Platinum Energy Resources 10Q 2006 Q2 Quarterly report

Washington, DC 20549

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

For the quarterly period ended June 30, 2006

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.)

25 Phillips Parkway Montvale, New Jersey (Address of principal executive offices)		07645 (Zip Code)

(212) 581-2401

(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 Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No 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 o

Non-Accelerated Filer x

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

As of August 14, 2006, 18,000,000 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

Table of Contents

		Page

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements		1-10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11-14

Item 3. Quantitative and Qualitative Disclosures About Market Risk		14

Item 4. Controls and Procedures		14

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		15

Item 1A. Risk Factors		15

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		15

Item 3. Defaults Upon Senior Securities		15

Item 4. Submission of Matters to a Vote of Security Holders		15

Item 5. Other Information		15

Item 6. Exhibits		15

Signatures		16

FINANCIAL INFORMATION

Item 1. Financial Statements.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development Stage Enterprise)

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

	June 30,		December 31,
	2006		2005
	(Unaudited)

CURRENT ASSETS
Cash and cash equivalents	$	6,836	$	902,498
Cash and cash equivalents held in trust		107,448,183		105,884,102
Prepaid expenses and other current assets		32,242		118,711
Total Current Assets		107,487,261		106,905,311
Performance deposit		500,000		--
Deferred acquisition and financing costs		893,865		--
TOTAL ASSETS	$	108,881,126	$	106,905,311

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	773,444	$	87,795
Due to related party		50,445		16,875
Note payable - stockholder		50,000		--
Income taxes payable - state		139,300		28,100
Total Current Liabilities		1,013,189		132,770

Common stock subject to possible redemption, 2,878,560 shares at conversion value		21,478,891		21,071,059

COMMITMENTS

STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, 1,000,000 authorized, 0 issued		--		--
Common stock, $.0001 par value; 75,000,000 shares authorized; 18,000,000 shares (which includes 2,878,560 subject to possible conversion) issued and outstanding		1,512		1,512
Additional paid-in capital		85,424,242		85,424,242
Earnings accumulated during the development stage		963,292		275,728

TOTAL STOCKHOLDERS' EQUITY		86,389,046		85,701,482

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	108,881,126	$	106,905,311

See notes to condensed consolidated financial statements

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development Stage Enterprise)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended June 30, 2006		Six Months Ended June 30, 2006		Period from April 25, 2005 (Inception) to June 30, 2005			Cumulative for the Period from April 25, 2005 (Inception) to June 30, 2006
	(Unaudited)		(Unaudited)					(Unaudited)

OPERATING EXPENSES
Administrative cost allowance - related party	$	19,170	$	33,570	$	--		$	50,445
Marketing, general and administrative expenses		134,048		323,915		3,719			474,314

Total operating expenses		153,218		357,485		3,719			524,759

OTHER INCOME (EXPENSES)
Interest income, net of interest allocated to common stock subject to possible redemption of $168,101, $407,832, $ 0 and $407,832		672,854		1,156,249		--			1,632,351
Interest (expense)		--		--		(1,093	)		(5,000	)
Total other income (expense)		672,854		1,156,249		(1,093	)		1,627,351

NET INCOME BEFORE INCOME TAXES		519,636		798,764		(4,812	)		1,102,592
PROVISION FOR INCOME TAXES		63,300		111,200		--			139,300

NET INCOME (LOSS)	$	456,336	$	687,564	$	(4,812	)	$	963,292

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES BASIC AND DILUTED		15,121,440		15,121,440		3,600,000

NET INCOME (LOSS) PER COMMON SHARE BASIC AND DILUTED	$	0.03	$	0.05	$	(0.00	)

See notes to condensed consolidated financial statements

PLATINUM ENERGY RESOURCES, INC.AND SUBSIDIARY
(A Development Stage Enterprise)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common stock
	Shares			Amount			Additional paid-in capital			Earnings accumulated during the development stage		Total stockholders equity

