U.S.
SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-K




R
            ANNUAL REPORT PURSUANT TO
      SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACTOF
  1934


For
      the fiscal year ended December 31,
2008




 ̈
            TRANSITION REPORT PURSUANT TO
      SECTION 13 or 15(d) OF THE SECURITIES EXCHANGEACT 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 if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act


Yes  ̈ No
R


Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes  ̈ No
R


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 R No  ̈




Check if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained in this form, and will not 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-K or any amendment to this Form
10-K.                                                
   R





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated
filer,””accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large
      accelerated filer £
                Accelerated
      filer£
                Non-accelerated
      filer £
                Smaller
      reporting company R





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




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 June
30, 2008: $2,467,775




Indicate
the number of shares outstanding of the Company’s classes of common stock as of
March 20, 2009: 15,732,056  shares.




Documents
incorporated by reference: None.







TABLE
OF CONTENTS




PART
      I
                  
                  
                  3ITEM
      1.
                  DESCRIPTION
      OF BUSINESS
                  
                  3ITEM
      2.
                  DESCRIPTION
      OF PROPERTY
                  
                  8ITEM
      3.
                  LEGAL
      PROCEEDINGS
                  
                  8ITEM
      4.
                  SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  
                  9PART
      II
                  
                  
                  9ITEM
      5.
                  MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                  
                  9ITEM
      7.
                  MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  
                  10ITEM
      8.
                  FINANCIAL
      STATEMENTS
                  
                  13ITEM
      9.
                  CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                  
                  14ITEM
      9A(T).
                  CONTROLS
      AND PROCEDURES
                  
                  14ITEM
      9B.
                  OTHER
      INFORMATION
                  
                  15PART
      III
                  
                  
                  15ITEM
      10.
                  DIRECTORS
      AND EXECUTIVE OFFICERS OF THE COMPANY
                  
                  15ITEM
      11.
                  EXECUTIVE
      COMPENSATION
                  
                  17ITEM
      12.
                  SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                  
                  18ITEM
      13.
                  CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
                  
                  20ITEM
      14.
                  PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                  
                  20ITEM
      15.
                  EXHIBITS
                  
                  21


2





PART
I




ITEM
1.  Description of Business




Statements
in this Form 10-K Annual Report may be “forward-looking
statements.”  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-K 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-K 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 our shares on a one (1) to fifty (50) basis. In August 2007, we
effected a reverse split of our shares on a one (1) to fifteen (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 shares of the Company’s common
stock (“Common Stock”) according to the formulas set forth in the Certificate of
Designation. Each share of Series A Preferred Stock was converted 200:1 into
Common Stock. This resulted in the issuance of 8,000,000 shares of common stock
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.


3




On
December 28, 2006, the Company completed the acquisition of Stellar Energy
Services, Inc. (“Stellar”), a distributor and service provider of standby and
emergency power 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.




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 shares of Common Stock at an exercise price of $1.20
and each Class B warrant entitles the holder to purchase 3,333 shares of Common
Stock at an exercise price of $1.40.




BUSINESS




Overview




Titan
Energy provides the power generation equipment, service and expertise to enable
companies, institutions and governments to safely maintain their critical
operations and services during times of power outages, suboptimal power
conditions and emergencies. We deliver power generation equipment and service to
a wide range of industrial customers including: hospitals and healthcare
institutions, apartment buildings, schools and universities, telecom companies,
data centers, financial institutions, grocery stores, manufacturers, and
municipalities.  Our products range from 50kW to multiple megaWatt
power generation systems provided by leading manufacturers such as Generac Power
Systems, Inc.  In addition, we offer engineering and design support,
power equipment, and specialized service support for all of our
customers.




In 2006,
we acquired two companies in the distributed energy and power generator
manufacturing industries: Titan Energy Development Inc., (“TEDI”), and Stellar
Energy Services, Inc. (“Stellar”).  TEDI merged with us on July 21,
2006 which made us a manufacturer and supplier of a unique disaster recovery
mobile utility system called the Sentry 5000®. Stellar
was acquired by us on December 28, 2006 giving us an established distributorship
for emergency and standby power in four Midwestern states.  Stellar is
operating under the name of Titan Energy Systems (“TES”).




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. Management believes that
our expertise is in the design, distribution, and service of power generation
equipment for companies, municipalities, government and military agencies and
residential customers.




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


4




Our
growth strategy is based on the following factors:





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


§
            To
      capitalizing on marketing and sales agreements with established suppliers
      for the Sentry 5000;


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


§
            By
      promoting and enhancing the Titan Energy brand name and
      reputation.




To
advance the company in these directions, we will strive to achieve a number of
initiatives. We will seek to acquire other established, strategically located
power generation companies that can grow our revenues and improve our overall
profitability. These acquisitions will also create a nationwide sales and
service footprint so that we can better service national accounts and larger
industrial customers. In addition, we are pursuing agreements with other power
equipment manufacturing, distribution and sales companies to assist us with
aggressively promoting and selling the Sentry 5000®to more
markets in the U.S. as well as around the world. We
are also exploring the ability to be a provider of alternative energy
technologies such as wind and solar, a variety of alternative fuels and more
advanced technologies such as fuel cells as companies seek newer ways to support
their energy and emergency power requirements.




The
Industry




We
believe that 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 are often required to have
standby power systems as part of their day-to-day operations. More and more
industries are being mandated by law to install emergency backup power in case
of a power outage or emergency.




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 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.


5




§
            Increased Legislation
      Mandating Emergency Power Systems for Critical Applications.In the
      wake of recent events and disasters, the government on the federal and
      local level is requiring that many entities such as healthcare
      institutions and municipal centers have installed an adequate means of
      providing back up and emergency power in times of
  need.




§
            The Growing Need for Green
      Solutions to Emergency and Back Up Power. The desire and need for
      “green” and alternative energy solutions is being felt in all areas of the
      marketplace, including the emergency and backup power
      industry.




Titan
Energy Systems Subsidiary




TES is an
authorized dealer for Generac Power Systems, Inc. (“Generac”) 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. TES provides a full line of power generation
equipment for all kinds of applications, in both diesel and gas fuel options. In
addition to sales of generator systems, TES provides preventative 24/7 emergency
maintenance services, packaged engine generator systems, remote monitoring
services, consultation and engineering services.




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.




