**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**




(Mark
      One)




**x**
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




**For
      the fiscal year ended December 31, 2007**




**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 No. 000-26139*




**Titan
      Energy Worldwide, Inc.**




Nevada
            26-0063012(State or other jurisdiction of
              incorporation or organization)
            (I.R.S. Employer
              Identification No.)





55800
      Grand River Avenue, Suite 100, New Hudson, MI 48165


(Address
      of principal executive offices) (Zip Code)




Company’s
      telephone number, including area code: (248) 446-8557




Securities
      registered under Section 12(b) of the Exchange Act: None.




Securities
      registered under Section 12(g) of the Exchange Act:




Common
      stock, par value $0.0001 per share.


(Title
      of
      class)




Indicate
      by check mark whether the Company (1) has filed all reports required to be
      filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding twelve months (or such shorter period that the Company was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.


Yes x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes o No x





State
      issuer’s revenues for its most recent fiscal year: $8,841,049





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      last sold, or the average bid and asked price of such common equity, as of
      March
      6, 2008:


$6,144,398





Indicate
      the number of shares outstanding of each of the Company’s classes of common
      stock as of March 6, 2008: 15,422,167 shares.





Documents
      incorporated by reference: None.


Transitional
      Small Business Disclosure Format (Check one): Yes o ; No x





**TABLE
      OF CONTENTS**




**PART I**
            
            
            1ITEM 1.
            DESCRIPTION
                OF BUSINESS
            
            1ITEM 2.
            DESCRIPTION
                OF PROPERTY
            
            7ITEM 3.
            LEGAL
                PROCEEDINGS
            
            7ITEM 4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            7**PART II**
            
            
            8ITEM 5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            
            8ITEM 6.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS
            
            11ITEM 7.
            FINANCIAL
                STATEMENTS
            
            14ITEM 8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            
            15ITEM 8A(T).
            CONTROLS
                AND PROCEDURES
            
            15ITEM 8B.
            OTHER
                INFORMATION
            
            16**PART III**
            
            
            17ITEM 9.
            DIRECTORS
                AND EXECUTIVE OFFICERS OF THE COMPANY
            
            17ITEM 10.
            EXECUTIVE
                COMPENSATION
            
            19ITEM 11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            
            20ITEM 12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            
            22ITEM 13.
            EXHIBITS
            
            23ITEM 14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            25







**PART
      I**




**Item
      1.**  **Description
      of Business**




Statements
      in this Form 10-KSB Annual Report may be “forward-looking statements” within the
      meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
      statements include, but are not limited to, statements that express our
      intentions, beliefs, expectations, strategies, predictions or any other
      statements relating to our future activities or other future events or
      conditions. These statements are based on current expectations, estimates and
      projections about our business based, in part, on assumptions made by our
      management. These statements are not guarantees of future performance and
      involve risks, uncertainties and assumptions that are difficult to predict.
      Therefore, actual outcomes and results may, and probably will, differ materially
      from what is expressed or forecasted in the forward-looking statements due
      to
      numerous factors, including those described above and those risks discussed
      from
      time to time in this Form 10-KSB Annual Report, including the risks described
      under “Risk Factors” and “Management’s Discussion and Analysis of Financial
      Condition and Results of Operations” and in other documents which we file with
      the Securities and Exchange Commission (“SEC”).




In
      addition, such statements could be affected by risks and uncertainties related
      to our financial condition, factors that affect our industry, market and
      customer acceptance, competition, government regulations and requirements,
      pricing, general industry and market conditions, growth rates, and general
      economic conditions. Any forward-looking statements speak only as of the date
      on
      which they are made, and we do not undertake any obligation to update any
      forward-looking statement to reflect events or circumstances after the date
      of
      this Form 10-KSB Annual Report.




**OVERVIEW**




Titan
      Energy Worldwide, Inc., a Nevada corporation, hereinafter referred to as “we,”
“us,” “Titan Energy,” or the “Company,” was incorporated under the name
      Global-Link Enterprises, Inc., in the state of Nevada on November 20, 1998.
      On
      February 4, 2000, the Company filed a Certificate of Name Change with the State
      of Nevada to “MLM World News Today, Inc.” which was granted on April 7, 2000. On
      August 6, 2002, the Company reverse split its shares on a one for one hundred
      basis, and on August 14, 2002, the Company amended its Articles of Incorporation
      to change its name to “Presidential Air Corporation.” On May 2, 2003, the
      Company’s name was changed to “Safe Travel Care, Inc.” In December 2006, we
      changed our name to “Titan Energy Worldwide, Inc.” and effected a reverse stock
      split of its shares on a one to 50 basis. In August 2007, we effected
      a reverse split of our shares on a one to 15 basis.




On
      August
      31, 2005, we amended our Articles of Incorporation to authorize 25,000,000
      shares of preferred stock, par value $0.0001 per share. We also designated
      10,000,000 shares of Series A Preferred Stock. On August 1, 2007, the Company
      filed an amended Certificate of Designation for its Series A Preferred Stock
      to
      affect a Fifty (50) to One (1) reverse stock split of the issued and outstanding
      shares of the Series A Preferred Stock. The results of this amendment were
      to
      reduce the outstanding shares of Series A Preferred Stock at August 1, 2007
      from
      2,000,000 shares to approximately 40,000 shares. On August 13, 2007, the Company
      converted the Series A Preferred Stock to common stock according to the formulas
      set forth in the Certificate of Designation. Each share of Series A was
      converted 200:1 to Common Shares. This resulted in issuing 8,000,000 common
      shares to the Company’s Chairman, Mr. Jeffrey Flannery, who was the only
      stockholder for the Series A Preferred Stock.




On
      July
      21, 2006, we entered into an agreement and plan of merger with Titan Energy
      Development Inc (TEDI), the manufacturer of a mobile utility system for disaster
      and emergency situations. In exchange for transferring the stock of TEDI to
      the
      Company, the TEDI shareholders received stock consideration consisting of
      1,000,000 newly issued shares of the Company’s Series B Preferred Stock. These
      shares were divided proportionately among the TEDI shareholders in accordance
      with the respective ownership interest in TEDI immediately before the completion
      of the merger. The TEDI Shareholders also received 1,000,000 shares of common
      stock. On August 13, 2007, the Series B shareholders agreed to convert their
      shares early resulting in the Company issuing 1,686,699 shares of common stock
      to those shareholders.




On
      December 28, 2006, the Company completed the acquisition of Stellar Energy
      Services, Inc. (“Stellar”), a distributor and service provider of standby and
      emergency generation systems, whereby Stellar exchanged all of its shares for
      cash and newly issued Series C Preferred Stock totaling 750,000 shares. The
      shareholders of Stellar also received 1,000,000 shares of Common Stock. On
      August 13, 2007, the Series C shareholders agreed to convert their shares early
      resulting in the Company issuing 907,809 shares of common stock to those
      shareholders.


1





On
      October 1 2007, we designated 10,000,000 shares of Series D Preferred Stock.
      This stock was sold to accredited investors between October 3, 2007 and January
      31, 2008 as part of the Units the investors purchased in a private placement
      offering. These Units consisted of one share of Series D Preferred Stock, one
      Class A warrant and one Class B warrant. The offering price per Unit was
      $10,000. The Series D Preferred Stock is convertible into 10,000 conversion
      shares assuming a conversion price of $1.00, each Class A warrant entitles
      the
      holder to purchase 3,333 common shares at an exercise price of $1.20 and each
      Class B warrant entitles the holder to purchase 3,333 common shares at an
      exercise price of $1.40.





**BUSINESS**




**Overview**


We
      are a
      manufacturer, distributor and service provider for power generation equipment,
      emergency power equipment and specialized mobile utility systems in the U.S.
      and
      internationally. We provide equipment and service to fire stations, police
      stations, the US military, hospitals, schools, manufacturers, municipalities,
      businesses and homes from manufacturers such as Generac Power Systems, Inc.





In
      2006,
      we acquired two companies in the distributed energy and generator manufacturing
      industries: Titan Energy Development Inc., (“TEDI”) merged with the Company on
      July 21, 2006 which made us a manufacturer and supplier of a unique disaster
      recovery mobile utility system called the Sentry 5000 TM ,
      We have
      executed a distribution agreement with Katolight Corporation, a prominent
      supplier of power generation equipment, to represent the Sentry 5000 TM through
      its national distribution network. Stellar Energy Services, Inc. (“Stellar”) was
      acquired by the Company on December 28, 2006 giving us an established
      distributorship for emergency and standby power in four Midwestern states.
      Since
      2006, we have installed hundreds of stand-by energy systems for customers in
      our
      territories and our sales have grown to approximately $8.5 million in 2007.





We
      believe that traditional power distribution needs to have its role expanded
      if
      it is going to meet the changing demands of today’s energy marketplace. The
      rising price of energy, the concern over the reliability of our utilities,
      and
      the need for cleaner, quieter power, are just a few of the factors redefining
      the power distribution market. We believe Titan Energy can capitalize on this
      opportunity by providing a more complete offering to our customers. We offer
      traditional power equipment and service, we provide nationwide service to our
      customers, and we design and manufacture emerging technologies for emergency
      and
      disaster relief applications.





**Strategy**


Our
      primary goal is to help our customers understand and solve their energy needs
      -
      whether that is providing back up power for mission critical operations,
      offering alternative energy solutions to help cut utility costs, or supplying
      emergency utility systems for use in times of disaster. Our expertise is in
      the
      design, distribution, and service of energy systems for companies,
      municipalities, government and military agencies and residential customers.





The
      energy market is growing and undergoing dramatic change in almost all areas
      as
      new technologies, new market drivers and conditions emerge. Our commitment
      is to
      be at the forefront of the energy market, to be able to respond effectively
      to
      the needs and demands of our customers and to maintain a profitable and growing
      enterprise.





Our
      growth strategy is based on the following:


§
            Aggressive
                marketing of the Sentry 5000TMthrough our distribution agreement with a national supplier and to
                military and government agencies.


§
            Internal
                growth of our distribution and service operations in the Midwestern
                United
                States


§
            Expansion
                of our distribution territories through acquisition or partnerships
                with
                our manufacturers.


§
            Promoting
                and enhancing the Titan Energy brand name and reputation.


2




To
      advance the company in these directions, we will seek to achieve a number of
      initiatives although our ability to do so cannot be guaranteed. We will seek
      to
      expand the capabilities and functionalities of the products that we manufacture,
      including the Sentry 5000 TM ,
      in
      order to make them less dependent on traditional fuel sources. We will also
      seek
      to develop new products that we believe have a market. For example, we have
      received interest in a specialized mobile unit that will feature water
      filtration that operates primarily from solar generated power or a solar/diesel
      combination. We are also exploring the use of wind technologies, a variety
      of
      alternative fuels as well as more advanced technologies such as fuel cells.





**The
      Industry**


Electric
      power is the life blood of our economy and our way of life. While many of us
      may
      take the availability of power for granted, many factors - economic,
      technological and environmental — are threatening the supply and reliability of
      electrical power in the United States and other countries. Many companies,
      institutions and agencies have operations that require a steady, constant supply
      of power. Hospitals, financial institutions, data centers, telecom companies
      and
      manufacturing operations have standby power systems as part of their day to
      day
      operations. More and more industries are being mandated by law to install
      emergency back power systems.




Titan
      Energy was founded to address some of the major challenges facing companies
      that
      need dependable power:




§
            *Generation,
                Transmission and Distribution Infrastructure Costs.*Our national energy grid is aging and in need of repair. In some
                areas of
                the country we are experiencing periodic outages (“brownouts” and
                “blackouts”) due to problems with our energy infrastructure. As
                electricity needs increase, these systems will need to be improved
                and
                expanded. Without further investments in this infrastructure, the
                likelihood of power shortages may
                increase.




§
            *Natural
                and manmade disasters.*The impact of hurricanes, tornadoes and storms have had a devastating
                effect on communities, including the loss of power and the inability
                to
                provide vital utility services in vast areas. Also, the threat of
                terrorist acts requires cities, municipalities, government agencies
                and
                others to be prepared in the case such an act would take place and
                interrupt services.




§
            *Limited
                Energy Supplies.*The primary fuels that have supplied this industry, fossil fuels
                in the
                form of oil, coal and natural gas, are limited, while worldwide demand
                is
                increasing dramatically. Therefore, the rising demand will probably
                result
                in higher prices, making it more likely that long-term average costs
                for
                electricity and fuel will continue to
                increase.




§
            *Need
                for Improved Service Offerings*.
                Thousands of generators and power generation systems have been deployed
                nationwide and many are not properly serviced. These assets are an
                opportunity for revenues from service contracts, installation and
                maintenance services. These service contracts may also include remote
                monitoring services which allow owners to be informed of the condition
                and
                operations of their equipment at any time and from any place. Service
                and
                remote monitoring are often structured as recurring
                revenues.




***Titan
      Energy Development, Inc. (TEDI) Subsidiary***




With
      the
      acquisition of TEDI, the Company became a manufacturer of mobile,
      multifunctional utility systems designed for disaster recovery and response
      situations. For more than two years TEDI had been working with major energy
      research centers and the U.S. military to create the next generation of mobile
      utility equipment. The result, which is now ready for commercial distribution,
      is its flagship product called the Sentry 5000 TM .




3


The
      Sentry 5000 TM was
      designed and developed by TEDI to be a mobile, completely self sufficient first
      response unit that will provide several vital utility services in manmade and
      natural disasters. The Sentry 5000 TM generates electricity, provides heating and cooling, water filtration,
      satellite, compressed air, voice and data communications, and emergency area
      lighting. The unit is small enough to be transported by a pick-up truck or
      SUV
      and operates on diesel fuel. We have entered into an agreement with Katolight
      Corporation, a national distributor of power generation equipment, to distribute
      the Sentry 5000 TM through
      its network of dealers. We reserve the right to sell the units directly to
      relief and charity organizations, and government and military
      agencies.





In
      the
      standby and power generation industry there are many large companies with more
      resources that could compete with the Company. However, management believes
      that
      the Sentry 5000 TM has no
      direct competition, as there is no product with similarly engineered,
      feature-to-feature functionality at the same target price point currently
      available on the market.




TEDI
      is
      committed to the continual improvement in its product offerings and maintaining
      products that offer the highest level of service and support. To this end,
      TEDI
      is actively engaged with Wayne State University, the US Army, TARDEC and
      NextEnergy in a number of cooperative research and development activities to
      address these issues. Specific initiatives underway over the next two years
      include:




·
            **Characterization
                of Fuel Properties of Synthetic/Petrol/Renewable
                Fuel.**TEDI and its partners will perform a systematic and comprehensive
                evaluation of fuel properties of Fischer-Tropsch synthetic fuel,
                and
                blends of synthetic and JP-8, synthetic and biodiesel, and JP-8 and
                biodiesel; and down-select fuel blends for engine and generator
                testings.




·
            **Optimization
                of Engine Control Strategy for Multiple Fuels.**TEDI and its partners will perform engine power testing and exhaust
                emission testing for selected Fischer-Tropsch synthetic fuel, and
                blends
                of synthetic with JP-8 or biodiesel, to optimize the engine control
                strategy. The goal is to develop a set of engine control parameters
                for
                different fuel and fuel blends.




·
            **Long-term
                Performance of Power Generator with Synthetic Fuel
                Blends.**TEDI and its partners will conduct a long-term performance testing
                of a
                Titan Sentry 5000TMpower generator with different synthetic fuel blends. The goal is
                to
                determine fuel compatibility, power performance, and component
                weakness.




The
      principal suppliers for TEDI are:




·
            Katolight
                - Provides Company with the trailer, aluminum enclosure, and engine
                generator.




·
            SLMCO
                Pure Water System - Manufacturer and provider of the TEDI reverse
                osmosis
                water purification system.




·
            Rush
                Air - Provides the heating and cooling
                system.




·
            NextEnergy
                - Provides TEDI with office space, board and meeting facilities,
                testing
                and laboratory space as well as connection to industry, research,
                military
                and business leaders.




·
            Tel
                - X Corporation, - Provides control panel, controls, and final
                assembly.




***Stellar
      Energy Services, Inc. Subsidiary***


Stellar
      is an authorized dealer for Generac Power Systems, Inc. generators and other
      products in four Midwestern states. Stellar provides products to protect a
      company’s critical equipment from over/under voltage or outages, transient
      surges and harmonic distortion, which represent 85% of critical user downtime
      due to damaged equipment. Stellar provides a full line of Generac power
      generation equipment for all kinds of applications, in both diesel and gaseous
      fuel options. In addition to sales of generator systems, Stellar provides
      preventative 24/7 emergency maintenance services, packaged engine generator
      systems, remote monitoring services, consultation and engineering
      services.