Common shares issued to founders for cash, May 6, 2005 at $.0077 per share		3,250,000		$	325		$	24,675		$	--	$	25,000
Retroactive effect of common stock dividend, declared September 23, 2005		1,250,000			125			(125	)		--		--
Retroactive effect of four-for-five reverse split effected October 21, 2005		(900,000	)		(90	)		90			--		--
Sale of 14,400,000 units, net of underwriters’ discount and offering expenses (includes 2,878,560 shares subject to possible conversion) on October 28, 2005 at $8.00 per unit		14,400,000			1,440			106,470,273			--		106,471,713
Proceeds subject to possible conversion of 2,878,560 shares		(2,878,560	)		(288	)		(21,070,771	)		--		(21,071,059	)
Proceeds from issuance of option		--			--			100			--		100
Net income, for the period from April 25, 2005 (Inception) to December 31, 2005		--			--			--			275,728		275,728
Balance at December 31, 2005		15,121,440			1,512			85,424,242			275,728		85,701,482
Net income, for the six months ended June 30, 2006 (unaudited)		--			--			--			687,564		687,564
Balance at June 30, 2006 (unaudited)		15,121,440		$	1,512		$	85,424,242		$	963,292	$	86,389,046

See notes to condensed consolidated financial statements

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development Stage Enterprise)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30, 2006			Period from April 25, 2005 (Inception) to June 30, 2005			Cumulative for the Period from April 25, 2005 (Inception) to June 30, 2006
	(Unaudited)						(Unaudited)

Cash Flows From Operating Activities
Net income	$	687,564		$	(4,812	)	$	963,292
Adjustments to reconcile net income to net cash used in operating activities:
Interest on cash held in trust, net of interest income allocated to common stock subject to possible redemption		407,832			--			407,832
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		86,469			--			(32,242	)
Accrued expenses		685,649			1,093			773,444
Due to related party		33,570			--			50,445
Income taxes payable		111,200			--			139,300
Net cash provided by (used in) operating activities		2,012,284			(3,719	)		2,302,071

Cash Flows From Investing Activities
Cash held in Trust Fund		(1,564,081	)		--			(107,448,183	)
Performance deposit		(500,000	)		--			(500,000	)
Deferred acquistion and financing costs		(893,865	)		--			(893,865	)
Net cash used in investing activities		(2,957,946	)		--			(108,842,048	)

Cash Flows From Financing Activities
Proceeds from the sale of common stock		--			25,000			25,000
Proceeds from note payable-stockholder		50,000			175,000			230,000
Repayment of note payable-stockholder		--			--			(180,000	)
Gross proceeds of public offering		--			--			115,200,000
Payments of costs of public offering		--			--			(8,728,287	)
Payment of deferred offering costs		--			(114,090	)		--
Proceeds from issuance of underwriter’s stock option		--			--			100
Net cash provided by financing activities		50,000			85,910			106,546,813

Net (Decrease) Increase in Cash		(895,662	)		82,191			6,836

Cash - Beginning of the Period		902,498			--			--

Cash - End of Period	$	6,836		$	82,191		$	6,836

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	--		$	--		$	5,000
Income taxes	$	--		$	--		$	--
Non-Cash Investing and Financing Activities:
Deferred offering costs accrued and deferred	$	--		$	35,000		$	--

See notes to condensed consolidated financial statements

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development Stage Enterprise)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - Nature of Operations and Summary of Significant Accounting Policies

Platinum Energy Resources, Inc. and subsidiary (a development stage enterprise) (the “Company”) was incorporated in Delaware on April 25, 2005 as a blank check company. The Company’s objective is to acquire an operating business in the energy industry.

As of June 30, 2006, the Company had not yet commenced any commercial operations. All activities through June 30, 2006 relate to the Company's formation, the completion of the public offering described below and the completion of the Merger transaction , as defined below. The Company selected December 31 as its fiscal year-end. The accompanying condensed consolidated financial statements have been prepared in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 7, Development Stage Enterprises, since planned principal operations have not commenced.

With respect to a Business Combination that is approved and consummated, any Public Stockholder who voted against the Business Combination may demand that the Company convert his or her shares. The per share conversion price will equal the amount in the Trust Account, calculated as of two business days prior to the consummation of the proposed Business Combination, divided by the number of shares of common stock held by Public Stockholders at the consummation of the Offering. Accordingly, Public Stockholders holding less than 20% of the aggregate number of shares owned by all Public Stockholders may seek conversion of their shares in the event of a Business Combination. Such Public Stockholders are entitled to receive their per-share interest in the Trust Account computed without regard to the shares held by Founding Stockholders.

