**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**


(Mark
      One)





x
            Quarterly
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934




For
      the
      quarterly period ended November 30, 2007




or





o
            Transition
                report pursuant Section 13 or 15(d) of the Securities Exchange Act
                of
                1934




For
      the
      transition period from ____________ to ____________




Commission
      file number 000-32847




**TITAN
      GLOBAL HOLDINGS, INC.**


(Exact
      name of registrant as specified in its charter)


**Utah**
              
              **87-0433444**(State
                  or other jurisdiction of incorporation or organization)
              
              (IRS
                  Employer Identification No.)





**1700
      Jay Ell Drive, Suite 200**


**Richardson,
      Texas 75081**


(Address
      of principal executive offices) (Zip Code)





**(972)
      470-9100**


(Registrant’s
      telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes oNo x





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





Large
      accelerated filer o    Accelerated
      filer o   Non-accelerated
      filer x





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





As
      of
      January 25 ,
      2008 the
      Company had 53,537,552  shares
      of
      its par value $0.001 common stock outstanding.







**TITAN
        GLOBAL HOLDINGS, INC.**
 **TABLE
        OF CONTENTS**
  Page**PART
                  I.**
              **FINANCIAL
                  INFORMATION**Item
                  1.
              Unaudited
                  Consolidated Financial Statements
              4Item
                  2.
              Management's
                  Discussion and Analysis of Financial Condition and Results of Operations
              27Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              41Item
                  4.
              Controls
                  and Procedures
              41**PART
                  II.**
              **OTHER
                  INFORMATION**Item
                  1.
              Legal
                  Proceedings
              42Item
                  1A.
              Risk
                  Factors
              43Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              48Item
                  3.
              Defaults
                  Upon Senior Securities
              48Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              48Item
                  5.
              Other
                  information
              48Item
                  6.
              Exhibits
              48Signatures
              49
  2




**STATEMENT
      REGARDING THIS REPORT**




**FORWARD-LOOKING
      INFORMATION**





Statements
      in this report concerning the future sales, expenses, profitability, financial
      resources, product mix, market demand, product development and other statements
      in this report concerning the future results of operations, financial condition,
      and business of Titan Global Holdings, Inc. are "forward-looking" statements
      as
      defined in the Securities Act of 1933 and Securities Exchange Act of 1934.
      Investors are cautioned that the Company's actual results in the future may
      differ materially from those projected in the forward-looking statements due
      to
      risks and uncertainties that exist in the Company's operations and business
      environment, including competition, need for increased acceptance of products,
      ability to continue to develop and extend our brand identity, ability to
      anticipate and adapt to a competitive market, ability to effectively manage
      rapidly expanding operations, amount and timing of operating costs and capital
      expenditures relating to expansion of our business, operations and
      infrastructure, ability to provide superior customer service, dependence upon
      key personnel and the like. The Company's most recent filings with the
      Securities and Exchange Commission, including Form 10-KSB, contain additional
      information concerning many of these risk factors, and copies of these filings
      are available from the Company upon request and without charge.




3


**Titan
        Global Holdings, Inc.**
 **Unaudited
        Consolidated Balance Sheet**
 **(In
        thousands, except common stock share data)**
  **November
                  30,**
              
              **August
                  31,****2007**
              
              **2007****ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              6,910
              
              $
              1,190Restricted
                  cash and short-term investments
              
              
              5,000
              
              
              750Accounts
                  receivable, trade (less allowance for doubtful accounts of $9,043
                  and$2,940
                  and allowance for sales returns of $3,723 and $888,
                  respectively)
              
              
              26,245
              
              
              12,699Universal
                  service fund fees recoverable
              
              
              -
              
              
              1,406Inventory,
                  net
              
              
              16,050
              
              
              1,663Prepaid
                  expenses and other current assets
              
              
              1,936
              
              
              2,015Total
                  current assets
              
              
              56,141
              
              
              19,723Equipment
                  and improvements, net
              
              
              18,010
              
              
              2,326Definite-lived
                  intangible assets, net
              
              
              7,960
              
              
              16,989Goodwill
                  and indefinite-lived intangible assets
              
              
              17,848
              
              
              6,661Capitalized
                  loan fees, net
              
              
              1,097
              
              
              412Other
                  assets
              
              
              239
              
              
              305Total
                  assets
              
              $
              101,295
              
              $
              46,416**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**Current
                  liabilities:Accounts
                  payable - trade
              
              $
              40,115
              
              $
              21,049Accrued
                  liabilities
              
              
              9,314
              
              
              2,911Deferred
                  revenue
              
              
              10,471
              
              
              12,009Short-term
                  notes payable
              
              
              1,820
              
              
              72Current
                  portion of long-term debt
              
              
              4,495
              
              
              3,432Total
                  current liabilities
              
              
              66,215
              
              
              39,473Lines
                  of credit
              
              
              36,088
              
              
              11,677Long-term
                  seller-financed note, net of discount of $68 and $122,
                  respectively
              
              
              1,354
              
              
              1,301Redeemable,
                  convertible preferred stock, preference in liquidation of $12,022
                  and$4,743,
                  respectively
              
              
              12,022
              
              
              4,743Long-term
                  debt, net of discount of $5,258 and $713, respectively
              
              
              12,904
              
              
              4,112Long-term
                  derivative liabilities
              
              
              15,573
              
              
              15,142Other
                  long-term liabilities
              
              
              2,830
              
              
              116Total
                  liabilities
              
              
              146,986
              
              
              76,564Stockholders'
                  deficit:Common
                  stock-$0.001 par value; 950,000,000 shares authorized; 54,754,809
                  and50,244,378
                  shares issued; 53,642,652 and 49,157,051 outstanding,
                  respectively
              
              
              55
              
              
              50Additional
                  paid-in capital
              
              
              30,934
              
              
              21,968Accumulated
                  deficit
              
              
              (75,173
              )
              
              (50,700
              )Treasury
                  stock, at cost, 1,112,157 and 1,087,307 shares,
                  respectively
              
              
              (1,507
              )
              
              (1,466
              )Total
                  stockholders' deficit
              
              
              (45,691
              )
              
              (30,148
              )Total
                  liabilities and stockholders' deficit
              
              $
              101,295
              
              $
              46,416


The
        accompanying notes form an integral part of the consolidated financial
        statements.
  4




**Titan
      Global Holdings, Inc.**


**Unaudited
      Consolidated Statements of Operations**


**(In
      thousands, except share and per share amounts)**


**Three
                Months Ended****11/30/2007**
            
            **11/30/2006**Sales
                - Energy division
            
            $
            90,015
            
            $
            -Sales
                - Communications division
            
            
            22,328
            
            
            24,574Sales
                - Electronics and homeland security division
            
            
            6,781
            
            
            5,412Sales
                - Global brands division
            
            
            3,183
            
            
            -Total
                sales
            
            
            122,307
            
            
            29,986Cost
                of sales - Energy division
            
            
            85,201
            
            
            -Cost
                of sales - Communications division
            
            
            18,270
            
            
            21,426Cost
                of sales - Electronics and homeland security division
            
            
            6,120
            
            
            5,131Cost
                of sales - Global brands division
            
            
            3,205
            
            
            -Total
                cost of sales
            
            
            112,796
            
            
            26,5579,511
            
            
            3,429Operating
                expenses:Sales
                and marketing
            
            
            1,210
            
            
            498General
                and administrative expenses
            
            
            9,087
            
            
            2,047Bad
                debt expense
            
            
            4,585
            
            
            33Impairment
                of intangibles
            
            
            21,141
            
            
            -Amortization
                of intangibles
            
            
            1,496
            
            
            1,335Loss
                from operations
            
            
            (28,008
            )
            
            (484
            )Other
                income (expenses):Other
                income
            
            
            628
            
            
            1Interest
                expense
            
            
            (1,634
            )
            
            (806
            )Gain
                (loss) on value of derivative instruments
            
            
            4,541
            
            
            (4,572
            )Loss
                before income taxes
            
            
            (24,473
            )
            
            (5,861
            )Provision
                for income taxes
            
            
            -
            
            
            -Net
                loss
            
            
            (24,473
            )
            
            (5,861
            )Accrual
                of preferred stock dividend
            
            
            (34
            )
            
            (68
            )Net
                loss applicable to common shareholders
            
            $
            (24,507
            )
            $
            (5,929
            )Net
                loss applicable to common shareholders per share:Basic
                and diluted
            
            $
            (0.48
            )
            $
            (0.12
            )Number
                of weighted average common shares outstanding:Basic
                and diluted
            
            
            50,543,634
            
            
            49,114,052




The
      accompanying notes form an integral part of the consolidated financial
      statements.




5




**Titan
      Global Holdings, Inc.**


**Unaudited
        Consolidated Statements of Cash Flows**
 **(In
        thousands)**
  **Three
                  Months Ended****11/30/2007**
              
              **11/30/2006**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (24,473
              )
              $
              (5,861
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
              
              
              870
              
              
              167Bad
                  debt and sales return allowances
              
              
              7,259
              
              
              33Non-cash
                  compensation
              
              
              5
              
              
              -Non-cash
                  asset retirement obligation accretion expense
              
              
              25
              
              
              -Non-cash
                  warrant expense
              
              
              -
              
              
              207Non-cash
                  interest expense (income)
              
              
              480
              
              
              (12
              )Amortization
                  of debt discounts and bank fees
              
              
              90
              
              
              134Amortization
                  of intangibles
              
              
              1,496
              
              
              1,335Goodwill
                  and intangible assets impairment charge
              
              
              21,141
              
              
              -Loss
                  (gain) on fair value of derivative liabilities
              
              
              (4,541
              )
              
              4,572Changes
                  in operating assets and liabilities, net of effects of
                  acquisitions:Accounts
                  receivable
              
              
              (10,555
              )
              
              (3,231
              )Inventory
              
              
              (677
              )
              
              479Prepaid
                  expenses and other current assets
              
              
              1,810
              
              
              (152
              )Other
                  assets
              
              
              83
              
              
              -Universal
                  service fund fee recoverable
              
              
              1,406
              
              
              (1,354
              )Federal
                  excise tax recoverable
              
              
              -
              
              
              (243
              )Accounts
                  payable and accrued liabilities
              
              
              (1,591
              )
              
              3,365Deferred
                  revenue
              
              
              (1,538
              )
              
              -Other
                  liabilities
              
              
              (48
              )
              
              -Total
                  adjustments
              
              
              15,715
              
              
              5,300Net
                  cash used in operating activities
              
              
              (8,758
              )
              
              (561
              )Cash
                  flows from investing activities:Equipment
                  and improvements expenditures
              
              
              (442
              )
              
              (70
              )Restricted
                  investment to collateralize obligation
              
              
              (4,250
              )
              
              -Cash
                  paid to sellers of Appco
              
              
              (30,000
              )
              
              -Cash
                  provided by acquisitions
              
              
              3,636
              
              
              -Net
                  cash used in investing activities
              
              
              (31,056
              )
              
              (70
              )Cash
                  flows from financing activities:Proceeds
                  from notes payable
              
              
              -
              
              
              850Proceeds
                  from issuance of common stock
              
              
              5,000
              
              
              -Proceeds
                  from sale leaseback transaction
              
              
              15,000
              
              
              (70
              )Proceeds
                  from issuance of long term debt
              
              
              15,000
              
              
              -Proceeds
                  from lines of credit, net of repayments
              
              
              14,257
              
              
              (810
              )Payments
                  on long-term debt
              
              
              (2,907
              )
              
              (60
              )Capitalized
                  loan fees
              
              
              (775
              )
              
              (125
              )Purchase
                  of treasury stock
              
              
              (41
              )
              
              -Net
                  cash provided by (used in) financing activities
              
              
              45,534
              
              
              (215
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              5,720
              
              
              (846
              )Cash
                  and cash equivalents at beginning of period
              
              
              1,190
              
              
              1,401Cash
                  and cash equivalents at end of period
              
              $
              6,910
              
              $
              555




6


**Supplemental
                  disclosures of cash flow information:**Interest
                  Paid
              
              $
              906
              
              $
              703Income
                  Tax Paid
              
              
              -
              
              
              -Non-cash
                  activities:Issuance
                  of redeemable preferred stock for acquisition of note
                  receivable
              
              $
              7,245
              
              $
              -Issuance
                  of common stock for acquisition of note receivable
              
              
              4,000
              
              
              -


The
        accompanying notes form an integral part of the consolidated financial
        statements.




7




**TITAN
      GLOBAL HOLDINGS, INC.**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**(Amounts
      in thousands, except share and per share amounts)**





***Note
      1 - Basis of Presentation and Nature of Business
      Operations***





**Basis
      of Presentation**





The
      accompanying unaudited consolidated financial statements of Titan Global
      Holdings, Inc. and its subsidiaries, (“Titan”, “We” or the “Company”), have been
      prepared in accordance with U.S. generally accepted accounting principles for
      interim financial information and with the instructions to Form 10-Q pursuant
      to
      the rules and regulations of the Securities and Exchange Commission.
      Accordingly, they do not include all of the information and footnotes required
      by U.S. generally accepted accounting principles for complete financial
      statements. In the opinion of management, all adjustments considered necessary
      for a fair presentation are included herein. Operating results for the
      three-month period ended November 30, 2007 are not indicative of the results
      that may be expected for the fiscal year ending August 31, 2008. These unaudited
      consolidated financial statements should be read in conjunction with the
      consolidated financial statements and the notes thereto included in the
      Company’s Annual Report to Shareholders on Form 10-KSB for the fiscal year ended
      August 31, 2007 as filed with the Securities and Exchange Commission on November
      29, 2007. All significant intercompany accounts and transactions have been
      eliminated in preparation of the consolidated financial statements. All amounts
      referenced below are stated in thousands except shares and per share amounts
      unless otherwise noted.





The
      preparation of unaudited consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the consolidated financial statements and the
      reported amounts of revenue and expenses during the reporting period. Actual
      results could differ from those estimates. Such estimates relate primarily
      to
      the estimated lives of equipment and improvements, reserves for accounts
      receivable and inventory, allocation of purchase price for acquisitions,
      impairment of intangible assets, valuation of derivatives, deferred tax
      accounts, fair value of equity instruments issued, and sales
      returns.




**Nature
      of Business**





*Organization:*





The
      Company was formed on March 1, 1985 as a Utah corporation. In August, 2002,
      the
      Company acquired Titan West in a merger transaction with a subsidiary of the
      Company. Prior to this merger, the Company had no active business operations.
      On
      November 4, 2005, the name of the corporation was changed from Ventures-National
      Incorporated to its present name.





*Nature
      of Operations:*





The
      Company operates in four market segments - (i) Titan Communications, (ii) Titan
      Electronics and Homeland Security (iii) Titan Global Energy Group, and (iv)
      Titan Global Brands.





Communications
      Segment




The
      Company, through its Oblio Telecom, Pinless, Titan Wireless and StartTalk
      subsidiaries, provides prepaid international phone cards and prepaid wireless
      services. The communications division creates and distributes prepaid offerings
      that provide first and second generation Americans efficient means to complete
      international calls and to maintain wireless services. These prepaid
      communications products are sold directly to wholesale distributors and large
      chain retailers in all 50 United States and Puerto Rico.