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.  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 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 energy options. This 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.  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. TES
recognizes additional revenues from service contracts, installation and
maintenance services for its customers and owners of Generac equipment. We offer
service contracts and support to all generator owners within our four state
service area. The service contracts yield higher margin as compared to equipment
sales and help support our effort to achieve profitability. 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, we 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
was the commercial release in 2008 of the product called the Sentry 5000®.


6




The
Sentry 5000®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®
generates electricity, provides heating and cooling, water filtration,
compressed air, satellite 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.




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)
            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 and will offer us
      access to strategic territories for sales and service of power generation
      equipment. These include companies in the traditional, alternative and
      renewable energy industries.




2)
            Increase sales revenues in TES
      from existing territories. We have identified a number of
      opportunities to improve product sales and revenues in our existing
      Midwest territory and these new initiatives are being put into practice. A
      dedicated effort to grow our service revenues and margins has been
      achieved with strong results to
date.




3)
            Establish sales and marketing
      partnerships for its Sentry 5000® and other
      emergency utility systems.We will seek agreements with power
      equipment manufacturing, distribution and sales companies to aggressively
      promote and sell the Sentry 5000®to
      more markets in the U.S. as well as around the world.




4)
            Increase number of territories
      through its manufacturing partners.We hope to work with our
      manufacturing partners to acquire underperforming or underserved
      territories that would increase our sales base and
    revenues.




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 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




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 finances,
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 our existing
common stock.


7




Inflation




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




Employees




We
currently have 25 full-time employees and two consultants that are employed on a
monthly retainer.




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 per month.
      The expiration date for this lease is December 1,
  2010.




§
            6177
      Center St., Suite 103, Omaha, NE 68106. This is a 3-year lease agreement,
      with at a cost of $850 per month. This lease expired 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 $4,400 per month. This lease expiration date is November
      30, 2012.




§
            451
      Northeast 69th Place, Suite 43, Ankeny, IA 50021. This is a 3-year lease
      at a cost of $667 per month. This lease expires on July 31,
      2009.




§
            12467
      Boone Ave S, Unit #7, Savage, MN  55378.  This was a
      6-month lease from November 26, 2007 to May 31, 2008 which was renewed for
      an additional 6-month period ending November 30, 2008.  The
      lease was further extended an additional three months to February 28, 2009
      at a cost of $1,400 per month. This lease has been continued on a
      month-to- month basis.




ITEM
3.  Legal Proceedings





On April
1, 2008, the Company and its wholly-owned subsidiary, Titan Energy Development,
Inc. (“TEDI”), along with Thomas Black, the Company’s President, and Donald
Snede, a former director of TEDI were served with a summons and complaint (the
“Complaint”) by Erbus, Inc. (“Erbus”) in the United States District Court,
Fourth Judicial District, State of Minnesota, County of Hennepin. The Complaint
alleges that the Company violated a confidentiality agreement with Erbus and
used unspecified and allegedly confidential, proprietary and trade secret
information related to a mobile emergency response unit that Erbus had been
trying to develop. The Complaint seeks injunctive relief and damages in an
amount greater than $50,000.





Pursuant
to court order, the parties engaged in non-binding mediation, however, at the
last session of mediation, which occurred on January 23, 2009, the parties were
unable to resolve the matter and the judge issued an order requiring that all
discovery be completed by the end of May and that the matter would be set for
trial during his November trial block (November 16 – December
14).  The parties are currently engaged in discovery.




Our
counsel has reviewed and investigated the factual predicate for the claims and
believes that there is no basis for the allegation or claims. We believe that we
did not violate any agreement, use any confidential or proprietary information
and that we have a meritorious defense to the suit and we are vigorously
defending the matter.


8




ITEM
4.  Submission of Matters to a Vote of Security Holders




Not
applicable.




PART
II




ITEM
5.  Market for Common Equity and Related Stockholder
Matters




MARKET
INFORMATION




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
                    
                    
                    LowCalendar
      Year 2008First
      Quarter
                    
                    
                    1.3500
                    
                    
                    
                    0.7200Second
      Quarter
                    
                    
                    0.7500
                    
                    
                    
                    0.2200Third
      Quarter
                    
                    
                    0.4000
                    
                    
                    
                    0.1200Fourth
      Quarter
                    
                    
                    0.1700
                    
                    
                    
                    0.0650Calendar
      Year 2007First
      Quarter
                    
                    
                    0.1800
                    
                    
                    
                    0.0500Second
      Quarter
                    
                    
                    0.1000
                    
                    
                    
                    0.0400Third
      Quarter
                    
                    
                    1.2500
                    
                    
                    
                    0.0030Fourth
      Quarter
                    
                    
                    1.9000
                    
                    
                    
                    1.0100




HOLDERS




We have
15,732,056 shares of our common stock outstanding as of March 20, 2008 held by
approximately 375 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.




DIVIDENDS




We have
not paid dividends to our stockholders in the last two fiscal years and have no
intention to pay dividends in the foreseeable future




SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS




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




RECENT
SALES OF UNREGISTERED SECURITIES




None.


9




PURCHASES
OF EQUITY SECURITIES BY THE ISSUER




The
following table provides information about purchases by us and our affiliated
purchasers during the quarter ended December 31, 2008 of equity securities that
are registered by us pursuant to Section 12 of the Securities Exchange Act of
1934:




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
                          ProgramsOctober
                        
                        
                        0
                        
                        
                        $
                        0
                        
                        
                        
                        0
                        
                        
                        
                        0November
                        
                        
                        0
                        
                        
                        $
                        0
                        
                        
                        
                        0
                        
                        
                        
                        0December
                        
                        
                        0
                        
                        
                        $
                        0
                        
                        
                        
                        0
                        
                        
                        
                        0Total
                        
                        
                        0
                        
                        
                        $
                        0
                        
                        
                        
                        0
                        
                        
                        
                        0




ITEM
7.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations.




Statements
included in this Management’s Discussion and Analysis of Financial Condition and
Results of  Operations, 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” 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.




OUR
BUSINESS




We are a
manufacturer, distributor and service provider for energy and power generation
equipment, emergency power equipment and specialized mobile utility systems in
the U.S. and internationally. Key drivers in our market include an ailing power
grid, the need and demand for reliable power, and legislative mandates for back
up and emergency power systems in critical industries. We provide equipment and
service to a broad market, including: financial institutions, telecommunication
centers, health care facilities, data centers, grocery store chains,
manufacturers, gas stations and others.


