary, increasing by 5% annually. Ms. Meier will be
      eligible for an annual bonus as determined by the Board or a compensation
      committee of the Board which, in the event the Company has positive cash flow,
      will be at least $50,000. In addition, Ms. Meier will be eligible for a
      performance bonus based on certain predetermined budgeted goals. The target
      bonus for this purpose will be 50% of base salary.





In
      addition, under terms of the employment agreement, Ms. Meier was granted 50,000
      incentive stock options to purchase shares of the Company’s common stock with an
      exercise price equal to the closing price on August 11, 2008, the date of grant,
      and will be granted an additional 50,000 stock options each year thereafter
      during the term of her employment. All options will be issued pursuant to the
      Company’s 2006 Long Term Incentive Plan and will be subject to a four year
      vesting schedule, with one-quarter of such options vesting on each anniversary
      of the date of grant, beginning August 11, 2009. Upon a change in control of
      the
      Company, the employment agreement provides that all options granted to Ms.
      Meier
      will immediately vest.





Pursuant
      to the employment agreement, if Ms. Meier’s employment is terminated by the
      Company without cause or Ms. Meier terminates her employment for good reason,
      she will receive an 18 month severance package. If, however, Ms. Meier’s
      employment is terminated by us for cause or Ms. Meier terminates her employment
      without good reason, she will receive no severance package.





Ms.
      Meier
      has also agreed that during the term of her employment with us and for an 18
      month period thereafter, she will not compete with the Company nor solicit
      our
      employees. If Ms. Meier breaches any of these obligations, she would forfeit
      her
      right to any severance payments and benefits to which she otherwise would be
      entitled.





40








On
      October 23, 2008, Lisa Meier, Chief Financial Officer, Treasurer and Secretary,
      delivered to the Company a communication indicating her intention to resign
      her
      employment with the Company. On
      November 13, 2008, Ms. Meier delivered a subsequent communication to the Company
      indicating her election to remain with the Company in her current
      position.





*Platenergy
      Services and Infrastructure*





Platenergy
      Services and Infrastructure (“PSI”) is a proposed new business that Ms.
      Meier will help develop in the oilfield services industry.  Pursuant to the
      employment agreement, Ms. Meier will also be appointed President of PSI. PSI’s
      business plan is to develop products, services and solutions to optimize
      customer performance in a safe and environmentally sound manner. PSI has entered
      into a restricted stock agreement with Ms Meier pursuant to which Ms. Meier
      will
      be issued 50 restricted shares of PSI’s common stock, representing 5% of
      the outstanding shares of PSI common stock. Under the agreement, the
      shares will be subject to a four year vesting schedule, with one-quarter of
      such shares to be released on each anniversary of the date of
      issue.   All shares will be released from restriction upon a sale
      of the PSI business.




41


The
        Company is obligated for minimum salaries pursuant to all executive and
        non-executive employment agreements as follows. This table excludes the cost
        of
        employee health benefits, payments of bonuses that are either discretionary
        or
        contingent upon performance criteria and stock based compensation arrangements:





Period Ending
                September 30:2009
            
            $
            1,053,0002010
            
            
            992,0002011
            
            
            684,0002012
            
            
            550,0002013
            
            
            278,000$
            3,557,000





**Supplemental
      Oil and Gas Information**





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





Three Months Ended
            
            Year to DateMarch 31, 2008
            
            June 30, 2008
            
            September
                30, 2008
            
            September
              30, 2008ProductionOil
                (Bls)
            
            
            58,707
            
            
            71,508
            
            
            73,554
            
            
            203,769Gas
                (Mcf)
            
            
            177,189
            
            
            175,936
            
            
            248,904
            
            
            602,029Boe
                (Bls)
            
            
            88,239
            
            
            100,831
            
            
            115,038
            
            
            304,108Average
                PricesOil
                ($/Bbl)
            