4


Our
      manufacturer, Generac Power Systems, Inc., offers a number of product features
      and capabilities that management believes gives our company an advantage in
      this
      competitive market place. The Generac brand features fully integrated power
      generation systems that include industrial, commercial, and residential
      generator sets, as well as automatic transfer switches, controls, fuel tanks,
      enclosures and remote monitoring software. By linking top quality, long life
      generator sets with its own paralleling switch technology, Generac has created
      a
      cost-effective single source offering.




For
      higher kilowatt requirements, Generac’s Modular Power System (“MPS”) utilizes
      multiple diesel or gaseous fueled generators in various side-by-side
      arrangements that match the power output of large single engine units. This
      cost-effective solution combines proven high volume engine designs with
      Generac’s own switching and paralleling technology to provide a fully integrated
      system. The MPS system is based upon diesel fueled units of 400, 500 or 600
      kilowatts (kW) working in concert to offer outputs ranging from 800 to 6000
      kW,
      and spark ignited gaseous fueled units of 100 to 300 kW with combined outputs
      of
      200 to 3000 kW. In addition to the above models, the entire MPS product offering
      uses Generac’s PowerManager® Digital Control Platform, which brings a high
      degree of reliability and flexibility to the control of these
      systems.





Many
      of
      our customers are seeking greener solutions for stand by and emergency power
      generation. The new Generac Bi-FuelTM configuration provides a number of
      alternative options. This innovative technology uses a combination of diesel
      and
      natural gas to take advantage of the best qualities of each fuel (more power
      from diesel, lower emissions from natural gas). Bi-Fuel configurations are
      available for both stand-alone and MPS applications. Single-engine units are
      available at 300 and 375 kW output, while Gemini Twin Pack modules are rated
      at
      600 and 750 kW. MPS versions can be combined as needed to achieve numerous
      power
      outputs up to 3750 kW. The compression ignited, gas-powered technology used
      in
      these Bi-Fuel generators offers numerous advantages:




·
            Extended
                run time




·
            Lower
                particulate and NOX(Nitrogen oxide) emissions




·
            On-site
                fuel supply




·
            Longer
                maintenance cycles




·
            Typically
                lower fuel costs




While
      operating under load, Bi-Fuel units can operate on up to 90% natural gas. If
      conditions dictate, the unit can revert to 100% diesel fuel with a no break
      automatic fuel changeover. The on-site diesel fuel tank required for Bi-Fuel
      units can also be smaller, if desired, to save space and cost.




**Service
      Support.** Stellar
      recognizes additional revenues from service contracts, installation and
      maintenance services for its customers and owners of Generac equipment. These
      service contracts may also include remote monitoring services which allow owners
      to be informed of the condition and operations of their equipment at any time
      and from any place. Service and remote monitoring are often structured as
      recurring revenues.




***Future
      Growth***


Our
      goals
      are to grow the sales and service of our products and to seek strategic
      acquisitions that will expand our sales, service and manufacturing capabilities.
      Although no assurances can be given, management anticipates Company growth
      from
      the following areas:





1)
            **Sale
                of Sentry 5000****TM****though
                a National Distribution Company.**The
                Company has an agreement with Katolight, a national generator distribution
                company, to distribute the Sentry 5000TMthrough
                its dealers in North America and other countries. We have received
                a
                purchase order for five Sentry 5000TMunits
                with a commitment for an additional fifteen units in 2008. Management
                believes that as the Sentry 5000TMproduct
                becomes more visible in the market place, additional orders will
                be
                forthcoming. The Company is gaining exposure through industry trade
                shows
                nationwide in an effort to support this distribution
                network.


5





2)
            **Acquisitions
                of other synergistic and complementary companies.**Management has identified and initiated discussions with numerous
                companies that we believe are strongly compatible with Titan Energy’s
                strategic vision. These include companies in the traditional, alternative
                and renewable energy industries.





3)
            **Expansion
                of sales internationally.**Management is also considering international territories for generator
                and
                Sentry 5000 sales including South America, India, the Caribbean,
                and
                Southeast Asia.





4)
            **Increase
                sales revenues in Stellar from existing territories.**We
                have identified a number of opportunities to improve product sales
                and
                revenues in our existing Midwest territory; new initiatives are being
                implemented. A dedicated effort to grow the Company’s service revenues and
                margins has been implemented with good results to
                date.





5)
            **Increase
                number of territories through its manufacturing
                partners.**The Company hopes to work with its manufacturing partners to acquire
                underperforming or underserved territories that would increase the
                Company’s sales base and revenues.





6)
            **Sentry
                5000****TM****Improvements.**Titan Energy has received orders for three military applications
                of
                specially modified Sentry 5000TMunits
                and is planning to deliver a revolutionary electric hybrid “Sentry 5000
                EH” system for the US Defense Logistics Agency by July 2008. Equipped
                with
                a photo-voltaic system, DC batteries, and a state-of-the-art AC/DC
                gateway, the Sentry 5000EH will be capable of extended runtimes without
                refueling. Titan Energy has also received a contract to test the
                Sentry
                5000TMwith four separate fuels: Ultra low diesel, Jet fuel, B-50 Bio-diesel,
                and
                the US Army’s new synthetic diesel. This program is sponsored by the State
                of Michigan with a $2.3 million grant. Titan Energy plans to develop
                service schedules and warranty programs for each fuel. Management
                believes
                that being able to offer a hybrid Sentry 5000TMwith the ability to warrant its operation on multiple fuels will
                give the
                company an advantage over potential
                competitors.





7)
            **Government
                and Military Sales.**Titan Energy is in the process of applying for a GSA number as the
                Company
                believes the interest and potential sales to government agencies
                will be
                significant. A GSA number will greatly facilitate future sales of
                the
                Sentry 5000TMto
                many government and related agencies.





Through
      strategic acquisitions and expanding sales and margin in our existing
      businesses, we are seeking to achieve a national footprint for sales and
      service, as well as the opportunity to create branding, greater economies of
      scale, and improved marketing, advertising, sales and service programs. We
      believe our Management is highly qualified to continue to improve our existing
      businesses and we are uniquely positioned to carry out an aggressive and
      successful acquisition strategy.




***Need
      for Capital to Support Future Growth***


Management
      believes that Titan Energy has sufficient capital to meet its operational need
      for the remainder of this year. Titan Energy will need additional capital to
      continue operations and will endeavor to raise funds through the sale of equity
      shares and revenues from operations. There can be no assurance that Titan Energy
      will generate revenues from operations or obtain sufficient capital on
      acceptable terms, if at all. Failure to obtain such capital or generate such
      operating revenues would have an adverse impact on Titan Energy’s financial
      position and results of operations and ability to continue as a going concern.
      Operating and capital requirements during the next fiscal year and thereafter
      will vary based on a number of factors, including the level of sales and
      marketing activities for services and products. There can be no assurance that
      additional private or public financing, including debt or equity financing,
      will
      be available as needed, or, if available, on terms favorable to Titan Energy.
      Any additional equity financing may be dilutive to stockholders and such
      additional equity securities may have rights, preferences or privileges that
      are
      senior to those of the Company’s existing common stock.




**Inflation**


In
      management’s opinion, inflation has not had a material effect on our financial
      condition or results of operations.


6





**Employees**


We
      currently have 32 full-time employees.





**Item
      2.**  **Description
      of Property**





We
      lease office space at the following locations:


·
              55800
                  Grand River Avenue, Suite 100, New Hudson, MI 48165 (our executive
                  offices). This is a 3-year lease agreement, at a cost of $3,170.00
                  per
                  month. The expiration date for this lease is December 1,
                  2010.·
              8880
                  Rio San Diego Drive, Floor 8th,
                  San Diego, CA 92108. This is a 1-year lease agreement, at a cost
                  of $1,645
                  per month. This lease terminates on May 1, 2008.·
              461
                  Burroughs Street, Detroit, MI 48202. This is a 1-year lease agreement,
                  at
                  a cost of $703 per month. This lease terminates on November 1,
                  2008.·
              6177
                  Center St., Suite 103, Omaha, NE 68106. This is a 3-year lease
                  agreement,
                  with at a cost of $886 per month. This lease expires April 30,
                  2008 and
                  has a renewal option to February 28, 2011.·
              6130
                  Blue Circle Drive, Suite 600, Minnetonka, MN 55343. This is a 5-year
                  lease
                  with a cost of $4,000 per month. This lease expiration date is
                  November
                  30, 2012.·
              1451
                  Northeast 69thPlace,
                  Suite 43, Ankeny, IA 50021. This is a 3-year lease at a cost of
                  $666.67
                  per month. This lease expires on July 31,
                  2009.





**Item
      3.**  **Legal
      Proceedings**





There
      are
      no outstanding legal proceedings against Titan Energy Worldwide or any of its
      subsidiaries.





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





None.


7


**PART
      II**




**Item
      5.**  **Market
      for Common Equity and Related Stockholder Matters**





Since
      May 19, 2003, our common stock has been quoted on the OTC Bulletin Board under
      the symbol “SFTV.OB.” On December 28, 2006, our symbol changed to “TEWW.OB.” On
      August 10, 2007, our symbol changed to “TEWI.OB”. The following table sets
      forth, for the fiscal quarters indicated, the high and low bid prices These
      quotations reflect the closing inter-dealer prices, without mark-up, mark-down
      or commission, and may not represent actual transactions.


**High**
                
                **Low****Calendar
                    Year 2007**First
                    Quarter
                
                
                0.1800
                
                
                0.0500Second
                    Quarter
                
                
                0.1000
                
                
                0.0400Third
                    Quarter
                
                
                1.2500
                
                
                0.0030Fourth
                    Quarter
                
                
                1.9000
                
                
                1.0100**Calendar
                    Year 2006**First
                    Quarter
                
                
                0.0070
                
                
                0.0056Second
                    Quarter
                
                
                0.0030
                
                
                0.0022Third
                    Quarter
                
                
                0.0040
                
                
                0.0032Fourth
                    Quarter
                
                
                0.1100
                
                
                0.0530


We
      have
      15,422,167 shares of our common stock outstanding as of March 6, 2008 held
      by
      approximately 374 stockholders of record. The number of record holders was
      determined from the records of our transfer agent and does not include
      beneficial owners of common stock whose shares are held in the names of various
      security brokers, dealers, and registered clearing agencies. Our common stock
      had a 15 to 1 reverse split on August 10, 2007 and a 50 to 1 reverse split
      on
      December 28, 2006.




**SECURITIES
      AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**





See
      “Item 11 - Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters.”





**RECENT
      SALES OF UNREGISTERED SECURITIES**





On
      January 31, 2008 (the “Final Closing Date”), Titan Energy Worldwide, Inc. (the
“Company”) closed on approximately $6.5 million of its $10 million private
      placement that commenced in October 2007 (the “Private Offering”). In the
      Private Offering, the Company offered units (the “Units”) consisting
      of:





·
            one
                (1) share of Series D Convertible Preferred Stock (the “Preferred Stock”);




·
            one
                (1) Class A Warrant (the “A Warrant”);
                and




·
            one
                (1) Class B Warrant (the “B Warrant”)




The
      A
      Warrant and the B Warrant are immediately detachable from the Preferred
      Stock.




The
      Company used part of the net proceeds from the Private Offering to retire
      approximately $3.8 million in debt and it plans to use the remainder to
      potentially acquire one or more targeted companies, and to provide inventory
      and
      operational funds.  The
      Company also used part of the net proceeds to purchase warrants of 1,050,000
      shares of common stock at $0.12 per share.


8


The
      Private Offering was not registered under the Securities Act of 1933, as amended
      (the “Securities Act”), but was made in reliance upon the exemptions from
      registration provided by Section 4(2) of the Securities Act and Rule 506 of
      Regulation D promulgated thereunder, insofar as such securities were issued
      only
      to “accredited investors” within the meaning of Rule 501 of Regulation
      D.




A
      more
      detailed description of this transaction may be found in our Form 8-K filed
      February 26, 2008.


9


**SECTION
      15(g) OF THE EXCHANGE ACT**




The
      shares of our common stock are covered by Section 15(g) of the Exchange Act,
      and
      Rules 15g-1 through 15g-6 promulgated thereunder, which impose additional sales
      practice requirements on broker-dealers who sell our securities to persons
      other
      than established customers and accredited investors.




Rule
      15g-2 declares unlawful any broker-dealer transactions in “penny stocks” unless
      the broker-dealer has first provided to the customer a standardized disclosure
      document.




Rule
      15g-3 provides that it is unlawful for a broker-dealer to engage in a “penny
      stock” transaction unless the broker-dealer first discloses and subsequently
      confirms to the customer the current quotation prices or similar market
      information concerning the penny stock in question.




Rule
      15g-4 prohibits broker-dealers from completing “penny stock” transactions for a
      customer unless the broker-dealer first discloses to the customer the amount
      of
      compensation or other remuneration received as a result of the penny stock
      transaction.




Rule
      15g-5 requires that a broker-dealer executing a “penny stock” transaction, other
      than one exempt under Rule 15g-1, disclose to its customer, at the time of
      or
      prior to the transaction, information about the sales person’s
      compensation.




Our
      common stock may be subject to the foregoing rules. The application of the
      “penny stock” rules may affect our stockholders’ ability to sell their shares
      because some broker-dealers may not be willing to make a market in our common
      stock because of the burdens imposed upon them by the “penny stock”
rules.




The
      following table provides information about purchases by us and our affiliated
      purchasers during the quarter ended December 31, 2007 of equity securities
      that
      are registered by us pursuant to Section 12 of the Securities Exchange Act
      of
      1934:





**Small
      Business Issuer Purchases of Equity Securities**




**(a)**
            
            **(b)**
            
            **(c)**
            
            **(d)****Total Number of**
              **Shares (or Units)**
              **Purchased**
            
            **Average Price**
              **Paid per Share**
              **(or Unit)**
            
            **Total Number of**
              **Shares (or Units)**
              **Purchased as Part**
              **of Publicly**
              **Announced Plans**
              **or Programs**
            
            **Maximum Number**
              **(or Approximate**
              **Dollar Value) of**
              **Shares (or Units)**
              **that May Yet Be**
              **Purchased under**
              **the Plans or**
              **Programs**October
                2007
            
            
            
            
            
            0
            
            $
            0
            
            
            
            
            
            0
            
            
            
            
            
            0November
                2007
            
            
            
            
            
            0
            
            $
            0
            
            
            
            
            
            0
            
            
            
            
            
            0December
                2007
            
            
            
            
            
            0
            
            $
            0
            
            
            
            
            
            0
            
            
            
            
            
            0Total
            
            
            
            
            
            0
            
            $
            0
            
            
            
            
            
            0
            
            
            
            
            
            0




10





**Item
      6.****Management’s
      Discussion and Analysis****or
      Plan of Operation.**





Statements
      included in this Management’s Discussion and Analysis or Plan of Operation, and
      in future filings by us with the Securities and Exchange Commission (the “SEC”),
      in our press releases and in oral statements made with the approval of an
      authorized executive officer which are not historical or current facts are
      “forward-looking statements” made pursuant to the safe harbor provisions of the
      Private Securities Litigation Reform Act of 1995 and are subject to certain
      risks and uncertainties that could cause actual results to differ materially
      from historical earnings and those presently anticipated or projected. We wish
      to caution readers not to place undue reliance on any such forward-looking
      statements, which speak only as of the date made. The following important
      factors, among others, in some cases have affected and in the future could
      affect our actual results and could cause our actual financial performance
      to
      differ materially from that expressed in any forward-looking statement:
      (i) the extremely competitive conditions that currently exist in the market
      for companies similar to us, and (ii) the lack of resources to maintain our
      good standing status and requisite filings with the SEC. The foregoing list
      should not be construed as exhaustive and we disclaim any obligation
      subsequently to revise any forward-looking statements to reflect events or
      circumstances after the date of such statements or to reflect the occurrence
      of
      anticipated or unanticipated events.




**PLAN
      OF OPERATIONS**





In
      2006,
      we acquired and merged with two corporations and entered a totally new
      marketplace. In 2007, our operations represent the operations of our two
      subsidiaries. Stellar Energy was a business with an established customer base
      and accounts for most of the sales. Titan Energy Development sold two Sentry
      5000 TM units in
      2007.




