Unassociated Document

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PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	5
	Consolidated Statements of Cash Flows	6
	Notes to the Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4T.	Controls and Procedures	38

PART II- OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 5.	Other Information	40
Item 6.	Exhibits	40
Signatures		41

	March 31, 2011			December 31, 2010
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	2,453,011		$	1,307,745
Restricted cash		448,851			466,761
Accounts receivable, net of $562,745 allowance for doubtful accounts at March 31, 2011 and December 31, 2010
Oil and gas sales		2,038,693			2,087,914
Due from joint interest partner		169,168			660,638
Inventory		80,603			91,588
Fair value of commodity derivatives - current		57,200			269,400
Prepaid expenses and other current assets		41,007			28,602
Assets held for sale – discontinued operations		3,367,722			3,455,241
Total current assets		8,656,255			8,367,889

NON-CURRENT ASSETS
Property and equipment, at cost
Oil and gas properties, full cost method		210,052,708			209,896,996
Land		2,700,000			2,700,000
Equipment		3,937,486			3,939,986
Less accumulated depreciation, depletion, amortization and impairment		(172,934,986	)		(171,806,199	)
Property and equipment, net		43,755,208			44,730,783
Total assets	$	52,411,463		$	53,098,672

	March 31, 2011			December 31, 2010
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES, not subject to compromise
Accounts payable - trade	$	771,761		$	1,736,534
Accounts payable - oil and gas sales		1,050,497			820,620
Accrued liabilities and other		2,277,508			2,102,439
Income taxes payable		165,363			132,690
Current portion of asset retirement obligation		828,357			923,751
Current maturities of long-term debt – related party		5,414,775			-
Current liabilities related to assets held for sale – discontinued operations, not subject to compromise		2,367,563			2,330,397
Total current liabilities, not subject to compromise		12,875,824			8,046,431

NON-CURRENT LIABILITIES, not subject to compromise
Long-term debt and notes payable, less current maturities		3,746,057			3,678,972
Long-term debt, less current maturities – related party		-			5,316,510
Asset retirement obligation, less current portion		6,677,751			6,613,534
Noncurrent liabilities related to assets held for sale – discontinued operations, not subject to compromise		45,556			81,588

Total liabilities, not subject to compromise		23,345,188			23,737,035

LIABILITIES SUBJECT TO COMPROMISE, RELATED TO ASSETS HELD FOR SALE – DISCONTINUED OPERATIONS		5,099,307			5,098,455

COMMITMENTS AND CONTINGENCIES		-			-

STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, 1,000,000 authorized, 0 issued		-			-
Common stock, $0.0001 par value; 75,000,000 shares authorized; 24,068,675 shares issued and 22,606,476 shares outstanding at March 31, 2011 and December 31, 2010		2,407			2,407
Additional paid-in capital		152,152,899			152,134,327
Accumulated deficit		(116,726,283	)		(116,411,497	)
Treasury stock, at cost - 1,462,199 shares at March 31, 2011 and December 31, 2010		(11,462,055	)		(11,462,055	)
Total stockholders' equity		23,966,968			24,263,182

Total liabilities and stockholders' equity	$	52,411,463		$	53,098,672

	Three Months Ended March 31,
	2011			2010
Oil and gas sales	$	5,718,849		$	6,056,196

Costs and expenses
Lease and other operating expense		2,752,359			2,290,867
Marketing, general and administrative expense		1,292,701			1,503,360
Depreciation, depletion and amortization expense		1,122,787			1,293,476
Accretion of abandonment obligations		134,041			356,347
Total costs and expenses		5,301,888			5,444,050

Operating income		416,961			612,146

Other income (expenses)
Interest income		2,300			49,735
Interest expense		(67,131	)		(210,525	)
Interest expense – related party		(113,133	)		-
Realized and unrealized loss on commodity derivatives, net		(212,244	)		(1,305,806	)
Foreign currency exchange loss		(98,265	)		-
Total other income (expenses)		(488,473	)		(1,466,596	)

Loss before income taxes and discontinued operations		(71,512	)		(854,450	)

Income tax expense (benefit)		(8,267	)		-
Loss before discontinued operations		(63,245)			(854,450	)

Loss from discontinued operations		(251,541	)		(98,322	)
Net loss	$	(314,786	)	$	(952,772	)

LOSS PER COMMON SHARE (BASIC AND DILUTED):

Loss from continuing operations, net of tax	$	(0.00	)	$	(0.04	)
Loss from discontinued operations, net of tax		(0.01	)		(0.00	)
Net loss per common share	$	(0.01	)	$	(0.04	)

Weighted average shares outstanding (basic and diluted)		22,606,476			22,338,619

	Three Months Ended March 31,
	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(314,786	)	$	(952,772	)
Loss from discontinued operations		251,541			98,322
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization		1,122,787			1,293,476
Accretion of asset retirement obligation		134,041			356,347
Stock-based compensation		18,572			-
Amortization of debt discount		67,085			62,407
Realized and unrealized loss on commodity derivatives, net		212,200			1,305,806
Foreign currency exchange loss		98,265			-
Changes in operating assets and liabilities:
Accounts receivable – oil and gas sales		49,221			(513,366	)
Accounts receivable – due from joint interest partner		491,470			(196,340	)
Inventory		10,985			(28,366	)
Prepaid expenses and other current assets		(12,405	)		87,297
Accounts payable – trade and oil and gas sales		(734,896	)		404,480
Accrued liabilities and other		175,069			172,392
Income taxes payable		32,673			(51,707	)
Cash provided by operating activities – continuing operations		1,601,822			2,037,977
Cash provided by operating activities – discontinued operations		(109,499)			490,451
Cash provided by operating activities		1,492,323			2,528,428

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(312,430	)		(51,608	)
Cash received (paid) on settlement of derivatives		-			473,306
Increase in restricted cash		17,910			-
Cash funded to Maverick		(162,036	)		(240,571	)
Cash provided by (used in) investing activities – continuing operations		(456,556	)		181,127
Cash used in investing activities – discontinued operations		-			-
Cash provided by (used in) investing activities		(456,556	)		181,127

	Three Months Ended March 31,
	2011			2010

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt		-			(20,015	)
Cash used in financing activities – continuing operations		-			(20,015	)
Cash used in financing activities – discontinued operations		(32,699	)		(33,243	)
Cash used in financing activities		(32,699	)		(53,258	)

Net increase in cash		1,003,068			2,656,297
Less (add): net decrease (increase) in cash – discontinued operations		(142,198)			(457,208	)
Net increase in cash – continuing operations		1,145,266			2,199,089

Cash and cash equivalents - beginning of the period		1,307,745			2,035,635
Cash and cash equivalents - end of the period	$	2,453,011		$	4,234,724

SUPPLEMENTAL INFORMATION:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	53,688		$	147,920

NONCASH TRANSACTIONS:
Issuance of treasury stock to settle accrued liability	$	-		$	1,098,215

Platinum Energy Resources, Inc. (which we refer to as “we,” “us,” “Platinum” or the “Company”) is an independent oil and gas production company. Platinum Energy Resources, Inc. is a holding company and all operations are conducted by its subsidiaries, which include Platinum Energy Resources Gulf Coast, Inc., Tandem Energy Corporation, Mixon Drilling, Inc., Red Iron Tool Company, Inc., and Maverick Engineering, Inc.