10




In 2006,
we acquired two companies in the distributed energy and generator manufacturing
industries: Titan Energy Development Inc., (“TEDI”) and Stellar Energy Services,
Inc.(d/b/a Titan Energy Systems  “TES”). TEDI merged with us on July
21, 2006, making us a manufacturer and supplier of unique disaster recovery
equipment including the mobile utility system called the Sentry 5000®.




The
acquisition of TES gave 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.




We are
actively seeking to expand the numbers of territories in which we can market and
serve power generation equipment through acquisitions of established power
equipment dealerships.




In
January 2008, we closed on a Private Placement Offering of our Series D
preferred stock and warrants (the “Private Offering”), raising approximately
$6.0 million in gross proceeds and converting nearly $2.0 million in debt. Net
proceeds were used to finance inventory and for general operations.




RESULTS
OF OPERATIONS




Year
Ended December 31, 2008 Compared to the Year Ended December 31,
2007




Sales




Sales for
the year ended December 31, 2008 were $9,250,608 compared to $8,841,049 for the
year ended December 31, 2007. The primary reason for the increase was
attributable to the sales of emergency utility systems through the TEDI
subsidiary.  The sales for TES had a slight decline from 2007 which
occurred in the first quarter of the year due to harsh weather conditions and
the implementation of a new sales strategy aimed at focusing sales efforts on
higher margin products.




Cost
of Sales




Cost of
sales was $7,676,966 for the year ended December 31, 2008 compared to $7,711,330
for the year ended December 31, 2007. Cost of sales as a percentage of sales was
83% for the year ended December 31, 2008 compared to 87% for the year ended
December 31, 2007. The improvements in gross margin were attributable to selling
higher margin products, improved efficiency on service contracts and pricing
policies at TES. The gross margin on the TES product and service contracts was
18.2% compared to 12.4% for the years ended December 31, 2008 and 2007,
respectively. The margins related to TEDI products were lower due to the
development contract which was limited by the federal government and had some
cost overruns.




General
and Administrative Expenses




General
and administrative expenses were $3,238,596 for the year ended December 31,
2008, compared to $3,322,023 for the year ended December 31, 2007, a decrease of
$83,427.  The decrease was the result of using fewer consultants and
replacing them with salaried employees. Such expenses would have decreased even
more if they had not been offset by legal expenses and expenses due to
activities on acquisitions that were not completed by December 31, 2008. Our
total legal costs representing non-recurring expense in 2008 was $134,144. In
addition, we incurred costs associated with proposed acquisitions which under
FASB 141R requires that direct costs be expensed rather than capitalized as part
of the purchase price. We were not able to obtain financing for two acquisitions
by December 31, 2008 and therefore, we charged $157,967 of direct costs to
expense. Without these legal and acquisition expenses our general and
administrative expenses for 2008 would have been decreased by more than $375,000
compared to 2007, a decrease of 11%.  The general and administrative
expenses as percentage of sales was 35% for year ended December 31, 2008
compared to 37.5% for the year ended December 31, 2007. One of our main
strategies is to leverage this ratio from increasing internal sales without
additional overhead. We intend to focus on continuing to improve our operating
efficiencies, cost reductions, and increasing revenue to achieve a lower ratio
of G&A expenses compared to sales.


11




Net
Interest Expense




Net
interest expense for the year ended December 31, 2008, was $46,545 compared to
$259,237 for the year ended December 31, 2007. The lower expense was
attributable to using proceeds from our $10 million Private Offering to retire
all of the short-term bridge financing. We have also replaced TES 11% line of
credit for working capital financing with an 8% line of credit.




Amortization
of Debt Discounts and Financing Costs




For the
year ended December 31, 2008, the amortization cost of debt discounts and
warrants was $12,605 compared to $923,845 for the year ended December 31, 2007.
This decrease was attributable to the retirement of all obligations that had
beneficial conversion features. The amount for December 31, 2008 is the
amortization of cost related to TES’ new credit facility.




Liquidity
and Capital Resources




During
the year ended December 31, 2008, cash used by operations was $2,289,213. We
intend to continue to find ways to expand our business through increasing
equipment and service sales in existing territories 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.




During
the year ended December 31, 2008, we incurred a net loss of $1,724,104 which
includes $246,156 of noncash charges. We used cash for investing activities of
$154,838 and net cash provided by financing activities was $2,028,653. This
included $2.2 million in net proceeds from the completion of our Private
Offering.




At
December 31, 2008 we had $327,166 in cash and short-term investment. We are in
the process of increasing the credit facility for TES to $1.0
million.  The interest rate on this line is 7.25%. We believe that
with the increase in this facility, combined with our effort to control
expenses, we will have adequate cash flow to operate our business.




If we
make a strategic acquisition, it will be necessary for us to raise additional
capital. There can be no assurance that additional private or public finances,
including debt or equity financing, will be available as needed, or, if
available, 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.




Off-Balance
Sheet Arrangements




None.


12




ITEM
8.  Financial Statements




TITAN
ENERGY WORLDWIDE, INC.


Consolidated
Financial Statements and


Reports
of Independent Registered Public Accounting Firms


December
31, 2008 and 2007




Table
of Contents




PageReport
      of Independent Registered Public Accounting Firm
                F-1Consolidated
      Balance Sheets
                F-2Consolidated
      Statements of Operations
                F-3Consolidated
      Statements of Changes in Stockholders’ Equity
                F-4Consolidated
      Statements of Cash Flows
                F-6Notes  to
      Consolidated Financial Statements
                F-7


13




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




BOARD
OF DIRECTORS AND STOCKHOLDERS


TITAN
ENERGY WORLDWIDE, INC.




We have
audited the accompanying consolidated balance sheets of Titan Energy Worldwide,
Inc. and Subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the
related consolidated statements of operations, stockholders’ equity and cash
flows for the years 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
audits.




We
conducted our audits 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
audits provide 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, 2008 and 2007, and the results of their
operations and their cash flows for the years 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 1 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 31,
2009


F-1




Titan
Energy Worldwide, Inc.