We
      have
      had some success in raising capital this year which Management believes gives
      us
      sufficient operating capital for the remainder of the year; however, we will
      need additional capital to continue our operations, as well as to consummate
      any
      new business opportunities and will endeavor to raise funds through the sale
      of
      equity shares, convertible debt securities and revenues from
      operations.




There
      can
      be no assurance that we will continue to generate revenues from operations
      or
      obtain sufficient capital on acceptable terms, if at all. Failure to obtain
      such
      capital or generate such operating revenues would have an adverse impact on
      our
      financial position and results of operations and ability to continue as a going
      concern. Our operating and capital requirements during the next fiscal year
      and
      thereafter will vary based on a number of factors, including the level of sales
      and marketing activities for our services and products. There can be no
      assurance that additional private or public financing, including debt or equity
      financing, will be available as needed, or, if available, will be on terms
      favorable to us. Any additional equity financing may be dilutive to stockholders
      and such additional equity securities may have rights, preferences or privileges
      that are senior to those of our existing common stock. Furthermore, debt
      financing, if available, will require payment of interest and may involve
      restrictive covenants that could impose limitations on our operating
      flexibility. Our failure to successfully obtain additional future funding may
      jeopardize our ability to continue our business and operations.




If
      we
      raise additional funds by issuing equity securities, existing stockholders
      may
      experience a dilution in their ownership. In addition, as a condition to giving
      additional funds to us, future investors may demand, and may be granted, rights
      superior to those of existing stockholders.





**RESULTS
      OF OPERATIONS**




**Year
      Ended December 31, 2007 Compared to the Year Ended December 31,
      2006**





***Sales***


Sales
      for
      the year ended December 31, 2007 were $8,841,049 compared to $0 for the year
      ended December 31, 2006. The primary reason for the increase was the
      acquisition of Stellar in December 2006. Stellar sales for 2006, under prior
      ownership, were $7,026,049. Year over year increase for Stellar sales was 17%.
      TEDI sold its first two Sentry 5000 TM units in
      the second quarter of 2007, which resulted in additional revenue of
      approximately $350,000. TEDI has received its first significant order for five
      units to be delivered in May of 2008. This order is valued at $625,000. In
      addition, TEDI has a developmental subcontract to provide an electric hybrid
      to
      the military. This contract is valued at approximately $630,000 and is scheduled
      to be delivered by the end of the third quarter of 2008.


11


***Cost
      of Sales***


Cost
      of
      sales was $7,711,330 for the year ended December 31, 2007 compared to $0 for
      the
      year ended December 31, 2006. Cost of sales as a percentage of sales was 87.2%
      for the year ended December 31, 2007. We expect that the gross margin will
      improve in 2008 due to increased sales of the Sentry 5000 TM which
      has a higher margin, and improvements in pricing policies at Stellar.





***General
      and Administrative Expenses***


General
      and administrative expenses were $3,322,023 for the year ended December 31,
      2007, compared to $688,106 for the year ended December 31, 2006, an increase
      of
      $2,633,917. In 2006, the general and administrative cost includes five months
      for TEDI expenses and included nothing for Stellar, which was purchased on
      December 31, 2006. For comparability purposes, the full year of general and
      administrative expense for these two subsidiaries would have been $2,260,765,
      an
      increase of $1,061,258. Approximately 45% of this increase was attributable
      to
      back pay to officers for working without compensation in prior years. The
      remainder of the increase was for consultants and other advisors in assisting
      the Company in raising capital and an increase in the number of employees
      associated with the growth of the Company. We expect G&A expenses will
      continue to increase moderately as sales volumes will require additional
      support. We intend to focus on operating efficiencies, cost reductions, and
      increasing revenue to achieve a lower ratio of G&A expenses compared to
      sales.




***Interest
      Expense***


Interest
      expense for the year ended December 31, 2007, was $259,237 compared to $40,751
      for the year ended December 31, 2006. The higher costs are attributable to
      obtaining financing for the acquisitions and operations of TEDI and Stellar.
      Interest expense will decrease in future quarters as the Company used the
      proceeds from its Private Offering to retire all the short-term bridge
      financing. This financing had an average interest rate of 11%. We have also
      replaced Stellar working capital financing with an 8% line of credit, which
      will
      go effective March 15, 2008





***Amortization
      of Debt Discounts and Financing Costs***


For
      the
      year ended December 31, 2007 the amortization cost of debt discounts and
      warrants was $923,845 compared to $65,625 for the year ended December 31, 2006.
      The increase in the amortization of debt discounts and warrants was primarily
      related to the Convertible Notes with detachable warrants issued in of 2007
      as
      part of our short-term bridge financing. The amortization of deferred financing
      costs was $242,303 which related to the Secured Senior Notes issued in the
      second and third quarters of 2007. The total financing cost incurred was
      $547,686, however as part of the Private Offering many of these notes were
      converted into common stock and any unamortized amount at conversion was
      recorded as a charge to additional paid in capital.





**Liquidity
      and Capital Resources**


During
      the year ended December 31, 2007, cash used by operations was $2,234,821. We
      intend to continue to find ways to expand our business through new product
      development and introduction and possibly through completing planned
      acquisitions. We believe that revenues and earnings will increase as we grow.
      We
      anticipate that we will incur smaller losses in the near future if we are able
      to expand our business and the marketing of our products and services now under
      development. The losses will be created to the extent of the excess of
      technology development and marketing expenses over the income from
      operations.




During
      the year ended December 31, 2007, we incurred a net loss of $3,375,386 which
      includes $1,223,620 of non-cash charges. We used cash for investing activities
      of $96,609 and net cash provided by financing activities was $3,042,515. This
      included $2,686,000 in gross proceeds from bridge loans, which net of commission
      and placement fees, resulted in approximately $2,100,000 in net proceeds. These
      proceeds were used to retire debt that was maturing and to fund operations.


12


On
      October 3, 2007, we issued a private placement memorandum to sell up to
      $10,000,000 of Units consisting of one share of Series D Convertible Preferred
      Stock and one Class A warrant and one Class B warrant. Each Unit was offered
      at
      $10,000. Holders of Preferred Stock may, at any time, convert their shares,
      in
      whole or in part, into shares of Common Stock. Assuming an initial conversion
      price of $1.00, each one (1) share of Preferred Stock is convertible into 10,000
      shares of Common Stock. Each A Warrant and B Warrant will entitle the holder
      to
      purchase Three thousand three hundred and thirty-three (3,333) shares of Common
      Stock with exercise prices of $1.20 and $1.40, respectively. The Units are
      being
      offered by us on a “reasonable efforts” basis only to “accredited investors” (as
      defined in Rule 501(a) of Regulation D promulgated under the Securities Act
      of
      1933, as amended), The aggregate gross proceeds resulting from the sales of
      these units were approximately $3.6 million. Net proceeds to us was
      approximately $3.0 million. In addition, $491,000 of the bridge financing was
      converted into the offering at a 10% discount. The proceeds from the closings
      have been used to retire debt, to repurchase stock warrants and the funding
      of
      inventory and operating costs. Also with this closing all the holders of the
      $1,846,000 of 11% Convertible Notes converted their notes and accrued interest
      into shares of Common Stock at $0.50 per share. The total number of common
      stock
      to be issued is approximately 3,859,844. The offering continued to January
      31,
      2008 raising additional gross proceeds of $2.4 million. Net proceeds to us
      were
      $2.2 million. These funds will be use for inventory of the Sentry
      5000 TM and
      operating costs in 2008. At March 15, 2008 the Company had $1.8 million in
      cash
      and short-term investment.





**Off-Balance
      Sheet Arrangements:** We do
      not have any off-balance sheet arrangements.


13


**Item
      7.**  **Financial
      Statements**




**TITAN
      ENERGY WORLDWIDE, INC.**


**Consolidated
      Financial Statements**


**and**


**Reports
      of Independent Registered Public Accounting Firms**


**December
      31, 2007 and 2006**





**Table
      of Contents**





PageReport of Independent Registered Public Accounting Firm
            
            F - 1Report of Independent Registered Public Accounting Firm
            
            F - 2Consolidated Balance Sheets
            
            F - 3Consolidated Statements of Operations and Comprehensive Loss
            
            F - 4Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
            
            F - 5Consolidated Statements of Cash Flows
            
            F - 7Notes  to Consolidated Financial Statements
            
            F - 8




14


**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





**BOARD
      OF DIRECTORS AND STOCKHOLDERS**


**TITAN
      ENERGY WORLDWIDE, INC.**





We
      have
      audited the accompanying consolidated balance sheet of Titan Energy Worldwide,
      Inc. and Subsidiaries (the “Company”) as of December 31, 2007, and the related
      consolidated statements of operations, stockholders’ equity and cash flows for
      the year then ended. These consolidated financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these consolidated financial statements based on our
      audit.




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. The Company
      is not required to have, nor were we engaged to perform, an audit of its
      internal control over financial reporting. Our audit included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the company's internal control
      over financial reporting. Accordingly, we express no such opinion. An audit
      also
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the consolidated financial statements, assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audit provides a reasonable basis for our opinion.




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Titan Energy Worldwide,
      Inc.
      and Subsidiaries as of December 31, 2007, and the results of their operations
      and their cash flows for the year then ended, in conformity with accounting
      principles generally accepted in the United States of America.




The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. As discussed in Note 1 to the
      consolidated financial statements, the Company’s recurring losses and
      accumulated deficit raise substantial doubt about its ability to continue as
      a
      going concern. Management’s plans as to these matters are also discussed in Note
      1. The consolidated financial statements do not include any adjustments that
      might result from the outcome of this uncertainty.





As
      discussed in Note 2 to the consolidated financial statements, effective January
      1, 2007, the Company adopted the provisions of FASB Interpretation 48,
“Accounting for Uncertainty in Income Taxes.”





/s/
      UHY
      LLP


Southfield,
      MI


March
      28,
      2008


F-1


**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**


****
 **TO
        THE BOARD OF DIRECTORS AND STOCKHOLDERS OF TITAN ENERGY WORLDWIDE, INC.**
 ****
 I
        have
        audited the accompanying consolidated balance sheet of Titan Energy Worldwide,
        Inc. as of December 31, 2006 and the related consolidated statements of
        operations, stockholders’ equity and cash flows for the year ended December 31,
        2006. These financial statements are the responsibility of the Company’s
        management. My responsibility is to express an opinion on these financial
        statements based on my audit.
 
 I
        conducted my audit in accordance with standards of the Public Company Accounting
        Oversight Board (United States). Those standards require that I plan and
        perform
        the audit to obtain reasonable assurance about whether the financial statements
        are free of material misstatement. An audit includes examining, on a test
        basis,
        evidence supporting the amounts and disclosures in the financial statements.
        An
        audit also includes assessing the accounting principles used and significant
        estimates made by management, as well as evaluating the overall financial
        statement presentation. I believe that my audit provides a reasonable basis
        for
        my opinion.
 
 In
        my
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Titan Energy Worldwide, Inc.
        as of
        December 31, 2006 and the results of its operations and cash flows for the
        year
        then ended in conformity with accounting principles generally accepted in
        the
        United States of America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 1 to the accompanying
        financial statements, the Company, among other factors, has incurred substantial
        losses and has an accumulated deficit, which raises substantial doubt about
        its
        ability to continue as a going concern. Management’s plan in regard to these
        matters is also discussed in Note 1. These financial statements do not include
        any adjustments that might result from the outcome of this uncertainty.
 
 **Gruber
        & Company LLC**
 ****
 Lake
        St.
        Louis, Missouri
 March
        17,
        2007, except for the effects of the restatement discussed in Note 1 for which
        the date is September 24, 2007


F-2


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**Consolidated
      Balance Sheets**


**December
      31, 2007 and 2006**


**Restated****2007**
              
              **2006****ASSETS****Current
                  assets**Cash
                  and cash equivalents
              
              $
              742,564
              
              $
              31,479Accounts
                  receivable, less allowance for doubtful accounts of $50,000 and
                  $128,120,
                  respectively
              
              
              1,089,845
              
              
              1,738,942Inventory
              
              
              598,207
              
              
              553,715Other
                  current assets
              
              
              137,005
              
              
              8,969Total
                  current assets
              
              
              2,567,621
              
              
              2,333,105Property
                  and equipment, net
              
              
              133,421
              
              
              79,575Customer
                  and distribution lists
              
              
              1,280,034
              
              
              1,425,347Goodwill
              
              
              1,599,160
              
              
              1,599,160Other
                  assets
              
              
              22,532
              
              
              4,130Total
                  assets
              
              $
              5,602,768
              
              $
              5,441,317**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****Current
                  liabilities**Notes
                  payable-current portion
              
              $
              544,425
              
              $
              1,070,759Accounts
                  payable
              
              
              882,126
              
              
              945,279Notes
                  payable - Stellar Acquisition
              
              
              -
              
              
              823,000Accrued
                  compensation
              
              
              537,584
              
              
              461,335Accrued
                  liabilities - other
              
              
              437,616
              
              
              383,295Customer
                  deposits and deferred revenue
              
              
              72,903
              
              
              690,879Total
                  current liabilities
              
              
              2,474,654
              
              
              4,374,547**Notes
                  payable, less current portion**
              
              
              3,670
              
              
              12,228Total
                  liabilities
              
              
              2,478,324
              
              
              4,386,775**Commitments
                  and Contingencies (Note 6)****Stockholders’
                  equity**Common
                  stock 1,900,000,000 shares authorized, $.0001 par value, issued
                  and
                  outstanding 15,398,205 and 6,979,971
              
              
              1,540
              
              
              698Preferred
                  Stock, Series A, authorized 10,000,000, issued and outstanding
                  0 and
                  2,000,000 shares, $.0001 par value
              
              
              
              
              
              200Preferred
                  Stock, Series B, authorized 10,000,000 issued and outstanding,
                  0 and
                  1,000,000 shares, $.0001 par value
              
              
              
              
              
              100Preferred
                  Stock, Series C, authorized 10,000,000 issued and outstanding 0
                  shares and
                  750,000 shares, $.0001 par value
              
              
              
              
              
              75Preferred
                  Stock Series D, authorized 10,0000,0000 issued and outstanding
                  411 and 0,
                  $.0001 par value
              
              
              1Additional
                  paid in capital
              
              
              24,169,118
              
              
              5,313,151Accumulated
                  deficit
              
              
              (21,046,215
              )
              
              (4,259,682
              )Total
                  stockholders’ equity
              
              $
              3,124,444
              
              $
              1,054,542Total
                  liabilities and stockholders’ equity
              
              $
              5,602,768
              
              $
              5,441,317


**See
      accompanying notes to consolidated financial statements.**


F-3


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**Consolidated
      Statements of Operations**


**For
      the Years Ended December 31, 2007 and 2006**


**Restated****2007**
              
              **2006**Sales
                  of equipment
              
              $
              6,858,941
              
              
              -Sales
                  of service and parts
              
              
              1,982,108
              
              
              -Total
                  sales
              
              
              8,841,049Material
                  costs of equipment
              
              
              5,939,635
              
              
              -Material
                  and labor costs for service and parts
              
              
              1,771,695
              
              
              -Total
                  cost of sales
              
              
              7,711,330
              
              
              -Gross
                  profit
              
              
              1,129,719
              
              
              -Salaries
                  and wages
              
              
              1,436,049
              
              
              272,844Consulting
                  and professional fees
              
              
              932,856
              
              
              296,587Other
                  general and administrative expense
              
              
              953,118
              
              
              118,675Total
                  general and administrative expenses
              
              
              3,322,023
              
              
              688,106Loss
                  from operations
              
              
              (2,192,304
              )
              
              (688,106
              )Interest
                  expenses
              
              
              259,237
              
              
              40,751Amortization
                  of debt discount and financing cost
              
              
              923,845
              
              
              65,625Net
                  loss
              
              $
              (3,375,386
              )
              $
              (794,482
              )Preferred
                  dividend from beneficial conversion feature on Series D
              
              
              (3,483,484
              )Preferred
                  dividend from early extinguishment of Preferred Stock Series A,
                  B &
                  C
              
              
              (9,767,847
              )Net
                  Loss for available to Common Shareholders
              
              $
              (16,626,717
              )
              $
              (794,482
              )Weighted
                  average number of shares outstanding
              
              
              6,638,249
              
              
              249,974Basic
                  net loss per common share
              
              $
              (2.50
              )
              $
              (3.18
              )Fully
                  diluted net loss per common share
              
              $
              (2.50
              )
              $
              (3.18
              )




**See
      accompanying notes to consolidated financial statements.**




F-4


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**Consolidated
      Statements of Stockholders’ Equity**


**For
      the Years Ended December 31, 2007 and 2006**





**Common Stock**
            
            **Preferred Stock****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount****Balance
                December 31, 2005**
            
            
            110,007,658
            
            $
            110,008Preferred
                Stock A
            
            
            
            
            
            
            
            
            2,000,000
            
            $
            200Proceeds
                from issuance of common stock
            
            
            15,990,894
            
            
            15,991
            
            
            
            
            
            -Stock
                issued for conversion of notes
            
            
            60,000,000
            
            
            60,000
            
            
            
            
            
            -Stock
                issued for services
            
            
            63,000,000
            
            
            63,000
            
            
            
            
            
            -50
                to 1 reverse stock split
            
            
            (244,018,581
            )
            
            (244,019
            )
            
            
            
            
            -Common
                stock issued to acquire Titan Energy Development, Inc.
            