During November 2010 and in conjunction with Maverick Engineering, Inc. (“Maverick”) seeking reorganization under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”), Platinum determined it would sell, or otherwise dispose of, its entire ownership interest in Maverick and discontinue its engineering services operating segment. Since that time, the Company’s continuing operations include operations from only one business line - independent oil and gas production, through which the Company conducts oil and natural gas development, acquisition, and production. The Company and Maverick are currently developing the reorganization plan and intend to submit the reorganization plan for confirmation prior to the extended due date of July 23, 2011. Additional information related to our discontinued operations can be found in Note 4.

The accompanying unaudited interim consolidated financial statements as of March 31, 2011 and 2010 and for the three months then ended have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the annual audited consolidated financial statements. The consolidated financial statements as of and for the three months ended March 31, 2011 and 2010 are unaudited. In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The consolidated balance sheet at December 31, 2010 has been derived from audited consolidated financial statements; however, the notes to the consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the SEC.

The consolidated financial statements have been prepared in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 852-10-45, Reorganizations - Other Presentation Matters (“ASC 852”). ASC 852 does not change the application of GAAP in the preparation of the Company’s financial statements. However, for periods including and subsequent to the filing of a Chapter 11 petition, ASC 852 does require that the financial statements distinguish transactions and events that are directly associated with the reorganization from those that are associated with the ongoing operations of the business.

Due to the Company’s decision to discontinue the engineering services line of business and sell, or otherwise dispose of, its ownership of Maverick, the Company’s consolidated financial statements have also been prepared in accordance with ASC Topic 205-20, Discontinued Operations, and ASC Topic 360-10-45, Other Presentation Matters. Assets held for sale were $3,367,722 and $3,455,241 as of March 31, 2011 and December 31, 2010, respectively. Assets held for sale include all assets of Maverick.

In accordance with ASC 852, Maverick (i) separated liabilities that are subject to compromise from liabilities that are not subject to compromise and (ii) distinguished transactions and events that were directly associated with the reorganization from those that are associated with the ongoing operations of the business. Maverick’s liabilities subject to compromise and liabilities not subject to compromised are presented separately, as liabilities related to assets held for sale, in the Company’s consolidated financial statements.

Expenses incurred and settlement impacts due to the Chapter 11 cases are reported separately as reorganization expenses, net on Maverick’s Statements of Operations. For the three months ended March 31, 2011, reorganization expenses were $76,309 and consisted solely of legal fees. Interest expense related to pre-petition indebtedness has been reported only to the extent that it will be paid during the pendency of the Chapter 11 cases, is permitted by Bankruptcy Court approval or is expected to be an allowed claim.

The pre-petition liabilities subject to compromise, including claims that become known after a petition is filed, are reported on the basis of the expected amount of the allowed claims, as opposed to the amounts for which those allowed claims may be settled. These expected allowed claims require management of Maverick to estimate the likely claim amount that will be allowed by the Bankruptcy Court prior to its ruling on the individual claims. These estimates are based on reviews of claimants’ supporting material, obligations to mitigate such claims, and assessments by management and third-party advisors. The Company expects that its estimates, although based on the best available information, will change as the claims are resolved by the Bankruptcy Court.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include volumes of oil and natural gas reserves, abandonment obligations, impairment of oil and natural gas properties, depreciation, depletion and amortization, income taxes, bad debts, the value of commodity derivatives, contingencies and litigation.

Oil and natural gas reserve estimates, which are the basis for unit-of-production depletion and the full cost ceiling test, have a number of inherent uncertainties. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities of oil and natural gas that are ultimately recovered. In addition, reserve estimates are vulnerable to changes in prices of crude oil and natural gas. Such prices have been volatile in the past and can be expected to be volatile in the future.

Cash and cash equivalents include demand deposits and money market funds for purposes of the statements of cash flows. The Company considers all highly liquid monetary instruments with original maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). Beginning December 31, 2010 through December 31, 2012 all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. This unlimited insurance coverage is separate from, and in addition to, the insurance coverage provided to the depositor’s other accounts held by a FDIC-insured institution, which are insured for balances up to $250,000 per depositor until December 31, 2013. At March 31, 2011, the Company had $1,528,724 in cash deposits in excess of FDIC insured limits.

At March 31, 2011 and the Company had $448,851 of restricted cash compared to $466,761 at December 31, 2010. Restricted cash is classified as a current asset. The restricted cash serves as collateral for letters of credit. No letter of credit has a maturity greater than one year, although certain of them can be renewed for another year. The cash is held in custody by the issuing bank, is restricted as to withdrawal or use and is currently invested in money market funds. Income from these funds is paid to the Company.

Accounts receivable are stated at the historical carrying amount net of write-offs and allowance for uncollectible accounts. The carrying amount of the Company’s accounts receivable approximates fair value because of the short-term nature of the instruments. The Company routinely assesses the collectability of all material trade and other receivables. The Company’s oil and gas receivables consist primarily of receivables from purchasers of the Company’s oil and gas and from joint interest owners on properties the Company operates. Joint interest receivables are recorded when the Company incurs expenses on behalf of the non-operator interest owners in the properties the Company operates. The Company may have the ability to withhold future revenue disbursements to recover any non-payment of these joint interest billings.

The Company’s reported balance of accounts receivable, net of allowance for doubtful accounts, represents management’s estimate of the amount that ultimately will be realized in cash. The Company reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical payment trends, the age of the receivables and knowledge of the individual customers or joint interest owners. When the analysis indicates, management increases or decreases the allowance accordingly. However, if the financial condition of our customers were to deteriorate, additional allowances may be required. The Company did not change its allowance for doubtful accounts during the quarter ended March 31, 2011.

Inventories consist principally of tubular goods and equipment and are valued at lower of cost or market. Cost is determined using the first-in, first-out (“FIFO”) method. Periodically, obsolescence reviews are performed for slow-moving inventory and reserves are established based on current assessment of future usage. At March 31, 2011 and December 31, 2010, no reserve for obsolescence was required.

The Company uses the full-cost method of accounting for its development activities. Under this method of accounting, the cost of both successful and unsuccessful development activities is capitalized as oil and gas property and equipment. Proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs 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, in which case a gain or loss would be recognized in the statement of operations. 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, its sole cost center.

Oil and gas properties may include costs that are excluded from costs being depleted. 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 in process development drilling costs. All costs excluded are reviewed at least quarterly to determine if impairment has occurred. The Company did not exclude any costs at March 31, 2011 or December 31, 2010.

In accordance with Rule 4-10 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. The price used to establish economic recoverability is the average price during the 12-month period preceding the end of the entity's fiscal year and calculated as the un-weighted arithmetic average of the first-day-of-the-month price for each month within such 12-month period.