The Company’s Certificate of Incorporation provides for mandatory liquidation of the Company in the event that the Company does not consummate a Business Combination within 18 months from the date of the consummation of the Offering (October 28, 2005), or 24 months from the consummation of the Offering if certain extension criteria have been satisfied. In the event of liquidation, it is likely that the per share value of the residual assets remaining available for distribution (including Trust Fund assets) will be less than the initial public offering price per share in the Offering (assuming no value is attributed to the Warrants contained in the Units in the Offering discussed in Note 3 - “Initial Public Offering”).

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development Stage Enterprise)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Principles of Consolidation

The condensed consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary PER Acquisition Corp, (“PER”) after elimination of all intercompany accounts and transactions. PER was organized as a Delaware corporation on January 25, 2006 for the purpose of merging into Tandem Energy Holdings, Inc. See Note 4 - "Business Combination" for a discussion of a definitive agreement and plan of merger entered into January 26, 2006.

Income Taxes

Deferred income taxes are provided for the differences between the bases of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

For Federal income tax purposes, as of June 30, 2006, the Company has a net operating loss carry forward approximating $630,000, which expires in 2020 and 2021. The net operating loss carry forward gives rise to a deferred tax asset approximating $214,000 against which the Company has recorded a full valuation allowance since management believes that, based upon current available objective evidence, it is not more likely than not that the deferred tax asset will be realized.

The effective tax rate differs from the statutory rate of 34% due principally to Federal tax free interest income, permanent differences and the effect of New Jersey state income taxes.

Income (Loss) Per Share

Income per share is computed by dividing the net income or loss by the weighted-average number of shares of common stock outstanding during the period. The warrants outstanding were not considered in the calculation since they are not exercisable as of June 30, 2006.

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.

Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying financial statements. Such standards may have an effect on financial statements in future periods.

Concentration of Risk

At June 30, 2006, the Company has cash balances in banks in excess of the maximum amount insured by the FDIC.

NOTE 2 - Basis of Presentation

The accompanying condensed consolidated unaudited interim financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial statements and the instructions to Form 10-Q. These financial statements reflect all adjustments, consisting of normal and recurring adjustments and accruals, which are, in the opinion of management, necessary for a fair presentation of the financial position of the Company as of June 30, 2006 and the results of operations and cash flows for the three and six month periods ended June 30, 2006, in conformity with accounting principles generally accepted in the United States of America applicable to interim periods. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The results of operations presented are not necessarily indicative of the results to be expected for the future quarters or for the year ending December 31, 2006.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development Stage Enterprise)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company believes it will have sufficient available funds (outside of the trust fund) to operate through June 30, 2007, in the event that the proposed business combination as described in Note 4 is not consummated during that time and assuming that the related performance deposit is returned. However, given the Company’s cash position of approximately $7,000 at June 30, 2006, limited sources of liquidity, current liabilities and expected continued costs associated with the proposed business combination, sufficient funds to continue operations may not be available if the proposed business combination is not consummated. We also may not have sufficient funds necessary to complete the proposed merger with Tandem. If, pursuant to the terms of the merger agreement, the performance deposit is forfeited, sufficient funds to continue to seek an alternative business combination may not be available absent additional sources of funds through a private debt financing or a private offering of debt or equity.

NOTE 3 - Initial Public Offering

On October 28, 2005, the Company sold to the public 14,400,000 units (“Units”) at an offering price of $8.00 per Unit. Each Unit consists of one share of the Company’s common stock, $0.0001 par value, and one Redeemable Common Stock Purchase Warrant (“Warrants”). Each Warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $6.00 commencing on the later of the completion of a Business Combination with a target business or one year from the effective date of the Offering and expiring four years from the effective date of the Offering. At the Company’s option the Warrants will be redeemable, in whole or in part, upon written consent of the representative of the underwriters, at a price of $0.01 per Warrant upon thirty (30) days notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $11.50 per share for any twenty (20) trading days within a thirty (30) trading day period ending on the third day prior to the date on which notice of redemption is given. Separate trading of the common stock and Warrants comprising the Units commenced on or about December 9, 2005. An additional 2,160,000 Units could have been sold for over-allotments in the 45-day period after the closing date of October 28, 2005. No over-allotment Units were sold.

In connection with the Offering, the Company issued an option, 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 and one year from the date of the prospectus relating to the Offering (October 24, 2005) and expiring five years from such date. The option may be exercised for cash or on a “cashless” basis, at the holder’s option, such that the holder may use the appreciated value of the option (the difference between the exercise prices of the option and the underlying Warrants and the market price of the Units and underlying securities) to exercise the option without the payment of any cash.