Subsequent
      to the three months ended November 30, 2007, the Company’s communications
      division experienced a significant decrease in sales and collections of
      outstanding accounts receivable. Many of the long-standing distributors of
      Oblio’s products stopped placing orders for new product and stopped sending
      payments for previously placed orders. While we are vigorously pursuing legal
      action against many of these customers, the extended collection process has
      significantly disrupted the operating cash flow cycle of the prepaid
      international long distance portion of our communication’s division. These
      issues along with losses experienced in its network operations have resulted
      in
      the Company ceasing to do business as Oblio in the prepaid international long
      distance market. As such the Company evaluated the division’s goodwill and other
      intangible assets for impairment based on changes in the business model. Based
      on the determination of management, the Company impaired the goodwill and
      certain intangible assets of Oblio.




8




Simultaneously,
      the Company determined to cease the distribution of code division multiple
      access “CDMA” prepaid wireless handsets and the related airtime through its
      subsidiary Titan Wireless RM, Inc, due to the increasing capital requirements
      associated with the business model at Titan Wireless, the Company’s wireless
      operating subsidiary. As such, the Company evaluated goodwill and other assets
      for impairment based on changes in its business model. Accordingly, the Company
      incurred an impairment charge for $14,572 of goodwill and intangible assets
      related to the Oblio and Titan Wireless.





Subsequent
      to the quarter ended November 30, 2007, the Company created Titan
      Communications, Inc. (“Titan Communications”) to further its strategic endeavors
      in the prepaid international long distance marketplace, and began exploring
      new
      relationships outside Oblio’s traditional distribution and supply channels.





Electronics
      and Homeland Security Segment




The
      Company, through its Titan East, Titan West, and Titan Nexus subsidiaries,
      manufactures printed circuit boards for quick-turn, prototype market and the
      defense supplier markets. The Company’s printed circuit boards serve as the
      foundation in many electronic products used in telecommunications, medical
      devices, automotive, military applications, aviation components, networking
      and
      computer equipment. The Company's time sensitive and high quality manufacturing
      services enable its customers to shorten the time it takes them to get their
      products from the research and development phase to the production phase, thus
      increasing their competitive position. Additionally, Titan East serves military
      and defense industry customers that are regulated to purchase printed circuit
      boards from companies that hold certain certifications from the United States
      Department of Defense. Titan PCB East currently has military certifications
      31032 and 55110.





Energy
      Segment





The
      Company, through its Appalachian Oil subsidiary (see additional discussion
      in
      Note 2), operates and distributes petroleum to 56 convenience store locations
      in
      Tennessee, Kentucky and Virginia. Appco is also a regional petroleum company
      that operates an extensive petroleum product distribution network that is
      comprised of 160 dealers in the southeastern United States.




Global
      Brands Segment




The
      Company, through its USA Detergents (“USAD”) subsidiary (see additional
      discussion in Note 2) is headquartered in North Brunswick, New Jersey and is
      a
      manufacturer and distributor of value-branded home care products that leverages
      brand extensions and licensing agreements with consumer product conglomerates.
      As discussed in Note 14, the Company determined that it was not feasible to
      fund
      the operations of USAD and is no longer operating this subsidiary.





In
      connection with the formation of our global brands division and the related
      acquisition of USA Detergents on October 16, 2007, goodwill in the amount of
      $6,569 was established as of the acquisition date as part of the purchase price
      allocation. Following November 30, 2007, the Company evaluated the working
      capital requirements of its USA Detergents subsidiary. During the due diligence
      phase of the acquisition of USAD and prior to acquisition, the Company made
      certain assumptions regarding the working capital necessary to revitalize the
      core business of USAD. During the execution phase of the post-acquisition
      reorganization plan, the Company was unable to successfully negotiate work
      out
      payment plans with key suppliers. As such, management determined to cease
      operations in its current structure. Accordingly, the Company incurred an
      impairment charge for $6,569 of goodwill related to the USA Detergent
      acquisition.





*Liquidity:*





As
      of
      November 30, 2007, the Company had a working capital deficit of $10,074, a
      shareholders’ deficit of $45,691 and an accumulated deficit of $75,173. The
      Company generated revenues of $122,307, incurred a net loss of $24,473, and
      used
      cash in operations of $8,758 for the three months ended November 30, 2007.
      The
      Company is also past due on a significant amount of trade payables and is not
      making payments on certain outstanding debt because of its current cash flow
      problems.




9




The
      Company’s principal sources of liquidity are the existing cash, cash
      equivalents, cash generated from operations, and cash available from borrowings
      under the revolving credit facility. The Company may also generate liquidity
      from offerings of debt and/or equity in the capital markets. As of November
      30,
      2007, the Company had a total of $6,910 in unrestricted cash and cash
      equivalents. As of November 30, 2007, the Company also had restricted cash
      and
      cash equivalents and short-term investments of $5,000 that included funds set
      aside and pledged to secure a term loan obtained to facilitate the Appco
      acquisition.





Subsequent
      to November 30, 2007, the Company has made material changes to its operations
      in
      the communications and global brands division in an effort to decrease the
      cash
      flow used in operations. The Company has reduced its labor force in the
      operations in Richardson, TX; Hiawatha, Iowa; and North Brunswick, New Jersey
      and implemented severe cost reduction strategies in those operations. The intent
      of the changes is to reduce the negative operating cash flow of these segments
      and our business as we redefine those operations through new business ventures,
      modified operating structures, sale to a third party, or liquidation. In the
      instances where business liquidation is considered necessary by management,
      our
      senior lender will in most cases receive the majority of the proceeds from
      liquidation. While the trade accounts payable and related accrued expenses
      for
      these operations have been recorded at the full amount of the amounts owed.
      Management anticipates that many of the unsecured creditors will not receive
      the
      full amount balances owed as recorded in the financial statements as of November
      30, 2007. Given the recent cost containment measures implemented subsequent
      to
      the November 30, 2007, management believes that our existing cash and
      investments, liquidity available under our revolving credit facility, ability
      to
      raise capital from the equity markets and cash flows from our remaining
      operations, namely the Energy segment, will be sufficient to meet our operating
      and capital requirements through at least the next twelve months. However,
      if we
      are not successful in continuing to reduce our costs and improve our related
      cash flows, it may be necessary to raise additional capital that may be dilutive
      to existing shareholders.





****** ***Note
      2 - Acquisitions***





*Acquisition
      of Appalachian Oil Company*





The
      Company formed Titan Global Energy Group to acquire and manage complementary
      energy sector assets. On September 17, 2007, the Company completed the
      acquisition of all of the issued and outstanding shares of capital stock of
      Appalachian Oil Company, Inc. (“Appco”), a corporation formed under the laws of
      Tennessee, from the James R. Maclean Revocable Trust, Sara G. Maclean, the
      Linda
      R. Maclean Irrevocable Trust and Jeffrey H. Benedict. The Company’s results of
      operations for the three months ended November 30, 2007 include Appco’s results
      from the purchase date to the end of the reporting period. The purchase price
      paid for the shares under the Appco stock purchase agreement, as amended, was
      $30,000 in cash, of which $1,000 will be escrowed for 18 months following the
      closing of the acquisition in order to secure the Company’s potential claims
      against the Appco sellers for any breach of their representations, warranties
      and covenants under the stock purchase agreement. In addition, the Company
      incurred $1,947 in closing costs related to the acquisition.





Appco
      is
      headquartered in Blountville, Tennessee and is primarily engaged in the
      distribution of petroleum fuels in eastern Tennessee, southwestern Virginia,
      eastern Kentucky, western North Carolina and southern West Virginia and in
      the
      operation of retail convenience stores in some of those regions. Appco is a
      part
      of the Titan Energy division.




10


The
      acquisition was accounted for as a purchase. The purchase price allocated to
      the
      acquired assets and assumed liabilities were determined using management
      estimates based on a model developed by a professional valuation group.
      Management used the income approach in valuing the definite lived intangible
      assets. The Company has allocated the purchase price as follows:


Cash
              
              $
              5,719Investment
                  securities
              
              
              2,597Accounts
                  receivable
              
              
              5,545Inventory
              
              
              7,888Real
                  estate and fixed assets
              
              
              27,434Definte
                  lived intangible assets
              
              
              900Goodwill
              
              
              7,666Indefinite-lived
                  intangible assets
              
              
              2,100Other
                  assets
              
              
              681Accounts
                  payable
              
              
              (16,969
              )Notes
                  payable
              
              
              (9,177
              )Other
                  liabilities
              
              
              (2,437
              )Purchase
                  price
              
              $
              31,947




The
      sources of funding for the purchase price were as follows:


Cash
              
              $
              2,092Investment
                  securities
              
              
              2,481Greystone
                  revolving debt facility
              
              
              14,909Yorkville
                  Advisors proceeds from sale of real estate
              
              
              15,000Greystone
                  term loan
              
              
              5,000Accounts
                  payable
              
              
              750Retirement
                  of notes payable
              
              
              (8,285
              )Purchase
                  price
              
              $
              31,947




*Sale
      and Leaseback of Real Estate*





Immediately
      following the closing of the acquisition of Appco on September 17, 2007, Appco
      and its wholly owned subsidiary Appco-KY, Inc. (“Appco-KY”) entered into a
      purchase and sale agreement with YA Landholdings, LLC and YA Landholdings 7,
      LLC
      pursuant to which Appco and Appco-KY sold certain property located in Kentucky,
      Tennessee and Virginia for $15,000 in cash. The proceeds were utilized to fund
      a
      portion of the acquisition cost of Appco. Certain properties were then leased
      back to Appco by YA Landholdings, LLC for a term of 20 years pursuant to the
      terms of a Land and Building Lease Agreement. The Land and Building Lease
      Agreement also contains four (4) five (5) year options to extend the term of
      the
      lease to a maximum of 40 years. The annual lease payment during each of the
      first five years of the term of the lease is $1,650. There was no gain or loss
      recorded associated with this transaction.





*Acquisition
      of USA Detergents*





The
      Company formed Titan Global Brands Division to integrate, protect and expand
      brand management capabilities and to identify and purchase other consumer
      product brands that can leverage and optimize growth from the Company's
      distribution channels. On October 16, 2007, the Company exercised its option
      to
      acquire 80% of the issued and outstanding capital of USA Detergents, Inc.
      (“USAD”) in exchange for one dollar pursuant to the Stock Purchase Agreement
      dated July 30, 2007 by and among the Company, USAD and USAD Metro Holdings,
      LLC,
      as amended. The Company’s results of operations for the three months ended
      November 30, 2007 include USAD’s results from the date the Company exercised its
      option to the end of the reporting period. See additional discussion in Note
      15.





USAD
      is
      headquartered in North Brunswick, New Jersey and is a manufacturer and
      distributor of value-branded home care products that leverages brand extensions
      and licensing agreements with consumer product conglomerates.




11




The
      acquisition was accounted for as a purchase. The purchase price allocated to
      the
      acquired assets and assumed liabilities were determined using management
      estimates based on a model developed by a professional valuation group.
      Management used the income approach in valuing the definite lived intangible
      assets. The Company has allocated the purchase price as follows:


Cash
              
              $
              6Accounts
                  receivable
              
              
              4,367Inventory
              
              
              4,650Property,
                  plant and equipment
              
              
              2,145Definte
                  lived intangible assets
              
              
              2,560Goodwill
              
              
              6,569Other
                  assets
              
              
              1,317Accounts
                  payable
              
              
              (10,161
              )Notes
                  payable
              
              
              (1,300
              )Revolving
                  credit facility
              
              
              (10,153
              )Purchase
                  price
              
              $
              -




*Proforma
      Operating Results*





Unaudited
      proforma operating results for the Company assuming the acquisition of Appco
      and
      USAD had occurred at the beginning of the period presented below. Nexus Nano
      (discussed below) had revenues of less than $7,000 for its year ended December
      31, 2006. Nexus Nano’s proforma operating results are not included due to
      immateriality.


Three
                  months ended11/30/2007
              
              11/30/2006Net
                  Sales
              
              $
              143,082
              
              $
              146,405Net
                  loss applicable to common shareholders
              
              
              (25,479
              )
              
              (7,189
              )Net
                  loss applicable to common shareholders per share:Basic
                  and diluted earnings per common share
              
              $
              (0.50
              )
              $
              (0.15
              )





*Acquisition
      of Secured Convertible Debt of Nexus Nano Electronics and Subsequent Surrender
      of Assets*





On
      November 2, 2007, Titan Nexus, Inc. (“Titan Nexus”), an indirect subsidiary of
      the Company, entered into a limited recourse assignment (the “Assignment”) with
      YA Global Investments, L.P. (“YA Global”). Pursuant to the Assignment, Titan
      Nexus was assigned all rights, title and interest to YA Global’s secured
      convertible debt position in Nexus Nano Electronics, Inc. (“Nexus Nano”), in the
      aggregate amount of $11,245, including principal and interest. The obligations
      are secured by all of Nexus Nano’s assets.





In
      consideration for the Assignment (i) the Company issued YA Global 2,000,000
      shares of common stock, valued at $2.00 per share, the price of the stock at
      the
      time of the closing, and (ii) Titan West, a direct subsidiary of the Company,
      issued YA Global 103,503 shares of Titan PCB West series A convertible preferred
      stock valued at $7,245.





On
      November 5, 2007, the Company formed Titan Electronics Group (“Titan EG”). Titan
      EG is currently a division of the Company and is a wholly owned subsidiary.
      Titan Nexus, along with the Company’s legacy subsidiaries, Titan East and Titan
      West are now a part of the Titan EG. The Company anticipates that this entity
      will be divested and spun off into a separate entity via a stock dividend in
      FY
      2008.




12




On
      November 30, 2007, Titan Nexus completed the final step in the acquisition
      of
      the assets of Nexus Nano, a manufacturer of custom circuit boards for aerospace,
      defense and other industries. The surrender of assets was completed by agreement
      between Nexus Nano as debtor and Titan as creditor. The fair value of the
      surrendered assets is presented below:


Cash
              
              $
              3Accounts
                  receivable
              
              
              338Inventory
              
              
              1,173Fixed
                  assets
              
              
              1,533Goodwill
              
              
              8,571Other
                  assets
              
              
              27Accounts
                  payable
              
              
              (10
              )Short
                  term debt
              
              
              (180
              )Long
                  term debt
              
              
              (210
              )Value
                  of common and preferred stock issued
              
              $
              11,245




***Note
      3 - Recent Accounting Pronouncements***





***SFAS
      No. 141(R)***




SFAS
      No.
      141(R) - In December 2007, the FASB issued FASB 141(R), "Business Combinations"
      of which the objective is to improve the relevance, representational
      faithfulness, and comparability of the information that a reporting entity
      provides in its financial reports about a business combination and its effects.
      The new standard requires the acquiring entity in a business combination to
      recognize all (and only) the assets acquired and liabilities assumed in the
      transaction; establishes the acquisition-date fair value as the measurement
      objective for all assets acquired and liabilities assumed; and requires the
      acquirer to disclose to investors and other users all of the information they
      need to evaluate and understand the nature and financial effect of the business
      combination.





This
      Statement applies prospectively to business combinations for which the
      acquisition date is on or after the beginning of the first annual reporting
      period beginning on or after December 15, 2008. An entity may not apply it
      before that date.





The
      Company is currently evaluating SFAS 141(R), and has not yet determined its
      potential impact on its future results of operations or financial
      position.