Under the full cost method of accounting, a ceiling test is performed quarterly. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test determines a limit on the carrying value of oil and gas properties. The capitalized costs of proved oil and gas properties, net of accumulated depreciation, depletion, amortization, and impairment and the related deferred income taxes, may not exceed the estimated future net cash flows from proved oil and gas reserves, excluding future cash outflows associated with settling asset retirement obligations that have been accrued on the balance sheet, generally using current prices (with consideration of price changes only to the extent provided by contractual arrangements) as of the date of the latest balance sheet presented 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 depreciation, depletion, amortization and impairment. In the application of the full cost method, the term “current price” means the average price during the 12-month period prior to the end of the current period, determined as the un-weighted arithmetical average of the prices on the first day of each month within the 12-month period.

Depletion, depreciation and amortization is provided using the unit-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment (ceiling test) indicate that the proved properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value.

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expense. There have been no material changes in the methodology used by the Company in calculating depletion of oil and gas properties under the full cost method during the three months ended March 31, 2011 and 2010.

Property and equipment are carried at cost, less accumulated depreciation. Depreciation expense ($68,787 for the three months ended March 31, 2011 and $31,978 for the three months ended March 31, 2010) is computed using the straight-line method over the estimated useful lives ranging from 3 to 15 years, except for land, which is not depreciated. Property and equipment held for sale is not depreciated while it is classified as held for sale.

Renewals and improvements that significantly extend the useful lives of the assets are capitalized. Capitalized leased assets and leasehold improvements are depreciated over the shorter of their useful lives or the remaining lease term. Expenditures for maintenance and repairs are charged to expense as incurred. The cost of assets retired or otherwise disposed of and the related disposals are credited or charged to operations.

The Company reviews its long-lived assets that have finite lives for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment (“ASC 360”), which requires that companies evaluate the fair value of long-lived assets based on the anticipated undiscounted future cash flows to be generated by the assets when indicators of impairment exist to determine if there is impairment to the carrying value. There have been no triggering events in the three months ended March 31, 2011 and 2010.

From time to time, the Company may utilize derivative instruments, consisting of puts, calls, swaps, and price collars, to attempt to reduce its exposure to changes in commodity prices. The Company accounts for its derivatives in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”), which 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. 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 cash flow hedges are recorded in other income (expense) as realized and unrealized (gain) lloss on commodity derivatives.

Sales of natural gas, natural gas liquids and oil, net of any royalties, are recognized when natural gas, natural gas liquids and oil have been delivered to a custody transfer point, persuasive evidence of a sales arrangement exists, the rights and responsibility of ownership pass to the purchaser upon delivery, collection of revenue from the sale is reasonably assured, and the sales price is fixed or determinable. The Company sells natural gas, natural gas liquids and oil on a monthly basis. Virtually all of our contracts’ pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, quality of the natural gas, natural gas liquid or oil, and prevailing supply and demand conditions, so that the price of the natural gas, natural gas liquid and oil fluctuates to remain competitive with other available natural gas, natural gas liquid and oil supplies.

The Company has elected the entitlements method to account for gas production imbalances. Gas imbalances occur when we sell more or less than our entitled ownership percentage of total gas production. Any amount received in excess of our share is treated as a liability. If we receive less than our entitled share the underproduction is recorded as a receivable. The Company did not have any significant gas imbalance positions at March 31, 2011 or 2010.

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 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 the codification, 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.

At March 31, 2011, the Company had 21,000 options to purchase shares of its common stock outstanding with a weighted average exercise price of $1.39, of which 3,800 options were exercisable with a weighted average exercise price of $2.60. No options were granted, exercised or forfeited during the three months ended March 31, 2011. Outstanding and exercisable options had $9,880 intrinsic value at March 31, 2011.

The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505”) 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, which requires that such equity instruments be recorded at their fair value on the measurement date.

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

If the assessment of a loss contingency indicates that it is probable that a loss has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. The Company expenses legal costs associated with contingencies as incurred.

The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed.

Liabilities for expenditures of a non-capital nature are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component is fixed or reliably determinable. No such liabilities existed or were recorded at March 31, 2011 or December 31, 2010.

The Company follows the asset and liability method prescribed by ASC Topic 740, “Income Taxes” (“ASC 740”). 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. 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. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize the tax assets through future operations during a reasonable period of time.

The Company accounts for foreign currency gains and losses in accordance with ASC Topic 830, Foreign Currency Matters, whereby foreign currency exchange transactions are recorded using the exchange rate at the date of settlement or of the balance sheet date for unsettled transactions. The Company incurred a transaction loss of $432,079 in the quarter ended March 31, 2011, related to an outstanding related party loan made to the Company which was payable in Canadian dollars until March 1, 2011 (see Note 9), and previously recognized a translation loss of $333,814 through December 31, 2010, which results in the net difference of $98,265 being recognized in the current period. This related party loan was converted from Canadian dollars to U.S. dollars during March 2011. There were no foreign currency gains or losses in the quarter ended March 31, 2010.

Basic net earnings (loss) per common share are computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for all periods presented in these consolidated financial statements, the diluted weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. For the three months ended March 31, 2011 and 2010, the Company excluded options to purchase 21,000 and 151,000 shares of common stock, respectively, as the effect would be anti-dilutive.

On May 12, 2011, the FASB and the International Accounting Standards Board (“IASB”) issued guidance on fair value measurement and disclosure requirements outlined in IFRS 13, Fair Value Measurement, and Accounting Standards Update (“ASU”) No. 2011-04, Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments explain how to measure fair value and harmonize disclosure requirements in U.S. GAAP and IFRS. ASU No. 2011-04 (i) clarifies that concepts of highest and best use and valuation premise in a fair value measurement are relevant only when measuring the fair value of nonfinancial assets; (ii) explicitly requires entities to measure the fair value of their own equity instruments from the perspective of market participants who hold those instruments as assets–consistent with the requirements for measuring the fair value of liabilities; and (iii) requires entities to disclose quantitative information about the unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy.

ASU No. 2011-04 also provides an exception that permits entities which manage their financial instruments on the basis of their net exposure rather than gross exposure to measure the fair value of such financial assets and financial liabilities on the basis of their net risk exposure; however, entities must assess whether the risks being offset are “substantially the same.” ASU No. 2011-04 precludes adjustments commonly referred to as blockage factors in fair value measurements because they are related to the size of an entity’s holding rather than the nature or attributes of the asset or liability. Premiums or discounts may be applied in a fair value measurement to the extent that they are consistent with the unit of account and market participants would consider them in a transaction for the asset or liability.

ASU No. 2011-04 expands disclosure requirements in FASB ASC Topic 820, particularly for Level 3 inputs, including quantitative disclosure of the unobservable inputs and assumptions used in the measurement; description of the valuation processes in place (e.g., how the entity decides its valuation policies and procedures, as well as changes in its analyses of fair value measurements, from period to period); and narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs.