            $
            96.83
            
            $
            122.22
            
            $
            115.40
            
            $
            112.44Gas
                ($/Mcf)
            
            $
            8.19
            
            $
            11.11
            
            $
            9.53
            
            $
            9.60Average
                Lifting CostPer
                Boe
            
            $
            27.53
            
            $
            28.68
            
            $
            36.25
            
            $
            31.21





**Capital
      Expenditures**-
      Oil and Gas Development





The
      reserve report prepared as of December 31, 2007 assumes that we will expend
      approximately $19.4 million in expenditures in 2008 to exploit oil and gas
      opportunities identified as part of the Company’s portfolio, with a primary
      focus of converting undeveloped potential into producing oil and gas, thereby
      generating new cash flows. The execution of the exploitation program is
      dependent on the availability of technical and field staff, product pricing,
      rig
      availability and an implementation of corporate strategy. Through September
      30,
      2008 we have incurred approximately $16.7 million of these
      expenditures.








42





**Off-Balance
      Sheet Arrangements**





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





**Contractual
      Obligations**





In
      connection with the October 26, 2007 Tandem acquisition, we entered into an
      agreement with Mr. Lance Duncan, for consulting services, including
      investigation and evaluation of possible future acquisitions. Under the terms
      of
      the consulting agreement, Mr. Duncan’s services were valued at $5 million. We
      agreed to issue to Mr. Duncan a total of 714,286 shares (based upon a $7 per
      share valuation at that date) of our restricted common stock, 25% to be issued
      upon commencement of services and the remainder in semi-annual installments
      of
      25% each over the eighteen month term of the agreement. As per the terms of
      the
      agreement, each installment will be paid with 178,572 shares of our common
      stock, based on payments of $1,250,000 valued at a fixed price of $7.00 per
      share.





On
      October 26, 2007, the first installment of 178,572 of irrevocable restricted
      shares was issued to Mr. Duncan. We were required to issue the second
      installment of 178,572 shares of our common stock on April 26, 2008.  The
      Company has not issued these shares due to a dispute between the Company and
      Duncan with respect to other claims that Duncan has raised. In
      a
      letter addressed to the Company dated October 10, 2008, Duncan demanded
      payment of $7.7 million relating to all such claims, including payment in cash
      for shares for which he is not yet entitled at a
      valuation not provided for in the consulting agreement and significantly
      above current market price. The
      Company believes that these claims have no merit and will vigorously defend
      its
      position. Stock
      compensation expense in the amount of $848,215, based upon a closing price
      of
      $4.75 per share on April 26, 2008 as quoted on the OTC Bulletin Board, is
      reflected in our financial statements for the three and nine month periods
      ended
      September 30, 2008.