***Note
      4 - Loss per Common Share***





The
      Company computes net loss per share in accordance with Statement of Financial
      Accounting Standards No. 128 *“Earnings
      per Share”* (“SFAS
      128”) and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). Under the provisions
      of SFAS 128 and SAB 98, basic net income or loss per share is computed by
      dividing the net income or loss available to common stockholders for the period
      by the weighted average number of common shares during the period. Diluted
      net
      income or loss per share is computed by dividing the net income or loss
      available to common shareholders for the period by the total number of common
      and common equivalent shares outstanding during the period. During the period
      when they would be anti-dilutive, common stock equivalents (which during the
      three months ended November 30, 2007 consisted of employee options/warrants
      to
      purchase 1,492,500 common shares, warrants to purchase 12,230,000 common shares,
      debentures convertible into 1,628,409 common shares and preferred stock
      convertible into 3,184,738 common shares) are not considered in the computations
      as they are anti-dilutive. During the period when they would be anti-dilutive,
      common stock equivalents (which during the three months ended November 30,
      2006
      consisted of options to purchase 1,245,000 common shares, warrants to purchase
      10,200,000 common shares, and preferred stock convertible into 6,054,500 common
      shares) are not considered in the computations as they are anti-dilutive.





***Note
      5 - Inventory***





Inventory
      consisted of the following at November 30, 2007:


Raw
                  materials and finished subassemblies
              
              $
              3,808Work
                  in process
              
              
              1,276Finished
                  goods
              
              
              14,85219,936Less
                  inventory reserves
              
              
              (3,886
              )Total
              
              $
              16,050





13




At
      November 30, 2007, the reserve for obsolescence was $3,886. This reserve is
      principally related to raw material inventory in the Electronics and Homeland
      Security division and finished goods inventory obsolescence in the
      Communications and Global Brands divisions.





***Note
      6 - Greystone Business Credit***





*Communications
      and Electronics and Homeland Security Divisions*




On
      December 29, 2006, the Company, together with all of its subsidiaries, entered
      into a credit facility with Greystone. The new credit facility with Greystone
      initially included a revolving line of credit (“Revolver”) in the maximum amount
      of $15,000 and also includes senior term loans of up to $7,950.





The
      revolver expires in December 2009, subject to earlier termination under certain
      circumstances. The revolving credit facility bears interest at a rate of 1.5%,
      plus the prime interest rate. Interest payments on the revolver are due monthly
      with principal paid at maturity. Revolver loans will be advanced based upon
      85%
      of eligible accounts receivable and up to a maximum of 85% of eligible
      inventory, subject to certain limitations. The Company is obligated to use
      any
      refunds on commercial taxes including Universal Service Fees (“USF”) to repay
      the term loans.





The
      senior term loans bear interest at a rate of 6%, plus the prime interest rate,
      provided that such rate is reduced by .5% for each reduction of principal by
      $1,000. The senior term loans were to be paid off in 48 equal installments
      of
      $135 per month which will result in repayment of the principal. At November
      30,
      2007, the Term Loan A had an interest rate of 9% and Term Loan B had an interest
      rate of 6%.





The
      Company granted a security interest in all of its assets to Greystone as
      security for the financing facility. Such security included a pledge of all
      trademarks and the stock of all subsidiaries.





The
      Company paid a commitment fee of $369 and will pay an annual commitment fee
      of
1⁄2% of the facility, payable on each anniversary. A loan servicing fee of .3%
      is
      payable each month based on the amount outstanding under the revolving facility.
      There is also a $20 per month administrative fee. In the event of a termination
      of the facility, an early termination fee will be payable. Such fee equals
      1% of
      the maximum revolving facility and the term loans if the termination occurs
      during the first year. As additional consideration for the facility, the Company
      issued to Greystone: (i) 500,000 shares of common stock valued at $505 which
      recorded as a debt discount, and (ii) a warrant to purchase 500,000 shares
      of
      common stock at a price of $1.00 per share, exercisable for a period of five
      years was recorded as a derivative liability. The Company is obligated to
      register the shares of common stock and the common stock underlying the
      warrant.





On
      February 14, 2007, the Company entered into Amendment #1 with Greystone. Through
      the amendment, Greystone increased the Company’s Revolver line of credit from
      $15,000 to $18,000 and provides for senior term loans of up to $7,608. The
      Company is required to have a minimum unused availability under the line in
      increasing amounts between $200 and $1,000.





On
      June
      1, 2007, the Company entered into Amendment #2 with Greystone. Through the
      amendment, the Company received approval from Greystone to transfer 100% of
      the
      issued and outstanding shares of common stock related to StartTalk from Oblio
      to
      Titan Global Holdings corporate.





On
      June
      11, 2007, the Company received the proceeds from tax refunds owed related to
      Federal Excise Tax (“FET”). The Company used $3,232 of the proceeds to repay
      Term Loan B in full.





On
      July
      25, 2007, the Company entered into Amendment #3 with Greystone. Through the
      amendment, Greystone agreed to re-establish Term Loan B and advance the Company
      up to $1,500. On August 23, 2007, the Company entered into Amendment #4 with
      Greystone. Through the amendment, Greystone agreed to increase Term Loan B
      by
      $500 up to a maximum of $2,000. The monthly principal payment for Term Loan
      A is
      $18 and the new monthly principal payment for reestablished Term Loan B is
      $83.
      The amended senior Term Loan B is to be paid off in 24 equal installments,
      which
      will result in repayment of the principal. The terms for Loan A were not
      changed.





On
      September 17, 2007, the Company entered into Amendment #5 with Greystone.
      Through the amendment, Greystone consented to the debt issuance in favor of
      YA
      Global Investments, L.P. of $6,000 and agreed to a Term Loan C advance of
      $5,000. This three-year note carries an annual interest rate of 1.5% in excess
      of the prime interest rate and is fully collateralized with $5,000 of cash
      held
      in a restricted account. The entire balance of Term Loan C is due and payable
      on
      the maturity date of the loan.




14




On
      October 17, 2007, the Company entered into Amendment #6 with Greystone. Through
      the amendment, Greystone consented to the formation of Titan Card Services,
      Inc.





On
      October 16, 2007, the Company entered into Amendment #7 with Greystone. Through
      the amendment, Greystone reduced the amount of the permanent reserve to $0
      and
      agreed to increase the permanent reserve by $16 each month up to a maximum
      amount of $750. In addition, the repayment schedule was modified for Term Loan
      B
      to $43 per month.





On
      November 30, 2007 the Company entered into Amendment #8 with Greystone. The
      amendment decreased the interest rate on Term Loan C from 1.5% above the prime
      rate to 0.75% per annum.




As
      of
      November 30, 2007, Term Loans A and B are recorded at $2,241 as debt related
      to
      the note (net of $410 discount) and the revolver has a balance of $17,538 with
      an excess availability of $262 based on loan limits and an excess available
      credit of $0 based on actual borrowing capacity. Interest rates on the revolver
      were 12.5% on $13,343 and 9% on $4,195.


**Debt
                  Covenant Restrictions Related to Communications and Electronics
                  and
                  Homeland Security Debts**Maximum
                  Cumulative Net Loss:
              
              $1,000
                  on a cumulative basis for the period from September 1, 2006 through
                  the
                  end of the TermMaximum
                  Leverage Ratio:
              
              Not
                  applicableLimitation
                  on Purchase Money Security Interests:
              
              $1,000Limitation
                  on Equipment Leases:
              
              $1,000Additional
                  Financial Covenants:
              
              None





The
      Company has met all covenant terms except the maximum cumulative net loss.
      The
      Company experienced a large cumulative loss in fiscal year 2007 related to
      several non-cash factors. The Company has received a written waiver from
      Greystone related to this covenant through August 31, 2008. No penalties have
      been assessed related to this violation.





*Energy
      Division*




On
      September 17, 2007, the Company acquired Appco. As part of the acquisition,
      the
      Company entered into a credit facility including a revolving line of credit
      in
      the maximum amount of $20,000 less the outstanding balance under Term Notes
      A, B
      and C under the Loan and Security Agreement dated as of December 29, 2006 (see
      above). The credit facility also includes term loans of up to $5,200. An
      aggregate of approximately $14,909 was advanced in the quarter under the loan
      and credit facility related to the initial Appco acquisition. Advances will
      be
      based upon (i) 90% of eligible accounts receivable, and (ii) the sum of up
      to
      45% of eligible convenience store inventory plus up to 75% of eligible fuel
      inventory. The borrower is required to have a minimum outstanding balance of
      $10,000. The revolving credit facility and the term loans bear interest at
      a
      rate of 1.5%, plus the prime interest rate. A loan servicing fee of .25% is
      payable each month based on the average daily outstanding balance outstanding
      under the revolving facility and the term loans. In the event of a termination
      of the facility, an early termination fee will be payable. Such fee equals
      1% of
      the maximum revolving facility and the term loans if the termination occurs
      during the first year, which is reduced to 0.50% if termination occurs in the
      second year and 0.25% if terminated thereafter. The borrower will also be
      assessed credit accommodation fees of 2% of the face amount of the letter of
      credit for up to 60 days and 1% of the face amount of such letter of credit
      for
      each 30 day period thereafter. The loan and line of credit is due September
      16,
      2012.





The
      Company issued Greystone a warrant to purchase 500,000 shares of common stock
      at
      a price of $2.00 per share, exercisable for a period of five years. Titan is
      obligated to register the common stock underlying the warrant within 6 months
      of
      the closing. The warrants had a value of $627 at November 30, 2007.




15




At
      November 30, 2007 the revolver had an outstanding balance of $11,969 and the
      term notes had a balance of $1,777 (net of discount of $751) and an excess
      availability of $5,503 based on loan limits and an excess available credit
      of
      $5,503 based on actual borrowing capacity. The interest rates on the Revolver
      and term loans were 9% at November 30, 2007.





*Global
      Brands Division*




On
      October 16, 2007 the Company assumed a note as a result of an acquisition.
      The
      note was held by Greystone and had an issue date of December 27, 2006 in the
      amount of a $10,000 line of credit which will mature on January 1, 2010. The
      line of credit includes $500 for equipment advances. Advances on the revolver
      are based on a formula related to certain levels of eligible accounts receivable
      and inventory (as defined in the agreement). The agreement has a term of three
      years with automatic three years extensions unless either party gives notice
      to
      the other of its intention to terminate the agreement.





Advances
      under the equipment advance facility are repayable in 84 monthly installments
      of
      principal and interest commencing February 1, 2007; however, such indebtedness,
      if any, will become due and payable on the earlier of (a) repayment of all
      revolver advances and the termination of any commitment by Greystone to make
      revolver advances under the agreement, and (b) the agreement maturity date.
      All
      advances bear interest at the prime rate plus 1% per annum.





The
      Company also assumed 4 term notes designated A, B, C, & D which have an
      interest rate of 8.50%. As of November 30, 2007 the revolver has an outstanding
      balance of $6,581 and the term notes have a balance of $3,735. The monthly
      principal payment for Term Loan A, B, C, & D is $72.  As
      collateral for advances under the credit facility, the Company has granted
      Greystone a security interest in all of its assets. The revolver and lines
      have
      an excess availability of $13,770 based on loan limits and an excess available
      credit of $7,270 based on actual borrowing capacity. The interest rates on
      the
      Revolver and term loans are 8.5%.





***Note
      7 - YA Global***





On
      September 17, 2007, the Company executed a secured convertible debenture in
      the
      principal amount of $6,000, all of which was advanced immediately. The Company
      pledged all of its assets and rights to secure this debenture subordinate to
      Greystone. Interest on the Debenture accrues at 10% per annum. The Debenture
      is
      convertible at the option of the holder into shares of common stock of Titan
      at
      a price of $2.25 per share. The Debenture matures on September 17, 2010.
      Beginning on May 1, 2008 and continuing on the first business day of each
      successive month, the Company will make payments by converting such installment
      payment into shares of common stock provided certain equity conditions are
      met.
      The conversion price is equal to the lower of (i) $2.25 per share, or (ii)
      90%
      of the lowest daily volume weighted average price of the common stock during
      the
      15 consecutive trading days immediately preceding the conversion date. The
      Company may also at its option choose to redeem a portion or all of the
      installment payment by paying such amounts in cash plus a redemption premium
      of
      10%. The Company may defer the payment of any installment payment to the
      maturity date if the volume weighted average price of the common stock equals
      110% of the applicable conversion price for the consecutive 5 trading days
      prior
      to the notice due date for the applicable installment payment. Each installment
      amount shall be equal to all accrued and unpaid interest, plus the lesser of
      (a)
      the product of (i) $200 multiplied by a fraction of which the numerator is
      the
      original principal amount and the denominator of which is the aggregate purchase
      price paid under the Purchase Agreement and (b) the principal amount of the
      Debenture on the installment payment date.





The
      Company has the right to redeem a portion or all amounts outstanding under
      the
      Debenture prior to the maturity date at a premium of 10% provided that (i)
      the
      Volume Weighted Average Price (VWAP) of Titan’s Common Stock is less than the
      conversion price of $2.25; (ii) no event of default has occurred and (iii)
      the
      underlying Registration Statement is effective.





The
      Company also issued YA Global warrants to purchase 525,000 shares of common
      stock at a price of $2.47 per share and 525,000 shares of common stock at a
      price of $2.81 per share, exercisable for a period of five years. Titan is
      obligated to register the common stock underlying the warrant within 90 days
      of
      the closing. The warrants had a value of $1,262 at November 30, 2007. The
      Company has not yet registered the common stock underlying the warrants. The
      Company has received a waiver from YA Global related to this deficiency. No
      penalties have been assessed related to this violation.




16




The
      note
      was issued with a beneficial conversion feature. At issuance, the note was
      recorded at $1,831 with an associated discount of $4,169. The discount will
      be
      amortized over the 36 month term of the note. At November 30, 2007, the note
      had
      a recorded balance of $1,902 with an associated unrecognized discount of
      $4,098.





***Note
      8 - Seller Financed Notes and Preferred Stock***





Seller-financed
      debt was provided in connection with the acquisition of Oblio on August 12,
      2005, and the Company issued to the Seller, F&L, LLP (“F&L”) formerly
      known as Oblio Telecom, LLP, an 18-month promissory note in the principal amount
      of $2,500. The note matured on February 12, 2007 and carried an interest rate
      of
      1% per annum. The note was recorded upon issuance at its fair value of $2,245,
      and the associated discount of $255 was amortized over the 18 month term of
      the
      note. The effective interest rate on the note was approximately 7.50%.





Additional
      seller financing was provided upon the closing of the Oblio acquisition in
      the
      amount of $2,323 in a contractual short term obligation that was not
      interest-bearing. On December 14, 2005, a promissory note was executed
      acknowledging this amount due to the Seller. The Note bears interest of 4%,
      and
      had a maturity date of May 31, 2006 which was extended to March 31,
      2009.





On
      December 29, 2006, F&L agreed to amend the terms of the Series A Preferred
      Stock originally issued to them as part of the Oblio acquisition. The provisions
      related to potential additional value of the preferred shares as a result of
      attainment of certain financial goals were eliminated and the stated value
      of
      the preferred stock was reduced from $9,000 to $4,500. The preferred stock
      agreement was modified as follows:




·
            The
                amended Series A Preferred Stock includes the first tranche only
                and is a
                fixed 3,000 shares with a stated value of $1.50 per
                share.


·
            Holders
                of the Series A Preferred are entitled to preferential cash dividends
                out
                of the Company’s funds at an annual rate of 3% of the then current stated
                value, payable quarterly.


·
            All
                shares must be redeemed by March 31,
                2009.