During late November 2010, Platinum decided to discontinue its engineering services operating segment and sell its wholly-owned subsidiary, Maverick, which was the only operating subsidiary within the engineering services segment. Shortly thereafter, on November 24, 2010 (the “Petition Date”), Maverick filed a voluntary petition with the Bankruptcy Court seeking reorganization relief under the provisions of Chapter 11 of the Bankruptcy Code. The Company expects the sale of Maverick will be finalized during 2011. Following the sale of Maverick, Platinum will have no continuing involvement in Maverick’s operations. The assets of Maverick and related liabilities constitute a component of the Company with distinguishable cash flows. Accordingly, Maverick’s assets and related liabilities, in their entirety and solely, and results of operations and cash flows associated with these assets, are classified as held for sale - discontinued operations in the accompanying consolidated financial statements of Platinum for all periods presented.

Under Chapter 11, certain claims against Maverick in existence prior to the filing of the petitions for relief under the Bankruptcy Code are stayed while Maverick continues business operations as debtor-in-possession (“DIP”). These claims are reflected in the Company’s March 31, 2011 consolidated balance sheet and Maverick’s March 31, 2011 balance sheet, presented below, as liabilities subject to compromise. Additional claims (liabilities subject to compromise) may arise after the Petition Date, resulting from rejection of executory contracts, including leases, and from the determination by the Bankruptcy Court (or agreed to by parties in interest) of allowed claims for contingencies and other disputed amounts.

Pursuant to Chapter 11, Maverick, as DIP, will continue to manage and operate its assets and business pending the confirmation of a reorganization plan and subject to the supervision and orders of the Bankruptcy Court. The Company and Maverick are currently developing the reorganization plan and intend to submit the reorganization plan for confirmation prior to the extended due date of July 23, 2011. As a DIP, Maverick is authorized to operate its business, but may not engage in transactions outside of the normal course of business without approval, after notice and hearing, of the Bankruptcy Court.

The consolidated financial statements of the Company and financial statements of Maverick do not purport to show (a) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities; (b) ultimate pre-petition liability amounts that may be allowed for claims or contingencies or the status or priority thereof; (c) the effect of any changes that may be made to the capitalization of Maverick; or (d) the effect of any changes that may be made in Maverick’s business operations, as the outcome of these matters is not presently determinable. Although Maverick and Platinum intend that Maverick will emerge from bankruptcy and be sold to a third party during 2011, there can be no assurance of the confirmation or timing of the reorganization. The consolidated financial statements of the Company, included herein, and the financial statements of Maverick, presented below, do not include any adjustments relating to the commencement of Maverick’s bankruptcy case.

The following condensed financial statements present the financial position of Maverick as of March 31, 2011 and December 31, 2010 and the results of Maverick’s operations and cash flows for the three months ended March 31, 2011 and 2010, and have been prepared on the same basis as the Company’s consolidated financial statements. Assets held for sale, liabilities related to assets held for sale, and discontinued operations presented in the accompanying consolidated financial statements of the Company are solely comprised of assets, liabilities, results of operations, and cash flows of Maverick. Cash provided by operations and total increase in cash presented in Maverick’s statement of cash flows differs from cash provided by (used in) operations - discontinued operations and total cash increase from discontinued operations presented in the Company’s consolidated statement of cash flows due to inclusion of Maverick expenses paid by parent as a use of cash from operations – discontinued operations on the Company’s consolidated statements of cash flows.

	March 31, 2011			December 31, 2010
ASSETS

CURRENT ASSETS
Cash	$	878,845		$	859,007
Accounts receivable, net of $533,001 and $518,001 allowance for doubtful accounts at March 31, 2011 and December 31, 2010, respectively		1,899,353			1,831,370
Prepaid expenses and other current assets		159,316			266,936
Total current assets		2,937,514			2,957,313

Property and equipment, net of $1,178,877 and $1,111,157 of accumulated depreciation as of March 31, 2011 and December 31, 2010, respectively		430,208			497,928

Total assets	$	3,367,722		$	3,455,241

LIABILITIES AND STOCKHOLDER’S DEFICIT

CURRENT LIABILITIES, not subject to compromise
Accounts payable – trade	$	105,839		$	118,863
Due to parent		162,036			-
Accrued liabilities		1,269,830			1,113,323
Unearned service revenue		834,468			954,202
Income tax payable		19,494			9,410
Current maturities of long-term debt and capital lease obligations		137,932			134,599
Total current liabilities, not subject to compromise		2,529,599			2,330,397

NON-CURRENT LIABILITIES, not subject to compromise
Long-term debt and lease obligations, less current portion		5,988			42,020
Deferred rent		39,568			39,568
Total liabilities, not subject to compromise		2,575,155			2,411,985

LIABILITIES SUBJECT TO COMPROMISE		5,099,307			5,098,455

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER’S DEFICIT
Common stock		120,878			120,878
Additional paid-in capital		11,505,277			11,505,277
Accumulated deficit		(15,932,895	)		(15,681,354	)
Total stockholder’s deficit		(4,306,740	)		(4,055,199	)

Total liabilities and stockholder’s deficit	$	3,367,722		$	3,455,241

	Three Months Ended March 31,
	2011			2010

Revenues	$	3,360,771		$	4,614,418

Costs and expenses
Cost of revenues		2,524,956			4,076,584
Marketing, general and administrative expense		884,432			477,427
Depreciation and amortization expense		67,720			96,553
Total costs and expenses		3,477,108			4,650,564

Operating loss		(116,337	)		(36,146	)

Other income (expenses)
Interest income		-			677
Interest expense		(48,811	)		(49,435	)
Total other expenses		(48,811	)		(48,758	)

Loss before reorganization expense and income taxes		(165,148	)		(84,904	)
Reorganization expense		76,309			-

Loss before income taxes		(241,457	)		(84,904	)
Provision for income taxes		10,084			13,418

Net loss	$	(251,451	)	$	(98,322	)

	Three Months Ended March 31,
	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(251,541	)	$	(98,322	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Bad debt expense		15,000			15,000
Depreciation and amortization		67,720			96,553
Expenses paid by parent		162,036			240,571
Changes in operating assets and liabilities:
Accounts receivable		(82,983	)		22,903
Prepaid expenses and other current assets		107,620			183,670
Accounts payable - trade		(13,024	)		56,045
Accrued liabilities and other		157,359			1,333,119
Unearned service revenue		(119,734	)		(1,337,140	)
Income taxes payable		10,084			218,623
Net cash provided by operating activities		52,537			731,022

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital leases obligations		(32,699)			(33,243	)
Net cash used in financing activities		(32,699)			(33,243	)

Net increase in cash		19,838			697,779
Cash and cash equivalents - beginning of the period		859,007			906,304
Cash and cash equivalents - end of the period	$	878,845		$	1,604,083

SUPPLEMENTAL INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

The following table sets forth the reconciliation of Maverick’s “Net cash provided by operating activities” and “Net increase in cash” presented above to “Cash used in operating activities – discontinued operations” and “Increase (decrease) in cash – discontinued operations” presented in the Company’s consolidated statements of cash flows included herein, the difference of which is Maverick expenses paid directly to vendors by the Company, which was treated as a capital contribution to Maverick by the Company as of March 31, 2010. The Maverick expenses paid directly to the vendors by the Company in the three months ended March 31, 2011 will be re-paid by Maverick and are included in the “Due to parent” account on the stand-alone Maverick’s balance sheet as of March 31, 2011.