CONSOLIDATED
BALANCE SHEETS


December
31, 2008 and 2007




2008
                
                
                2007ASSETSCurrent
      assetsCash
      and cash equivalents
                
                $
                327,166
                
                
                $
                742,564Accounts
      receivable less allowance for doubtful accounts of $44,000 and $50,000,
      respectively
                
                
                1,349,105
                
                
                
                1,089,845Inventory
                
                
                703,941
                
                
                
                598,207Other
      current assets
                
                
                161,432
                
                
                
                137,005Total
      current assets
                
                
                2,541,644
                
                
                
                2,567,621Property
      and equipment, net
                
                
                225,389
                
                
                
                133,421Customer
      and distribution lists, net
                
                
                1,134,720
                
                
                
                1,280,034Goodwill
                
                
                1,599,160
                
                
                
                1,599,160Other
      assets
                
                
                7,302
                
                
                
                22,532Total
      assets
                
                $
                5,508,215
                
                
                $
                5,602,768LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilitiesNotes
      payable-current portion
                
                $
                557,085
                
                
                $
                544,425Accounts
      payable
                
                
                1,007,843
                
                
                
                882,126Accrued
      compensation
                
                
                115,409
                
                
                
                537,584Accrued
      liabilities – other
                
                
                183,157
                
                
                
                437,616Customer
      deposits and deferred revenue
                
                
                3,504
                
                
                
                72,903Total
      current liabilities
                
                
                1,866,998
                
                
                
                2,474,654Notes
      payable, less current portion
                
                
                
                
                
                
                3,670Total
      liabilities
                
                
                1,866,998
                
                
                
                2,478,324Commitments
      and ContingenciesStockholders’
      equityCommon
      stock 1,800,000,000 shares authorized, $.0001 par value, issued and
      outstanding  15,732,056 and 15,398,205
                
                
                1,573
                
                
                
                1,540Series
      D Preferred Stock 10,000,000 authorized, $.0001 par value, issued and
      outstanding 657 and 411, $.0001 par value
                
                
                1
                
                
                
                1Additional
      paid-in capital
                
                
                27,003,124
                
                
                
                24,169,118Accumulated
      deficit
                
                
                (23,363,481
                )
                
                
                (21,046,215
                )Total
      stockholders’ equity
                
                $
                3,641,217
                
                
                $
                3,124,444Total
      liabilities and stockholders’ equity
                
                $
                5,508,215
                
                
                $
                5,602,768




See
accompanying notes to consolidated financial statements.


F-2


Titan
Energy Worldwide, Inc.


CONSOLIDATED
STATEMENTS OF OPERATIONS


For
the Years Ended December 31, 2008 and 2007




2008
                
                
                2007Sales
      of equipment
                
                $
                7,160,973
                
                
                
                6,858,941Sales
      of service and parts
                
                
                2,089,635
                
                
                
                1,982,108Total
      sales
                
                
                9,250,608
                
                
                
                8,841,049Material
      cost and labor for equipment
                
                
                6,141,505
                
                
                
                5,939,635Material
      cost and labor for service and parts
                
                
                1,535,461
                
                
                
                1,771,695Total
      cost of  sales
                
                
                7,676,966
                
                
                
                7,711,330Gross
      profit
                
                
                1,573,642
                
                
                
                1,129,719Salaries,
      wages and benefits
                
                
                1,693,822
                
                
                
                1,436,049Consulting  and
      professional fees
                
                
                610,346
                
                
                
                932,856Other
      general and administrative expense
                
                
                934,428
                
                
                
                953,118Total
      general and administrative expenses
                
                
                3,238,596
                
                
                
                3,322,023Loss
      from operations
                
                
                (1,664,954
                )
                
                
                (2,192,304
                )Interest
      expense, net
                
                
                46,545
                
                
                
                259,237Amortization
      of debt discount and financing cost
                
                
                12,605
                
                
                
                923,845Net
      loss
                
                $
                (1,724,104
                )
                
                $
                (3,375,386
                )Preferred
      dividend from beneficial conversion feature on Series D Preferred
      Stock
                
                
                (593,162
                )
                
                
                (3,483,484
                )Preferred
      dividend from early extinguishment of   Series A, B & C
      Preferred Stock
                
                
                -
                
                
                
                (9,767,847
                )Net
      Loss for available to Common Shareholders
                
                $
                (2,317,266
                )
                
                $
                (16,626,717
                )Basic
      and diluted weighted average number of shares outstanding
                
                
                15,558,222
                
                
                
                6,638,249Basic
      and diluted net loss per common share
                
                $
                (0.15
                )
                
                $
                (2.50
                )




See
accompanying notes to consolidated financial statements.


F-3


Titan
Energy Worldwide, Inc.


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY


For
the Years Ended December 31, 2008 and 2007




Common Stock
                      
                      
                      Preferred StockShares
                      
                      
                      Amount
                      
                      
                      Shares
                      
                      
                      AmountBalance
      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 Series A Preferred Stock
                      
                      
                      8,000,000
                      
                      
                      
                      800
                      
                      
                      
                      (2,000,000
                      )
                      
                      
                      (200
                      )Early
      extinguishment of Series B Preferred Stock
                      
                      
                      1,686,699
                      
                      
                      
                      169
                      
                      
                      
                      (1,000,000
                      )
                      
                      
                      (100
                      )Early
      extinguishment of Series C Preferred Stock
                      
                      
                      977,809
                      
                      
                      
                      98
                      
                      
                      
                      (750,000
                      )
                      
                      
                      (75
                      )Conversion
      of Secured Convertible Notes
                      
                      
                      3,859,844
                      
                      
                      
                      386Preferred
      stock issuance
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      417
                      
                      
                      
                      1Warrants
      issued with Series D Preferred StockBeneficial
      conversion feature related to Series D Preferred StockPurchase
      of common stock warrantsOtherNet
      loss for the yearBalance
      December 31, 2007
                      
                      
                      15,398,205
                      
                      
                      $
                      1,540
                      
                      
                      
                      417
                      
                      
                      $
                      1Stock
      issued for conversion of notes
                      
                      
                      23,962
                      
                      
                      
                      2Stock
      issued for services
                      
                      
                      265,000
                      
                      
                      
                      27Stock
      issued for compensation
                      
                      
                      6,667Proceeds
      from issuance of common stock
                      
                      
                      38,222
                      
                      
                      
                      4Preferred
      stock issuance
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      240Warrants
      issued with Preferred Series DBeneficial
      conversion feature related to Series D Preferred StockPurchase
      of common stock warrantsNet
      loss for the yearBalance
      December 31, 2008
                      
                      
                      15,732,056
                      
                      
                      $
                      1,573
                      
                      
                      
                      657
                      
                      
                      $
                      1




See
accompanying notes to consolidated financial statements.


F-4




Titan
Energy Worldwide, Inc.