·
            The
                Series A Preferred is convertible into a number of shares of Common
                Stock
                equal to the then stated value (plus accrued and unpaid dividends)
                divided
                by $1.50 (the “Conversion Price”). The Conversion Price is subject to
                adjustments as a result of, among other things, stock splits and
                reclassifications and contains initial anti-dilution provisions including
                adjustments to the Conversion Price in the event of the Company issuing
                Common Stock at prices below the initial Conversion Price.


·
            The
                Series A Preferred is non-voting.





On
      the
      same date, pursuant to the amendment, F&L agreed to extend the maturity date
      of the notes to March 31, 2009, and increase the interest rate to 5% per annum.
      Oblio will make monthly payments of $179, commencing January 31, 2007. In
      connection with the amendment, the Company issued 250,000 shares of common
      stock
      valued at $253 to F&L LLP. In addition, the Company agreed to guaranty the
      payment to be made by Oblio. No payments have been made since July 2007 and
      the
      Company is currently being sued by F&L, as discussed in Note
      19.





In
      accordance with SEC Accounting Series Release No. 268 *,
      Presentation in Financial Statements of "Redeemable Preferred Stock",* the
      Company has classified this preferred stock as long-term liability as well
      as
      the accrued dividends. Additionally, due to the potential variability of the
      Conversion Price as discussed above, the Company is required to record the
      embedded conversion feature of the Series A Preferred as a liability at fair
      value and to re-measure that value each reporting period with changes being
      charged to operations.





As
      of
      November 30, 2007, the Company has recorded $3,501 as debt related to the note
      (net of $69 discount) and $4,777 related to the preferred stock (which includes
      $277 in accrued dividends).





***Note
      9 - Deferred Purchase Consideration***





On
      May
      11, 2007, the Company acquired certain assets of Ready Mobile, LLC. Pursuant
      to
      the terms of the Asset Purchase Agreement, the Company agreed to pay
      consideration equal to 55% of earnings before interest, depreciation, taxes,
      and
      amortization (EBITDA) for the first 36 months subsequent to the closing, payable
      monthly in arrears. As of August 31, 2007, the Company has accrued $3,401 for
      deferred purchase consideration which represents managements estimate of the
      total amounted to be paid for the asset purchase.





As
      discussed in Note 15, the Company determined to cease the distribution of CDMA
      prepaid wireless handsets and the related airtime through its subsidiary Titan
      Wireless RM, Inc, due to the increasing capital requirements associated with
      the
      business model at Titan Wireless, the Company’s wireless operating subsidiary.
      As such, the Company impaired the goodwill and intangible assets related to
      Ready Mobile asset purchase. This impairment was offset by a reduction of the
      Deferred Purchase Consideration. As of November 30, 2007, the Company has $267
      remaining in the accrual for deferred purchase consideration. On January 25,
      2008, the remaining assets of Titan Wireless were sold (see additional
      discussion in Note 21).




17




***Note
      10 - Titan PCB West Convertible Preferred Stock***





Titan
      West, a direct subsidiary of the Company and the parent company of Titan Nexus,
      issued YA Global 103,503 shares of its series A convertible preferred stock
      (“Titan West Preferred Stock”), which contains the following
      provisions:





·





·





·





·





·





In
      accordance with SEC Accounting Series Release No. 268 *,
      Presentation in Financial Statements of "Redeemable Preferred Stock",* the
      Company has classified this preferred stock as a long-term liability at face
      value. The underlying stock for the conversion option is not traded.




18


***Note
      11 - Long Term Debt***





Long
      term
      debt consists of:


Issue
              
              Expiration
              
              
              
              Outstanding
                  atDate
              
              Date
              
              Instrument
              
              11/30/200708/12/2005
              
              
              03/31/2009
              
              
              $4,823
                    Seller Financed Debt
              
              $
              3,57012/29/2006
              
              
              02/01/2011
              
              
              $18,000
                    Secured Revolving Note
              
              
              17,53812/29/2006
              
              
              02/01/2011
              
              
              $7,608
                    Term Notes
              
              
              2,65104/09/2007
              
              
              04/08/2010
              
              
              Deferred
                  Purchase Consideration
              
              
              26709/17/2007
              
              
              09/17/2012
              
              
              $20,000
                    Secured Revolving Note
              
              
              11,96909/17/2007
              
              
              09/17/2012
              
              
              $5,200
                    Term Notes
              
              
              2,52809/17/2007
              
              
              09/17/2010
              
              
              $6,000
                    Convertible Debentures
              
              
              6,00009/17/2007
              
              
              09/17/2010
              
              
              $5,000
                    Term Note C
              
              
              5,00010/16/2007
              
              
              01/01/2010
              
              
              $10,000
                    Secured Revolving Note
              
              
              6,58110/16/2007
              
              
              01/01/2010
              
              
              $4,087
                    Term Notes
              
              
              3,73511/30/2007
              
              
              08/31/2010
              
              
              Other
              
              
              330Total
                  debt
              
              
              
              
              
              
              
              
              60,169Less
                  discount from warrants and derivatives
              
              
              
              
              
              
              
              
              (5,328
              )Total
                  carrying value of debt
              
              
              
              
              
              
              
              
              54,841Less
                  current portion of long-term debt
              
              
              
              
              
              
              
              
              (4,495
              )Total
                  long term debt
              
              
              
              
              
              
              
              $
              50,346





Long
      term
      debt repayments are due as follows:


Fiscal
                  Year
              
              F&L
                  Note
              
              YA
                  Global
              
              Deferred
                  Purchase Consideration
              
              Other
              
              Greystone
                  Revolvers
              
              Greystone
                  Term Debt
              
              Total
                  Long Term Debt2008
              
              $
              2,147
              
              $
              -
              
              $
              -
              
              $
              120
              
              $
              -
              
              $
              2,228
              
              $
              4,4952009
              
              
              1,423
              
              
              -
              
              
              -
              
              
              120
              
              
              -
              
              
              -
              
              
              1,5432010
              
              
              -
              
              
              -
              
              
              267
              
              
              90
              
              
              6,581
              
              
              -
              
              
              6,9382011
              
              
              -
              
              
              6,000
              
              
              -
              
              
              -
              
              
              17,538
              
              
              2,866
              
              
              26,4042012
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              6,922
              
              
              6,9222013
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              11,969
              
              
              1,898
              
              
              13,867$
              3,570
              
              $
              6,000
              
              $
              267
              
              $
              330
              
              $
              36,088
              
              $
              13,914
              
              $
              60,169


***Note
      12 - Derivative Financial Instrument Liability***




Pursuant
      to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
      as amended, and EITF Issue No. 00-19, Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, A Company’s Own Stock, the
      Company has identified certain embedded and freestanding derivative instruments.
      Generally, where the ability to physical or net-share settle an embedded
      conversion option or free standing financial instrument is not deemed to be
      within the control of the Company, the embedded conversion option is required
      to
      be bifurcated and both the freestanding instruments and bifurcated conversion
      feature are accounted for as derivative liabilities.





At
      each
      reporting date, the Company estimates the fair values of all derivatives and
      changes in the fair value are charged to operations. For embedded and free
      standing derivatives valued using the Black-Scholes option pricing model the
      following assumptions were used: (1) contractual term of 3 to 7 years; (2)
      volatility of 115%, (3) risk free interest rates between 4.11% and 4.70% and
      (4)
      dividend rate of 0%.




19




The
      fair
      value of the individual short and long-term embedded and free standing
      derivatives at November 30, 2007 is as follows:


**Issue
                  Date**
              
              **Expiration
                  Date**
              
              **Instrument**
              
              **Exercise
                  Price per Share**
              
              **Fair
                  Value at 11/30/2007**09/17/2007
              
              
              09/17/2012
              
              
              Long-Term
                  fair value of conversion feature of Convertible Debenture
              
              
              
              
              $
              667**Long-Term
                  Embedded Derivatives**
              
              
              
              
              
              **667**03/24/2006
              
              
              03/24/2013
              
              
              6,750,000
                  Warrants
              
              $
              0.23
              
              
              10,06010/12/2006
              
              
              10/12/2011
              
              
              250,000
                  Warrants
              
              $
              1.00
              
              
              32310/12/2006
              
              
              10/12/2011
              
              
              250,000
                  Warrants
              
              $
              1.10
              
              
              31912/29/2006
              
              
              12/29/2011
              
              
              500,000
                  Warrants
              
              $
              1.00
              
              
              65609/17/2007
              
              
              09/17/2012
              
              
              500,000
                  Warrants
              
              $
              2.00
              
              
              62709/17/2007
              
              
              09/17/2012
              
              
              525,000
                  Warrants
              
              $
              2.47
              
              
              63809/17/2007
              
              
              09/17/2012
              
              
              525,000
                  Warrants
              
              $
              2.81
              
              
              624**Total
                  Long-Term Freestanding Derivatives**
              
              
              
              
              
              **13,247**08/12/2005
              
              
              03/31/2009
              
              
              Long-Term
                  fair value of conversion feature of Oblio Series A Preferred
                  Stock
              
              $
              1.50
              
              
              1,659**Total
                  Embedded and Free Standing Derivative Liabilities**
              
              
              
              
              **$**
              **15,573**





***Note
      13 - Related Party Notes Payable***





On
      September 28, 2007, the Company entered into a 6.5% promissory note with Frank
      Crivello, managing partner of the Crivello Group (a majority shareholder).
      The
      maturity date of the note is March 28, 2008. As of November 30, 2007, the
      outstanding balance of the note payable was $250.





***Note
      14 - Short-term Notes Payable***





The
      Company has entered into 12 month financing agreements with several vendors
      to
      purchase fixed assets for its electronics and homeland security division. As
      of
      November 30, 2007, the Company has recorded $261 related to these short-term
      notes payable.





As
      discussed in Note 2, the Company assumed certain short-term notes payables
      in
      the acquisitions of USAD and the surrender of assets of Titan Nexus. As of
      November 30, 2007, the Company has recorded $1,309 related to these short-term
      notes payable.





***Note
      15 - Impairment of Goodwill and Intangible Assets***





Subsequent
      to the three months ended November 30, 2007, the Company’s communications
      division experienced a significant decrease in sales and collections of
      outstanding accounts receivable. Many of the long-standing distributors of
      Oblio’s products stopped placing orders for new product and stopped sending
      payments for previously placed orders. While we are vigorously pursuing legal
      action against many of these customers, the extended collection process has
      significantly disrupted the operating cash flow cycle of the prepaid
      international long distance portion of our communication’s division. These
      issues along with losses experienced in its network operations have resulted
      in
      the Company ceasing to do business as Oblio in the prepaid international long
      distance market. As a result, the Company ceased doing business as Oblio in
      the
      prepaid international long distance market and as such the Company evaluated
      the
      division’s goodwill and other intangible assets for impairment based on changes
      in the business model. Based on the determination of management, the Company
      fully impaired the goodwill and all of the intangible assets of Oblio with
      the
      exception of the trade names. Management determined to retain the trade names
      associated with Oblio and to continue to market them under Titan Communications.





Simultaneously,
      the Company determined to cease the distribution of CDMA prepaid wireless
      handsets and the related airtime through its subsidiary Titan Wireless RM,
      Inc,
      due to the increasing capital requirements associated with the business model
      at
      Titan Wireless, the Company’s wireless operating subsidiary. As such, the
      Company evaluated goodwill and other assets for impairment based on changes
      in
      its business model. Accordingly, the Company incurred an impairment charge
      for
      $14,572 of goodwill and intangible assets related to the Oblio and Titan
      Wireless.




20




In
      connection with the formation of our global brands division and related
      acquisition of USA Detergents on October 16, 2007, goodwill in the amount of
      $6,569 was established as of the acquisition date as part of the purchase price
      allocation. Following November 30, 2007, the Company evaluated the working
      capital requirements of its USA Detergents subsidiary. During the due diligence
      phase of the acquisition of USAD and prior to acquisition, the Company made
      certain assumptions regarding the working capital necessary to revitalize the
      core business of USAD. During the execution phase of the post-acquisition
      reorganization plan, the Company was unable to successfully negotiate work
      out
      payment plans with key suppliers. As such, management determined to cease
      operations in its current structure. Accordingly, the Company incurred an
      impairment charge for $6,569 of goodwill related to the USA Detergent
      acquisition.





***Note
      16 - Stock Options and Stock Based Compensation***





As
      of
      November 30, 2007, the Company has approved the 2002 Stock Option Plan and
      Directors Stock Plan. In addition to this plan, the Board of Directors has
      authorized the issuance of warrants to executive officers as additional
      compensation. The Company calculated the fair value of each option award on
      the
      date of grant using the Black-Scholes option pricing model.





21




Employee
      stock option activity is summarized as follows:


**Three Months Ended****11/30/2007**Outstanding,
                  September 1, 2007
              
              
              1,582,500Granted
              
              
              -Exercised
              
              
              -Forfeited/Expired
              
              
              (90,000
              )Outstanding,
                  November 30, 2007
              
              
              1,492,500Non-vested,
                  September 1, 2007
              
              
              250,000Grants
              
              
              -Vested
              
              
              (125,000
              )Forfeitures
              
              
              -Non-vested,
                  November 30, 2007
              
              
              125,000Average
                  exercise price per share:Outstanding,
                  September 1, 2007
              
              $
              0.69Granted
              
              $
              -Forfeited/expired
              
              $
              (0.92
              )Outstanding,
                  November 30, 2007
              
              $
              0.84Exercisable
              
              $
              0.84Non
                  Vested, September 1, 2007
              
              $
              1.11Non
                  Vested, November 30, 2007
              
              $
              1.23Weighted-average
                  grant date fair value:Non
                  Vested, September 1, 2007
              
              $
              0.86Grants
              
              $
              -Vested
              
              $
              0.69Forfeited
              
              $
              0.37Non
                  Vested, November 30, 2007
              
              $
              1.03Weighted-average
                  remaining term of outstanding options and warrants
              
              
              3.01
                  yearsWeighted-average
                  remaining term of exercisable options and warrants
              
              
              2.99
                  years




As
      of
      November 30, 2007, there was $86 of total unrecognized compensation cost related
      to non vested share-based compensation arrangements granted. That cost is
      expected to be recognized over a weighted-average period of 1.40
      years.





***Note
      17 - Universal Service Fund Refund***





In
      1997,
      the FCC issued an order, referred to as the Universal Service Order that
      requires all telecommunications carriers providing interstate telecommunications
      services to periodically contribute to universal service support programs
      administered by the FCC, the Universal Service Funds (“USF”). The Company is
      currently exempt from remitting USF contributions on the vast majority of its
      revenues in the prepaid international long distance calling card portion of
      our
      communications division due to the Limited International Revenue Exemption
      (LIRE) whereby in excess of 88% of the originated calls are terminated
      internationally. On March 18, 2007 Oblio entered into a settlement and release
      agreement for USF charges included in billings in 2006 and 2007 with Sprint
      Communications Company, L.P. These amounts were recorded as USF recoverable
      as
      of August 31, 2007. In the three months ended November 30, 2007, Oblio
      determined that no further USF credits were recoverable and wrote off the
      remaining $1,402 of USF recoverable to cost of sales.




22




***Note
      18 - Treasury Stock***




On
      May 9,
      2007, the Company’s Board of Directors approved a 4,000,000 share open market
      buyback program. The Board cited its attractive share price, as well as,
      reported record financial revenue results and strategic progress from its
      various business units in making this decision. As of November 30, 2007, the
      Company had re-purchased 1,062,157 shares for $1,452 including transaction
      costs
      under the repurchase program. The Company also repurchased 50,000 shares of
      employee stock options for $55.