	Three Months Ended March 31,
	2011			2010
Net cash provided by operating activities, presented above	$	52,537		$	731,022
Maverick expenses paid by parent, presented above		(162,036	)		(240,571	)
Cash used in operating activities – discontinued operations, presented in the Company’s consolidated statements of cash flows	$	(109,499)		$	490,451

Net increase in cash, presented above	$	19,838		$	697,779
Maverick expenses paid by parent, presented above		(162,036	)		(240,571	)
Increase (decrease) in cash – discontinued operations, presented in the Company’s consolidated statements of cash flows	$	(142,198	)	$	457,208

	March 31, 2011		December 31, 2010
Revolver payable to Maverick former shareholders	$	2,917,403	$	2,917,403
Term note to Maverick former shareholders		252,181		252,181
Second term note to Maverick former shareholders		1,403,410		1,403,410
Total debt subject to compromise		4,572,994		4,572,994

Accounts payable – trade		133,921		133,921
Accrued liabilities		392,392		391,540
	$	5,099,307	$	5,098,455

The Company engages in price risk management activities from time to time, through utilizing derivative instruments consisting of swaps, floors and collars, to attempt to reduce the Company’s exposure to changes in commodity prices. None of the Company’s derivatives are designated as cash flow hedges. Changes in fair value of derivative instruments which are not designated as cash flow hedges are recorded in other income (expense) as realized and unrealized (gain) loss on commodity derivatives. The obligations under the derivative contracts are collateralized by the same assets that collateralized the Senior Credit Facility and the New Senior Credit Facility (collectively, the “Credit Facilities”), described in Note 9, and substantially all of the derivative financial instruments are collateral for the Credit Facilities. Additionally, the contracts are cross-defaulted to the Credit Facilities.

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

The Company’s determination of fair value of its commodity derivative instruments incorporates various factors required under ASC 815, Derivatives and Hedging. The fair value determined by the Company is based on counterparties’ valuation models that utilize market-corroborated inputs, with consideration of the impact of our nonperformance risk and the credit standing of the counterparties involved in the Company’s derivative contracts. The Company considers the fair value of its commodity derivatives to be Level 2 hierarchy, in that the fair value is based on observable inputs. At March 31, 2011 and December 31, 2010, the aggregate Level 2 fair value of the commodity derivatives was $57,200 and $269,400, respectively. For further information regarding the Company’s derivative instruments and hedging activities, see Note 6.

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

The Company uses an income approach to estimate the fair value of its ARO based on discounted cash flow projections using numerous estimates, assumptions and judgments regarding such factors as the existence of a legal obligation for an ARO; estimated probabilities, amounts and timing of settlements; the credit-adjusted risk-free rate to be used; and inflation rates. AROs incurred in the current period were Level 3 fair value measurements. See Note 8 for a summary of changes in the ARO.

The carrying amount of the Company’s Senior Credit Facility, New Credit Facility and loans related to the acquisition of Maverick approximates fair value due to the associated interest rates approximating current market rates. The Company’s New Senior Credit Facility was denominated in Canadian dollars until March 1, 2011 and was valued using the market exchange rate as of each reporting date. See Note 9 for further information regarding the Company’s long-term debt and notes payable.

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

On March 14, 2008, TEC and PER Gulf Coast, Inc. (“Borrower”), wholly-owned subsidiaries of Platinum, entered into a Senior Secured Revolving Credit Facility (“Senior Credit Facility”) with Bank of Texas. The Senior Credit Facility provided for a revolving credit facility up to the lesser of the borrowing base and $100 million. The initial borrowing base was set at $35 million. The facility was collateralized by substantially all of the Company’s proved oil & gas assets as well as substantially all of the derivative financial instruments discussed in Note 5. The Senior Credit Facility was originally to mature on March 14, 2012.

Under the terms of the Senior Credit Facility, the Borrower was required to maintain certain financial and nonfinancial covenants. Platinum, as the parent company, was not a co-borrower or guarantor of the line. Transfers from the Borrower to Platinum were limited to (i) $1 million per fiscal year to the parent for management fees, and (ii) the repayment of up to $2 million per fiscal year in subordinate indebtedness owed to the parent.

In June 2009, the borrowing base was reduced to $15 million and the Senior Credit Facility was amended to change the interest rate provisions and modify the maturity date to June 1, 2010. In addition, the Borrower was obligated to the lender for a monthly fee of any unused portion of the line of credit at the rate of 0.50% per annum. In May 2010, the Company paid down $1.5 million on the Senior Credit Facility, and in June 2010, subsequent to the modified due date, the Company paid down an additional $2 million on the Senior Credit Facility utilizing cash on hand and the proceeds from the liquidation of certain commodity derivative contracts.

On August 6, 2010, with an effective date of June 1, 2010, the Company and the Bank of Texas executed an Amendment to the Senior Credit Facility. The Amendment (1) granted the Company an extension on the maturity date of the loan to September 1, 2010, (2) reduced the Borrowing Base under the Senior Credit Facility to approximately $9.5 million, (3) required the Company to reduce the then outstanding balance of $9.5 million under the Senior Credit Facility by $1 million, (4) waived certain events of default of the Borrower through the period ended June 10, 2010, and (5) increased the interest rate floor to a rate of not less than 5% per annum. The Company paid a fee of $40,000 to the Bank of Texas in connection with the waivers and the extension in the maturity date and $36,846 in interest. Additionally, on August 6, 2010, the Company used cash on hand to pay down $1.0 million on the Senior Credit Facility, reducing the Bank of Texas loan balance to approximately $8.5 million. On August 30, 2010, the Company liquidated its swap derivatives for approximately $3.5 million and used those proceeds to pay down the Credit Facility to a balance of approximately $5.0 million.

On September 1, 2010, A.R. Development Corporation (“A.R. Development”), a company owned and controlled by Al Rahmani, CEO of Platinum at September 1, 2010 and through January 31, 2011, purchased the Senior Credit Facility and all rights to the ancillary security from Bank of Texas. At the time of the purchase, the balance on the Senior Credit Facility was approximately $5.0 million. The Independent Committee of the Board of Directors (“Board”) of the Company entered into a Loan on behalf of the Company with A.R. Development (“Agreement”) pursuant to A.R. Development’s acquisition of the Senior Credit Facility, referred to herein as the New Senior Credit Facility.