            
            1,000,000
            
            
            100
            
            
            
            
            
            -Common
                stock issued to acquire Stellar Energy Services, Inc.
            
            
            1,000,000
            
            
            100
            
            
            
            
            
            -Preferred
                stock B issued to acquire Titan Energy Development, Inc.
            
            
            -
            
            
            -
            
            
            1,000,000
            
            
            100Preferred
                stock C issued to acquire Stellar Energy Services, Inc.
            
            
            -
            
            
            -
            
            
            750,000
            
            
            75Convertible
                debt beneficial conversion feature
            
            
            -
            
            
            -
            
            
            
            
            
            -Net
                loss for the year
            
            
            -
            
            
            -
            
            
            
            
            
            -Amended
                By Laws change in par
            
            
            -
            
            
            (4,482
            )
            
            
            
            
            -**Balance
                December 31, 2006**
            
            
            6,979,971
            
            $
            698
            
            
            3,750,000
            
            $
            375Stock
                issued for conversion of notes
            
            
            2,772,835
            
            
            277Proceeds
                from issuance of common stock
            
            
            562,118
            
            
            56Stock
                issued for services
            
            
            1,350,000
            
            
            135Warrants
                issued with convertible debt15
                to 1 reverse stock split
            
            
            (10,829,148
            )
            
            (1,083
            )Settlement
                of accounts payable
            
            
            38,077
            
            
            4Beneficial
                conversion feature related to convertible debtEarly
                extinguishment of Preferred Stock A
            
            
            8,000,000
            
            
            800
            
            
            (2,000,000
            )
            
            (200
            )Early
                extinguishment of Preferred Stock B
            
            
            1,686,699
            
            
            169
            
            
            (1,000,000
            )
            
            (100
            )Early
                extinguishment of Preferred Stock C
            
            
            977,809
            
            
            98
            
            
            (750,000
            )
            
            (75
            )Conversion
                of Secured Convertible Notes
            
            
            3,859,844
            
            
            386Preferred
                stock issuance
            
            
            
            
            
            
            
            
            417
            
            
            1Warrants
                issued with Preferred Series DBeneficial
                conversion feature related to Preferred Series DPurchase
                of common stock warrantsOtherNet
                loss for the year**Balance
                December 31, 2007**
            
            
            15,398,205
            
            $
            1,540
            
            
            417
            
            $
            1




**See
      accompanying notes to consolidated financial statements.**


F-5


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**Consolidated
      Statements of Stockholders’ Equity**


**For
      the Years Ended December 31, 2007 and 2006 (Continued)**





**Additional Paid**
              **in Capital**
            
            **Accumulated**
              **Deficit**
            
            **Total****Balance
                December 31, 2005**
            
            $
            2,868,224
            
            $
            (3,465,200
            )
            $
            (486,968
            )Preferred
                Stock A
            
            
            
            
            
            
            
            
            200Proceeds
                from issuance of common stock
            
            
            27,153
            
            
            -
            
            
            37,744Stock
                issued for conversion of notes
            
            
            -
            
            
            -
            
            
            60,000Stock
                issued for services
            
            
            80,048
            
            
            -
            
            
            143,04850
                to 1 reverse stock split
            
            
            244,019
            
            
            -
            
            
            -Common
                stock issued to acquire Titan Energy Development, Inc.
            
            
            169,900
            
            
            
            
            
            170,000Common
                stock issued to acquire Stellar Energy Services, Inc.
            
            
            69,900
            
            
            
            
            
            70,000Preferred
                stock B issued to acquire Titan Energy Development, Inc.
            
            
            999,900
            
            
            -
            
            
            1,000,000Preferred
                stock C issued to acquire Stellar Energy Services, Inc.
            
            
            749,925
            
            
            -
            
            
            750,000Convertible
                debt beneficial conversion feature
            
            
            105,000
            
            
            -
            
            
            105,000Net
                loss for the year
            
            
            -
            
            
            (794,482
            )
            
            (794,482
            )Amended
                By Laws change in par
            
            
            4,482
            
            
            -
            
            
            -**Balance
                December 31, 2006**
            
            $
            5,313,151
            
            $
            (4,259,682
            )
            $
            1,054,542Stock
                issued for conversion of notes
            
            
            2,496
            
            
            
            
            
            2,773Proceeds
                from issuance of common stock
            
            
            72,964
            
            
            
            
            
            73,020Stock
                issued for services
            
            
            111,565
            
            
            
            
            
            111,700Warrants
                issued with convertible debt
            
            
            102,479
            
            
            
            
            
            102,47915
                to 1 reverse stock split
            
            
            1,083
            
            
            
            
            
            -Settlement
                of accounts payable
            
            
            41,117
            
            
            
            
            
            41,121Beneficial
                conversion feature related to convertible debt
            
            
            642,168
            
            
            
            
            
            642,168Early
                extinguishment of Preferred Stock A
            
            
            8,506,350
            
            
            (8,506,950
            )
            
            -Early
                extinguishment of Preferred Stock B
            
            
            908,669
            
            
            (1,012,707
            )
            
            (103,969
            )Early
                extinguishment of Preferred Stock C
            
            
            352,070
            
            
            (408,006
            )
            
            (55,913
            )Conversion
                of Secured Convertible Notes
            
            
            1,650,433
            
            
            
            
            
            1,650,819Preferred
                Series D stock issuance
            
            
            2,075,675
            
            
            
            
            
            2,075,676Warrants
                value in Preferred Series D
            
            
            1,394,093
            
            
            
            
            
            1,394,093Beneficial
                conversion feature related to Preferred Series D
            
            
            3,483,484
            
            
            (3,483,484
            )
            
            -Purchase
                common stock warrants
            
            
            (479,000
            )
            
            
            
            
            (479,000
            )Other
            
            
            (9,679
            )
            
            
            
            
            (9,679
            )Net
                loss for the year
            
            
            
            
            
            (3,375,386
            )
            
            (3,375,386
            )**Balance
                December 31, 2007**
            
            $
            24,169,118
            
            $
            (21,046,215
            )
            $
            3,124,444




**See
      accompanying notes to consolidated financial statements.**


F-6


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**Consolidated
      Statements of Cash Flows**


**For
      the Years Ended December 31, 2007 and 2006**


**2007**
              
              **Restated**
                **2006****Operating
                  activities:**Net
                  loss
              
              $
              (3,375,386
              )
              $
              (794,482
              )**Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:**Compensation
                  paid by issuance of stock
              
              
              111,700
              
              
              143,048Depreciation
                  and amortization
              
              
              188,075
              
              
              28,638Amortization
                  of debt discount
              
              
              923,845
              
              
              65,625**Changes
                  in operating assets and liabilities:**Accounts
                  receivable
              
              
              649,097
              
              
              (15,024
              )Inventory
              
              
              (44,492
              )
              
              (14,002
              )Other
                  assets
              
              
              (137,101
              )
              
              (3,000
              )Accounts
                  payable
              
              
              (63,153
              )
              
              (32,535
              )Accrued
                  liabilities
              
              
              130,570
              
              
              325,667Customer
                  deposits
              
              
              (617,976
              )
              
              130,496Net
                  cash used by operating activities
              
              
              (2,234,821
              )
              
              (165,539
              )**Investing
                  activities:**Increase
                  in fixed assets
              
              
              (96,609
              )
              
              (3,775
              )Net
                  cash used for investing activities
              
              
              (96,609
              )
              
              (3,775
              )**Financing
                  activities:**Cash
                  from acquisitions.
              
              
              -
              
              
              12,719Proceeds
                  from issuance of Preferred Series D Stock
              
              
              3,044,173
              
              
              -Payment
                  of financing costs
              
              
              (547,686
              )Proceeds
                  from issuance of notes
              
              
              4,456,204
              
              
              190,530Payment
                  of notes
              
              
              (3,674,196
              )
              
              (40,200
              )Proceeds
                  from issuance of common stock
              
              
              73.020
              
              
              37,774Purchase
                  of common stock warrants
              
              
              (309,000
              )
              
              **-**Net
                  cash provided by financing activities
              
              
              3,042,515
              
              
              200,793Increase
                  in cash and cash equivalents
              
              $
              711,085
              
              $
              31,479Cash
                  and cash equivalents, beginning of year
              
              
              31,479
              
              
              -Cash
                  and cash equivalents, end of year
              
              $
              742,564
              
              $
              31,479





**See
      accompanying notes to consolidated financial
      statements.**


F-7




**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      1 - BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**




**Background**




Titan
      Energy Worldwide, Inc. (the “Company”) was incorporated on December 28, 2006 in
      the state of Nevada and was formerly known as “Safe Travel Care, Inc.,” a Nevada
      corporation.




Safe
      Travel was originally incorporated under the name “Global-Link Enterprises,
      Inc.” in the state of Nevada on November 20, 1998. On February 4, 2000, the
      Company filed a Certificate of Name Change with the state of Nevada to change
      the Company’s name to “MLM World News Today, Inc.” which was granted on April 7,
      2000. On August 14, 2002, the Company changed its name to “Presidential Air
      Corporation.”




On
      May 2,
      2003, the Company executed an agreement to acquire all of the assets of “Safe
      Travel Care, Inc.,” a California general partnership, and changed the Company’s
      name from Presidential Air Corporation to “Safe Travel Care, Inc.”




On
      July
      21, 2006, Safe Travel Care, Inc. entered into an agreement and plan of merger
      with Titan Energy Development, Inc. (“TEDI”) (“the Merger Agreement”). TEDI is a
      manufacturer and distributor of emergency on site survival equipment called
      the
      Sentry 5000 TM .
      In
      exchange for transferring TEDI to Safe Travel Care, Inc., the TEDI shareholders
      received stock consideration consisting of 1,000,000 newly issued shares of
      the
      Company’s preferred stock (the “Merger”), which were divided proportionately
      among the TEDI shareholders in accordance with their respective ownership
      interests in TEDI immediately before the completion of the Merger. The TEDI
      Shareholders also received 1,000,000 shares of common stock. The Company changed
      its name to “Titan Energy Worldwide, Inc.” on December 26, 2006.




On
      December 28, 2006, the Company acquired Stellar Energy Services, Inc., a
      Minnesota corporation (“Stellar”), whereby Stellar exchanged all its common
      shares for 750,000 newly issued shares of the Company’s preferred stock, plus a
      Note payable to Stellar shareholders of $823,000. The Stellar shareholders
      also
      received 1,000,000 share of common stock. Stellar provides products and services
      to protect an industry’s critical equipment from power outages, over/under
      voltage or transient surges and harmonic distortion.




On
      August
      1, 2007, the Company's Articles of Incorporation were amended to affect an
      up to
      Fifty (50) to One (1) reverse stock split of the issued and outstanding shares
      of common stock. As a result, a Fifteen (15) to One (1) reverse split took
      effect on August 10, 2007. The result of this split was to reduce the
      outstanding shares of common stock from approximately 11,602,777 as of August
      9,
      2007 to approximately 773,518 shares as of August 10, 2007.





On
      August
      10, 2007, the Company changed its trading symbol to “TEWI.OB,” and is currently
      trading on the OTCBB.





Effective
      August 13, 2007, t he
      Company agreed to the conversion of its Series A Preferred Stock into common
      stock according to the formulas set forth in the Certificate of Designation.
      Each share of Series A Preferred Stock converted 200:1 into shares of Common
      Stock. In addition, the Company converted the Series B Preferred Stock into
      $2.00 of Common Stock and shares of Series C Preferred Stock into $1.50 of
      Common Stock. The effective date for these transactions was August 13, 2007
      and
      the amount of Common Stock increased by 10,664,508 shares. The price of the
      Common Stock, based on the five days closing price before the effective date
      was
      $1.07. The Series B and Series C stockholders had an option to take a Note
      due
      in August 13, 2008 with 11% interest. In total, the Company has issued Notes
      totaling $159,882. Since these preferred shares were not yet convertible under
      the original conversion terms, these transactions have been accounted for as
      an
      extinguishment of the convertible preferred shares resulting in charges to
      retained earnings of $9,767,847 for the excess of the fair market value of
      the
      common stock issued over the recorded amount of the preferred stock.


F-8


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**Following
      is a summary of the Company’s significant accounting
      policies.**





**Restatement
      of Consolidated Financial Statements:**


The
      Company has restated its consolidated balance sheet as of December 31, 2006,
      and
      the related consolidated statements of operations, stockholders’ equity and cash
      flows for the year then ended. The restatements relate to 1) the Company’s
      recognition of Beneficial Conversion Features on convertible debt with
      detachable warrants, 2) the correction of errors relating to the purchase price
      allocation, and 3) recognition of revenue for consulting
      services.





**(1)**
            **Beneficial
                Conversion Feature:**


In
      accordance with Emerging Issues Task Force Issue 98-5, Accounting for
      Convertible Securities with a Beneficial Conversion Feature or Contingently
      Adjustable Conversion Ratios (“EITF 98-5”), the Company recognized a beneficial
      conversion feature present in the Convertible Note. The Company recognized
      and
      measured an aggregate of $105,000 of the proceeds, which is equal to the
      intrinsic value of the embedded beneficial conversion feature, to additional
      paid-in capital and a discount against the Convertible Notes. The debt discount
      attributed to the beneficial conversion feature issued is amortized over the
      Convertible Note’s maturity period (two year) as an interest expense. In year
      ended December 31, 2006, the amortization was $65,625, which includes fourth
      quarter of 2005.





**(2)**
            **Purchase
                Price Adjustments:**


In
      the
      purchase of Titan Energy Development, Inc., the Company had allocated the
      purchase price based on the allocation of the preferred shares. The preferred
      shares issued to the shareholders had a minimum value of $1.00 per share. This
      resulted in increasing the purchase price from $849,000 to $1,170,000. In
      addition, the allocation was based on the September 30, 2006 balance sheet
      and
      not the purchased balance sheet as of July 31, 2007, with result affecting
      various balance sheet accounts. The purchase allocation resulted in an
      intangible for Customer List which should have been amortized over the estimated
      life of 10 years. The statement of operation includes $27,789 of additional
      expense. In the purchase of Stellar Energy Services, the purchase price did
      not
      include additional consideration of 1,000,000 shares of Common stock valued
      at
      $70,000. The adjustment increases goodwill.





**(3)**
            **Revenue
                Recognition:**


In
      the
      fourth quarter of 2006, the Company recognized $10,000 for consulting services,
      however this amount should not have been recognized as the work was not
      completed and resulted in a full refund in the first quarter of 2007. Earnings
      per share was also adjusted for the 50-to-1 reverse stock split effected on
      December 26, 2006.