**Critical
      Accounting Policies:**





**Use
      of Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.




**Full
      Cost and Impairment of Assets**





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





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







43





**Depletion**





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





**Significant
      Estimates and Assumptions**





**Oil
      and Gas Reserves**





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





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





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




**Valuation
      of proved undeveloped properties**





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





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




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





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





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





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








44







**Provision
      for DD&A**





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





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





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





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




**Hedging
      Activities**





From
      time
      to time, we utilize derivative instruments, consisting of swaps, floors and
      collars, to attempt to reduce our exposure to changes in commodity prices and
      interest rates. We account for our derivatives in accordance with SFAS No.
      133,
      Accounting for Derivative Instruments and Hedging Activities, as amended. SFAS
      No. 133 requires that all derivative instruments be recognized as assets or
      liabilities in the balance sheet, measured at fair value. The accounting for
      changes in the fair value of a derivative depends on both the intended purpose
      and the formal designation of the derivative. Designation is established at
      the
      inception of a derivative, but subsequent changes to the designation are
      permitted. We have elected not to designate any of our derivative financial
      contracts as accounting hedges and, accordingly, account for these derivative
      financial contracts using mark-to-market accounting. Changes in fair value
      of
      derivative instruments which are not designated as cash flow hedges are recorded
      in other income (expense) as changes in fair value of derivatives. Hedging
      is a
      strategy that can help a company to mitigate the volatility of oil and gas
      prices by limiting its losses if oil and gas prices decline; however, this
      strategy may also limit the potential gains that a company could realize if
      oil
      and gas prices increase. Historically, certain “costless collars” executed in
      June 2005 and swaps executed in mid 2006 by our predecessor in interest were
      employed to protect such predecessor and its creditors from exposure to lower
      oil and gas prices. However, as a result of those positions, we have and may
      continue to periodically incur settlement losses associated with the ceiling
      component of such hedges as oil prices have increased during 2007 and in 2008.
      For the three and nine months ended September 30, 2008, we reported
      derivative losses of $9.8 and $11.8 million, respectively. In the period
      from September 30, 2008 through November 10, 2008, as a result of a
      decrease in the price of crude oil, these derivative instruments experienced
      an
      unrealized increase in value of approximately $16.6 million on a consolidated
      basis.





**Asset
      Retirement Obligation**





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





**Recent
      Accounting Pronouncements**





See *Recent
      Accounting Pronouncements* in Note
      2 within the financial statements in Item 1 for a description of Recent
      Accounting Pronouncements.





45


**Item
        3.** **** **Quantitative
        and Qualitative Disclosures About Market Risk.**


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





**Interest
      Rate Risk**





At
      September 30,2008 our oil and gas subsidiaries had approximately $9 million
      in
      outstanding borrowings associated with their credit facility with a major bank
      and our engineering services company had $5.1 million in outstanding borrowings
      under a revolving credit facility and term notes with the selling shareholders
      in the acquisition of that business. To the extent we have debt outstanding,
      we
      will be subject to risk of interest rate changes that would impact our future
      results of operations and cash flows.




**Price
      Risks**





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




**Item
      4.****Controls
      and Procedures.**





**Evaluation
      of Disclosure Controls and Procedures**





The
      Company carried out an evaluation, under the supervision and with the
      participation of management, including the Company principal executive officer
      and principal financial officer, of the effectiveness of the disclosure controls
      and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as
      of
      September 30, 2008.





As
      disclosed in our Current Report on Form 8-K filed on October 31, 2008,
      management discovered an error in reporting certain commodity hedges that were
      entered into in April 2008 but inadvertently omitted from the reported second
      quarter 2008 financial results. As a result of this error the Company restated
      its previously reported unaudited consolidated financial statements for the
      three and six months periods ended June 30, 2008 in our Quarterly Report on
      a
      Form 10-Q/A for the period ended June 30, 2008, filed on November 14,
      2008.





In
      connection with this restatement, management of the Company, including our
      principal executive officer and principal financial officer, determined that
      we
      had a material weakness in our system of internal control over financial
      reporting, which weakness related to the monitoring and timely recording of
      oil
      and gas derivative hedging transactions in our financial statements. As a result
      of this material weakness, management, including our principal executive officer
      and principal financial officer, has concluded that our disclosure controls
      and
      procedures were not effective as of September 30, 2008.





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







46


**Changes
        in Internal Control Over Financial Reporting**


There
      were no changes in internal control over financial reporting that occurred
      during the third quarter of 2008 that have materially affected, or are
      reasonably likely to affect materially, our internal control over financial
      reporting. Subsequent to the end of the third quarter and as a result of the
      restatement, we have made the following improvements and implemented the
      following policies and procedures:





• While
      all
      transactions we undertook were properly authorized by the Board of Directors,
      we
      have instituted a formal policy to require any person entering into a derivative
      transaction to notify the CFO in writing immediately;





• Responsible
      accounting personnel will maintain and update daily the inventory of hedging
      derivative transactions in which we engaged;





• We
      will
      obtain at least on a monthly basis confirmation from our counterparties of
      our
      positions and their estimated fair market value;





• Reconciliations
      with counterparties will be performed on at least a monthly basis;





• Establishment
      of a formal disclosure committee of the board of directors;
      and




•Appointed
      a new in house
      counsel.