The Agreement provided for an initial fixed term of six months from September 1, 2010 and carried an interest rate of 5.5% per annum for the first two months ending November 1, 2010, 6% per annum for the next two months ending January 1, 2011, followed by an interest rate of 6.5% per annum until March 1, 2011. Additionally, the Company paid a $40,000 loan origination fee to A. R. Development, which was expensed. It was understood that the New Senior Credit Facility would no longer be a revolving note and therefore, no new advances would be made to the Company. The New Senior Credit Facility carried the same rights as the Senior Credit Facility, and remains collateralized by substantially all of the Company’s oil and gas assets and remaining commodity derivatives contracts.

On March 1, 2011, the Company and A. R. Development Corporation amended the Agreement, extending repayment of the New Senior Credit Facility to March 1, 2012, with an interest rate of 7.5% per annum for the first three months of the loan extension. Thereafter, until March 1, 2012, the interest rate will be 8% per annum. The Company paid A. R. Development an extension fee of $25,000, which was expensed. The outstanding principle balance and all accrued but unpaid interest is due on March 1, 2012. Additionally, the amendment provided that on March 1, 2011, the balance due to A.R. Development shall be converted from Canadian dollars to U.S. dollars, using the current exchange rate, and all future payments will be made in U.S. dollars. The March 1, 2011 conversion of the Net Senior Credit Facility from Canadian dollars to U.S. dollars resulted in a realized currency exchange loss of $432,079, $98,265 of which was recognized in the quarter ended March 31, 2011 and $333,814 of which was previouslyrecognized in the year ended December 31, 2010. The outstanding New Senior Credit Facility was classified as a current and noncurrent liability at March 31, 2011 and December 31, 2010, respectively, based on the extended due date of March 1, 2012.

As part of the acquisition of Maverick, the Company agreed to pay $5 million to Maverick’s selling stockholders over five years pursuant to non-interest bearing cash flow notes, subject to certain escrows, holdbacks and post-closing adjustments (“Cash Flow Notes”). The Cash Flow Notes, which are an obligation of Platinum and not part of the Maverick Chapter 11 proceedings, are payable quarterly at the rate of 50% of pre-tax net income generated by the Maverick business on a stand-alone basis in the preceding quarter. At the five year anniversary of the Cash Flow Notes, if the aggregate quarterly payments made pursuant to the formula described in the preceding sentence are less than $5 million, any shortfall will be converted into a one year term note, bearing interest at the prime rate plus 2% per annum, with principal and interest due in equal monthly installments over the twelve month term. The Cash Flow Notes can be accelerated by certain events, including change in control of Maverick.

The Cash Flow Notes were reduced by the amount of the working capital post-closing adjustment, which was determined by the Company to be $645,596. At the time the acquisition was completed, a discount of $1,320,404 was recorded and deducted from the Cash Flow Notes as these notes are non-interest bearing for the initial five years of their term, resulting in a net carrying value of the Cash Flow Notes on April 29, 2008 of $3,034,000. Accretion of the discount related to the Cash Flow Notes of $67,085 and $62,407 for the three months ended March 31, 2011 and 2010, respectively, was recognized as interest expense.

On April 16, 2009, the Company received a written notice of acceleration from Robert L. Kovar Services, LLC (“Kovar”), as the stockholder representative, claiming the Company failed to make timely mandatory prepayments in the amount of $110,381 due under the terms of the Cash Flow Notes. The Company has not reclassified the long-term portion of these Cash Flow Notes to current liabilities. It is the Company’s position that Maverick generated pretax quarterly losses during the period April 29, 2008 through March 31, 2011, and as such the Company was not obligated to make any mandatory payments to the note holders. GAAP requires certain intangible assets to be amortized over their useful lives and for goodwill and intangible assets to be reviewed annually for potential impairment. The pretax income as calculated by Kovar did not include amortization expense or impairment charges related to intangible assets and goodwill in accordance with U.S. GAAP. These Cash Flow Notes are now the subject of litigation between Kovar and the Company as further described in Note 12.

At March 31, 2011, the Company has net operating loss carryforwards of approximately $23 million for federal income tax purposes (decrease of approximately $1.0 million from December 31, 2010). These net operating loss carryforwards may be carried forward in varying amounts, subject to certain limitations, until the time when they begin to expire in 2026 through 2031. In addition to any Section 382 limitations for change of control, uncertainties exist as to the future utilization of the operating loss carryforwards under the criteria set forth under ASC 740 and the Company has increased its valuation allowance at March 31, 2011 to approximately $10.2 million, an increase of roughly $0.1 million from December 31, 2010.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets in a reasonable period of time. In making this determination, it considers all available positive and negative evidence and makes certain assumptions, including, among other things, the deferred tax liabilities; the overall business environment; the historical earnings and losses; and its outlook for future years. At March 31, 2011 and December 31, 2010, the Company provided a full valuation allowance for its net deferred tax assets, as it is more likely than not that these assets will not be realized in a reasonable period of time. The Company’s effective tax rate differs from the statutory rate of approximately 35% for the three months ended March 31, 2011 and 2010, primarily due to state income taxes and the change in valuation allowance.

On December 3, 2008, Robert Kovar filed suit against Platinum alleging that he “Resigned for Good Reason” according to his employment contract. Mr. Kovar was seeking a Declaration Judgment that he had “Good Reason” to resign his employment at Platinum Energy and Maverick Engineering. Mr. Kovar also requested payment of the severance package, accelerated vesting of options and accelerated payment of a note held by Mr. Kovar, presented as Notes Payable – Kovar in Note 9, plus attorney fees and court costs.

On January 30, 2011, the presiding judge ruled in favor of the Company, denying Mr. Kovar’s claim for breach of his employment agreement and concluding that Mr. Kovar did not have “good reason” to terminate his employment with Platinum Energy, thus effectively extinguishing his portion of the Cash Flow Notes. The Company does not anticipate an extinguishment of the Cash Flow Notes issued to the former minority shareholders and has presented the amount due to the minority shareholders as a noncurrent liability of $782,192 at March 31, 2011 and December 31, 2010. The Company has continued to reflect the Kovar portion of the Cash Flow Notes, totaling $2,964,000 at March 31, 2011, as a non-current liability of the Company, pending the entry of the final judgment in the case and the outcome of any potential appeal by Mr. Kovar.

On May 3, 2011, Platinum and Maverick Engineering. Inc. filed suit against Kovar, Robert L. Kovar (individually), Rick J. Guerra, and Walker, Keeling, & Carroll. L.L.P. (“WKC”) collectively (the Defendants”) alleging, among other things, a suit for declaratory judgment asking the court to declare that Platinum and Maverick are entitled to indemnification from the former Maverick stockholders, including Mr. Guerra and Mr. Kovar, for any damages they suffer as a result of a default on any note contained in the Maverick and PermSUB Merger Agreement. In addition, Platinum and Maverick asked the Court to declare that WKC breached the merger agreement by not stepping down as the Merger Escrow Agent. Platinum and Maverick have also sued to recover costs of court and attorneys’ fees.

On March 2, 2011, the presiding judge denied Platinum’s request for attorney fees and awarded attorney fees to the former Maverick shareholders in the amount of $750,000. Although the Company intends to appeal the awarding of attorney fees, the Company has recorded an accrued liability of $750,000, in light of the January 30, 2011 unfavorable ruling. At March 31, 2011, this liability remains unpaid.