F-9


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





The
      changes to the Balance Sheet and Statement of Operations as of and for the
      year
      ended December 31, 2006 are as follows:





**Consolidated Balance Sheet**
            
            **As Reported**
            
            **Adjustment**
            
            **Restated**Customer
                and distribution list
            
            
            1,453,136
            
            
            (27,789
            )
            
            1,425,347Goodwill
            
            
            1,315,231
            
            
            283,929
            
            
            1,599,160Other
                Assets
            
            
            29,130
            
            
            (25,000
            )
            
            4,130Total
                Assets
            
            
            5,210,177
            
            
            231,140
            
            
            5,441.317Notes
                payable
            
            
            794,134
            
            
            276,625
            
            
            1,070,759Deposit
                and Deferred Revenue
            
            
            680,879
            
            
            10,000
            
            
            690,879Long-term
                debt
            
            
            328,228
            
            
            (316,000
            )
            
            12,228Total
                Liabilities
            
            
            4,416,150
            
            
            (29,375
            )
            
            4,386,775Common
                Stock
            
            
            498
            
            
            200
            
            
            698Preferred
                Stock Series A
            
            
            300
            
            
            (100
            )
            
            200Additional
                Paid in Capital
            
            
            4,949,322
            
            
            363,829
            
            
            5,313,151Accumulated
                Deficit
            
            
            (4,156,268
            )
            
            (103,414
            )
            
            (4,259,682
            )**Total
                Shareholder Equity**
            
            
            794,027
            
            
            260,515
            
            
            1,054,542







**Consolidated Statement of Operation**
            
            **As Reported**
            
            **Restated**Revenue
            
            
            10,000
            
            
            -Gross
                profit
            
            
            10,000
            
            
            -General
                and administrative expenses
            
            
            660,317
            
            
            688,106Loss
                from operations
            
            
            (650,317
            )
            
            (688,106
            )Interest
                expense
            
            
            41,751
            
            
            106,376Net
                loss
            
            
            (691,068
            )
            
            (794,782
            )Weighted
                average number of shares
            
            
            82,948,562
            
            
            3,749,609**Basic
                and diluted net loss per common share**
            
            
            (0.00
            )
            
            (0.21
            )




F-10


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**




**Principles
      of Consolidation**


The
      financial statements include the accounts of the Company and its 100% owned
      subsidiaries, TEDI and Stellar. The statement of operations includes the
      accounts of the Company for the year, plus TEDI for the period after
      acquisition, or August 1, 2006 and Stellar for the three day period from
      December 28, 2006 to December 31, 2006.





**Basis
      of Presentation and Going Concern**


The
      accompanying financial statements have been prepared in conformity with
      accounting principles generally accepted in the United States of America, which
      contemplate continuation of the Company as a going concern. The Company incurred
      a net loss for the year ended December 31, 2007 of $3,375,386 and at December
      31, 2007 had an accumulated deficit of $21,046,215. The loss for the year
      includes a non-cash charge for Beneficial Conversion Feature of $681,542
      resulting from the convertible debt issued during the year. The accumulated
      deficit includes a charge of $9,767,847 for the early extinguishment of the
      Series A, B and C Preferred Stock and issuance of Common Stock. In addition,
      the
      Company issued Convertible Preferred Stock Series D with a Beneficial Conversion
      Feature which resulted in recording a Preferred Stock Dividend of $3,483,484.
      The accumulated deficit without these two transactions would have been
      $7,635,068. However, these conditions raise substantial doubt as to the
      Company’s ability to continue as a going concern. These financial statements do
      not include any adjustments that might result from the outcome of this
      uncertainty. These financial statements do not include any adjustments relating
      to the recoverability and classification of recorded asset amounts, or amounts
      and classification of recorded asset amounts, or amounts and classification
      of
      liabilities that might be necessary should the Company be unable to continue
      as
      a going concern. Management has taken the following steps that it believes
      will
      be sufficient to provide the Company with the ability to continue in
      existence.




·
            Management
                has acquired companies that they believe will be cash
                positive.


·
            Management
                has completed an offering for Series D Preferred Stock with detachable
                warrants. The result of the offering was to raise approximately $6.0
                million of cash and to convert $1.8 million of debt into common stock
                and
                an additional $491,000 of debt was converted into Series D preferred
                stock. At March 15, 2008 the Company had cash balances in excess
                of $1.7
                million. (See subsequent events Note -
                9).


·
            The
                Company’s subsidiary TEDI has received an order for five units of the
                Sentry 5000TM,
                which should have positive impact on the profitability and cash
                flow.


·
            Company
                plans include acquiring additional companies as well as raising additional
                financing to fund these purchases.





**Supplemental
      Cash Flow Information Regarding Non-Cash Transactions** .


During
      the years ended December 31, 2007 and 2006, the Company has entered into several
      non-cash transactions in order to provide financing for the Company in order
      to
      conserve cash. The table below shows the transaction that occurred due during
      the past two years.




2007
            
            2006Preferred
                and Common Stock issued for acquisitions
            
            $
            
            
            $
            1,990,000Conversion
                of Preferred Stock Series A, B and C
            
            $
            9,767,847Stock
                issued for services
            
            $
            111,700
            
            $
            134,048Stock
                issued to convert long-term debt
            
            $
            2,423,694
            
            $
            60,000Stock
                issued in settlement of accounts payable
            
            $
            41,121
            
            $
            -




F-11


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**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 reported amounts of assets and
      liabilities, 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.





**Revenue
      Recognition**




Revenue
      is recognized in accordance with SEC Staff Accounting Bulletin No. 101, “Revenue
      Recognition in Financial Statements.” The Company recognizes revenue when the
      significant risks and rewards of ownership have been transferred to the customer
      pursuant to applicable laws and regulations, including factors such as when
      there has been evidence of a sales arrangement, delivery has occurred, or
      services have been rendered, the price to the buyer is fixed or determinable,
      and collectability is reasonably assured.





**Cash
      Equivalents**


For
      purposes of reporting cash flows, the Company considers all short-term
      investments with an original maturity of three months or less to be a cash
      equivalent.





**Concentration
      of Credit Risk**


Financial
      instruments which subject the Company to concentrations of credit risk include
      cash and cash equivalents.





The
      Company maintains its cash in well-known banks selected based upon management’s
      assessment of the bank’s financial stability. Balances may periodically exceed
      the $100,000 federal depository insurance limit; however, the Company has not
      experienced any losses on deposits.




**Property
      and Equipment**


Property
      and equipment are recorded at cost, net of accumulated depreciation.
      Depreciation is provided using the straight-line method over the estimated
      useful lives of the assets, which range from three to seven years. Expenditures
      for major renewals and betterments that extend the original estimated economic
      useful lives of the applicable assets are capitalized. Expenditures for normal
      repairs and maintenance are charged to expense as incurred. The cost and related
      accumulated depreciation of assets sold or otherwise disposed of are removed
      from the accounts, and any gain or loss is included in operations. A summary
      of
      fixed assets is shown below.


2007
              
              2006Furniture
                  and office equipment
              
              $
              118,080
              
              $
              80,921Vehicles
              
              
              52,003
              
              
              52,003Tools
                  and Shop Equipment
              
              
              81,804
              
              
              22,356Accumulated
                  Depreciation
              
              
              (118,466
              )
              
              (75,705
              )Net
                  Property and Equipment
              
              $
              133,421
              
              $
              79,575Depreciation
                  Expense
              
              $
              30,581
              
              $
              849


F-12


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**Intangible
      Assets**





In
      accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142,
“Goodwill and Other Intangible Assets,” the Company evaluates intangible assets
      and other long-lived assets for impairment, at least on an annual basis and
      whenever events or changes in circumstances indicate that the carrying value
      may
      not be recoverable from its estimated future cash flows. Recoverability of
      intangible assets and other long-lived assets is measured by comparing their
      net
      book value to the related projected undiscounted cash flows from these assets,
      considering a number of factors including past operating results, budgets,
      economic projections, market trends and product development cycles. If the
      net
      book value of the asset exceeds the related undiscounted cash flows, the asset
      is considered impaired, and a second test is performed to measure the amount
      of
      impairment loss.





The
      Company has acquired with each of its acquisitions a customer list that has
      been
      classified as an intangible requiring amortization. The Company believes that
      the useful life of this intangible is 10 years. The accumulated amortization at
      December 31, 2007 and December 31, 2006 were $173,192 and $27,789,
      respectively.


F-13


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**Advertising
      Costs**


Advertising
      costs are expensed as incurred. There were advertising expenses for the years
      ended December 31, 2007 and 2006 were $4,003 and $4,577
      respectively.




**Income
      Taxes**


The
      Company accounts for income taxes under SFAS 109, “Accounting for Income Taxes.”
Under the asset and liability method of SFAS 109, deferred tax assets and
      liabilities are recognized for the future tax consequences attributable to
      differences between the financial statements 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.





Effective
      January 1, 2007, the Company adopted the provisions of FASB Interpretation
      No.
      48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 was issued
      to clarify the requirements of Statement of Financial Accounting Standards
      No.
      109, “Accounting for Income Taxes,” relating to the recognition of income tax
      benefits. As of December 31, 2007, the Company had no unrecognized tax benefits
      due to uncertain tax positions.





**Loss
      per Share**


In
      accordance with SFAS No. 128, “Earnings Per Share,” the basic income (loss) per
      common share is computed by dividing net income (loss) available to common
      stockholders by the weighted average number of common shares outstanding.
      Diluted income per common share is computed similar to basic income per share
      except that the denominator is increased to include the number of additional
      common shares that would have been outstanding if the potential common shares
      had been issued and if the additional common shares were dilutive. The loss
      for
      common shareholder would be increase for any undeclared preferred
      dividends.




**Stock-Based
      Compensation**


As
      permitted by SFAS No. 123, for 2005, the Company accounted for share-based
      payments to employees using APB opinion no 25’s intrinsic value method and as
      such generally recognized no compensation cost for employee stock options.
      Effective January 1, 2006, we have adopted SFAS No. 123R fair value method
      of
      accounting for share based payments. Accordingly, the adoption of SFAS No.
      123R’s fair value method may have a significant impact on the Company’s results
      of operations as we are required to recognize the cost of employee services
      received in exchange for awards of equity instruments based on the grant date
      fair value of those rewards. SFAS No. 123R permits public companies to adopt
      its
      requirements using either the modified prospective method or the modified
      retrospective method. The Company adopted SFAS No. 123R using the modified
      prospective method. Options or share awards issued to non-employees are valued
      using the fair value method and expensed over the period services are
      provided.





**Stock
      Split**


In
      December 2006, the Company’s Board of Directors approved a fifty (50) to one (1)
      reverse stock split of common stock. The par value of the Company’s common stock
      remains $.0001 per share. All share and per share amounts have been restated
      to
      reflect the fifty (50) to one (1) reverse stock split, except for the statements
      of stockholders’ equity which reflect the stock split by reclassifying from
      Common Stock to Additional Paid-in Capital an amount equal to the par value
      of
      the shares cancelled to effect the reverse stock split.




**Fair
      value of financial instruments**


The
      Company uses the following methods and assumptions to estimate the fair value
      of
      derivative and other financial instruments at the relative balance sheet
      date:




·
            Short-term
                financial statements (cash equivalents, accounts receivable and payable,
                short-term borrowings, and accrued liabilities) - cost approximates
                fair
                value because of the short maturity period.·
            Long-term
                debt - fair value is based on the amount of future cash flows associated
                with each debt instrument discounted at our current borrowing rate
                for
                similar debt instruments of comparable
                terms.




F-14


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**Segment
      Reporting**


Based
      on the Company’s integration and management strategies, the Company operated in
      a single business segment.




**Impairment
      of Long-Lived Assets**


In
      the event that facts and circumstances indicate that the carrying value of
      a
      long-lived asset, including associated intangibles, may be impaired, an
      evaluation of recoverability is performed by comparing the estimated future
      undiscounted cash flows, associated with the asset or the asset’s estimated fair
      value, to the asset’s carrying amount to determine if a write-down to market
      value or discounted cash flow is required.




**Recent
      Accounting Pronouncements**


The
      following are new accounting standards and interpretations that may be
      applicable in the future to the Company:





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measures” (“SFAS No.
      157”). SFAS No. 157 defines fair value, establishes a framework for measuring
      fair value in generally accepted accounting principles (“GAAP”), expands
      disclosures about fair value measurements, and applies under other accounting
      pronouncements that require or permit fair value measurements. SFAS No. 157
      does
      not require any new fair value measurements; however the FASB anticipates that
      for some entities, the application of SFAS No. 157 will change current practice.
      SFAS No. 157 is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, which for the Company would be its fiscal
      year beginning January 1, 2008. The implementation of SFAS No. 157 is not
      expected to have a material impact on the Company’s results of operations and
      financial condition.





In
      September 2006, the FASB issued SFAS No. 158, “Employer’s Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87, 88, 106 and 132R.” This Statement requires employers to recognize the
      overfunded or underfunded status of a defined benefit postretirement plan (other
      than a multi-employer plan) as an asset or liability in its statement of
      financial position and to recognize changes in that funded status in the year
      in
      which the changes occur through comprehensive income of a business entity or
      changes in unrestricted net assets of a not-for-profit organization. This
      statement also requires an employer to measure the funded status of a plan
      as of
      the date of its year-end statement of financial position with limited
      exceptions. The provisions of SFAS No. 158 are effective for employers with
      publicly traded equity securities as of the end of the fiscal year ending after
      December 15, 2006. This pronouncement does not currently apply to the
      Company.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities- Including an amendment of FASB
      Statement No. 115.” This Statement permits entities to choose to measure many
      financial instruments and certain other items at fair value that are not
      currently required to be measured at fair value. The objective is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge accounting
      provisions. This Statement is expected to expand the use of fair value
      measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. This Statement also
      establishes presentation and disclosure requirements designed to facilitate
      comparisons between entities that choose different measurement attributes for
      similar types of assets and liabilities. This Statement does not affect any
      existing accounting literature that requires certain assets and liabilities
      to
      be carried at fair value. This Statement does not establish requirements for
      recognizing and measuring dividend income, interest income, or interest expense.
      This Statement does not eliminate disclosure requirements included in other
      accounting standards, including requirements for disclosures about fair value
      measurements included in SFAS No. 157. The implementation of SFAS No. 159 is
      not
      expected to have a material impact on the Company’s results of operations and
      financial condition.


F-15


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**NOTE
      2 - INVENTORIES**


Inventories
      are stated at the lower of cost, determined by a first in, first out method,
      or
      market. Inventories are adjusted for estimated obsolescence and written down
      to
      net realizable value based upon estimates of future demand, technology
      developments and market conditions. Inventories are comprised of the
      following:





2007
            
            2006Parts
            
            $
            416,862
            
            $
            392,154Work
                in process
            
            
            68,286
            
            
            159,555Finished
                Goods
            
            
            113,059
            
            
            -$
            598,207
            
            $
            553,715





**NOTE
      3 - NOTES PAYABLE**





Notes
      Payable consists of the following at December 31, 2006 and 2007:




2007
            
            2006Revolving
                credit facility with a financial institution, bearing interest at
                10% at
                December31,
                2007. The agreement provides for maximum borrowings of up to $1,000,000.
                Unusedand
                available borrowings under this facility were $596,858 at December
                31,
                2007.
            
            $
            403,142
            
            $
            468,200Two
                promissory notes payable, bearing interest at 11%, due August 13,
                2007
            
            
            132,724Note
                Payable to related party at 10% interest, repaid in 2007
            
            
            
            
            
            32,470Notes
                and convertible notes payable with interest rates ranging from 7%
                to 10%
                interest,
              all
                repaid in 2007
            
            
            
            
            
            558,530Other
                loans
            
            
            12,229
            
            
            63,162Total
            
            $
            548,095
            
            $
            1,122,362Less
                Current portion
            
            
            544,425
            
            
            1,110,134Less
                Unamortized Discount
            
            
            -
            
            
            (39,375
            )Not
                Payable - current
            
            $
            544,425
            
            $
            1,070,759Balance
                long-term debt
            
            $
            3,670
            
            $
            12,222





During
      the fourth quarter, the Company issued a private placement memorandum through
      which it sold 417 Units up until December 31, 2007, which was prior to the
      final
      close of the Offering. Each Unit was sold at $10,000 and consisted of one share
      of Series D Convertible Preferred Stock, one class A warrant and one class
      B
      warrant. Gross funds from the Offering at December 31, 2007 totaled
      approximately $4.1 million. Also during this time, holders of $1,929,921 of
      11% Secured Convertible Notes converted their Notes and accrued interest into
      shares of common stock at $0.50 per share, and holders of $491,000 of 11%
      Promissory Notes due in December 2008 converted their Notes into the Offering.
      Net proceeds from the Offering at December 31, 2007 were approximately $3.0
      million in cash with a reduction in convertible debt of $2.3 million in proceeds
      from the converted debt. Approximately $1.5 million of the cash proceeds has
      been used to retire debt. The total number of shares of common stock to be
      issued for transaction up to December 31, 2007 is approximately
      3,859,844.




Management
      decided to extend the final closing of the private placement until January
      31, 2008, and during this extension we sold another 240 Units for additional
      gross proceeds of $2.4 million.  In total for this Offering which was
      formally closed on January 31, 2008, the Company grossed approximately $6.5
      million in Unit Sales and $2.3 million in Note conversions (See Note 9 -
      Subsequent Event).  The total number of shares of common stock that would
      be issued if the preferred stock is converted at $1.00 is 6,570,000.