Period
              
              Total
                  Number of Shares Purchased
              
              Average
                  Price Paid per Share
              
              Total
                  Number of Shares Purchased as Part of Publicly Announced Plans
                  or
                  Programs
              
              Maximum
                  Number of Shares that May Yet Be Purchased Under the Plans or
                  Programs05/09/07   
                  08/31/07
              
              
              1,087,307
              
              $
              1.35
              
              
              1,037,307
              
              
              2,962,69309/01/07   
                  11/30/07
              
              
              24,850
              
              
              1.62
              
              
              24,850
              
              
              2,937,843**Total**
              
              
              **1,112,157**
              
              **$**
              **1.35**
              
              
              **1,062,157**
              
              
              **2,937,843**
  ***Note
      19 - Litigation***





AT&T




On
      December 5, 2006, the Company filed a Demand for Arbitration with the American
      Arbitration Association against AT&T Corp. (“AT&T”). The Company was
      seeking a refund of amounts paid to AT&T for the period from 1999 to October
      2006 for USF charges paid to AT&T pursuant the Purchase Order Agreement,
      which sets forth the parties’ business relationship. The fees paid to AT&T
      for AT&T’s Enhanced Prepaid Card Service (“Prepaid Card Service”) included
      USF and other Federal Communications Commission (the “FCC”) charges. AT&T
      retained this revenue instead of making the required contributions to the USF
      and other FCC programs based on AT&T’s argument that its Prepaid Card
      Service was exempt under the law.




In
      February 2005, the FCC issued an order that made it clear that AT&T is
      required to pay USF charges on its Prepaid Card Service, a large percentage
      of
      which was resold to the public through Oblio. The order required AT&T and
      all companies providing calling card services similar to those described in
      the
      order to file new or revised Form 499s to properly report revenues consistent
      with the Order’s findings.





In
      compliance with the FCC order, Oblio has registered with the FCC as an
      Interstate Telecommunications Service Provider and is now considered to be
      a
      direct contributor of USF. As a direct contributor, over 98% of Oblio’s revenue
      is exempt from USF contributions and other Universal Service Administrative
      Company’s mandated fees to AT&T or other wholesale telecommunications
      service providers due to a specific FCC rule exemption applicable to
      international services.




On
      April
      16, 2007, Oblio filed a Petition for Declaratory Relief with the FCC requesting
      that the FCC find that AT&T’s refusal to honor Oblio’s proof of exemption
      from USF pass-through charges and request for a refund of collected USF charges
      are unreasonable practices and unjustly discriminatory in violation of Sections
      201(b) and 202(a) of the Communications Act.  Oblio thereafter filed a
      motion to stay the arbitration pending the FCC’s determination of Oblio’s
      Petition for Declaratory Ruling.  On May 4, 2007, the arbitrator stayed
      Oblio’s claims, but ordered that AT&T’s counterclaims, discussed below,
      could proceed.  On June 19, 2007, the FCC issued a Public Notice seeking
      public comment on Oblio’s Petition for Declaratory Ruling by interested parties
      on or before July 19, 2007.




In
      the
      arbitration, AT&T maintained that it did not charge Oblio USF fees, and if
      it did, Oblio was not owed any refund of USF amounts embedded in the amounts
      charged by AT&T to Oblio from 1999 to October 2006.  AT&T also
      filed a counterclaim in the arbitration against Oblio seeking payment for $7,200
      plus interest for prepaid phone cards purchased by Oblio.  In the
      arbitration, Oblio admitted that it has not paid AT&T the amount sought by
      AT&T.  However, Oblio asserted that the amounts claimed by AT&T are
      completely offset and excused by the USF amounts claimed by Oblio.





On
      October 12, 2007, the Company entered into a Settlement Agreement (the
“Settlement Agreement”) with AT&T, effective as of October 11, 2007. Prior
      to the Settlement Agreement, Oblio had refused to pay AT&T for previously
      delivered services in response to AT&T’s refusal to honor Oblio’s request
      for a refund of certain Universal Service Fund pass through charges which Oblio
      had alleged that it paid previously to AT&T. Pursuant to the Settlement
      Agreement, AT&T agreed to waive and discharge its right to receive $7,200
      and Oblio issued a promissory note for the payment of the balance of $600 in
      interest to AT&T in full settlement of the Partial Final Award issued in the
      arbitration proceeding on the counter claims brought by AT&T against Oblio
      and in full settlement of the Oblio’s Universal Service Fund claim against
      AT&T. As Oblio had already recorded its liability in its accounts payable,
      the $6,600 net proceeds were used to offset the accounts payable and therefore
      reduce the cost of sales during the current quarter.




23




Oblio
      has
      remitted $200 to AT&T in compliance with the Settlement Agreement as of
      November 30, 2007. Additionally, the Company has recorded $400 as a liability
      to
      AT&T as of November 30, 2007 for the remainder of the amounts due AT&T
      per the Settlement Agreement.





CLIFTON
      PREPAID COMMUNICATIONS CORP




On
      August
      21, 2007, the Company filed suit against Clifton Prepaid Communications Corp.,
      Clifton Pre-Paid Corp, and Aref Aref (collectively, “Clifton”) for non-payment
      of invoices related to services rendered in the District Court, 199 th Judicial
      District, Collin County, Texas. The Company is seeking $2,199 in payment plus
      pre-judgment interest, post judgment interest at the maximum lawful rate from
      July 30, 2007 until judgment at the rate of six percent per annum, and
      reasonable and necessary attorney fees and costs. The Company also filed a
      Motion for Writ of Garnishment against Clifton’s funds on deposit with Bank of
      America, N.A.





On
      August
      22, 2007, Clifton filed a Motion to Dissolve Writ of Garnishment. A hearing
      was
      set on September 12, 2007. On September 12, 2007, the court denied Clifton’s
      Motion to Dissolve Writ of Garnishment. The case is still pending in
      litigation.





As
      of
      November 30, 2007, the Company has fully reserved and allowed for the $2,199
      in
      accounts receivable from Clifton. The Company has recorded no other amounts
      related to this suit.





LEVEL
      3
      COMMUNICATIONS, LLC




On
      November 2, 2007, the Company’s subsidiary, Oblio, was notified, via a process
      server, that it was being sued by Level 3 Communications, LLC (“Level 3”). Level
      3 is seeking $2,379 for alleged unpaid invoices for services rendered in
      Broomfield County: District Court, CO. This action is currently pending. The
      Company has accrued the amounts alleged to be due in its accounts payable at
      November 30, 2007.





F&L,
      LLP




On
      November 27, 2007, the Company was notified, via a process server, that it
      was
      being sued by F&L, LLP (“F&L”) in the District Court of Dallas County,
      Texas 160 th Judicial
      District. F&L is seeking the Company to perform on its guarantee of notes
      payable from Oblio to F&L. Principal amounts due to F&L, LLP as of
      November 30, 2007 is $3,570. This action is currently pending. The Company
      has
      recorded the amounts due as a liability as of November 30, 2007. Oblio has
      recorded accrued interest of $365 related to this obligation.




LATIN
      AMERICAN VOIP, INC




On
      December 26, 2007, the Company’s subsidiaries, Oblio and Starttalk were
      notified, via a process server, that it was being sued by Latin American VOIP,
      Inc (“Latin American VOIP”). Latin American VOIP is seeking $518 for alleged
      unpaid invoices for services rendered in Palm Beach County: Circuit Court,
      Florida. This action is currently pending. The Company has accrued the amounts
      alleged to be due in its accounts payable as of November 30, 2007.





STX
      COMMUNICATIONS, INC




On
      January 16, 2008, STX Communications, LLC d.b.a. STX Phone Cards (“STX”) sought
      a Temporary Restraining Order (“TRO”) in the 14 th Judicial
      District Court of Dallas, County, Texas against the Company’s subsidiary Oblio.
      The TRO immediately restrained Oblio from suspending its network support for
      any
      pre-paid phone card supplied by Oblio to STX and from taking any action to
      impair the network supporting any pre-paid phone card supplied by Oblio to
      STX.
      On January 23, 2008, the Company was notified by its attorneys that the TRO
      became effective and enforceable and that the Company was in violation of its
      TRO and was subject to sanctions for contempt of court. As of January 24, 2008,
      the Company has complied with the request and is no longer in violation of
      the
      order.





WESTERN
      PRINT & MAIL, LLC




On
      January 25, 2008, the Company’s subsidiary Titan Wireless was notified, via a
      process server, that it and Ready Mobile, LLC were being sued by Western Print
      & Mail, LLC (“Western”). Western is seeking $71 including late charges from
      Ready Mobile, LLC. Western is seeking $183 from Titan Wireless, which includes
      the $71 from Ready Mobile, LLC and $112 including late charges from Titan
      Wireless, for alleged unpaid invoices for services rendered in Iowa District
      Court for Linn County. This action is currently pending. The Company has accrued
      $103 of the amounts alleged to be due from Titan Wireless in its accounts
      payable at November 30, 2007. The Company has not accrued any amounts related
      to
      the charges incurred by Ready Mobile, LLC. As per the asset purchase agreement
      with Ready Mobile, LLC, this liability was not assumed and therefore is not
      a
      responsibility of the Company. In addition, the Titan Wireless liability was
      assumed by Boomerang Wireless, Inc. on January 25, 2008 with the sale of certain
      CMDA assets as discussed in Note 21.




24




OTHER
      LEGAL MATTERS




Subsequent
      to November 30, 2007, the Company’s subsidiary, Oblio, filed Motions for Writ of
      Garnishment against various customers for lack of payment for services rendered
      by Oblio. Motions for Writ of Garnishment have been issued for Touchtell
      Communications, Inc., Pactel Corporation, Detroit Phone Cards, and Diamond
      Phone
      Cards.





As
      of
      November 30, 2007, the Company has fully reserved and allowed (through its
      allowance for doubtful accounts $7,217 and its allowance for sales returns
      $3,581) $10,798 in accounts receivable recorded for the communications division
      matters referenced above including Clifton.





***Note
      20 - Segment Information***





The
      Company considers itself in four distinct operating segments.





The
      Company, through its subsidiaries PCB West, PCB East, Titan Nexus, is a
      fabrication service provider of time sensitive, high tech, prototype and
      pre-production printed circuit boards, providing time-critical printed circuit
      board manufacturing services to original equipment manufacturers, contract
      manufacturers and electronic manufacturing services providers. The Company
      acquired certain assets of Titan Nexus on November 30, 2007. The Company
      considers this its electronics and homeland security business segment.





The
      Company, through its subsidiaries Oblio and Titan Wireless, is engaged in the
      creation, marketing, and distribution of prepaid telephone products for the
      wire
      line and wireless markets and other related activities. The Company acquired
      Oblio in a transaction that was completed on August 12, 2005. The Company
      through its subsidiary, Titan Wireless, acquired certain assets of Ready Mobile,
      LLC in a transaction that was completed May 11, 2007. The Company considers
      this
      its communications business segment.





The
      Company, through its Appco subsidiary, distributes petroleum fuels and operates
      retail convenience stores. Appco is a regional petroleum company that owns
      and
      operates an extensive petroleum product distribution network that is comprised
      of 160 dealers in the southeastern United States. Appco operates 56 convenience
      store locations in Tennessee, Kentucky and Virginia. The Company acquired Appco
      in a transaction that was completed September 17, 2007. The Company considers
      this its energy business segment.





The
      Company, through its USAD subsidiary headquartered in North Brunswick, New
      Jersey, manufactures and distributes value-branded home care products that
      leverages brand extensions and licensing agreements with consumer product
      conglomerates. The Company acquired USAD in a transaction that was completed
      October 16, 2007. The Company considers this its global brands business
      segment.





25




**Three
                  Months Ended****11/30/2007****E
                  & HS**
              
              **Comm**
              
              **Energy**
              
              **Brands**
              
              **Corp.**
              
              **Total**Sales:
              
              
              6,781
              
              
              22,328
              
              
              90,015
              
              
              3,183
              
              
              -
              
              
              122,307Interest
                  expense:
              
              
              189
              
              
              647
              
              
              381
              
              
              170
              
              
              247
              
              
              1,634Net
                  income (loss):
              
              
              574
              
              
              (18,668
              )
              
              (435
              )
              
              (7,699
              )
              
              1,755
              
              
              (24,473
              )Impairment
                  of intangibles:
              
              
              -
              
              
              14,572
              
              
              -
              
              
              6,569
              
              
              -
              
              
              21,141Assets:
              
              
              19,620
              
              
              14,021
              
              
              43,751
              
              
              14,756
              
              
              9,147
              
              
              101,295Accounts
                  receivable, net:
              
              
              4,784
              
              
              7,605
              
              
              9,680
              
              
              4,176
              
              
              -
              
              
              26,245Inventory,
                  net
              
              
              2,406
              
              
              251
              
              
              8,732
              
              
              4,661
              
              
              -
              
              
              16,050Equipment
                  and improvements, net:
              
              
              3,217
              
              
              626
              
              
              11,978
              
              
              2,052
              
              
              137
              
              
              18,010Depreciation
                  expense:
              
              
              180
              
              
              69
              
              
              547
              
              
              62
              
              
              12
              
              
              870Goodwill
                  and indefinite lived intangible assets:
              
              
              8,571
              
              
              -
              
              
              9,277
              
              
              -
              
              
              -
              
              
              17,848Definite
                  lived intangible assets, net
              
              
              -
              
              
              4,633
              
              
              831
              
              
              2,496
              
              
              -
              
              
              7,960




**Three
                  Months Ended****11/30/2006****E
                  & HS**
              
              **Comm**
              
              **Energy**
              
              **Brands**
              
              **Corp.**
              
              **Total**Sales:
              
              
              5,412
              
              
              24,574
              
              
              -
              
              
              -
              
              
              -
              
              
              29,986Interest
                  expense:
              
              
              152
              
              
              654
              
              
              -
              
              
              -
              
              
              -
              
              
              806Net
                  Income (loss):
              
              
              (5,174
              )
              
              (59
              )
              
              -
              
              
              -
              
              
              (628
              )
              
              (5,861
              )Assets:
              
              
              6,135
              
              
              47,985
              
              
              -
              
              
              -
              
              
              135
              
              
              54,255Accounts
                  receivable, net:
              
              
              2,976
              
              
              13,707
              
              
              -
              
              
              -
              
              
              -
              
              
              16,683Inventory,
                  net
              
              
              965
              
              
              974
              
              
              -
              
              
              -
              
              
              -
              
              
              1,939Equipment
                  and improvements, net:
              
              
              1,772
              
              
              345
              
              
              -
              
              
              -
              
              
              -
              
              
              2,117Depreciation
                  expense:
              
              
              146
              
              
              21
              
              
              -
              
              
              -
              
              
              -
              
              
              167Goodwill
                  and indefinite lived intangible assets:
              
              
              -
              
              
              4,448
              
              
              -
              
              
              -
              
              
              -
              
              
              4,448Definite
                  lived intangible assets, net:
              
              
              -
              
              
              20,096
              
              
              -
              
              
              -
              
              
              -
              
              
              20,096




All
      the
      Company's facilities are located in the United States and the majority of the
      Company's sales are made within the United States.





***Note
      21 - Subsequent Events***





TITAN
      APPAREL




On
      December 14, 2007, Titan Apparel, Inc. (“Titan Apparel”), a wholly owned
      subsidiary of Titan Global Holdings, Inc., acquired substantially all of the
      assets of Global Brand Marketing Inc (“Global”). Global, located in Santa
      Barbara, CA, owns the popular brands Dry-shod, No Mass, Mehandi and Funflopps.
      Global operates under the banner Global Feet and sells its footwear products
      in
      130 countries worldwide. The purchase price of $6,057 was financed through
      a
      credit facility with Greystone Business Credit II L.L.C.