On December 14, 2010, Robert L. Kovar Services, LLC filed suit against Robert L. Kovar and Kovar Mineral Partners on their guaranties of the Shareholder Notes. Platinum was sued as a third party defendant by Robert L. Kovar and Kovar Mineral Partners to seek indemnification for the guarantees. The Company believes the suit is without merit and denies any wrongdoing or liability in the matter. On May 10, 2011, the parties had their first hearing in order to establish the proper venue for this action.

On October 20, 2009, Lisa Meier filed suit for breach of her employment contract. According to the Petition, Ms. Meier resigned for “good cause” and she is seeking severance pay. On June 10, 2009, Ms. Meier delivered to the Board of Directors of Platinum Energy Resources, her second notice of intent to resign for “Good Reason.” Ms. Meier’s first notice was submitted on October 23, 2008, less than three months after entering into her employment agreement, and subsequently withdrawn. The Board of Directors accepted Ms. Meier’s resignation, but stated that “good reason” did not exist. In March 2011, Ms. Meier and the Company agreed to release all claims against each other and dismiss the litigation.

Our activities are subject to local, state and federal laws and regulations governing environmental quality and pollution control in the United States. The drilling and production from wells, natural gas facilities, including the operation and construction of pipelines, plants and other facilities for transporting, processing, treating or storing natural gas and other products, are subject to stringent environmental regulation by state and federal authorities, including the Environmental Protection Agency (“EPA”). Such regulation can increase our cost of planning, designing, installing and operating such facilities.

Significant fines and penalties may be imposed for the failure to comply with environmental laws and regulations. Some environmental laws provide for joint and several strict liabilities for remediation of releases of hazardous substances, rendering a person liable for environmental damage without regard to negligence or fault on the part of such person. In addition, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, such as oil and gas related products.

On October 14, 2009, Maverick Engineering filed suit in Harris County against CITGO Refining & Chemical Company, LP for Breach of Contract. According to the Petition, Maverick provided engineering services to CITGO, and CITGO has refused to pay for those services. Maverick is suing for recovery of $357,538, representing the outstanding accounts receivable balance due from CITGO on the date the suit was filed, plus damages, costs, attorney fees, interest, and other relief. In consideration of CITGO’s refusal to pay the outstanding amount the Company recorded a full allowance for doubtful collection of the $357,538 receivable during 2010. While Maverick has performed all terms, conditions, and covenants required under its contract with CITGO, it is too early in this litigation to be able to predict the outcome. Currently, this case is on hold due to the Maverick bankruptcy filing.

On March 22, 2011, the presiding judge signed an order extending the exclusivity period until May 23, 2011, and extending the period for soliciting acceptances of the plan of reorganization until July 23, 2011. On May 6, 2011, the presiding judge signed an order extending the exclusivity period until July 23, 2011, and extending the period for soliciting acceptances of the plan of reorganization until September 23, 2011.

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.

In our oil and gas operations, we conduct oil and natural gas 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.

(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. On November 24, 2010 (the “Petition Date”), Maverick filed a voluntary petition in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) seeking reorganization relief under the provisions of Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). During November 2010, and in conjunction with Maverick seeking reorganization under Chapter 11 of the Bankruptcy Code, Platinum determined it would sell, or otherwise dispose of, its entire ownership interest in Maverick and discontinue its engineering services operating segment.

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

Furthermore, like all businesses engaged in the 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 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.

For the quarter ended March 31, 2011, our revenues for continuing operations were $5.7 million, resulting in a net loss from continuing operations of $63,245 or $0.00 loss per share. For the quarter ended March 31, 2010, our revenues for continuing operations were $6.1 million, resulting in a net loss from continuing operations of $854,450 or $0.04 loss per share. The 6.0 percent decrease in total revenues was primarily due to a decrease in production. The decrease in production was due to shut downs in several fields resulting from wild fires in West Texas and rolling power outages and freezing conditions throughout Texas and New Mexico during January and February. The average oil price we obtained on our product sales for the three months ended March 31, 2011 was $83,69, compared to $75.19 for the three months ended March 31, 2010. The average gas price we obtained for our product for the three months ended March 31, 2011 was $4.56 per Mcf, as compared to $5.74 for the three months ended March 31, 2010. Production on a BOE basis decreased 12.9% from 92,821 BOE’s during the three months ended March 31, 2010, to 80,832 BOE’s during the three months ended March 31, 2011.

Oil and gas production costs in the form of lease operating expense on a BOE basis increased by 37.9% percent from $24.68 to $34.05 for the three months ended March 31, 2010 and 2011, respectively. The increase was due primarily for repairs to damaged equipment caused by hard freezes and wildfires across Texas. Other factors outside management control, such as third party service availability and the availability of adequate technical and field staff, could have an adverse effect on lease operating costs in the future.

Depletion expense for oil and gas properties was $1.1 million and $1.5 million for the three months ended March 31, 2011 and 2010, respectively. This represents a decrease of $0.4 million, or 27 percent, during the quarter ended March 31, 2011 compared to the quarter ended March 31, 2010. The decrease was related to lower carrying values of oil and gas properties, as well as lower production volumes during the 2011 period.

Revenues for the three months ended March 31, 2011 and 2010 were $3.4 million and $4.6 million, respectively. Gross margin performance for these periods was a negative 3.46% and 0.17%, respectively. The decline in first quarter gross margin was primarily due to a lower head count leading to lower service revenue, Maverick had approximately 100 employees at March 31, 2011 vs. approximately 128 at March 31, 2010. Engineering services reported pretax losses of $241,457 and $84,904 in the three months ended March 31, 2011 and the three months ended March 31, 2010, respectively.

At March 31, 2011, we had cash and cash equivalents of $2,453,011 and negative working capital of $4,219,569, compared to cash and cash equivalents of $1,307,745 and positive working capital of $321,458 as of December 31, 2010. The change in working capital position was primarily attributable to the classification of $5,414.775 representing our New Senior Credit Facility as a current liability due to its maturation on March 1, 2012.

The Company’s decision to place its wholly-owned subsidiary, Maverick, in a Chapter 11 proceeding, and its plan to dispose of the related operations going forward, should have minimal impact to the Company’s future cash flows. Since its acquisition, Maverick has not generated negligible positive cash flows, and for the quarters ended March 31, 2011 and 2010, Maverick, before considering funding received from the parent, had total positive cash flows of approximately $19,838 and positive cash flows of $697,779, respectively. During the three months ended March 31, 2011 the Company has provided $162,036 in additional funding to Maverick for operating purposes Since the filing of the Chapter 11 petition the Company has incurred expenses related to the reorganization effort of $140,800.

The reserve report prepared as of December 31, 2010 assumes that we will spend approximately $33 million to exploit oil & gas assets. Our primary focus since the beginning of the year has been to control our operating costs and stabilize our existing production. The execution of any capital program is dependent on the availability of technical and field staff, product pricing, rig availability and an implementation of corporate strategy. Through March 31, 2011 we have incurred capital expenditures of approximately $138,000, primarily related to the completion of the Ball #26 in Palo Pinto County.