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY


For
the Years Ended December 31, 2008 and 2007 (Continued)




Additional Paid
                      in Capital
                    
                    
                    Accumulated
                      Deficit
                    
                    
                    TotalBalance
      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 Series A Preferred Stock
                    
                    
                    8,506,350
                    
                    
                    
                    (8,506,950
                    )
                    
                    
                    -Early
      extinguishment of Series B Preferred Stock
                    
                    
                    908,669
                    
                    
                    
                    (1,012,707
                    )
                    
                    
                    (103,969
                    )Early
      extinguishment of Series C Preferred Stock
                    
                    
                    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 Series D Preferred Stock
                    
                    
                    1,394,093
                    
                    
                    
                    
                    
                    
                    
                    1,394,093Beneficial
      conversion feature related to Series D Preferred Stock
                    
                    
                    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
                    )
                    
                    $
                    3,124,444Stock
      issued for conversion of notes
                    
                    
                    29,966
                    
                    
                    
                    
                    
                    
                    
                    29,968Stock
      issued for services
                    
                    
                    43,021
                    
                    
                    
                    
                    
                    
                    
                    43,048Stock
      issued for compensation
                    
                    
                    1,066
                    
                    
                    
                    
                    
                    
                    
                    1,066Proceeds
      from issuance of common stock
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    4Preferred
      stock issuance
                    
                    
                    1,445,909
                    
                    
                    
                    
                    
                    
                    
                    1,445,909Warrants
      issued with Series D Preferred Stock
                    
                    
                    741,341
                    
                    
                    
                    
                    
                    
                    
                    741,341Beneficial
      conversion feature related to Series D Preferred Stock
                    
                    
                    593,162
                    
                    
                    
                    (593,162
                    )
                    
                    
                    -Cost
      of issuing Series D Preferred Stock
                    
                    
                    (20,459
                    )
                    
                    
                    
                    
                    
                    
                    (20,459
                    )Net
      loss for the year
                    
                    
                    
                    
                    
                    
                    (1,724,104
                    )
                    
                    
                    (1,724,104
                    )Balance
      December 31, 2008
                    
                    $
                    27,003,124
                    
                    
                    
                    (23,363,481
                    )
                    
                    
                    3,641,217




See
accompanying notes to consolidated financial statements.


F-5


Titan
Energy Worldwide, Inc.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


For
the Years Ended December 31, 2008 and 2007





2008
                          
                          
                          2007Operating
      activities:Net loss
                          
                          $
                          (1,724,104
                          )
                          
                          $
                          (3,375,386
                          )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Compensation
      paid by issuance of stock
                          
                          
                          25,367
                          
                          
                          
                          111,700Depreciation
      and amortization
                          
                          
                          208,184
                          
                          
                          
                          188,075Amortization
      of debt discount
                          
                          
                          12,605
                          
                          
                          
                          923,845Changes
      in operating assets and liabilities:Accounts
      receivable
                          
                          
                          (259,260
                          )
                          
                          
                          649,097Inventory
                          
                          
                          (105,734
                          )
                          
                          
                          (44,492
                          )Other
      assets
                          
                          
                          2,836
                          
                          
                          
                          (137,101
                          )Accounts
      payable
                          
                          
                          125,717
                          
                          
                          
                          (63,153
                          )Accrued
      liabilities
                          
                          
                          (505,425
                          )
                          
                          
                          130,570Customer
      deposits
                          
                          
                          (69,399
                          )
                          
                          
                          (617,976
                          )Net
      cash used in operating activities
                          
                          
                          (2,289,213
                          )
                          
                          
                          (2,234,821
                          )Investing
      activities:Purchase
      of property & equipment
                          
                          
                          (154,838
                          )
                          
                          
                          (96,609
                          )Net
      cash used investing activities
                          
                          
                          (154,838
                          )
                          
                          
                          (96,609
                          )Financing
      activities:Proceeds
      from issuance of Series D Preferred Stock
                          
                          
                          2,166,786
                          
                          
                          
                          3,044,173Payment
      of financing costs
                          
                          
                          (5,888
                          )
                          
                          
                          (547,686
                          )Proceeds
      from issuance of notes payable
                          
                          
                          449,558
                          
                          
                          
                          4,456,204Payment
      of notes payable
                          
                          
                          (411,803
                          )
                          
                          
                          (3,674,196
                          )Proceeds
      from issuance of common stock
                          
                          
                          -
                          
                          
                          
                          73,020Purchase
      of common stock warrants
                          
                          
                          (170,000
                          )
                          
                          
                          (309,000
                          )Net
      cash provided by financing activities
                          
                          
                          2,028,653
                          
                          
                          
                          3,042,515Increase
      (decrease) in cash and cash equivalents
                          
                          $
                          (415,398
                          )
                          
                          $
                          711,085Cash
      and cash equivalents, beginning of year
                          
                          
                          742,564
                          
                          
                          
                          31,479Cash
      and cash equivalents, end of year
                          
                          $
                          327,166
                          
                          
                          $
                          742,564




See
accompanying notes to consolidated financial statements.


F-6


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®. 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 the Company’s common stock
(“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 shares 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 Stellar is
operating under during business as Titan Energy Systems, Inc
(“TES”).





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.





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





Effective
August 13, 2007, the 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 on 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-7


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





At
December 31, 2008 and December 31, 2007 the Company has no Preferred Stock
Series A, B and C outstanding. The description of these securities:





Preferred
      Stock, Series A, authorized 10,000,000, $.0001 par
valuePreferred
      Stock, Series B, authorized 10,000,000, $.0001 par
valuePreferred
      Stock, Series C, authorized 10,000,000, $.0001 par
  value





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





Principles
of Consolidation





The
financial statements include the accounts of the Company and its 100% owned
subsidiaries, TEDI and TES.





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, 2008 of $1,724,104 and at December
31, 2008 had an accumulated deficit of $23,363,481 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 2007. In addition, the
Company issued Series D Convertible Preferred Stock with a beneficial conversion
feature which resulted in recording a preferred stock dividend of $4,076,646.
The accumulated deficit without these transactions would have been $9,518,988
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 flow
      positive.


·
            The
      Company’s loss from operations was reduced by $527,000 as compared to
      2007.


·
            The
      Company has taken measures to reduce the loss from Titan Energy
      Development, Inc. as management has moved to a strategy of licensing the
      Sentry 5000®to
      a third party and thereby eliminating the operating costs associated with
      the development and launch of the
product.





Supplemental
Cash Flow Information Regarding Non-Cash Transactions





During
the years ended December 31, 2008, and 2007, 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 transactions that occurred
during the past two years.