CDMA
      WIRELESS ASSETS




On
      January 25, 2008, the Company’s subsidiary, Titan Wireless RM, Inc completed a
      sale of certain assets for $1,000 and the assumption of certain liabilities
      to
      Boomerang Wireless, Inc. The Company received a Promissory Note from Boomerang
      for $1,000 bearing interest at the prime interest rate plus four percent. The
      Promissory Note is to be paid to the Company in four annual installments with
      interest in arrears beginning on December 31, 2008. The Company has obtained
      UCC-1 security interests in the accounts receivable, inventory, equipment and
      other assets of Boomerang as collateral to the Promissory Note. Boomerang also
      assumed certain liabilities of Titan Wireless RM, Inc as additional
      consideration to the Company. The Company retained its accounts receivable
      and
      retained its legacy wireless brand names Bravo Cellular and Picante
      Movil.




26




**ITEM
      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF
      OPERATIONS OR PLAN OF OPERATIONS**





*This
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations and other portions of this report contain forward-looking information
      that involve risks and uncertainties. The Company's actual results could differ
      materially from those anticipated by the forward-looking information. Factors
      that may cause such differences include, but are not limited to, availability
      and cost of financial resources, product demand, market acceptance and other
      factors discussed in this report under the heading “Forward Looking
      Information/Risk Factors. ” This Management's Discussion and Analysis of
      Financial Condition and Results of Operations should be read in conjunction
      with
      its consolidated financial statements and the related notes included elsewhere
      in this report.*





**Overview**





A
      detailed overview of our business and history is set forth in our Annual Report
      on Form 10-KSB for the year ended August 31, 2007, to which overview we make
      reference. All amounts excluding share and per share amounts referenced below
      are stated in thousands unless otherwise noted.





**Summary
      Corporate Background**





The
      Company is a diversified holding company with a dynamic portfolio of
      subsidiaries that capitalize on the ever-expanding worldwide demand for new
      communications and connectivity services and products. The Company is committed
      to providing consumers with the tools they need to thrive by connecting them
      to
      family, friends and colleagues.





The
      Company was organized under the laws of the State of Utah on March 1, 1985,
      with
      the primary purpose of seeking potential business enterprises which in the
      opinion of the Company's management would prove profitable. The Company was
      largely inactive through 2001.





The
      Company began its electronics and homeland security division in 2001 through
      SVPC Partners LLC, a Delaware limited liability company that commenced its
      operations in July 2001 ("SVPC"). SVPC began acquiring cutting edge technology
      equipment, processes, customer lists and orders from competitors but was unable
      to remain in business principally due to a severe market downturn and excessive
      levels of indebtedness. On July 16, 2001, SVPC acquired all of the assets of
      SVPC Circuit Systems, Inc. and certain assets of Circuit Systems, Inc. ("CSI")
      pursuant to a combined approved bankruptcy court sale. After acquiring SVPC
      Circuit Systems, Inc. and certain assets of CSI, Titan acquired certain system
      integration division assets out of bankruptcy from creditors of Paragon
      Electronic Systems, Inc.





On
      June
      28, 2002, the Company entered into a letter of intent with Titan PCB West,
      Inc.,
      a manufacturer of time sensitive, high tech, prototype and pre-production
      printed circuit boards.





Effective
      August 30, 2002, through the Company's wholly-owned subsidiary Titan EMS
      Acquisition Corp., a Delaware corporation ("AcquisitionCo"), the Company
      acquired all of the capital stock of Titan PCB West through an exchange of
      its
      Common Stock pursuant to an Agreement and Plan of Merger (the "Merger"). In
      connection with the Merger, its fiscal year end was also changed from June
      30 to
      August 31.





In
      connection with the Merger, AcquisitionCo merged with and into Titan PCB West
      through the exchange of 6,880,490 shares of its Common Stock for all of Titan
      PCB West's outstanding shares of common stock.





On
      August
      12, 2002, Titan PCB West acquired certain intangible assets contributed by
      Louis
      George, the Company's President and Chief Executive Officer, in exchange for
      50,000 shares of Titan common stock valued at $1.50 per share, pursuant to
      the
      terms and conditions of a Contribution Agreement and Assignment and Assumption
      of Liabilities.





On
      February 27, 2003, through the Company's subsidiary, Titan PCB East, the Company
      acquired substantially all of the assets of Eastern Manufacturing Corporation,
      an Amesbury, Massachusetts-based manufacturer of rigid-flex printed circuits
      using a patented manufacturing process (the "HVR Flex Ô Process"), for
      approximately $500 in a foreclosure sale from Eastern Manufacturing
      Corporation's secured lender Eastern Bank. The acquired assets included
      equipment, work-in-progress, inventory, technology and patent licenses and
      customer lists. In connection with this acquisition, the Company assigned
      Eastern Manufacturing Corporation's rights under a license agreement with Coesen
      Inc., a New Hampshire corporation ("Coesen Inc."), to manufacture PCBs using
      the
      HVR Flex Ô Process to Titan PCB East and Titan PCB East was granted an option to
      purchase certain real estate assets. The Company financed the acquisition of
      Eastern Manufacturing Corporation's assets through the issuance and sale on
      February 27, 2003 of secured promissory notes by Titan PCB East to a limited
      number of accredited investors in a private placement.




27





Effective
      March 5, 2003, the Company purchased shares of common stock of Coesen Inc.
      representing 33.3% of its issued and outstanding shares of common stock from
      Mr.
      Howard Doane, the principal stockholder and an officer and director of Eastern
      Manufacturing Corporation, in exchange for 30,000 shares of Titan common stock
      and $5 in cash. In connection with the share purchase, David M. Marks, one
      of
      Titan’s Directors, was elected to the Board of Directors of Coesen Inc. and Mr.
      Doane resigned as a director of Coesen Inc. In consideration for the license
      rights to the proprietary technology of Coesen Inc., the Company has agreed
      to
      pay Coesen Inc. a royalty in the amount of 2.0% of revenues derived from the
      Company's sale of products using this technology, payable on a quarterly basis,
      subject to Coesen Inc. forgiving the royalty payment should certain directors
      of
      Coesen Inc. be under employment contracts with us.





In
      2005,
      the Company launched its communications division by acquiring Oblio Telecom,
      Inc.





On
      July
      28, 2005, Farwell Equity Partners, LLC (“Farwell”) and its newly formed
      acquisition subsidiary, Oblio entered into an Asset Purchase Agreement with
      Oblio Telecom L.L.P. (“Seller”) and its sole owners, Sammy Jibrin and Radu
      Achiriloaie (“Selling Owners”), for the purchase of substantially all of the
      assets of Seller. This transaction closed on August 12, 2005, upon Oblio
      obtaining financing for the acquisition. Also, effective on August 12, 2005
      and
      immediately following the aforementioned closing, Farwell contributed its 1,000
      shares of the common stock of Oblio to Titan, which stock represents all of
      the
      authorized and outstanding common stock of Oblio. Upon receipt of the Oblio
      common stock by Titan, Oblio became a wholly-owned subsidiary of Titan.





Through
      the Oblio acquisition, the Company also acquired Pinless, Inc. Pinless offers
      customers the ability to access prepaid international calling features via
      e-commerce or Pinless residential dialing. Pinless supports first and second
      generation Americans that have established credit and prefer the convenience
      of
      managing their account purchases of prepaid communications services and products
      online through our website WhyUseIt.com.





On
      April
      17, 2006, the Company established StartTalk, Inc. to own and operate switching
      equipment. This switching equipment enables the Company to rapidly deploy and
      efficiently deliver prepaid international telecommunications services at
      favorable cost structures. StartTalk owns, operates and leases switching
      equipment in two strategic locations in the United States.





On
      September 28, 2006, the Company established Titan Wireless Communications,
      Inc.
      Titan Wireless is the Company’s prepaid wireless communications subsidiary and
      is a Mobile Virtual Network Operator (“MVNO”). Titan Wireless markets its MVNO
      through two brands, BRAVO cellular and Picante Movil.





On
      May
      11, 2007, the Company through its subsidiary Titan Wireless acquired certain
      assets of Ready Mobile, LLC. Ready Mobile is in the business of creating,
      marketing, and distributing prepaid telephone products for the wireless markets.
      Pursuant to the terms of the Asset Purchase Agreement dated as of April 9,
      2007,
      the Company agreed to pay consideration equal to 55% of earnings before
      interest, depreciation, taxes, and amortization (EBITDA) for the first 36 months
      subsequent to the closing, payable monthly in arrears. The EDITDA calculation
      is
      based on revenue from the acquired distribution channels off set by a formula
      based expense structure.





The
      assets acquired include all fixed assets, equipment, furniture, fixtures, and
      leasehold improvements located at Ready Mobile’s offices in Hiawatha, Iowa, and
      used by Ready Mobile in connection with its business. The Company also acquired
      all contracts and intellectual property of Ready Mobile used in the operation
      of
      the business.





On
      July
      23, 2007, the Company formed a new division, the Titan Energy Group (“Titan
      Energy”). Titan Energy’s focus will be on acquiring and managing complementary
      energy sector assets, which falls in line with the Company’s strategy to aid
      growth through strategic acquisitions.





On
      August
      7, 2007, the Company formed a new division, Titan Global Brands (“Titan
      Brands”). Titan Brands will focus on integrating, protecting and expanding brand
      management capabilities and leveraging and optimizing growth from the Company's
      distribution channels.




28





On
      September 4, 2007, the Company formed Titan Card Services, Inc. ("Card
      Services"). Card Services is a division of the Company and is a wholly owned
      subsidiary. Card Services’ focus will be to capitalize on the burgeoning
      multibillion dollar international prepaid money transfer sector. Given the
      Company’s familiarity with the prepaid sector and the specific needs of its core
      demographic customer base, which includes first and second generation Americans,
      the Company's senior management identified a significant need in this growing
      market to transfer funds internationally. For competitive reasons, Titan will
      not release details of these products and their pricing at this time.




On
      September 17, 2007, the Company completed the acquisition of all of the issued
      and outstanding shares of capital stock of Appalachian Oil Company, Inc.
      (“Appco”), a corporation formed under the laws of Tennessee, from the James R.
      Maclean Revocable Trust, Sara G. Maclean, the Linda R. Maclean Irrevocable
      Trust
      and Jeffrey H. Benedict. The purchase price paid for the shares under the Appco
      stock purchase agreement, as amended, was $30,000 in cash, of which $1,000
      will
      be escrowed for 18 months following the closing of the acquisition in order
      to
      secure the Company’s potential claims against the Appco sellers for any breach
      of their representations, warranties and covenants under the stock purchase
      agreement.





Appco
      is
      headquartered in Blountville, Tennessee and is primarily engaged in the
      distribution of petroleum fuels in eastern Tennessee, southwestern Virginia,
      eastern Kentucky, western North Carolina and southern West Virginia and in
      the
      operation of retail convenience stores in some of those regions. Appco is a
      part
      of the Titan Energy division.





On
      October 16, 2007, the Company exercised its option to acquire 80% of the issued
      and outstanding capital of USA Detergents, Inc. (“USAD”) in exchange for one
      dollar pursuant to the Stock Purchase Agreement dated July 30, 2007 by and
      among
      the Company, USAD and USAD Metro Holdings, LLC, as amended.





USAD
      is
      headquartered in North Brunswick, New Jersey and is a manufacturer and
      distributor of value-branded home care products that leverages brand extensions
      and licensing agreements with consumer product conglomerates. With the addition
      of USAD, Titan Brands Division’s expansive and overlapping distribution network
      will now reach more than 86,000 domestic retail locations and over 175
      international locations.





On
      November 2, 2007, Titan Nexus, Inc. (“Titan Nexus”), an indirect subsidiary of
      Titan Global Holdings, Inc. (the “Company”), entered into a limited recourse
      assignment (the “Assignment”) with YA Global Investments, L.P. (“YA Global”).
      Pursuant to the Assignment, Titan Nexus was assigned all rights, title and
      interest to YA Global’s secured convertible debt position in Nexus Nano
      Electronics, Inc. (“Nexus Nano”), in the aggregate amount of $11,245, including
      principal and interest. The obligations are secured by all of Nexus Nano’s
      assets.





In
      consideration for the Assignment (i) Titan issued YA Global 2,000,000 shares
      of
      common stock, valued at $2.00 per share, the price of the stock at the time
      of
      the closing, and (ii) Titan PCB West, Inc. (“Titan West”), a direct subsidiary
      of the Company and the parent company of Titan Nexus, issued YA Global 103,503
      shares of Titan PCB West series A convertible preferred stock.





On
      November 5, 2007, the Company formed Titan Electronics Group (“Titan EG”). Titan
      EG is currently a division of the Company and is a wholly owned subsidiary.
      Titan Nexus, along with the Company’s legacy subsidiaries, Titan East and Titan
      West are now a part of the Titan EG. The Company anticipates that this entity
      will be divested and spun off into a separate entity via a 100% stock dividend
      in FY 2008.





On
      November 30, 2007, Titan Nexus completed the final step in the acquisition
      of
      the assets of Nexus Nano Electronics, Inc. ("Nexus"), a manufacturer of custom
      circuit boards for aerospace, defense and other industries. The surrender of
      assets was completed by agreement between Nexus as debtor and Titan as
      creditor.





On
      December 14, 2007, Titan Apparel, Inc. (“Titan Apparel”), a wholly owned
      subsidiary of Titan Global Holdings, Inc., acquired substantially all of the
      assets of Global Brand Marketing Inc (“Global”). Global, located in Santa
      Barbara, CA, owns the popular brands Dry-shod, No Mass, Mehandi and Funflopps.
      Global operates under the banner Global Feet and sells its footwear products
      in
      130 countries worldwide. The purchase price of $6,057 was financed through
      a
      credit facility with Greystone Business Credit II L.L.C.





**Business
      Overview**





The
      Company is in the early stage of operations and, as a result, the relationships
      between revenue, cost of revenue, and operating expenses reflected in the
      financial information included in this Form 10-Q do not represent future
      expected financial relationships. Much of the cost of revenue and operating
      expenses reflected in its consolidated financial statements are costs based
      on
      the integration of the acquired companies and assets that comprise its
      operations. Accordingly, the Company believes that, at the Company's current
      stage of operations, period-to-period comparisons of results of operations
      are
      not meaningful.




29




The
      Company’s business strategy is to create shareholder value in each of its
      operating divisions, which include energy, communications, electronics and
      homeland security and consumer products. The Company may continue to evaluate
      acquisition, spin-off, and/or divestiture opportunities in its operating
      divisions. Additionally, the Company may pursue acquisition opportunities in
      new
      market segments.





The
      Company’s business strategy, by division, is to:





*Titan
      Global Energy Group*





Titan
      Global Energy Group was formed in the fourth quarter of fiscal year 2007. Titan
      Global Energy Group is a division engaged in the acquisition and management
      of
      complementary energy sector assets. On September 17, 2007 Titan Global Energy
      Group completed the acquisition of Appco. Appco, formed in 1923 and based in
      Blountville, Tennessee, is a regional petroleum company that owns and operates
      an extensive petroleum product distribution network that is comprised of 160
      dealers in the southeastern United States. Appco operates 56 convenience store
      locations in Tennessee, Kentucky and Virginia. Appco has more than 550 employees
      and maintains long standing partnerships with strategic terminal operators
      and
      major oil companies.