In accordance with ASC 852, Maverick (i) separated liabilities that are subject to compromise from liabilities that are not subject to compromise and (ii) distinguished transactions and events that are directly associated with the reorganization from those that are associated with the ongoing operations of the business. Maverick’s liabilities subject to compromise and liabilities not subject to compromise are presented combined, as liabilities related to assets held for sale, in the Company’s consolidated financial statements.

Expenses incurred and settlement impacts due to the Chapter 11 cases are reported separately as reorganization expenses, net on Maverick’s Statements of Operations. For the three months ended March 31, 2011, reorganization expenses were $76,309 and consisted of legal fees. Interest expense related to pre-petition indebtedness has been reported only to the extent that it will be paid during the pendency of the Chapter 11 cases, is permitted by Bankruptcy Court approval or is expected to be an allowed claim.

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.

Under the full cost method of accounting, a ceiling test is performed quarterly. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test determines a limit on the carrying value of oil and gas properties. The capitalized costs of proved oil and gas properties, net of accumulated depreciation, depletion, amortization, and impairment and the related deferred income taxes, may not exceed the estimated future net cash flows from proved oil and gas reserves, excluding future cash outflows associated with settling asset retirement obligations that have been accrued on the balance sheet, generally using current prices (with consideration of price changes only to the extent provided by contractual arrangements) as of the date of the latest balance sheet presented 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 depreciation, depletion, amortization and impairment. In the application of the full cost method, the term “current price” means the average price during the 12-month period prior the end of the entity's fiscal year determined as the un-weighted arithmetical average of the prices on the first day of each month within the 12-month period.

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.

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers, which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expense.

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.

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 shale, coal and other such sources.

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.

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.

At March 31, 2011 our oil and gas subsidiaries had approximately $5.4 million in outstanding borrowings associated with their credit facility with a major bank and our engineering services subsidiary had $8.1 million in outstanding borrowings under term notes with the selling shareholders from whom we acquired Maverick, our engineering services business. The company expects the Cash Flow notes payable to Robert Kovar to be legally extinguished upon receipt of the signed court decision from the presiding judge, as such, the company does not consider there to be any risk associated with the interest of the balance presented in the financial statements.

The Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of March 31, 2011. Based on that evaluation, the Company’s Principal executive officer concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2011 due to material weaknesses in our internal controls related to inadequate staffing within our accounting department and upper management, lack of consistent policies and procedures, inadequate monitoring of controls, inadequate disclosure controls and significant turnover among the staff and officers of the Company. It is Management’s plan to remediate the internal control material weakness by implementing new controls and procedures that combined will improve the quality of the financial reporting process.

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

On May 3. 2011, Platinum and Maverick Engineering. Inc. filed suit against Kovar, Robert L. Kovar (individually), Rick J. Guerra, and Walker, Keeling, & Carroll. L.L.P. (“WKC”) collectively (the Defendants”) alleging, among other things, a suit for declaratory judgment asking the court to declare that Platinum and Maverick are entitled to indemnification from the former Maverick stockholders, including Mr. Guerra and Mr. Kovar, for any damages they suffer as a result of a default on any note contained in the Maverick and PermSUB Merger Agreement. In addition, Platinum and Maverick asked the Court to declare that WKC breached the merger agreement by not stepping down as the Merger Escrow Agent. Platinum and Maverick have also sued to recover costs of court and attorneys’ fees.

On March 2, 2011, the presiding judge denied Platinum’s request for attorney fees and awarded attorney fees to the former Maverick shareholders in the amount of $750,000. Although the Company intends to appeal the awarding of attorney fees, the Company has recorded an accrued liability as of December 31, 2010 of $750,000, in light of the January 30, 2011 unfavorable ruling. At March 31, 2011, this liability remains unpaid.

On March 14, 2011, Robert L. Kovar Services, LLC filed suit against Robert L. Kovar and Kovar Mineral Partners on their guaranties of the Capital One Notes. Platinum was sued as a third party defendant by Robert L. Kovar and Kovar Mineral Partners to seek indemnification for the guarantees. The Company believes the suit is without merit and denies any wrongdoing or liability in the matter. On May 10, 2011, the parties had their first hearing in order to establish the proper venue for this action.

On October 20, 2011, Lisa Meier filed suit for breach of her employment contract. According to the Petition, Ms. Meier resigned for “good cause” and she is seeking severance pay. On June 10, 2011, Ms. Meier delivered to the Board of Directors of Platinum Energy Resources, her second notice of intent to resign for “Good Reason.” Ms. Meier’s first notice was submitted on October 23, 2008, less than three months after entering into her employment agreement, and subsequently withdrawn. The Board of Directors accepted Ms. Meier’s resignation, but stated that “good reason” did not exist. In March 2011, Ms. Meier and the Company agreed to release all claims against each other and dismiss the litigation.

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)

Balance at January 1, 2011:	$	209,897
Acquisition of properties
Proved		-
Unproved		-

Addition and changes to asset retirement obligation		10
Development costs		146
Balance, at March 31, 2011	$	210,053

	March 31, 2011			December 31, 2010
Costs being amortized	$	210,053		$	209,897
Costs not being amortized		-			-
		210,053			209,897
Accumulated depletion and impairment		(170,016	)		(168,844	)
Net capitalized costs	$	40,037		$	41,053

Period Ended		Total Volumes	Contract		Fair Value Asset
March 31,	Instrument Type	(MMBTU/BBL)	Price		(in thousands)
2011	Puts	90,000	$	80.00	$	57
	Total fair value				$	57

	Three Months Ended March 31, 2011
ARO liability at January 1, 2011 – current and noncurrent	$	7,537
Abandonments during period		(175	)
Accretion expense		134
Changes in estimates		10
ARO liability at March 31, 2011 – current and noncurrent	$	7,506

	March 31, 2011			December 31, 2010
Senior Credit Facility	$	-		$	-
New Senior Credit Facility (related party)		5,415			5,316
Notes Payable - Kovar		2,964			2,911
Notes Payable - Former Minority Shareholders		782			768
		9,161			8,995
Less: Current maturities		(5,415	)		-
Long-term debt, less current maturities	$	3,746		$	8,995

Exhibit Number		Exhibit Description

31.1		Section 302 Certification of Principal Executive Officer

31.2		Section 302 Certification of Principal Financial Officer

	PLATINUM ENERGY RESOURCES, INC.

Date: June 13, 2011	By:	/s/ Martin Walrath
		Martin Walrath Chief Executive Officer and Chief Financial Officer

	Three Months Ended March 31,
	2011		2010
Production
Oil (Bls)		62,273		67,099
Gas (Mcf)		111,354		154,332
Boe (Bls)		80,832		92,821

Average Prices
Oil ($/Bbl)	$	83.69	$	75.19
Gas ($/Mcf)	$	4.56	$	5.74

Average Lifting Cost
Per Boe	$	34.05	$	24.68