47





**OTHER
      INFORMATION**




**Item
      1.**  **Legal
      Proceedings.**





There
      have been no material changes to the legal proceedings previously disclosed
      in
      the Company’s Quarterly Report on Form 10-Q/A for the fiscal quarter ended June
      30, 2008.





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





The
      following is an update of the risk factors set forth in the Company’s Annual
      Report on Form 10-K/A for the year ended December 31, 2007 (the “Form 10-K/A”).
      There have otherwise been no material changes in our risk factors from the
      information provided in Item 1A. Risk Factors contained in the Form
      10-K/A.





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




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




Our
      operations are subject to inherent casualty risks such as fires, blowouts,
      cratering and explosions. Other risks include pollution, the uncontrollable
      flows of oil, natural gas, brine or well fluids. These risks may result in
      injury or loss of life, suspension of operations, environmental damage or
      property and equipment damage, all of which would cause us to experience
      substantial financial loss. Our drilling operations involve risks from high
      pressures and from mechanical difficulties such as stuck pipes, collapsed
      casings and separated cables.




Although
      many of our properties are located across Texas and southeast New Mexico and
      are
      not confined to one geographic area, our Tomball field, the largest producer
      in
      our current portfolio, and much of our Maverick business are located in the
      Gulf
      Coast region of Texas, an area that may be subject to catastrophic weather
      and
      natural disasters such as floods, earthquakes and hurricanes. If such disaster
      were to occur, it could severely disrupt our operations in that area and results
      of operations could be materially and adversely affected. In accordance with
      customary industry practice, we maintain insurance against some, but not all,
      of
      these risks. There can be no assurance that any insurance will be adequate
      to
      cover any losses or liabilities. We cannot predict the continued availability
      of
      insurance, or its availability at premium levels that justify its purchase.
      In
      addition, we may be liable for environmental damages caused by previous owners
      of properties that we purchased, which liabilities would not be covered by
      our
      insurance. We are currently unaware of any material liability we may have for
      environmental damages caused by previous owners of properties purchased by
      us.




***Maverick
      Engineering, our wholly owned subsidiary, is dependent upon a small number
      of
      customers for a large portion of its net revenues, and a decline in sales to
      its
      major customers could harm Maverick's results of
      operations.***




A
      small
      number of customers are responsible for a significant portion of Maverick's
      net
      revenues. During 2007, Maverick's 5 largest customers accounted for
      approximately $22 million out of its $33.8 million of net revenues. Maverick's
      customer concentration could increase or decrease depending on future customer
      requirements, which will depend in large part on business conditions in the
      market sectors in which Maverick's customers participate. The loss of one or
      more major customers or a decline in sales to Maverick’s major customers could
      significantly harm Maverick's business and results of operations. If Maverick
      is
      not able to expand its customer base, it will continue to depend upon a small
      number of customers for a significant percentage of its sales. There can be
      no
      assurance that its current customers will not reduce the amount of services
      for
      which we are retained or otherwise terminate their relationship with
      us.







48




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




None.




**Item
      3.**  **Defaults
      Upon Senior Securities.**




None.




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




None.




**Item
      5.**  **Other
      Information.**




None





**Item
      6.**  **Exhibits.**




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




**Exhibit**
              **Number**
            
            **Exhibit
                Description**31
            
            Section
                302 Certification of Principal Executive and Financial
                Officer32.1
            
            Section
                906 Certification








49


**SIGNATURES**




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


**PLATINUM
                ENERGY RESOURCES, INC.**Date:
                November 14, 2008
            By:
            /s/
                Barry KostinerBarry
                Kostiner
              Chief
                Executive Officer




By:
            /s/
                Lisa MeierLisa
                Meier
              Chief
                Financial Officer





50