Titan
      Global Energy Group’s business strategy is to:





·
            Integrate
                the operations and distribution network of
                Appco.


·
            Increase
                the integration of biofuel products through strategic agreements
                and
                acquisitions that will enhance core profitability at wholesale and
                retail
                distribution and environmental responsibility in the markets we
                serve.


·
            Integrate
                vertically in the supply chain of purchasing
                petroleum.


·
            Increase
                inside store margins and volume through alignment with strategic
                distribution partners, product placement and aggressive liquid fuel
                pricing.





*Titan
      Communications Division*





Titan
      Communications Division is comprised of prepaid international long distance
      distribution, international long distance network operations and prepaid
      wireless distribution. The Company started its Communications Division with
      the
      purchase of the assets of Oblio Telecom in August 2005. Oblio Telecom was
      comprised of a strategic relationship with a tier one communications provider
      and a distribution network of over 60,000 retail locations for prepaid
      international long distance products. Subsequent to the acquisition of Oblio
      Telecom, the Company expanded relationships to another strategic tier one
      provider, began international network operations through its subsidiary
      Starttalk, Inc, and purchased assets of Ready Mobile, LLC to expand its prepaid
      wireless distribution of CDMA handsets.





Titan
      Communications Division business strategy is to:





·
            Evaluate
                the viability of the Company’s Oblio Telecom subsidiary and its
                distribution network.


·
            Create
                new distribution opportunities for prepaid international long distance
                products through new channels to include point of sale activated
                products.


·
            Enter
                strategic relationships with carriers and other entities to secure
                high
                quality, cost effective termination of international long distance
                traffic.


·
            Enter
                strategic relationships with tier one strategic partners to distribute
                prepaid international long distance products.


·
            Evaluate
                the viability of the Company’s distribution of prepaid CDMA handsets and
                wireless airtime.


·
            Identify
                opportunities to leverage the Company’s distribution network and valued
                brands with other prepaid wireless offerings such as GSM handsets
                and
                airtime or SIM cards.






30




·
            Offer
                other prepaid services (i.e. money transfer, prepaid debit/credit
                cards,
                etc.) through existing distribution channels to first and second
                generation Americans.




Subsequent
      to the quarter ended November 30, 2007, the Company created Titan Communications
      to further its strategic endeavors in the prepaid international long distance
      marketplace, and began exploring new relationships outside Oblio’s traditional
      distribution and supply channels.  Additionally, the Company no longer had
      strategic relationships with tier one partners for resale of prepaid
      international calling cards due to disputes over USF charges (see Note 17).
      Simultaneously the Company experienced a significant decrease in sales and
      collections of outstanding accounts receivable. Many of the long-standing
      distributors of Oblio’s products stopped placing orders for new product and
      stopped sending payments for previously placed orders. While we are vigorously
      pursuing legal action against many of these customers, the extended collection
      process has significantly disrupted the operating cash flow cycle of the prepaid
      international long distance portion of our communication’s division. These
      issues along with losses experienced in its network operations have resulted
      in
      the Company ceasing to do business as Oblio in the prepaid international long
      distance market. As such, the Company evaluated goodwill and other assets for
      impairment based on changes in business model. Goodwill and other intangibles
      of
      $4,666 were expensed as impaired and the allowance for sales returns was
      increased to $3,552 and the allowance for uncollectible accounts receivable
      was
      increased to $7,194 for Oblio Telecom as of November 30, 2007.




Additionally,
      subsequent to quarter end, Titan Wireless, Inc (“Titan Wireless”), the Company’s
      wireless operating subsidiary, determined to cease the distribution of CDMA
      prepaid wireless handsets and the related airtime through its subsidiary Titan
      Wireless RM, Inc, due to the increasing capital requirements associated with
      the
      business model. As such, the Company evaluated goodwill and other assets for
      impairment based on changes in its business model. Goodwill associated with
      the
      purchase of Ready Mobile, LLC and the goodwill associated with the CDMA MVNO
      agreement in the amount of $9,906 was expensed as impaired as of November 30,
      2007.  In addition, the remaining goodwill, definite and indefinite lived
      assets were written off against the contingent purchase price commitment
      established with the asset purchase from Ready Mobile, LLC. Titan Wireless
      has
      sold its CDMA wireless subscriber base and distribution network. Titan Wireless
      is concurrently seeking other strategic relationships to offer GSM handsets
      and
      airtime to its distribution channels, which would reduce capital costs per
      subscriber on an on-going basis.





*Titan
      Electronics and Homeland Security Division*





Titan’s
      Electronics and Homeland Security Division is comprised of Titan PCB East and
      Titan PCB West. These companies specialize in the manufacturing of advanced
      circuit boards and other high tech products for military and high-tech clients.
      On November 30, 2007, the Company completed its acquisition of Nexus Nano.
      Nexus
      Nano is a manufacturer of custom circuit boards for aerospace, defense and
      other
      industries.





Titan
      Electronics and Homeland Security Division business strategy is to:





·
            Target
                potential customers and industries needing prototype boards with
                required
                turnaround times between 24 hours and the industry standard 10
                days.


·
            Aggressively
                market specialty manufacturing services for time sensitive, high-tech
                prototype and pre-production Rigid and HVR Flex PCBs to the high
                technology industry and cater to customers who need time sensitive
                delivery of low to medium production runs with high quality and superior
                design and customer service interface whether for production or research
                and development.


·
            Expand
                the Company’s innovative “rep-centric” sales
                approach.


·
            Seek
                continued geographic diversification of its customer base through
                its
                nationwide rep network.


·
            Integrate
                operations of Nexus Nano Custom Electronics,
                Inc.





*Titan
      Global Brands*





Titan
      Global Brands was formed to integrate, protect and expand brand management
      capabilities and to identify and purchase other consumer product brands that
      can
      leverage and optimize growth from the Company's distribution channels. On
      October 17, 2007 the Company completed its acquisition of USA Detergents, Inc.
      (“USAD”). USAD currently distributes mixed truckloads of laundry, cleaner and
      candle brands at attractive prices and in unique merchandising configurations.
      By leveraging brand extensions and licensing agreements with consumer product
      conglomerates, USAD's brand extensions include Arm & Hammer, Aim, Close-up,
      Pepsodent, Betty Crocker, Snapple, Fabulous and Oxymax. Additionally, USAD
      owns
      tier one brands such as Country Air, Crystal Shine, Fine Care HS, Swiss Pine
      and
      Touch of Glass and USAD owns tier two brands such as Laundry Bright, Plumbers
      Aid, Power Scrub and Xtra Easy. USAD also owns 50% of net profits generated
      by
      the liquid cleaner portion of the Brillo brand. Subsequent to the three months
      ended November 30, 2007, the Company ceased its manufacturing operations for
      filling and packaging USAD liquid products. The Company is pursuing other
      alternatives for the operating assets of USAD which could include a sale or
      facility closure and subsequent liquidation. The Company is exploring
      opportunities to maximize the value of the brands by outsourcing filling and
      packaging of USAD brands, licensing USAD brands to other manufacturers, and
      other alternatives. See additional discussion in Note 15.




31


Subsequent
      to the quarter ended November 30, 2007, the Company, through its newly formed
      subsidiary Titan Apparel, Inc (“Titan Apparel”) acquired the assets of Global
      Brands Marketing, Inc. (“GBMI”). Titan Apparel, located in Santa Barbara, CA,
      owns the brands Dry-shod, No Mass, Mehandi and Funflopps. Titan Apparel operates
      under the banner Global Feet and, through its predecessor entity GBMI, sold
      its
      footwear products in 130 countries worldwide.





Titan
      Global Brands business unit strategy is to:





·
            Integrate
                USAD brands into Company’s distribution
                network.


·
            Evaluate
                the viability of USAD’s manufacturing facilities in New
                Jersey.


·
            Evaluate
                other strategic partners to manufacture or license products for USAD’s
                valued brands.


·
            Identify
                and integrate other extensions of Titan Global Brands portfolio of
                brands
                and intellectual property.





**ACCOUNTING
      PRINCIPLES; ANTICIPATED EFFECT OF GROWTH**





Below
      the
      Company describes a number of basic accounting principles which the Company
      employs in determining its recognition of revenues and expenses, as well as
      a
      brief description of the effects that the Company believes that its anticipated
      growth will have on its revenues and expenses in the future.





In
      our
      energy division, we recognize sales of petroleum and other items when the title
      passes to the customer. We recognize the gross amounts earned from sales to
      wholesale customers as revenues. Shipping and handling costs charged to
      customers are included in our sales. At November 30, 2007 we had $0 allowance
      for returns and an allowance for doubtful accounts of $90. Actual returns may
      differ materially from our estimates, and revisions to the allowances may be
      required from time to time.





Sales
      in
      our energy division are subject to volatility based on trading prices of
      petroleum and the competitive forces in our markets. We expect sales to continue
      to remain constant in fiscal year 2008 subject to changes in trading prices
      of
      petroleum.





In
      the
      communications division, the Company recognizes revenue upon the activation
      of
      its prepaid calling cards (except StartTalk products) by the customers or the
      transfer of risk of loss on our prepaid wireless handsets. The Company
      recognizes revenue as the minutes are used on our StartTalk products as that
      is
      when the revenue is earned. StartTalk products are provided through switches
      that the Company owns and/or leases and thus the Company is responsible for
      inbound and outbound termination. The third party switches bill as minutes
      are
      used. The Company records an estimated liability for these minutes when the
      cards are activated. Breakage is recognized ratably over the anticipated usage
      of cards. Revenue is deferred on StartTalk products that have been sold but
      services have not yet been provided to the end customer. The Company records
      sales as gross sales less an allowance for returns and discounts. We provide
      our
      customers a limited right of return for calling cards and defective handsets
      and
      record an allowance against gross revenues for estimated returns at the time
      of
      the sale based on historical results. At November 30, 2007 we had $3,581
      allowance for returns and an allowance for doubtful accounts of $7,217. Actual
      returns may differ materially from our estimates, and revisions to the
      allowances may be required from time to time.





We
      are
      currently evaluating the future direction of our prepaid international long
      distance business and our CDMA prepaid wireless business. We have incorporated
      Titan Communications, Inc. to pursue new distribution channels with point of
      sale activated product and we are pursuing strategic relationships with tier
      one
      providers and other strategic partners that can enhance our market position.
      Additionally, we are pursuing more economic means to provide prepaid wireless
      services to our distribution channels and customers. Specifically, we are
      pursuing opportunities to provide GSM services and/or other alternatives for
      prepaid wireless services and airtimes to our customers.




32




In
      our
      electronics and homeland security division, we recognize sales upon shipment
      to
      our customers. We record net sales as gross sales less an allowance for returns
      and discounts. At November 30, 2007 we had approximately 263 customers in our
      electronics and homeland security division. We provide our customers a limited
      right of return for defective PCBs and record an allowance against gross
      revenues for estimated returns at the time of sale based on its historical
      results. Because our customers quickly test the PCBs the Company manufactures
      for them, the majority of returns for defects occur within the first 15 days
      following shipment. At November 30, 2007, we had an allowance for returns of
      $142 and an allowance for doubtful accounts of $359. Actual returns may differ
      materially from our estimates, and revisions to the allowances may be required
      from time to time.





We
      expect
      sales to grow in our electronics and homeland security division as we continue
      to develop our reputation in the quick turn and prototype and defense industry
      markets. Additional acquisitions such as the acquisition of Nexus Custom
      Electronics will also increase sales as well as cause disruption as facilities,
      employees, and processes are integrated. We expect these fluctuations to be
      relatively short lived while expecting the sales growth to be more permanent
      with the variable of market demand as a condition.





In
      our
      global brands division, we recognize sales at the time the merchandise is
      shipped to our distribution customers. At November 30, 2007 we had $0 allowance
      for returns and an allowance for doubtful accounts of $1,377. Actual returns
      may
      differ materially from our estimates, and revisions to the allowances may be
      required from time to time.





We
      are
      currently evaluating opportunities in our global brands division to outsource
      manufacturing of our products, license brands for other companies use in similar
      products and other strategic alternatives.




*Cost
      of Sales*





In
      our
      energy division, cost of sales consists of costs of acquiring petroleum and
      related products in our stores. Additionally, we include transportation costs
      of
      petroleum, shipping costs and handling costs in the cost of sales. Our cost
      of
      sales can fluctuate based on the changing market pricing of petroleum products
      on a daily basis. We effort to mitigate our risk of market fluctuations in
      petroleum pricing by purchasing fuel on the spot market at the refineries,
      through strategic relationships with terminal operators and prevailing rates
      on
      the open market.





In
      our
      communications division, cost of sales consists of network costs associated
      with
      terminating our customers’ traffic, regulatory fees, printing and shipping. The
      cost of wireless handsets is also included in cost of sales in our prepaid
      wireless division as well. Our cost of sales can fluctuate with changes in
      the
      amount of traffic to certain destinations, changes in the regulatory fees to
      certain destinations and method of call termination. Our network capacity
      utilizes least cost routing software which chooses routes real time from many
      suppliers for each destination to maintain a competitive cost base and
      acceptable call quality. If we are successful completing a strategic
      relationship with a tier one partner or other strategic partners, we could
      experience improvements in our margins.





In
      our
      electronics and homeland security division cost of sales consists of materials,
      labor, outside services and overhead expenses incurred in the manufacture and
      testing of its products. Many factors affect its gross margin, including, but
      not limited to, capacity utilization, production volume, production quality
      and
      yield. We do not participate in any long-term supply contracts and we believe
      there are a number of high quality suppliers for the raw materials we use.
      Our
      cost of goods, as a percentage of revenues, varies depending on the complexity
      of the PCBs we manufacture in any given period.





In
      our
      global brands division, cost of sales includes the cost of materials, labor,
      outside services and overhead expenses incurred in the manufacture and filling
      of its products. As in our electronics division, many factors affect our gross
      margin, including, but not limited to, capacity utilization, production volume,
      production quality and yield.





Included
      in cost of sales is overhead which is relatively fixed on an annual basis.
      Materials are variable and labor is semi-variable and is influenced by the
      complexity of orders as well as the quantity of orders. As our electronics
      and
      homeland security business is continually changing with regard to the type
      of
      product produced, we plan to implement broader use of production systems to
      control the overtime in production as well as the use of materials in
      production. We anticipate that these systems will assist in the pricing of
      its
      products with the objective to be more competitive and profitable in its target
      market.





*Operating
      and Non-Operating Expenses*





Each
      division’s operating expenses for the three months ended November 30, 2007 and
      2006 are comprised of marketing, general and administrative, non-recurring
      costs
      and costs related to mergers and acquisitions.




33




Selling
      and marketing expenses consist primarily of salaries and commissions paid to
      its
      internal sales team, commissions paid to independent sales representatives
      and
      costs associated with advertising and marketing activities. We expect our
      selling and marketing expenses to fluctuate as a percentage of sales as we
      add
      new personnel, develop new independent sales representative channels and
      advertise the products and company.





General
      and administrative expenses include all corporate and administrative functions
      that serve to support its current and future operations and provide an
      infrastructure to support future growth. Major items in this category include
      management and staff salaries and benefits, travel, network administration
      and
      systems/data processing, training, rent/leases and professional services. We
      do
      not expect a material increase in sales and marketing expense that is not
      consistent with an increase in our sales over a reasonable period of time.
      We
      anticipate our sales and marketing costs to fluctuate as a percentage of sales
      due to the addition of sales personnel and various marketing activities planned
      throughout the year.