The
      11%
      Promissory Notes issued in August 2007 have detachable warrants. The Company
      has
      allocated the proceeds based on the fair value with $102,092 allocated to the
      warrants and $687,908 to the Notes. The warrants are exercisable to 2010 at
      an
      exercise price of $0.75 per share. Since, these notes were paid or converted
      the
      unamortized balance of the warrants of $72,021 was charged to
      expense.


F-16


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





The
      Company issued 11% Promissory Notes to former holders of shares of the Company’s
      Series B and Series C Preferred Stock. These Notes are due August 13, 2008
      and
      are not convertible and do not have any warrants. The Company may elect to
      prepay without penalty.





In
      July
      2007, Stellar refinanced their bank credit line with a financial institution
      to
      assign and sell its eligible receivables for short term financing up to a
      maximum of $1,000,000. Under this agreement, Stellar is required to have a
      reserve account equal to 20% of the amount financed, and pay a minimum monthly
      fee and service fee based on the prime rate plus 2.75%. At December 31, 2007,
      the service fee rate was 10.05%.





In
      the
      quarter ended March 31, 2007, the Company issued convertible notes with
      detachable warrants for total gross proceeds of $875,000. This amount was
      allocated based on the relative fair value with warrants $79,303 and the
      convertible debt $795,697. Some of the convertible debt had a beneficial
      conversion feature in the money at commitment date requiring the Company, under
      EITF 98-5, to determine the discount related to this debt. The Company’s
      evaluation has determined that the discount was $454,851. This amount has been
      amortized to expense as additional interest over the term of these notes. These
      were short term notes and the full amount has been recognized during the first
      six months of 2007. The warrants are exercisable to 2012 and have been amortized
      to interest expense.





Convertible
      Note Payable of $105,000 to a non related corporation with interest payable
      at
      8% is due quarterly beginning on January 1, 2006 and the principal balance
      is
      due on maturity September 7, 2007. This note has a beneficial conversion feature
      that was “in-the-money” at the commitment date requiring the Company to
      determine the discount related to this debt pursuant to the Emerging Issue
      Task
      Force guidance provided in EITF 98-5. The Company has determined that the full
      value of the Note should be recognized as a discount. Amortization of the
      discount for the year ended December 31, 2007 and 2006 were $39,375 and $65,625,
      respectively.




Accrued
      interest is included in accrued liabilities at December 31, 2007, and 2006
      in
      the amounts of $5,600 and $102,642, respectively.





**NOTE
      4 - INCOME TAXES**




The
      Company’s effective income tax rate of 0.0% differs from the federal statutory
      rate of 34% for the reason set forth below for the years ended December
      31:





2007
            
            2006Income
                taxes at the statutory rate
            
            $
            (1,147,631
            )
            $
            (270,123
            )Valuation
                allowance
            
            
            1,093,500
            
            
            247,811Permanent
                differences and other, net
            
            
            54,131
            
            
            22,312Total
                income taxes
            
            $
            -
            
            $
            -





Deferred
      tax assets and liabilities reflect the net effect of temporary differences
      between the carrying amount of assets and liabilities for financial reporting
      purposes and amounts used for income tax purposes.




The
      Company has a net operating loss carry forward of approximately
      $6,000,000.




The
      Company may offset net operating loss carry forwards against future taxable
      income through the year 2021. No tax benefit has been reported in the financial
      statements as the utilization of the tax benefits related to the carry-forward
      is not assured. Accordingly, the potential tax benefits of the net operating
      loss carry-forwards are offset by valuation allowance of the same
      amount.


F-17


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





In
      September 2007, the State of Michigan signed into law the Michigan Business
      Tax
      Act (“MBTA”), replacing the Michigan single business tax with a business income
      tax and modified gross receipts tax. These new taxes take effect January 1,
      2008, and, because they are based or derived from income-based measures, the
      provisions of SFAS No. 109, “Accounting for Income Taxes”, apply as of the
      enactment date. The law, as amended, establishes a deduction to the business
      income tax base if temporary differences associated with certain assets result
      in a net deferred tax liability as of December 31, 2007, and has an indefinite
      carry-forward period. The enactment of the MBTA, as amended, does not have
      a
      material impact on the consolidated financial statements of the Company as
      of
      December 31, 2007.





**NOTE
      5 - ACQUISITIONS**




On
      July
      21, 2006, the Company acquired Titan Energy Development, Inc. (“TEDI”) pursuant
      to the “Stock Exchange Agreement”, which provided that the TEDI shareholders
      would receive 1,000,000 shares of the Company’s newly issued Series B Preferred
      Stock. The Preferred Stock would be divided proportionally among the TEDI
      shareholders in accordance with their respective ownership interest in TEDI
      immediately before the exchange transaction. As a condition of the agreement,
      the shareholders of TEDI also received 1,000,000 shares of common stock of
      the
      Company. Pursuant to the “Stock Exchange Agreement” the Company acquired a 100%
      interest in TEDI, and as a result, TEDI became a wholly-owned subsidiary of
      the
      Company. As a condition of the Agreement, each TEDI shareholder also received
      1,000,000 shares of the Company’s common stock.




Each
      share of Series B stock will be convertible into the Company’s common stock
      starting on August 4, 2008. Each Preferred share will convert to $1.00 value
      of
      the Company’s common stock at the time of conversion. The “Stock Exchange
      Agreement” contains certain escalation considerations as follows: (i) if
      TEDI gross revenues for 2007 and 2008 average $1.0 million or more, each share
      of Series B Preferred Stock will convert to $1.50 in value of the Company’s
      common stock at the time of conversion, (ii) if TEDI gross revenues for
      2007 and 2008 average $2.0 million or more, each share of Series B Preferred
      Stock will convert to $2.00 in value of The Company’s stock at the date of
      conversion, (iii) if TEDI gross revenues for 2007 and 2008 average $3.0
      million or more, each share of Series B Preferred Stock will convert to $3.00
      in
      value of the Company’s common stock at the time of conversion, (iv) if TEDI
      gross revenues for 2007 and 2008 average $4.0 million or more, each share of
      Series B Preferred Stock will convert to $4.00 in value of Company stock at
      the
      time of conversion, (v) similar progression will apply to additional
      increases in gross revenues over the period of 2007 to 2008.On
      August
      13, 2007, the Company converted the Series B shareholders to convert their
      shares early to resolve this contingency. The conversion has been accounted
      for
      as extinguishment of the convertible preferred shares resulting in a reduction
      of retained earnings for the excess over the amount originally
      recorded.




The
      purchase price was allocated to tangible and intangible assets and liabilities
      at the date of acquisition as follows:




**Allocation**Current
                  assets
              
              $
              175.340Property
                  and equipment
              
              
              4,160Customer
                  list
              
              
              666,947Goodwill
              
              
              690,339Total
                  assets
              
              
              1,536,786Less
                  - Total liabilities
              
              
              366,786$
              1,170,000


F-18


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





On
      December 28, 2006, the Company acquired Stellar Energy Services, Inc.
      (“Stellar”) pursuant to the “Stock Exchange Agreement” dated December 28, 2006.
      Pursuant to the Stock Exchange Agreement, the Company acquired a 100% interest
      in Stellar, and as a result, Stellar became a wholly-owned subsidiary of the
      Company.




Under
      the
      Stock Exchange Agreement, in exchange for surrendering their shares in Stellar,
      the Stellar shareholders received stock consideration of 750,000 newly issued
      shares of the Company’s Series C Preferred Stock, which were divided
      proportionally among the Stellar shareholders in accordance with their
      respective ownership interests in Stellar immediately before the completion
      of
      the Stock Exchange Transaction. As a condition of the Agreement, the Stellar
      shareholders received at the closing: a promissory note for (i) a cash
      payment of $588,000 due on January 15, 2007 and a (ii) cash payment of
      $235,000 due on June 15, 2007. In addition, the Stellar shareholders received
      1,000,000 shares of common stock. these notes have been paid in
      full.





Each
      share of Series C Preferred Stock can be converted into $1.00 worth of the
      Company’s common stock beginning December 28, 2008. Escalated conditions on this
      conversion apply if the Stellar subsidiary achieves specified revenue goals
      over
      the next two years. On August 13, 2007, the Company converted the shares of
      Series C Preferred Stock early to resolve this contingency. The conversion
      has
      been accounted for as extinguishment of the convertible preferred shares
      resulting in a reduction of retained earnings for the excess over the amount
      originally recorded.




The
      purchase price was allocated to tangible and intangible assets and liabilities
      at the date of acquisition as follows:


**Allocation**Current
                  assets
              
              $
              2,103,284Property
                  and equipment
              
              
              72,714Other
                  assets
              
              
              4,130Customer
                  list
              
              
              786,189Goodwill
              
              
              908,821Total
                  assets
              
              
              3,875,138Less
                  - Total liabilities
              
              
              2,232,138$
              1,643,000


The
      following unaudited pro forma financial information presents the combined
      results of operations of Titan Energy Worldwide, Inc. and Stellar Energy
      Service, Inc. as if the acquisitions had occurred as of the beginning of 2006.
      The unaudited pro forma financial information for the year ended 2006 is not
      necessarily indicative of what the Company’s consolidated results of operations
      actually would have been had the Company completed the acquisition at the
      beginning of each period. In addition, the unaudited pro forma financial
      information does not attempt to project the future results of operations of
      the
      combined company.


**Pro forma**
                **2006**Revenues
              
              $
              7,036,267Cost
                  of sales
              
              
              5,941,172Gross
                  profit
              
              
              1,095,095General
                  and administrative expense
              
              
              1,898,159Loss
                  from operations
              
              
              (803,864
              )Interest
                  expense
              
              
              74,245Net
                  loss
              
              $
              (877,309
              )Weighted
                  Average number of shares outstanding -basic and diluted
              
              
              249,974Net
                  loss per share - basic and diluted
              
              $
              (3.51
              )


F-19


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**NOTE
      6 - COMMITMENTS AND CONTINGENCIES**




The
      Company leases space for its executive office expiring November 12, 2010. The
      minimum annual lease payment is $38,040. The Company leases its San Diego office
      under an agreement scheduled to expire May 31, 2008. The minimum annual lease
      payments for 2008 are $8,225. The Company also leases office facilities and
      testing facilities in the Next Energy located in Detroit under a lease agreement
      expiring on November 30, 2008. The minimum annual payment for 2008 is $21,241.
      The Company is also obligated under rental agreements expiring October 31 2012.
      The minimum annual lease payment is $48,000. The Company’s Chief Executive
      Officer is part owner of this property. Total minimum annual lease payments
      are
      as follows:




Year
                ending December 31, 2008
            
            $
            115,506Year
                ending December 31, 2009
            
            
            86,040Year
                ending December 31, 2010
            
            
            82,870Year
                ending December 31, 2111
            
            
            48,000Year
                ending December 31, 2010
            
            
            40,000$
            372,416




**NOTE
      7 - SERIES D CONVERTIBLE PREFERRED STOCK**





On
      October 3, 2007, the Company issued a private placement memorandum to sell
      up to
      $10,000,000 of Units consisting of one share of Series D Convertible Preferred
      Stock, one class A warrant and one class B warrant. Each Unit is being offered
      at $10,000. The holder of the Convertible Preferred Stock may, at any time,
      convert their shares, in whole or in part, into shares of Common Stock. Assuming
      an initial conversion price of $1.00, each one (1) share of Preferred Stock
      is
      convertible into 10,000 shares of Common Stock. Each A Warrant and B Warrant
      will entitle the holder to purchase three thousand three hundred and
      thirty-three (3,333) shares of Common Stock with exercise prices of $1.20 and
      $1.40, respectively.





The
      Units
      are being offered by the Company on a “reasonable efforts” basis only to
“accredited investors” (as defined in Rule 501(a) of Regulation D promulgated
      under the Securities Act of 1933, as amended), on a minimum of 100 Units
      ($1,000,000), and a maximum of 1,000 Units ($10,000,000) at a price of $10,000
      per Unit. The Company had closings for the cash gross proceeds of approximately
      $3.6 million and approximately $513,000 of 11% Promissory Notes and accrued
      interest that was convertible into the offering at a 10% discount from the
      offering price. Net cash proceeds to the Company were approximately $3.0
      million. The proceeds from the closings have been used to retire debt,
      repurchase of stock warrants and funds for inventory and operating costs.





The
      Units
      offered includes warrants and a beneficial conversion feature as the Series
      D
      Preferred Stock was convertible and in the money at closing date. The Company
      has determined the value of the warrants to be $1,394,093 and the value of
      Series D Preferred stock to be $2,075,676. The Company has valued the beneficial
      conversion feature of $3,483,484. This amount is treated as a preferred stock
      dividend with the amount increasing paid in capital and reducing retained
      earnings.





In
      an
      Event of Liquidation (as defined below) of the Company, holders of any
      then-unconverted shares of Preferred Stock will be entitled to immediately
      receive accelerated redemption rights in the form of a Liquidation Preference
      Amount. The Liquidation Preference Amount shall be equal to 125% of the sum
      of:
      (i) the Stated Value ($10,000) of any then-unconverted shares of Preferred
      Stock
      and (ii) any accrued and unpaid dividends thereon. An “Event of Liquidation”
shall mean any liquidation, dissolution, or winding up of the Company, whether
      voluntary or involuntary, as well as any change of control of the Company which
      shall include, for the purposes hereof, sale by the Company of either (x)
      substantially all of its assets or (y) that portion of its assets which
      comprises its core business technology, products or services.


F-20


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**




**NOTE
      8 - COMMON STOCK TRANSACTIONS**





In
      conjunction with the Company’s private placement offering of its Series D
      Convertible Preferred Stock, Noteholders with $1,929,922 of 11% convertible
      debt
      plus accrued interest elected to convert their debt into common stock. The
      conversion price was $0.50 per share resulting in issuing 3,859,844 common
      shares.





On
      August
      1, 2007, the Company's Articles of Incorporation were amended to effect an
      up to
      Fifty (50) to One (1) reverse stock split of the issued and outstanding shares
      of common stock. As a result, a Fifteen (15) to One (1) reverse split took
      effect on August 10, 2007. The result of this split was to reduce the
      outstanding shares of common stock from approximately 11,602,777 as of August
      9,
      2007 to approximately 773,518 shares as of August 10, 2007. All shares and
      per
      share amounts have been restated to reflect the fifteen (15) to One (1) reverse
      stock split, except
      for the statements of stockholders’ equity which reflect the stock split by
      reclassifying from Common Stock to Additional Paid-in Capital an amount equal
      to
      the par value of the shares cancelled to effect the reverse stock
      split.




On
      August
      1, 2007, the Company filed an amended Certificate of Designation for its Series
      A Preferred Stock to effect a Fifty (50) to One (1) reverse stock split of
      the
      issued and outstanding shares of the Series A Preferred Stock. The result of
      this amendment was to reduce the outstanding shares of Series A Preferred Stock
      at August 1, 2007 from 2,000,000 shares to approximately 40,000 shares.




During
      the third quarter of 2007, the Company agreed with the holders of Series A,
      B
      and C Preferred Stock to exchange their shares for Common Stock. These shares
      were not convertible at the time of the exchange, thus, resulting in an
      extinguishment of the preferred shares and issuance of new common shares. The
      accounting treatment for this extinguishment resulted in a charge to retained
      earnings for the excess of the fair market value of the common stock over the
      amount recorded upon issuance of the preferred stock. The Company’s
      extinguishment charge was $9,767,867 for the following transactions:




1.
            The
                Company converted the Series A Preferred Stock to common stock according
                to the formulas set forth in the Certificate of Designation. Each
                share of
                Series A was converted 200:1 to Common
                Shares




2.
            The
                Company agreed with the holders of Series B Preferred Stock to convert
                into $2.00 worth of Common Shares.




3.
            The
                Company agreed with the holders of Series C Preferred Stock into
                a $1.50
                worth of Common shares.




The
      price
      of the Common Stock, based on the five days closing price before the effective
      date of
      August 13, 2007 was $1.07. The effective date for these transactions was August
      13, 2007 and the increase in Common Stock was 10,664,508. The holders for Series
      B and C had an option to take a Note due in August 13, 2008 with 11% interest.
      The Company has issued Notes totaling $159,882. One of these notes was paid
      off
      early at a discount. The current outstanding balance is
      $132,724.





During
      the year ended December 31, 2007, the Company issued (i) 90,000 shares of its
      common stock (post-split) for services totaling $111,700, (ii) 184,857 shares
      of
      its common stock (post-split) in accordance with the provisions of its
      convertible debt, (iii) 38,077 shares of its common stock to settle accounts
      payable of $41,120 and (iv) the Company sold under Regulation S common stock
      of
      83,834 shares (post-split) for proceeds of $73,020.