F-8


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





2008
                  
                  
                  2007Conversion
      of Preferred Stock Series A, B and C
                  
                  $
                  
                  
                  
                  
                  9,767,847Stock
      issued for services
                  
                  $
                  43,028
                  
                  
                  $
                  111,700Stock
      issued to convert long-term debt
                  
                  $
                  29,968
                  
                  
                  $
                  2,423,694Stock
      issued in settlement of accounts payable
                  
                  $
                  
                  
                  
                  $
                  41,121





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 Federal Deposit Insurance Corporation limit (which is currently $250,000 but
will decrease to $100,000 on December 31, 2009); 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.


F-9


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


2008
                
                
                2007Furniture
      and office equipment
                
                $
                153,393
                
                
                $
                118,080Vehicles
                
                
                61,703
                
                
                
                52,003Tools
      and Shop Equipment
                
                
                93,647
                
                
                
                81,804Rental
      equipment
                
                
                97,983
                
                
                
                -Accumulated
      Depreciation
                
                
                (181,337
                )
                
                
                (118,466
                )Net
      Property and Equipment
                
                $
                225,389
                
                
                $
                133,421Depreciation
      Expense
                
                $
                62,871
                
                
                $
                30,581





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, 2008 and December 31, 2007 was $318,415 and $173,192,
respectively.





Advertising
Costs





Advertising
costs includes trade shows, demo and literature which are expensed as incurred.
The advertising costs for the years ended December 31, 2008 and 2007 were
$75,242 and $42,763, 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 SFAS No. 109 relating to the recognition of
income tax benefits. As of December 31, 2008 and 2007, the Company had no
unrecognized tax benefits due to uncertain tax positions.


F-10


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





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





Effective
January 1, 2006, we 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 August
2007, the Company’s Board of Directors approved a fifteen (15) 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 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.





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.





Segment
Reporting





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


F-11


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





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 March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities” (“SFAS 161”), which
amends  and  expands  the  disclosure  requirements  of  FASB  Statement  No.
133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS
133”), with the intent to provide users of financial statements with an enhanced
understanding of: (a) how and why an entity uses derivative instruments; (b) how
derivative instruments and related hedged items are accounted for under SFAS No.
133 and its related interpretations; and (c) how derivative instruments and
related hedged items affect an entity’s financial position, financial
performance and cash flows. SFAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures about
fair value amounts of and gains and losses on derivative instruments and
disclosures about credit-risk-related contingent features in derivative
instruments. This statement applies to all entities and all derivative
instruments. SFAS 161 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008. The Company has not
yet determined the effect on our consolidated financial statements, if any, upon
adoption of SFAS No. 161.





In
February 2008, the FASB issued FASB Staff Position No. 157-2, “Effective Date of
FASB Statement No. 157” (“FSP 157-2”), which delays the effective date of SFAS
157 for nonfinancial assets and nonfinancial liabilities. Therefore, the Company
has delayed application of SFAS 157 to its nonfinancial assets and nonfinancial
liabilities, which include assets and liabilities acquired in connection with a
business combination, goodwill, intangible assets and asset retirement
obligations recognized in connection with final capping, closure and
post-closure landfill obligations, until January 1, 2009. The Company is
currently evaluating the impact of SFAS 157 for nonfinancial assets and
liabilities on the Company's financial position and results of
operations.





In
December 2007, the FASB issued SFAS No.  141(R), “Business
Combinations,” and SFAS No.  160,  “Noncontrolling Interests
in Consolidated Financial Statements.” SFAS No. 141(R) requires an acquirer to
measure the identifiable assets acquired, the liabilities assumed and any
noncontrolling interest in the acquiree at their fair values on the acquisition
date, with goodwill being the excess value over the net identifiable assets
acquired. SFAS No. 160 clarifies that a noncontrolling interest in a subsidiary
should be reported as equity in the consolidated financial statements. The
calculation of earnings per share will continue to be based on income amounts
attributable to the parent. SFAS No. 141(R) and SFAS No. 160 are effective for
financial statements issued for fiscal years beginning after December 15, 2008.
Early adoption is prohibited. The Company has not yet determined the effect on
our consolidated financial statements, if any, upon adoption of SFAS No. 141(R)
or SFAS No. 160.


F-12


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements - an Amendment of ARB No. 51” (“SFAS 160”),
which establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No.
160 clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS No. 160 also requires consolidated net
income to be reported at amounts that include the amounts attributable to both
the parent and the noncontrolling interest. It also requires disclosure, on the
face of the consolidated statement of income, of the amounts of consolidated net
income attributable to the parent and to the noncontrolling interest. SFAS No.
160 also provides guidance when a subsidiary is deconsolidated and requires
expanded disclosures in the consolidated financial statements that clearly
identify and distinguish between the interests of the parent’s owners and the
interests of the noncontrolling owners of a subsidiary. SFAS 160 is effective
for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. The Company is currently evaluating the impact this
statement will have on its financial position and results of
operations.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities.” SFAS No. 159 permits companies to
choose to measure many financial instruments and certain other items at fair
value. SFAS No. 159 is effective for financial statements issued for fiscal
years beginning after November 15, 2007. The adoption of SFAS No. 159 did not
have a material impact on our consolidated financial statements.





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:





2008
                  
                  
                  2007Parts
                  
                  $
                  376,246
                  
                  
                  $
                  456,862WIP
                  
                  
                  185,172
                  
                  
                  
                  68,286Finished
      Good
                  
                  
                  197,523
                  
                  
                  
                  113,059Obsolescence
      Reserve
                  
                  
                  (55,000
                  )
                  
                  
                  (40,000
                  )Total
                  
                  $
                  703,941
                  
                  
                  $
                  598,207





NOTE
3 - NOTES PAYABLE





Notes
Payable consists of the following at December 31, 2008 and 2007:





2008
                
                
                2007Revolving
      line of credit, prime plus 2.0% with minimum interest rate of 8% and due
      April 3, 2009
                
                $
                449,558
                
                
                
                -Revolving
      credit facility with a financial institution bearing interest at 10% at
      December 31, 2007
                
                
                -
                
                
                $
                403,142Promissory
      note payable, bearing interest at 11% due April 1, 2009
                
                
                103,969
                
                
                
                132,724Other
      Loans
                
                
                3,558
                
                
                
                12,229Total
                
                $
                557,085
                
                
                $
                548,095Less
      current portion
                
                
                557,085
                
                
                
                544,425Long
      -term Debt
                
                $
                -
                
                
                $
                3,670


F-13


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





The
Company issued a private placement memorandum through which it sold 657 Units
from October 1, 2007 through January 31, 2008. 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 totaled
approximately $6.5 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 were approximately $5.2 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
Company issued 11% Promissory Notes to former holders of shares of the Company’s
Series B and Series C Preferred Stock. These Notes were due August 13, 2008 and
are not convertible and do not have any warrants. The Company may elect to
prepay without penalty. During the first quarter of 2008, one of the former
shareholders elected to convert his Note and accrued interest of $29,968 for
23,962 shares of common stock.