The option and the 720,000 units, the 720,000 shares of common stock and the 720,000 warrants underlying such units, and the 720,000 shares of common stock underlying such warrants, have been deemed compensation by the National Association of Securities Dealers (“NASD”) and are therefore subject to a 180-day lock-up pursuant to Rule 2710(g)(1) of the NASD Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of the Offering prospectus (October 24, 2005). Although the purchase option and its underlying securities are intended to be registered under the registration statement relating to the Offering, 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, other than underwriting commissions, which will be paid for by the holders themselves.

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.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development Stage Enterprise)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company has accounted for the fair value of the option, inclusive of the receipt of the $100.00 cash payment, as a cost of the Offering resulting in a charge directly to stockholders’ equity. The Company estimates that the fair value of this option is approximately $2,412,000 ($0.168 per Unit) using a Black-Scholes option-pricing model. The fair value of the option granted to the representative of the underwriters is estimated as of the date of grant using the following assumptions: (i) expected volatility of 49.65%, (ii) risk-free interest rate of 4.34%, (iii) expected life of 5 years and (iv) a dividend rate of zero.

The volatility calculation of 49.65% is based on the 365-day average volatility of a representative sample of seven (7) companies with an average market capitalizations of $407.0 million, ranging from $309.0 million to $595.0 million, that Management believes are engaged in the oil and gas energy and production industry (the “Sample Companies”). Because the Company does not have a trading history, the Company needed to estimate the potential volatility of its common stock price, which will depend on a number of factors which cannot be ascertained at this time. The Company referred to the 365-day average volatility of the Sample Companies because Management believes that the average volatility of such companies is a reasonable benchmark to use in estimating the expected volatility of the Company’s common stock post-business combination. A one-year period was selected as being representative of the current environment and market valuations for companies in this sector. Although an expected life of five years was taken into account for purposes of assigning a fair value to the option, if the Company does not consummate a Business Combination within the prescribed time period and liquidates, the option would become worthless.

NOTE 4 - Proposed Business Combination

On January 26, 2006, the Company, and its wholly-owned subsidiary, PER Acquisition Corp., a Delaware corporation (“Acquisition Sub”) (formed on January 25, 2006), entered into a definitive Agreement and Plan of Merger, as amended, (the “Merger Agreement”) with Tandem Energy Holdings Inc., a Nevada corporation (“Tandem”), which was amended on June 30, 2006 and July 31, 2006 pursuant to which, subject to satisfaction of the conditions contained in the Merger Agreement, Acquisition Sub will merge with and into Tandem (the “Merger”). At the effective time of the Merger (the “Effective Time”), Tandem will be the surviving corporation and will become a wholly-owned subsidiary of the Company.

Pursuant to the Merger Agreement, current stockholders of Tandem will receive, in the aggregate, approximately $102.0 million, in cash, less the amount required to retire the indebtedness of Tandem and its subsidiaries of approximately $42.5 million. More specifically, at the Effective Time and as a result of the Merger, holders of the outstanding Tandem common stock are to receive $2.53 per share. However, certain directors and officers of Tandem, who in the aggregate own approximately 85% of the outstanding Tandem common stock have waived their right to receive $0.40 of such consideration and have elected to receive only $2.13 per share. The waived amounts will be added to the amounts to be received by stockholders who purchased their shares directly from Tandem or in the open market. Accordingly, such stockholders will receive an aggregate of $4.50 per share.

On January 26, 2006, the Company provided to Tandem a performance deposit of $500,000 which will be applied toward the payment of the purchase price upon closing. The performance deposit would be forfeited in the event the Merger Agreement is terminated for any reason other than a material breach of the terms of the Merger Agreement by Tandem. The merger agreement further contemplates the reimbursement, at closing, of Tandem by the Company for all capital and workover-related costs for the period from January 1, 2006 through the closing in an amount not to exceed an average of $700,000 per month. Additionally, the merger agreement requires Tandem to have working capital of at least $5.0 million at closing (including its rights to unpaid reimbursements of capital and workover-related costs) with any shortfall to be covered by certain of Tandem’s stockholders who executed the merger agreement and any excess to be paid to such stockholders.