F-21


**TITAN
      ENERGY WORLDWIDE, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**




**NOTE
      8 - COMMON STOCK WARRANTS**




During
      the year ended December 31, 2007, the Company raised capital through short-term
      bridge debt and through the private placement of its Series D Convertible
      Preferred Stock. These transactions included warrants for the investor and
      the
      brokers.  The
      total
      numbers of warrants issued were 6,119,084. None of the warrants have been
      exercised this year. The following table shows the warrants outstanding at
      December 31, 2007:




Number of
            
            **Exercise**
            
            ExpirationWarrants
            
            Price
            
            Date1,172,500
            
            $
            0.35
            
            
            January
                2012553,800
            
            $
            0.50
            
            
            April-
                July 2012646,100
            
            $
            0.625
            
            
            April-
                July 2012316,000
            
            $
            0.75
            
            
            August
                20101,388,202
            
            $
            1.20
            
            
            October-December
                2010654,280
            
            $
            1.25
            
            
            October-December
                20101,388,202
            
            $
            1.40
            
            
            October-December
                2010




In
      September 2007, the Company and Mastodon (an investment advisory firm) agreed
      that Mastodon would cancel warrants of 1,050,000 shares of common stock at
      a
      $0.12 exercise price in exchange for a payment of $500,000 if the brokers raised
      $6,000,000. The actual raise by the brokers was less than $6,000,000 resulting
      in a payment of $479,000.




**NOTE
      9- SUBSQUENT EVENT**




The
      Company’s final closing for subscriptions to its private placement of Series D
      Preferred Stock (as described in Note 6) was January 31, 2008. The Company
      received subscriptions for 240 Units resulting in net cash proceeds of
      $2,187,250. Warrants issued related to this closing were 801,587 Class A
      warrants, 801,587 Class B warrants and broker warrants of 261,000.




The
      Units
      includes warrants and a beneficial conversion feature for the Series D Preferred
      Stock, The Company has determined the value of the warrants to be $55,468 and
      the value of Series D Preferred stock to be $2,131,782. The Company has valued
      the beneficial conversion feature of $140,896. This amount is treated as a
      preferred stock dividend with the amount increasing paid in capital and reducing
      retained earnings.


F-22


**Item
      8.**  **Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure**




Effective
      July 16, 2007, Gruber & Company, LLC (“Gruber”) resigned as the Company’s
      independent certified public accountants. The resignation was accepted by the
      Board of Directors of the Company.




The
      report on our financial statements for the years ended December 31, 2006 and
      2005 contained no adverse opinion or a disclaimer of opinion, and were not
      qualified or modified as to uncertainty, audit scope, or accounting principles.
      However, such report contained an explanatory paragraph expressing substantial
      doubt about our ability to continue as a going concern.




We
      filed
      Gruber’s letter as Exhibit 16 to our amended Current Report on Form 8-K/A on
      August 6, 2007.




During
      the Company’s fiscal years ended December 31 2006 and 2005 and subsequent
      interim periods preceding the resignation, there were no disagreements between
      us and Gruber on any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedure, which disagreements,
      if
      not resolved to the satisfaction of Gruber, would have caused Gruber to make
      reference to the subject matter of the disagreements in connection with his
      reports on the financial statements for such periods.




Regulation
      S-B Item 304(a)(1)(iv) was not applicable.




On
      July
      16, 2007 we engaged UHY LLP (“UHY”) as our independent certified accountants to
      report on our balance sheet as of December 31, 2007, and the related combined
      statements of income, stockholders’ equity and cash flows for the years then
      ended. The decision to appoint UHY was approved by our Board of
      Directors.




During
      our two most recent fiscal years and any subsequent interim period prior to
      the
      engagement of UHY, neither we nor anyone on our behalf consulted with UHY
      regarding either (i) the application of accounting principles to a
      specified transaction, either contemplated or proposed, or the type of audit
      opinion that might be rendered on our financial statements or (ii) any
      matter that was either the subject of a “disagreement” or a “reportable event,”
as those terms are defined in Regulation S-B, Items 304(a)(1)(iv).





**ITEM
      8A(T): Controls and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**





We
      maintain a set of disclosure controls and procedures, as defined in Section
      13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), that are designed to ensure that information required to be disclosed by
      us in the reports filed by us under the Securities Exchange Act of 1934, as
      amended (the “Exchange Act”) is recorded, processed, summarized and reported
      within the time periods specified in the SEC’s rules and forms. We carried out
      an evaluation, under the supervision and with the participation of our Chief
      Executive Officer and our Chief Financial Officer, of the effectiveness of
      the
      design and operation of our disclosure controls and procedures pursuant to
      Rule
      13a-15(b) of the Exchange Act. Based on that evaluation, our Chief Executive
      Officer and our Chief Financial Officer concluded that our disclosure controls
      and procedures were effective as of the end of the period covered by this
      report.





Notwithstanding
      the foregoing, there can be no assurance that the Company’s disclosure controls
      and procedures will detect or uncover all failures of persons within the Company
      to disclose material information otherwise required to be set forth in the
      Company’s periodic reports. There are inherent limitations to the effectiveness
      of any system of disclosure controls and procedures, including the possibility
      of human error and the circumvention or overriding of the controls and
      procedures. Accordingly, even effective disclosure controls and procedures
      can
      only provide reasonable, not absolute, assurance of achieving their control
      objectives.




15


**Management’s
      Report on Internal Control over Financial Reporting**





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting, as such term is defined in Exchange Act Rule
      13a-15(f). Internal control over financial reporting is a process designed
      to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. Internal control over financial
      reporting includes those policies and procedures that (i) pertain to the
      maintenance of records that, in reasonable detail, accurately and fairly reflect
      the transactions and dispositions of our assets; (ii) provide reasonable
      assurance that transactions are recorded as necessary to permit preparation
      of
      the financial statements in accordance with generally accepted accounting
      principles, and that receipts and expenditures are being made only with proper
      authorizations; and (iii) provide reasonable assurance regarding prevention
      or
      timely detection of unauthorized acquisition, use or disposition of our assets
      that could have a material effect on the financial statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.





Our
      management, under the supervision of and with the participation of the Chief
      Executive Officer and the Chief Financial Officer, assessed the effectiveness
      of
      our internal control over financial reporting as of December 31, 2007 based
      on
      criteria for effective control over financial reporting described in Internal
      Control — Integrated Framework issued by the COSO. Based on this assessment, our
      management concluded that our internal control over financial reporting was
      effective as of December 31, 2007.





This
      annual report does not include an attestation report of the Company's registered
      public accounting firm regarding internal control over financial reporting.
      Management's report was not subject to attestation by the Company's registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission that permit the Company to provide only management's report
      in this annual report.





**Item
      8B.**  **Other
      Information**


None. ****


16


**PART
      III**





**ITEM
      9.**  **DIRECTORS
      AND EXECUTIVE OFFICERS OF THE COMPANY**




Our
      directors and executive officers are:





**Name**
            
            **Age**
            
            **Position**
            
            **Position Held Since**Jeffrey
                W. Flannery
            
            51
            
            Chairman
            
            2005John
                M. Tastad
            
            41
            
            Chief
                Executive Officer
            
            2007Thomas
                Black
            
            44
            
            President,
                Chief Operating Officer and Secretary
            
            2006James
                J. Fahrner
            
            56
            
            Chief
                Financial Officer
            
            2007





A
      description of our directors’ business experience during the past five years is
      set forth below.




**Jeffrey
      Flannery, Chairman and Director, Titan Energy Worldwide,
      Inc.**Mr.
      Flannery has been the Company’s Chairman, Chief Executive Officer and Chief
      Financial Officer since December 15, 2005. On May 1, 2007, Mr. Flannery stepped
      down from the position of CFO, and on October 1, 2007 he stepped down from
      the
      position of CEO. He remains as the Company’s Chairman. From 1994 to 2004, Mr.
      Flannery was the founder and Chief Executive Officer of Enhanced Information
      Systems, Inc., an online home health care provider for the pharmacy industry,
      Vice President of Development for IUSA, an information technology company,
      and
      Vice President of Corporate Communications for Center For Special Immunology,
      a
      public company dedicated to medical treatments for immune disorders. As
      President of FLC Partners, Inc., an advisory company, Mr. Flannery has provided
      financial consulting and business development services for many public and
      private companies. Mr. Flannery received his B.A in Philosophy from the
      University of California, Los Angeles.




**John
      Michael Tastad, Chief Executive Officer and Director, Titan Energy
      Worldwide** .
      Mr.
      Tastad became the Chief Executive Officer and a Director of Titan Energy
      Worldwide on October 1, 2007. With expertise in the energy, utility, and
      manufacturing industries, Mr. Tastad has developed strong business and industry
      relationships both domestically and abroad. From 2005 until the present, Mr.
      Tastad founded and served as CEO of San Vision Energy Technology, an energy
      technology product and service company based in California which has developed
      state-of-the-art demand response technology, digital sub metering and consumer
      energy monitoring products. From 1998 to 2001, Mr. Tastad was Chairman of the
      Board of Alliance Energy, a company that developed, installed and serviced
      power
      generation systems for private companies. In 2001, Mr. Tastad negotiated the
      sale of Alliance Energy to DTE Energy Technologies (“DTE”), a global leader in
      the distributed generation business. Following the company sale, Mr. Tastad
      took
      on a position at DTE as VP of Sales until 2005 and was actively involved in
      the
      development and commercialization of several DG technologies including fuel
      cells, mini-turbines and pre-packaged natural gas co-generation equipment.
      He
      went on to develop DTE's international strategy for Asia that included
      identifying potential partners and negotiating distribution agreements in Japan,
      Korea and China.




**Thomas
      Black,**  **President
      and Director, Titan Energy Worldwide, Inc.** Mr.
      Black has served as a Director of Titan Energy Development Inc. since its
      inception in 2003 and as President since April 2005. In recent years, he
      also was President of BluePoint Energy Development, Inc. from 2003 to
      2005. BluePoint Energy is a manufacturer of a state-of-the-art cogeneration
      system. Mr. Black was Vice President of Sales for DTE Energy Technologies
      from 2001 to 2003. DTE Energy Technologies is an unregulated subsidiary of
      DTE Energy whose business was designing, engineering, manufacturing and
      distributing cogeneration products and services. Mr. Black has over 25
      years of experience in co-generation, standby and continuous power systems,
      complex electrical switches and switching systems. He is experienced in
      general management, engineering, operations, sales and marketing, and sales
      training. He has a Bachelors Degree in Industrial Management from Lawrence
      Technological University.


17




**James
      Fahrner, Chief Financial Officer and Director, Titan Energy Worldwide,
      Inc.** A
      seasoned financial executive with 35 years of experience in accounting, audit
      internal control, cash flow management, purchase accounting, budgeting and
      forecasting, Mr. Fahrner was Senior Consultant for Callaway Partners from 2006
      until his employment with the Company in May 2007. From 2000 to 2006, he was
      the
      Controller for DTE Energy Technology. Mr. Fahrner has his BS in Mathematics
      from
      Eastern Michigan University. He is a Certified Public Accountant, and a member
      of the AICPA and MACPA organizations.




**Section
      16(A) Beneficial Ownership Reporting Compliance**


Under
      Section 16(a) of the Exchange Act, our directors and certain of our officers,
      and persons holding more than 10 percent of our common stock are required to
      file forms reporting their beneficial ownership of our common stock and
      subsequent changes in that ownership with the Securities and Exchange
      Commission. Such persons are also required to furnish us with copies of all
      forms so filed.




Based
      solely upon a review of copies of such forms filed on Forms 3, 4, and 5, we
      are
      aware of one person who during the year ended December 31, 2007, was a director,
      officer, or beneficial owner of more than ten percent of our common stock,
      and
      who failed to file, on a timely basis, reports required by Section 16(a) of
      the
      Securities Exchange Act of 1934 during such fiscal year as follows:




·
            Jeffrey
                W. Flannery was an officer and director during the year 2007 and
                failed to
                timely file a Form 4 for the year ended December 31,
                2007.




**Code
      of Ethics**


We
      have adopted a code of ethics that applies to our principal executive officer,
      principal financial officer, principal accounting officer or controller, or
      persons performing similar functions. The code of ethics is designed to deter
      wrongdoing and to promote:




·
            Honest
                and ethical conduct, including the ethical handling of actual or
                apparent
                conflicts of interest between personal and professional
                relationships;




·
            Full,
                fair, accurate, timely, and understandable disclosure in reports
                and
                documents that we file with, or submits to, the SEC and in other
                public
                communications made by us;




·
            Compliance
                with applicable governmental laws, rules and
                regulations;




·
            The
                prompt internal reporting of violations of the code to an appropriate
                person or persons identified in the code;
                and




·
            Accountability
                for adherence to the code.




A
      copy of
      our code of ethics that applies to our principal executive officer, principal
      financial officer, principal accounting officer or controller, or persons
      performing similar functions previously has been filed with the
      SEC.




We
      will
      provide to any person without charge, upon request, a copy of our code of
      ethics. Any such request should be directed to our corporate secretary at 55800
      Grand River Avenue, Suite 100, New Hudson, MI 48165 telephone (248)
      446-8557.





**Nominating,
      Audit or Compensation committees**


The
      Company does not have Nominating, Audit or Compensation committees.


18




**Item
      10.****Executive
      Compensation**




**Compensation
      of Executive Officers**




The
      following table sets forth, for the fiscal year ended December 31, 2007 and
      2006, all compensation paid by the Company, including salary, bonuses and
      certain other compensation, if any, to its Chief Executive Officer and the
      two
      most highly compensated executive officers other than the CEO. The executive
      officers listed in the table below are sometimes referred to as the “named
      executive officers” in this Form 10-KSB.





**Summary
      Compensation Table for 2007 and 2006**




**Name and**
              **Principal Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock**
              **Awards**
              **($)**
            
            **Options**
              **Awards**
              **($)**
            
            **Non-**
              **Equity**
              **Incentive Plan**
              **Compensation**
              **($)**
            
            **Change in**
              **Pension Value**
              **and Non-**
              **qualified**
              **Deferred**
              **Compensation**
              **Earnings**
              **($)**
            
            **All Other**
              **Compensation**
              **($)**
            
            **Total**
              **($)**Jeffrey
                W. Flannery (1)
              Chairman
            
            
            2006
              2007
            
            
            180,000
              130,500
            
            
            0
              60,000
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              53,050
            
            
            180,000
              243,550John
                Tastad(2)
              Chief
                Executive Officer
            
            
            2007
            
            
            75,000
            
            
            50,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            300,000
            
            
            425,000Thomas
                Black
              President,
                COO,
              Director
                and Secretary (3)
            
            
            2006
              2007
            
            
            77,466
              165,000
            
            
            0
              40,000
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            0
              0
            
            
            65,000
              0
            
            
            142,466
              205,000James
                Fahrner(4)
              Chief
                Financial Officer
            
            
            2007
            
            
            90,250
            
            
            5,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            8,900
            
            
            104,150





(1)
            On
                December 30, 2006, Jeffrey W. Flannery resigned as President of the
                Company. He retained his position as Chief Executive Officer and
                Chief
                Financial Officer of Titan. On May 1, 2007, Jeffery Flannery resigned
                his
                position as Chief Financial Officer and on October 1, 2007 as Chief
                Executive Officer retaining the position of the Chairman of the Company.
                All amounts in the table for Mr. Flannery were paid in 2007. The
                amount
                under Other Compensation represents a reimbursement for the amount
                spent
                in obtaining the shell corporation.(2)
            On
                October 1, 2007, John M. Tastad was appointed as the Chief Executive
                Officer of the Company. John M. Tastad has worked as a consultant
                for the
                Company since formation of the Company. The Other Compensation for
                John M.
                Tastad includes payment for his consulting work done between October
                2005
                and September 2006 which was deferred until he became an employee.(3)
            On
                December 31, 2006, Thomas Black was appointed President, Chief Operating
                Officer, Director and Secretary. Other Compensation consists of payments
                to Mr. Black as a consultant, consisting of $45,000 in cash and $20,000
                stock payments. Mr. Black was paid $72,408 of his 2006 compensation
                in
                2007.(4)
            On
                May 1, 2007, James J. Fahrner was appointed Chief Financial Officer
                of the
                Company. Other Compensation includes $1,900 in cash, a $3,000 stock
                payment while Mr. Fahrner was a contractor and $4,000 for his monthly
                car
                allowance.