In March
2009, Stellar’s Revolving Line of Credit of $750,000 was extended to April 3,
2009 for the bank to complete an audit on the collateral. The Company
anticipates that this Revolving Line of Credit will be extended for another year
and the amount will be increased to $1.0 million. Borrowings under this facility
are subject to a borrowing base formula consisting of 75% of the accounts
receivable balances under 90 days plus 50% of the inventories, up to a maximum
of $125,000.





The
holder of the 11% Promissory Note was extended from August 13, 2008 until April
1, 2009.





Accrued
interest is included in accrued liabilities at December 31, 2008 and 2007, in
the amounts of $4,355 and $5,600, 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:





2008
                
                
                2007Income
      taxes at the statutory rate
                
                $
                (586,195
                )
                
                $
                (1,147,631
                )Valuation
      Allowance
                
                
                520,551
                
                
                
                1,093,500Permanent
      differences and other, net
                
                
                65,644
                
                
                
                54,131Total
      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
$7,600,000.





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-14


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





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, 2008, 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, 2008.





NOTE
5 – RETIREMENT PLAN





All
eligible employees are covered under the Company 401(k) pension and profit
sharing plan. For the year ended December 31, 2008, the Company made profit
sharing contributions of $29,670. The Company did not have a plan in 2007;
however TES had a 401(k) plan with no Company match.





NOTE
6 - 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 was offered at
$10,000. The holder of the Convertible Preferred Stock may, at any time and are
required to convert their preferred stock 24 months after issuance, 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 entitles 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
were 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 offering closed on
January 31, 2008. The Company had closings for cash gross proceeds of
approximately $6.0 million. Approximately $513,000 of 11% Promissory Notes and
accrued interest was converted into the Offering at a 10% discount from the
Offering price. Net cash proceeds to the Company were approximately $5.2
million. The proceeds from the closings have been used to retire debt,
repurchase stock warrants and fund inventory and operating costs.





The Units
offered include warrants and a beneficial conversion feature as the Series D
Preferred Stock was convertible and in the money at closing dates. The Company
has determined the value of the warrants to be $2,135,434 and the value of
Series D Preferred stock to be $3,521,558. The Company has valued the beneficial
conversion feature of $4,076,646. This amount is treated as a preferred stock
dividend with the amount increasing paid in capital and reducing retained
earnings. In the year ended December 31, 2008, the increase in the preferred
dividend was $593,162.





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-15


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
7 - COMMON STOCK TRANSACTIONS





During
the third quarter of 2008, the Company paid several consultants and a former
employee in stock for their services. The aggregate number of common shares
issued was 271,667. The price per share was based on the current market value at
time of issuance, approximately $0.16 per share.





During
the first quarter of 2008, the Company settled an 11% Promissory Note by
converting the Note to common stock. This transaction resulted in the issuance
of 23,962 common shares. The price for conversion was based on the current
market price for the stock of $1.25 per share.





In
conjunction with the Company’s private placement offering of its Series D
Convertible Preferred Stock, Note holders 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 the issuance of 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:





·
            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.





·
            The
      Company agreed with the holders of Series B Preferred Stock to convert
      into $2.00 worth of common shares.





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


F-16


TITAN
ENERGY WORLDWIDE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





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 and another note holder elected to convert his note
to common stock. The current outstanding balance is $103,969.





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.





NOTE
8 - COMMON STOCK WARRANTS





During
the past 21 months, 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 for the year ended December 31, 2008, and for the
year ended December 31, 2007, were 1,750,736 and 5,927,284, respectively. None
of the warrants have been exercised this year. The following table shows the
warrants outstanding at December 31, 2008:





Number of Warrants
                
                
                Exercise Price
                
                Expiration Date1,172,500
                
                
                $
                0.35
                
                January
      2012553,800
                
                
                $
                0.50
                
                April-July
      2012478,800
                
                
                $
                0.625
                
                June
      201254,800
                
                
                $
                0.625
                
                January
      201379,000
                
                
                $
                0.75
                
                September
      2010158,000
                
                
                $
                0.75
                
                December
      20122,189,790
                
                
                $
                1.20
                
                January
      2013801,540
                
                
                $
                1.25
                
                January
      20132,189,790
                
                
                $
                1.40
                
                January
      2013





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 – OPERATING LEASES





The
Company leases office space and warehouses. Rent expense for the years ended
December 31, 2008 and 2007 was $142,645 and $125,628. Future minimum rental
payments required under the non-cancelable operating leases are as follows: 2009
- $101,040; 2010 - $97,870; 2011 - $54,500 and 2012 - $48,400.


F-17




ITEM
9.  Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure




None.




ITEM
9A(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.




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, 2008 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, 2008.


14




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
9B.  Other Information




None.





PART
III




ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE




Our
directors and executive officers are:





Name
                    
                    Age
                    
                    Position
                    
                    Position Held SinceJeffrey
      W. Flannery
                    
                    52
                    
                    Chairman
                    
                    2005John
      M. Tastad
                    
                    42
                    
                    Chief
      Executive Officer
                    
                    2007Thomas
      Black
                    
                    45
                    
                    President,
      Chief Operating Officer and Secretary
                    
                    2006James
      J. Fahrner
                    
                    57
                    
                    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 and is working as a consultant to the Company.
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, Inc. 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.


15




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. 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.




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 B.S. 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
not aware of any person who during the year ended December 31, 2008, 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.




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 number (248)
446-8557.


16




Nominating,
Audit or Compensation committees




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




ITEM
11.  Executive Compensation




Compensation
of Executive Officers




The
following table sets forth, for the fiscal years ended December 31, 2008 and
2007, 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-K.