The closing of the Merger is subject to various closing conditions, including the filing of a proxy statement with the U.S. Securities and Exchange Commission, approval of the Merger Agreement by the stockholders of the Company and Tandem and the satisfaction or waiver of other customary conditions. In addition, the closing is conditioned on holders of less than twenty percent (20%) of the shares of the Company common stock issued in the offering voting against the Merger and electing to convert their shares of the Company common stock into cash, as permitted by the Company certificate of incorporation. The Company’s initial shareholders, officers and directors, who hold approximately 20% of the Company’s voting stock, have agreed to vote their shares on the Merger in accordance with the vote of the majority of the non-affiliated Public Stockholders. Certain officers and directors of Tandem, holding approximately 75% of the outstanding shares of Tandem common stock have agreed to vote in favor of the Merger. Accordingly, Tandem stockholder approval is assured.

PLATINUM ENERGY RESOURCES, INC. AND SUBSIDIARY

(A Development Stage Enterprise)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company and Tandem have made customary representations and warranties and covenants in the Merger Agreement. In addition, Tandem has agreed not to solicit proposals related to alternative business combination transactions or enter into discussions concerning or to provide information in connection with alternative business combination transactions. The Company has agreed not to enter into any agreement to acquire any oil and gas interest that would require a closing prior to the closing of the Merger.

The Merger Agreement contains certain termination rights for both the Company and Tandem, including, subject to certain limited exceptions, the ability for the Company to terminate the Merger Agreement prior to closing in the event it is not satisfied or believes in its sole judgment that it will not be satisfied with the results of its due diligence investigation.

In connection with the Merger Agreement:

a. The Company retained C.K. Cooper & Company, Inc., an investment banking firm, to provide a fairness opinion as to whether the merger consideration is fair, from a financial point of view, to the Company’s stockholders and that the fair value of Tandem is at least equal to 80% of the Company’s net assets. The Company paid $50,000 upon execution of the agreement and is obligated for an additional payment of $30,000 upon closing of the merger transaction.

b. In connection with the Merger Agreement, the Company entered into a letter 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. Pursuant to the letter agreement, the Company agreed to pay Mr. Duncan a fee of $3.0 million at the consummation of the Merger for services rendered in connection with the Merger, including introduction of the parties, facilitation of the negotiations among the parties and release of any claims to ownership of shares of common stock of Tandem by Mr. Duncan and his affiliates. Pursuant to the letter agreement, the Company has also agreed to issue to Mr. Duncan over an 18-month period following the consummation of the Merger restricted shares of the Company’s common stock valued at $5.0 million in consideration of continuing consulting services, including investigation of possible future acquisitions for the Company and, if warranted, introductions to parties and facilitation of the negotiation process.

Tandem has been informed of a claim of ownership of 2.7 million shares of Tandem common stock. Tandem believes such shares to be a portion of 2.878 million shares which Tandem asserts were invalidly issued but such claim could result in a claim against Platinum upon consummation of the merger. Tandem has filed a lawsuit in Nevada District Court seeking a declaration by the court that the certificates evidencing the shares were not validly issued, that such shares should be cancelled by the transfer agent, that the third party does not have a valid claim to or interest in the shares and the party claiming ownership of the 2.7 million shares has filed a competing lawsuit in the Florida Circuit Court, naming Platinum as a defendant in addition to Tandem based upon the mistaken belief that the merger has already been consummated. These shares are not included in the outstanding shares of Tandem. Pursuant to the terms of the merger agreement, as amended, certain major stockholders of Tandem will indemnify Platinum against, among other things, claims arising or losses resulting from capitalization issues; such indemnification obligations are not subject to financial limitations or qualifications. The merger agreement, as amended, provides that $5 million of the merger consideration otherwise payable to Messrs. Culp, Chambers, Yocham and Cunningham will be deposited with the exchange agent (appointed to act as agent for receipt of the shares of Tandem common stock and issuance of merger consideration payments to the stockholders of Tandem tendering their shares) to be held in escrow for a period of 2 years to be used to support such shareholders’ indemnification obligations. The amount held in escrow will be available for, among other things, payment of the claim of Mr. Mortensen or his transferee (if adjudicated to be valid after the merger has been consummated) as well as for other claims or losses resulting from capitalization issues. The amount of the escrow does not reflect a limitation relating to the indemnification obligations of Messrs. Culp, Chambers, Yocham and Cunningham which obligations are unlimited under the merger agreement. Management of Platinum believes that these provisions would address the claim of ownership of 2.878 million shares of Tandem common stock and other claims, if made. However, the amount held in escrow to support the indemnification obligations may be insufficient to address such claims and Platinum would then rely solely on the unsecured indemnification obligations of Messrs. Culp, Chambers, Yocham and Cunningham.