19




**Compensation
      of Directors**




We
      have
      no formal or informal arrangements or agreements to compensate our directors
      for
      services they provide as directors of the Company.




**Employment
      Agreements**




The
      Company has the following employment agreements:





**Jeffrey
      W. Flannery** .
      Mr.
      Flannery signed an employment agreement with the Company effective as of January
      1, 2006. The employment agreement is for a four-year term, with a base salary
      of
      $180,000 per year for 2006, $198,000 per year for 2007 and $210,000 for 2008.
      Mr. Flannery shall also be entitled to such additional compensation as approved
      by the Board, in its discretion. Mr. Flannery is not entitled to any payments
      in
      the event of a change of control of the Company. In the agreement, the Company
      agreed to employ Mr. Flannery as Chief Executive Officer, President, and
      Chairman. He was previously appointed President, Chief Financial Officer and
      Secretary in December 2005 pursuant to a resolution of the Board of Directors.
      On December 30, 2006, Mr. Flannery resigned as President of the Company. On
      May
      1, 2007, Jeffery Flannery resigned his position as Chief Financial Officer
      and
      on October 1, 2007, he resigned as Chief Executive Officer, retaining the
      position of the Chairman of the Company, a position which he still holds. As
      of
      April 2007, the Company began paying Mr. Flannery $9,000 per month.





**Thomas
      Black** .
      Mr.
      Black signed an employment agreement with the Company effective as of January
      1,
      2007 to serve as the Company’s President and Chief Operating Officer. The
      employment agreement is for a four-year term, with a base salary of $175,000
      per
      year for the remainder of 2006 to cover back pay owed to Mr. Black, $175,000
      per
      year for 2007 and $200,000 for 2008. Mr. Black also shall be entitled to an
      incentive bonus for fiscal years 2007 and 2008 as determined by the Board of
      Directors. He also is entitled to stock options pursuant to the Company’s Option
      Plan, which will be issued as soon as the Company’s new option plan is adopted,
      as well as a monthly car allowance. His monthly car allowance has never been
      paid and no amounts are accruing. Mr. Black is not entitled to any payments
      in
      the event of a change of control of the Company.





**James
      Fahrner** .
      Mr.
      Fahrner signed an employment agreement with the Company effective as of May
      1,
      2007 to serve as the Company’s Chief Financial Officer. The employment agreement
      is for a three-year term, with a base salary of $135,000 per year for the
      remainder of 2007, $135,000 per year for 2008 and $150,000 per year for 2009.
      Mr. Fahrner shall also be entitled to an incentive bonus for fiscal years 2007
      and 2008 as determined by the Company’s Board of Directors. He also is entitled
      to stock options pursuant to the Company’s Option Plan. Mr. Fahrner was entitled
      to 150,000 shares in 2007 pursuant to such Option Plan, which he shall receive
      when the Option Plan is adopted. Mr. Fahrner also is entitled to a car allowance
      of $500 per month. Finally, Mr. Fahrner is entitled to severance payments
      consisting of two times his annual salary and bonus plus two years of health
      insurance coverage in the event of a change of control of the Company.





The
      Company does not have an employment agreement with its CEO, John
      Tastad.




**Confidentiality
      Agreements**




None.





**Item
      11.**  **Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters**




**Securities
      Authorized for Issuance under Equity Compensation Plans**




None.


20




**Security
      Ownership of Certain Beneficial Owners and Management**




The
      following table sets forth, as of March 6, 2008, information concerning
      ownership of our securities by




·
            Each
                person who beneficially owns more than five percent of the outstanding
                shares of our common stock;·
            Each
                person who beneficially owns more than five percent of the outstanding
                shares of our preferred stock;·
            Each
                director;·
            Each
                named executive officer; and·
            All
                directors and officers as a group.




**Common Stock**
                **Beneficially Owned**(2)**Name and Address of Beneficial Owner**(1)
              
              **Number**
              
              **Percent**Jeffrey
                  W. Flannery, Chairman
              
              
              7,892,400
              
              
              51.2
              %John
                  M. Tastad, Chief Executive Officer
              
              
              0
              
              
              0Thomas
                  Black, President and Chief Operating Officer
              
              
              105,172
              
              
              *James
                  J. Fahrner, Chief Financial Officer
              
              
              19,444
              (3)
              
              *
              (3)All
                  directors and executive officers as a group (four persons)
              
              
              8,017,016
              
              
              51.9
              %Wholesale
                  Realtors Supply
              
              
              2,499,900
              (4)
              
              13.95
              %(4)Carl
                  Rountree
              
              
              1,666,600
              (5)
              
              9.75
              %(5)Eckhart
                  Grohmann Revocable Trust of 1985
              
              
              1,666,600
              (6)
              
              9.75
              %(6)




*
            Less
                than one percent.(1)
            Unless
                otherwise indicated, the address for each of these stockholders is
                c/o
                Titan Energy Worldwide, Inc., 55800 Grand River Avenue, Suite 100,
                New
                Hudson, MI 48165. Also, unless otherwise indicated, each person named
                in
                the table above has the sole voting and investment power with respect
                to
                his shares of our common and preferred stock beneficially owned.(2)
            Beneficial
                ownership is determined in accordance with the rules of the SEC.(3)
            Mr.
                Fahrner is the holder of 1 unit from the Company’s Private Offering,
                consisting of one share of Series D Preferred Stock; one Class A
                warrant
                to purchase 3,333 shares at $1.20 exercise price; and one Class B
                warrant
                to purchase 3,333 shares at $1.40 exercise price. The Series D Preferred
                Stock has a 10,000-to-1 conversion ratio into shares of Common Stock.
                The
                Class A and Class B Warrants are immediately exercisable. The figure
                above
                reflects the 10,000 shares of common stock in the ownership figure
                even
                though no conversion of Series D Preferred Stock has taken place.
                The
                Series D Preferred Stock votes on an as-converted basis. The figure
                above
                also reflects 6,666 shares of common stock in the ownership figure
                even
                though none of the warrants have been exercised.(4)
            Wholesale
                Realtors Supply is the holder of150
                units from the Company’s Private Offering, consisting of an aggregate of
                150 shares of Series D Preferred Stock; 150 Class A warrants, each
                to
                purchase 3,333 shares at a $1.20 exercise price; and 150 Class B
                warrants,
                each to purchase 3,333 shares at a $1.40 exercise price. The Series
                D
                Preferred Stock has a 10,000-to-1 conversion ratio into shares of
                Common
                Stock. The Class A and Class B Warrants are immediately exercisable.
                The
                figure above reflects the 1,500,000 shares of common stock in the
                ownership figure even though no conversion of Series D Preferred
                Stock has
                taken place. The Series D Preferred Stock votes on an as-converted
                basis.
                The figure above also reflects 999,900 shares of common stock in
                the
                ownership figure, even though none of the warrants have been exercised.
                The address for Wholesale Realtors Supply is 40 Old Lancaster Rd.,
                #614,
                Merion Station, PA 19066.(5)
            Carl
                Rountree is the holder of 100 units from the Company’s Private Offering,
                consisting of an aggregate of 100 shares of Series D Preferred Stock;
                100
                Class A warrants, each to purchase 3,333 shares at a $1.20 exercise
                price;
                and 100 Class B warrants, each to purchase 3,333 shares at a $1.40
                exercise price. The Series D Preferred Stock has a 10,000-to-1 conversion
                ratio into shares of Common Stock. The Class A and Class B Warrants
                are
                immediately exercisable. The figure above reflects the 1,000,000
                shares of
                common stock in the ownership figure even though no conversion of
                Series D
                Preferred Stock has taken place. The Series D Preferred Stock votes
                on an
                as-converted basis. The figure above also reflects 666,600 shares
                of
                common stock in the ownership figure, even though none of the warrants
                have been exercised. The address for Mr. Rountree is c/o APS Financial,
                1301 Capital of Texas, Suite B-220, Austin, TX 78746.(6)
            Eckhart
                Grohmann Revocable Trust of 1985 is the holder of an aggregate of
                100
                units from the Company’s Private Offering, consisting of an aggregate of
                100 shares of Series D Preferred Stock; 100 Class A warrants, each
                to
                purchase 3,333 shares at a $1.20 exercise price; and 100 Class B
                warrants,
                each to purchase 3,333 shares at a $1.40 exercise price. The Series
                D
                Preferred Stock has a 10,000-to-1 conversion ratio into shares of
                Common
                Stock. The Class A and Class B Warrants are immediately exercisable.
                The
                figure above reflects the 1,000,000 shares of common stock in the
                ownership figure even though no conversion of Series D Preferred
                Stock has
                taken place. The Series D Preferred Stock votes on an as-converted
                basis.
                The figure above also reflects 666,600 shares of common stock in
                the
                ownership figure, even though none of the warrants have been exercised.
                The address for the Trust is 6990 No. Barnett Lane, Milwaukee, WI
                53217.




21


**Change
      in Control Arrangements**




There
      are
      no arrangements, known to us, including any pledge by any person of our
      securities, the operation of which may at a subsequent date result in a change
      in control of the Company.





There
      are
      no arrangements or understandings among members of both the former and the
      new
      control groups and their associates with respect to election of directors or
      other matters.





**Item
      12.**  **Certain
      Relationships and Related Transactions.**




None.




**Parents**




None.




**Promoters
      and Control Persons**




Not
      applicable.


22


**ITEM
      13.**  **EXHIBITS**




**Exhibit**
              **No.**
            
            **Identification of Exhibit**3.1*
            
            Articles
                of Incorporation, filed with the Nevada Secretary of State on November
                20,
                1998.3.2*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on February 4, 2000.3.3*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on February 14, 2001.3.4*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on August 14, 2002.3.5*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on September 4, 2002.3.6*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on October 15, 2002.3.7*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on May 2, 2003.3.8*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on August 31, 2005.3.9*
            
            Amended
                and Restated Articles of Incorporation, filed with the Nevada Secretary
                of
                State on June 2, 2006.3.10*
            
            Amended
                and Restated Articles of Incorporation, filed with the Nevada Secretary
                of
                State on December 26, 2006.3.11*
            
            Bylaws4.1*
            
            Certificate
                of Designation establishing our Series A Preferred Stock, filed August
                31,
                2005.4.2*
            
            Certificate
                of Designation establishing our Series D Preferred Stock filed February
                26, 200810.1*
            
            Agreement
                and Plan of Merger with Titan Energy Development, Inc., dated July
                21,
                200610.2*
            
            Stock
                Purchase and Exchange Agreement with Stellar Energy Services, Inc.,
                dated
                December 28, 200610.3**
            
            Employment
                Agreement dated January 1, 2007 between Titan and Thomas
                Black10.4**
            
            Employment
                Agreement dated May 1, 2007 between Titan and James
                Fahrner14*
            
            Code
                of Ethics16*
            
            Letter
                Regarding Change of Certifying Accountant (incorporated by reference
                to
                Titan’s Form 8-K/A filed on August 6, 2007).21**
            
            Subsidiaries




23




23.1**
            
            Consent
                of UHY LLP23.2**
            
            Consent
                of Gruber & Company LLC31.1**
            
            Certification
                of John M. Tastad, Chief Executive Officer of the Company, pursuant
                to 18
                U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
                of 2002.31.2**
            
            Certification
                of James J. Fahrner, Chief Financial Officer of the Company, pursuant
                to
                18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1**
            
            Certification
                of John M. Tastad, Chief Executive Officer of the Company, pursuant
                to 18
                U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of 2002.32.2**
            
            Certification
                of James J. Fahrner, Chief Financial Officer of the Company, pursuant
                to
                18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.


* **Previously
                filed**.
 ** **Filed
                herewith**.


24


**Item
      14.**  **Principal
      Accountant Fees and Services**  ****




**Audit
      Fees**





The
      aggregate fees billed by UHY LLP for professional services rendered for the
      audit of our annual financial statements and reviews of quarterly financial
      statements included in Form 10Q-SBs for the year ended December 31, 2007 were
      $50,365.




The
      aggregate fees billed by Randall Gruber [Gruber & Co. LLC?] for professional
      services rendered for the audit of our annual financial statements for fiscal
      year ended December 31, 2006 were $20,000.




**Audit-Related
      Fee** s





There
      were no fees billed by UHY LLP for audit-related activities.





The
      aggregate audit-related fees billed by Randall Gruber for professional services
      rendered for the audit of our annual financial statements for fiscal year ended
      December 31, 2006 were $4,000 and for the fiscal year ended December 31, 2005
      were $2,250.




**Tax
      Fees**




There
      were no fees billed by UHY LLP and Randall Gruber for tax related fees in the
      last two fiscal years.




**All
      Other Fees**




There
      were no other fees billed by UHY LLP and Randall Gruber for professional
      services rendered, other than as stated under the captions Audit Fees,
      Audit-Related Fees, and Tax Fees.





The
      firm of UHY LLP ("UHY") acts as our principal independent registered public
      accounting firm. Through [balance sheet date], UHY had a continuing relationship
      with UHY Advisors, Inc. (“Advisors”) from which it leased auditing staff who
      were full time, permanent employees of Advisors and through which UHY’s partners
      provide non-audit services. UHY has no full time employees and therefore, none
      of the audit services performed were provided by permanent full-time employees
      of UHY. UHY manages and supervises the audit services and audit staff, and
      is
      exclusively responsible for the opinion rendered in connection with its
      examination.


25


**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      as
      amended, the Company has duly caused this Annual Report to be signed on its
      behalf by the undersigned, thereunto duly authorized.


**TITAN
                ENERGY WORLDWIDE, INC.**Dated:
                March 31, 2008
            By:
            
            /s/
                John M. TastadJohn
                M. Tastad
              Chief
                Executive OfficerDated:
                March 31, 2008
            By:
            
            /s/
                James J. FahrnerJames
                J. Fahrner
              Chief
                Financial OfficerDated:
                March 31, 2008
            By:
            
            /s/
                Jeffrey W. FlanneryJeffrey
                W. Flannery
              ChairmanDated:
                March 31, 2008
            By:Thomas
                R. Black
              President




26


**EXHIBIT
      INDEX**





**Exhibit**
              **No.**
            
            **Identification of Exhibit**3.1*
            
            Articles
                of Incorporation, filed with the Nevada Secretary of State on November
                20,
                1998.3.2*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on February 4, 2000.3.3*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on February 14, 2001.3.4*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on August 14, 2002.3.5*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on September 4, 2002.3.6*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on October 15, 2002.3.7*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on May 2, 2003.3.8*
            
            Certificate
                of Amendment to Articles of Incorporation, filed with the Nevada
                Secretary
                of State on August 31, 2005.3.9*
            
            Amended
                and Restated Articles of Incorporation, filed with the Nevada Secretary
                of
                State on June 2, 2006.3.10*
            
            Amended
                and Restated Articles of Incorporation, filed with the Nevada Secretary
                of
                State on December 26, 2006.3.11*
            
            Bylaws4.1*
            
            Certificate
                of Designation establishing our Series A Preferred Stock, filed August
                31,
                2005.4.2*
            
            Certificate
                of Designation establishing our Series D Preferred Stock filed February
                26, 200810.1*
            
            Agreement
                and Plan of Merger with Titan Energy Development, Inc., dated July
                21,
                200610.2*
            
            Stock
                Purchase and Exchange Agreement with Stellar Energy Services, Inc.,
                dated
                December 28, 200610.3**
            
            Employment
                Agreement dated January 1, 2007 between Titan and Thomas
                Black10.4**
            
            Employment
                Agreement dated May 1, 2007 between Titan and James
                Fahrner14*
            
            Code
                of Ethics16*
            
            Letter
                Regarding Change of Certifying Accountant (incorporated by reference
                to
                Titan’s Form 8-K/A filed on August 6, 2007).21**
            
            Subsidiaries




27




23.1**
            
            Consent
                of UHY LLP23.2**
            
            Consent
                of Gruber & Company LLC31.1**
            
            Certification
                of John M. Tastad, Chief Executive Officer of the Company, pursuant
                to 18
                U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
                of 2002.31.2**
            
            Certification
                of James J. Fahrner, Chief Financial Officer of the Company, pursuant
                to
                18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1**
            
            Certification
                of John M. Tastad, Chief Executive Officer of the Company, pursuant
                to 18
                U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of 2002.32.2**
            
            Certification
                of James J. Fahrner, Chief Financial Officer of the Company, pursuant
                to
                18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.


* **Previously
            filed** .
 ** **Filed
            herewith** .




28