Summary
Compensation Table for 2008 and 2007





Year
                                                
                                                Salary
                                                  ($)
                                                
                                                Bonus
                                                  ($)
                                                
                                                StockAwards
                                                  ($)
                                                
                                                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
                                                
                                                
                                                2007
                                                
                                                130,500
                                                
                                                
                                                60,000
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                53,050
                                                
                                                
                                                243,5502008
                                                
                                                81,000
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                27,000
                                                
                                                
                                                108,000John Tastad(2)
                                                
                                                
                                                2007
                                                
                                                75,000
                                                
                                                
                                                50,000
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                300,000
                                                
                                                
                                                425,000Chief
      Executive Officer
                                                
                                                
                                                2008
                                                
                                                180,000
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                2,550
                                                
                                                
                                                182,550Thomas Black(3)President,
      COO,
                                                
                                                
                                                2007
                                                
                                                165,000
                                                
                                                
                                                40,000
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                205,000Director
      and Secretary
                                                
                                                
                                                2008
                                                
                                                180,000
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                3,150
                                                
                                                
                                                183,150James Fahrner(4)
                                                
                                                
                                                2007
                                                
                                                90,250
                                                
                                                
                                                5,000
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                8,900
                                                
                                                
                                                104,150Chief
      Financial Officer
                                                
                                                
                                                2008
                                                
                                                135,000
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                0
                                                
                                                
                                                0
                                                
                                                8,585
                                                
                                                
                                                143,585





1)
            On
      October 1, 2008, Mr. Flannery resigned his employment and became a
      consultant.  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.
      The amount under All Other Compensation for 2007 represents a
      reimbursement for the amount spent in obtaining the shell corporation in
      2007. The amount under All Other Compensation for 2008 represents payment
      as a consultant.


2)
            On
      October 1, 2007, Mr. Tastad was appointed as the Chief Executive Officer
      of the Company.  Mr. Tastad has worked as a consultant for the
      Company since its formation.  The All Other Compensation for
      2007 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 in 2007. All Other Compensation for 2008 represent our
      matching contribution to the 401(k)
plan.


3)
            Mr.
      Black was paid $72,408 of his 2006 compensation in 2007. All Other
      Compensation for 2008 represent our matching contribution to the 401(k)
      plan.


4)
            On
      May 1, 2007, James J. Fahrner was appointed Chief Financial Officer of the
      Company. All Other Compensation for 2007 includes $1,900 in cash, a $3,000
      stock payment while Mr. Fahrner was a contractor and $4,000 for his
      monthly car allowance. All Other Compensation for 2008 represents our
      matching contribution to the 401(k) plan and his car allowance of
      $6,000.


17




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:




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 and Chairman, John
Tastad, and Jeffrey Flannery.




Confidentiality
Agreements




None.




ITEM
12.  Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters




Securities
Authorized for Issuance under Equity Compensation Plans




None.




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
      director;


§
            Each
      named executive officer; and


§
            All
      directors and officers as a
group.


18


Beneficial
ownership is determined in accordance with the rules of the SEC and includes any
shares which the person has the right to acquire within 60 days through the
exercise of any stock option, warrant or other right.





Common Stock
                                Beneficially OwnedName and Address of Beneficial Owner(1)
                              
                              Number
                              
                              Percent (2)Jeffrey
      W. Flannery, Chairman
                              
                              
                              2,120,650
                              
                              13.48
                              %John
      M. Tastad, Chief Executive Officer
                              
                              
                              3,041,000
                              
                              19.33
                              %Thomas
      Black, President and Chief Operating Officer
                              
                              
                              1,605,172
                              
                              10.20
                              %James
      J. Fahrner, Chief Financial Officer
                              
                              
                              229,444
                              (3)
                              1.44
                              %All
      directors and executive officers as a group (four persons)
                              
                              
                              6,996,266
                              
                              44.41
                              %Wholesale
      Realtors Supply
                              
                              
                              2,499,900
                              (4)
                              13.95
                              %Carl
      Rountree
                              
                              
                              1,666,600
                              (5)
                              9.58
                              %Eckhart
      Grohmann Revocable Trust of 1985
                              
                              
                              1,666,600
                              (6)
                              9.58
                              %




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)
            Based
      on 15,732,056 shares of common stock outstanding as of March 20,
      2009.




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 of 150 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.


19




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
13.  Certain Relationships and Related Transactions.




None.




Parents




None.




Promoters
and Control Persons




Not
applicable.




ITEM
14.  Principal Accounting 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 10Qs and 10Q-SBs for the years ended December 31,
2008 and 2007 were $41,000 and $50,365, respectively.




Audit-Related
Fees




The
aggregate fees billed by UHY LLP for professional services rendered for the
audit of proposed acquisition candidates for fiscal year ended December 31, 2008
were $43,000.




Tax
Fees




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




All
Other Fees




In 2008,
the other fees billed by UHY LLP were $3,000 for review of the draft of a
Registration Statement on Form S-1.




The firm
of UHY LLP ("UHY") acts as our principal independent registered public
accounting firm. Through December 31, 2008, 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 nonaudit services. UHY has no full time employees and therefore, none of
the audit services performed was 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.


20


ITEM
15.    Exhibits





Exhibit
      No.
                
                Identification
      of Exhibit3.1*
                
                Amended
      and Restated Articles of Incorporation, filed with the Nevada Secretary of
      State on December 26, 2006.3.2*
                
                Bylaws4.1*
                
                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 Ethics21**
                
                Subsidiaries23.1**
                
                Consent
      of UHY LLP31.1**
                
                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.


21




SIGNATURES




In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Registrant 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, 2009
              By:
              /s/
      John M. TastadJohn
      M. Tastad
                Chief
      Executive Officer




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.




Signature
                
                Title
                
                Date/s/ James J. Fahrner
                
                Chief
      Financial Officer (Principal Financial Officer) and
    Director
                
                March 31,
      2009James
      J. Fahrner/s/ John M. Tastad
                
                Chief
      Executive Officer (Principal Executive Officer) and
    Director
                
                March 31,
      2009John
      M. Tastad/s/ Jeffrey W. Flannery
                
                Chairman
      and Director
                
                March 31,
      2009Jeffrey
      W. Flannery/s/ Thomas R. Black
                
                President
      and Director
                
                March 31,
      2009Thomas
      R. Black


22


EXHIBIT
INDEX





Exhibit
      No.
                
                Identification
      of Exhibit3.1*
                
                Amended
      and Restated Articles of Incorporation, filed with the Nevada Secretary of
      State on December 26, 2006.3.2*
                
                Bylaws4.1*
                
                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 Ethics21**
                
                Subsidiaries23.1**
                
                Consent
      of UHY LLP31.1**
                
                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.


23