In July 2006, the Company received a commitment letter from a bank, conditioned upon consummation of the Tandem transaction and execution of a definitive financing agreement, for $45,000,000 in financing. This arrangement is comprised of a $35,000,000 formula based secured reducing revolving line of credit and a $10,000,000 secured acquisition line of credit. Availability will be subject to a formula based upon assets and maintenance of compliance with certain financial ratios. The arrangement would have a four-year term, and would require minimum $825,000 monthly mandatory principal payments to reduce any outstanding balance of the revolving line of credit.

Deferred acquisition and financing costs reflected on the condensed consolidated balance sheet as of June 30, 2006, includes costs principally incurred in connection with the Tandem transaction, including due diligence related costs, fair value consultants and other fees.

NOTE 5 - Note Payable - Stockholder

In May 2006, the Company received $50,000 from the proceeds of a note payable to an officer and stockholder of the Company. The note bears interest at 5% per annum and is due on the earlier of (i) April 28, 2007 or (ii) upon the consummation of the Merger.

NOTE 6 - Commitments

As of June 30, 2006 the Company occupied office space provided by an affiliate of a Founding Stockholder. Such affiliate has agreed that, until the acquisition of a target business by the Company, it will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company agreed to pay such affiliate $7,500 per month for such office space and services commencing on the effective date of the Offering. As of June 30, 2006, $50,445 has been accrued with respect to this arrangement. Upon completion of a Business Combination or the distribution of the trust account to the public stockholders, the Company will no longer be required to pay this monthly fee.

In October 2005, the Company entered into a sublease for office space expiring April 2009 at the rate of $2,844 per month. The agreement provided that the Company, at its option, may cancel the sublease effective, November 2006, and that the sublessor could request that the Company vacate the premises on 60 days advanced notice. Pursuant to a termination agreement, the Company received a refund of advanced rent and of the security deposit aggregating $17,063, which was included in prepaid expenses and other current assets on the balance sheet as of December 31, 2005.

In February 2006, the Company entered into an operating facilities sublease arrangement in New Jersey. The term of the sublease commenced on March 1, 2006 and expires February 28, 2009, subject to earlier termination. The Company may terminate the sublease without penalty within a year of the commencement date by providing the sublessor two months’ prior written notice. Prior to the first anniversary of the commencement date, the sublessor may give notice to the Company that it has found an alternative tenant, at which point the Company has 10 days to elect to continue the sublease for the full term or vacate within two months. The gross rental commitment, including annual escalations and electric charge, approximates $20,000 for each year of the three year lease term, subject to earlier termination as described.

The Company has engaged Casimir Capital LP (“CCLP”), the representative of the underwriters, on a non-exclusive basis, as its agent for the solicitation of the exercise of the Warrants. To the extent not inconsistent with the guidelines of the NASD and the rules and regulations of the Securities and Exchange Commission (“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.

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

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

Overview

Platinum is a blank check company. We were formed on April 25, 2005, to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an unidentified operating business in the global oil and gas exploration and production, or E&P industry. Our initial business combination must be with a target business or businesses whose fair market value is at least equal to 80% of net assets at the time of such acquisition. We intend to utilize cash derived from the proceeds of our recently completed public offering, our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business combination.

At June 30, 2006, Platinum had not yet commenced any commercial operations. All activities for the period from April 25, 2005 (inception) through June 30, 2006 relate to the Company’s formation, the completion of the public offering and the completion of the Merger described below. We selected December 31 as the Company’s fiscal year end.

Merger Announcement

On January 26, 2006, we announced that we had executed a definitive agreement and plan of merger with Tandem Energy Holdings, Inc., a Nevada corporation (“Tandem”) which was amended on June 30, 2006 and July 31, 2006, pursuant to which, subject to satisfaction of the conditions contained in the merger agreement, our wholly-owned subsidiary, PER Acquisition Corp., will merge with and into Tandem. At the effective time of the merger, Tandem would be the surviving corporation in the merger with PER Acquisition Corp. and would continue as a wholly-owned subsidiary of Platinum. Currently, Tandem, through its wholly-owned subsidiary, Tandem Energy Corporation, a Colorado corporation headquartered in Midland, Texas, is engaged in the oil and gas E&P industry and operates oil fields in Texas and New Mexico.