*Interest
      Expense*





Interest
      expense reflects interest paid or accrued on debt instruments, the amortization
      of debt issuance costs, and finance charges. Interest expense includes, for
      derivative instrument liabilities, the amortization of the discount from the
      face value of convertible debt resulting from allocating part or all of the
      proceeds to the derivative instruments, together with the stated interest on
      the
      instrument, which is amortized over the life of the instrument, using the
      effective interest method.





*Gain
      or Loss from Derivative Liabilities*





The
      Company reviews the terms of convertible debt and equity instruments issued
      to
      determine whether there are embedded derivative instruments, including embedded
      conversion or other features that are required to be bifurcated and accounted
      for separately as derivative financial instruments. Generally, where the ability
      to physical or net-share settle an embedded conversion option is not deemed
      to
      be within the control of the Company, the embedded conversion option is required
      to be bifurcated and accounted for as a derivative liability. In connection
      with
      the sale of convertible debt and equity instruments, we may also issue
      freestanding options or warrants. Although the terms of the options and warrants
      may not provide for net-cash settlement, in certain circumstances, physical
      or
      net-share settlement is deemed to not be within our control and, accordingly,
      we
      are required to account for these freestanding options and warrants as
      derivative liabilities, rather than as equity. Certain instruments, including
      convertible debt and equity instruments and freestanding options and warrants,
      may be subject to registration rights agreements, which impose penalties for
      failure to register the underlying common stock. The existence of these
      potential cash penalties may require that the embedded conversion option and
      the
      freestanding options or warrants be accounted for as derivative instrument
      liabilities.





Derivative
      liabilities are initially measured at their fair value and then re-valued at
      each reporting date, with changes in the fair value reported as charges or
      credits to the statements of operations. For derivative liabilities related
      to
      freestanding warrants and embedded conversion features, we use the Black-Scholes
      option pricing model to determine the fair value. For derivative liabilities
      related to registration rights agreements and cash payment premiums, we used
      a
      discounted present value of expected future cash flows to determine the fair
      value. To the extent that the initial fair values of the bifurcated and/or
      freestanding derivative liabilities exceed the total proceeds received, an
      immediate charge to the statements of loss is recognized, in order to initially
      record the derivative liabilities at fair value. The discount from the face
      value of the convertible debt resulting from allocating part or all of the
      proceeds to the derivative liabilities, together with the stated interest on
      the
      instrument, is amortized over the life of the instrument through periodic
      charges to the statements of operations, using the effective interest method.





**Results
      of Operations**





As
      of
      November 30, 2007, the Company had a working capital deficit of $10,074 and
      an
      accumulated deficit of $75,173. The Company generated sales of $122,307 and
      $29,986 for the three months ended November 30, 2007 and 2006, respectively
      and
      had net income and incurred a net loss of $24,473 and $5,861, respectively.
      In
      addition, the Company used $8,758 and $561 of cash flows from operations during
      the three months ended November 30, 2007 and 2006, respectively.




34




**Three
      Months Ended November 30, 2007 Compared to the Three Months Ended November
      30,
      2006.**





The
      following table sets forth statement of operations data for the three months
      ended November 30, 2007 and 2006 and should be read in conjunction with our
      consolidated financial statements and the related notes appearing elsewhere
      in
      this report.


**Three
                  Months Ended****11/30/2007**
              
              **11/30/2006**Sales
                  - energy division
              
              $
              90,015
              
              
              74
              %
              $
              -
              
              
              -
              %Sales
                  - communications division
              
              
              22,328
              
              
              18
              
              
              24,574
              
              
              82Sales
                  - electronics and homeland security division
              
              
              6,781
              
              
              6
              
              
              5,412
              
              
              18Sales
                  - global brands division
              
              
              3,183
              
              
              3
              
              
              -
              
              
              -Total
                  sales
              
              
              122,307
              
              
              100
              
              
              29,986
              
              
              100Cost
                  of sales - energy division
              
              
              85,201
              
              
              70
              
              
              -
              
              
              -Cost
                  of sales - communications division
              
              
              18,270
              
              
              15
              
              
              21,426
              
              
              71Cost
                  of sales - electronics and homeland security division
              
              
              6,120
              
              
              5
              
              
              5,131
              
              
              17Cost
                  of sales - global brands division
              
              
              3,205
              
              
              3
              
              
              -
              
              
              -Total
                  cost of sales
              
              
              112,796
              
              
              92
              
              
              26,557
              
              
              89Gross
                  profit
              
              
              9,511
              
              
              8
              
              
              3,429
              
              
              11Operating
                  expenses:Sales
                  and marketing
              
              
              1,210
              
              
              1
              
              
              498
              
              
              2General
                  and administrative
              
              
              9,087
              
              
              7
              
              
              2,047
              
              
              7Bad
                  debt expense
              
              
              4,585
              
              
              4
              
              
              33
              
              
              0Impairment
                  of intangibles
              
              
              21,141
              
              
              17
              
              
              -
              
              
              -Amortization
                  of intangibles
              
              
              1,496
              
              
              1
              
              
              1,335
              
              
              4Total
                  operating expenses
              
              
              37,519
              
              
              31
              
              
              3,913
              
              
              13Operating
                  income
              
              
              (28,008
              )
              
              (23
              )
              
              (484
              )
              
              (2
              )Other
                  income
              
              
              628
              
              
              1
              
              
              1
              
              
              0Interest
                  expense
              
              
              (1,634
              )
              
              (1
              )
              
              (806
              )
              
              (3
              )Gain/(loss)
                  value of derivative instruments
              
              
              4,541
              
              
              4
              
              
              (4,572
              )
              
              (15
              )Net
                  loss
              
              $
              (24,473
              )
              
              (20
              )%
              $
              (5,861
              )
              
              (20
              )%




*S* *ales.* Sales
      increased by $92,321 or 308% from $29,986 in the three months ended November
      30,
      2006 to $122,307 in the three months ended November 30, 2007. Sales increased
      primarily due to the formation of our Titan Energy division and the acquisition
      of Appco on September 17, 2007.





*Cost
      of Sales.* Cost
      of
      sales increased $86,239 or 325%, from $26,557 in the three months ended November
      30, 2006 to $112,796 in the three months ended November 31, 2007, and as a
      percentage of sales increased from 89% in the three months ended November 30,
      2006 to 92% in the three months ended November 30, 2007. The cost of sales
      increased due to the formation of our Titan Energy division and the acquisition
      of Appco on September 17, 2007.





*Sales
      and Marketing.* Sales
      and
      marketing expenses increased by $712 or 143%, from $498 in the three months
      ended November 30, 2006 to $1,210 in the three months ended November 30, 2007.
      As a percentage of sales, sales and marketing expense decreased from 2% in
      the
      three months ended November 30, 2006 to 1% in the three months ended November
      30, 2007. This decrease is primarily attributable to lower sales and marketing
      expenses as a percent of sales in our titan energy division in the three months
      ended November 30, 2007 as compared to the three months ended November 30,
      2006
      offset by sales and marketing expenses in our newly formed Titan Global Brands
      division.




35




*General
      and Administrative Expenses.* General
      and administrative expenses increased $7,040 or 344% from $2,047 in the three
      months ended November 30, 2006 to $9,087 in the three months ended November
      30,
      2007. As a percentage of sales, general and administrative expense remained
      relatively flat. In general, expenses increased due to the acquisitions that
      occurred during the three months ended November 30, 2007.





*Bad
      Debt Expense.* Bad
      debt
      expense increased $4,552 or 13,794% from $33 in the three months ended November
      30, 2006 to $4,585 in the three months ended November 30, 2007. As a percentage
      of sales, bad debt expense increased due to an increase in the allowance for
      doubtful accounts in our communications division. In connection with the dispute
      with one of our wholesale providers, management determined that the collection
      of several customer receivables was considered doubtful and an appropriate
      reserve was established. While management will continue its collection efforts,
      an adjustment to the established allowance for doubtful accounts will be made
      when and if those certain accounts are collected or are deemed to be
      collectible. Oblio has allowed $7,194 for uncollectible accounts and $3,552
      for
      sales returns related to these disputes.





*Amortization
      of Intangibles.* Amortization
      of intangibles increased $161 or 12% from $1,335 in the three months ended
      November 30, 2006 to $1,496 in the three months ended November 30, 2007.
      Amortization of intangibles increased during the three months ended November
      30,
      2007 due to one and a half months of amortization for intangible items related
      to the acquisition of Appco.





*Interest
      Expense.* Interest
      expense increased $828 or 103%, from interest expense of $806 in the three
      months ended November 30, 2006 to $1,634 in the three months ended November
      30,
      2007. Interest expense increased primarily due to the debt used to finance
      our
      acquisition in our Titan Energy division.





*Gain
      or Loss from Derivative Liabilities* .
      Derivative liabilities are initially measured at their fair value and then
      re-valued at each reporting date, with changes in the fair value reported as
      charges or credits to the statements of loss. The Company recognized a gain
      from
      the change in fair value of its derivative liabilities of $4,541 in the three
      months ended November 30, 2007 and a loss from the change in fair value of
      derivative liabilities of $4,572 in the three months ended November 30,
      2006.





*Impairment
      Charge.* Impairment
      charge was $21,141 in the three months ended November 30, 2007. Subsequent
      to
      the quarter ended November 30, 2007, the Company created Titan Communications
      to
      further its strategic endeavors in the prepaid international long distance
      marketplace, and began exploring new relationships outside our legacy
      traditional distribution and supply channels. Additionally, Oblio experienced
      a
      significant decrease in sales and collections of outstanding accounts
      receivable. Many of the long-standing distributors of Oblio’s products stopped
      placing orders for new product and stopped sending payments for previously
      placed orders. While we are vigorously pursuing legal action against many of
      these customers, the extended collection process has significantly disrupted
      the
      operating cash flow cycle of the prepaid international long distance portion
      of
      our communication’s division. These issues along with losses experienced in its
      network operations have resulted in the Company ceasing to do business as Oblio
      in the prepaid international long distance market. As such, the Company
      evaluated goodwill and other assets for impairment based on changes in business
      model. Accordingly, the Company incurred an impairment charge for $14,572 of
      goodwill related to the Oblio Telecom.





Additionally,
      subsequent to quarter end, Titan Wireless, the Company’s wireless operating
      subsidiary, determined to cease the distribution of CDMA prepaid wireless
      handsets and the related airtime through its subsidiary Titan Wireless RM,
      Inc,
      due to the increasing capital requirements associated with the business model.
      As such, the Company evaluated goodwill and other assets for impairment based
      on
      changes in its business model.





Moreover,
      in connection with the formation of our global brands division and related
      acquisition of USA Detergents on October 16, 2007, goodwill in the amount of
      $6,569 was established as of the acquisition date as part of the purchase price
      allocation. Subsequent to November 30, 2007, the Company evaluated the working
      capital requirements of its USA Detergents subsidiary. During the due diligence
      phase of the acquisition of USAD and prior to acquisition, the Company made
      certain assumptions regarding the working capital necessary to revitalize the
      core business of USAD. During the execution phase of the post-acquisition
      reorganization plan, the Company was unable to successfully negotiate work
      out
      payment plans with key suppliers. As such, management determined to cease
      operations in its current structure. Accordingly, the Company incurred an
      impairment charge for $6,569 of goodwill related to the USA Detergent
      acquisition.





**Liquidity
      and Capital Resources**





Our
      principal sources of liquidity are our existing cash and cash equivalents,
      cash
      generated from operations, and cash available from borrowings under our $13,000
      revolving credit facility in our communications division, our $5,000 revolving
      credit facility in our electronics and homeland securities division, our $20,000
      revolving credit facility in our energy division, and our $10,000 revolving
      credit facility in our global brands division. As of November 30, 2007, the
      Company had excess availability of $19,535 based on loan limits and $12,773
      based on actual collateral limits. We may also generate liquidity from offerings
      of debt and/or equity in the capital markets. As of November 30, 2007, we had
      a
      total of $6,910 in unrestricted cash and cash equivalents. As of November 30,
      2007, we also had restricted cash and cash equivalents and short-term
      investments of $5,000 that included funds set aside and pledged to secure term
      debt. See additional discussion in Note 6.




36




Subsequent
      to November 30, 2007, the Company has made material changes to its operations
      in
      the communications and global brands division in an effort to decrease the
      cash
      flow used in operations. The Company has reduced its labor force in the
      operations in Richardson, TX; Hiawatha, Iowa; and North Brunswick, New Jersey
      and implemented severe cost reduction strategies in those operations. The intent
      of the changes is to reduce the negative operating cash flow of these segments
      and our business as we redefine those operations through new business ventures,
      modified operating structures, sale to a third party, or liquidation. In the
      instances where business liquidation is considered necessary by management,
      our
      senior lender will in most cases receive the majority of the proceeds from
      liquidation. While the trade accounts payable and related accrued expenses
      for
      these operations have been recorded at the full amount of the amounts owed.
      Management anticipates that many of the unsecured creditors will not receive
      the
      full amount balances owed as recorded in the financial statements as of November
      30, 2007. Given the recent cost containment measures implemented subsequent
      to
      the November 30, 2007, management believes that our existing cash and
      investments, liquidity available under our revolving credit facility, ability
      to
      raise capital from the equity markets and cash flows from our remaining
      operations, namely the Energy segment, will be sufficient to meet our operating
      and capital requirements through at least the next twelve months. However,
      if we
      are not successful in continuing to reduce our costs and improve our related
      cash flows, it may be necessary to raise additional capital that may be dilutive
      to existing shareholders.




As
      of
      November 30, 2007, the Company had a working capital deficit of $10,074 and
      an
      accumulated deficit of $75,173. In addition, the Company used $8,758 in
      operations during the three months ended November 30, 2007. The cash used in
      operations during the three months ended November 30, 2007 were primarily to
      fund our communications division’s network operations during periods of
      decreased collections of accounts receivable (see additional discussion in
      Note
      15).





We
      currently intend to evaluate strategic opportunities to align with tier one
      communications partners or other communications carriers to revitalize our
      trusted brands in the prepaid international long distance markets. Additionally,
      we plan to evaluate opportunities to optimize our electronics and homeland
      security division through various means. We also plan to pursue other strategic
      acquisitions in our energy division. We anticipate financing any purchases
      of
      assets, and any related working capital and/or initial operating cost needs,
      with cash from operations, our existing cash, cash equivalents and short-term
      investments, borrowings under our revolving credit facility, and proceeds from
      offerings of debt and/or equity securities. The amounts we may seek to raise
      through any such offerings may be substantial. There can be no assurance that
      financing will be available in amounts or on terms acceptable to us, if at
      all.
      Further, equity financing may result in dilution to existing shareholders and
      may involve securities that have rights, preferences, or privileges that are
      senior to our common stock.




*Operating
      Activities.* Cash
      used
      in operating activities was $8,758 during the three months ended November 30,
      2007 compared to cash used in operating activities of $561 during the three
      months ended November 30, 2006. The increase in cash used by operations was
      primarily due to our larger net loss during the three months ended November
      30,
      2007 than in the three months ended November 30, 2006 and an increase in
      accounts receivable.





*Investing
      Activities.* Cash
      used in investing activities was $31,056 during the three months ended November
      30, 2007 compared to cash used in investing activities of $70 during the three
      months ended November 30, 2006. The increase in cash used in investing
      activities was due primarily to cash payments related to the Appco acquisition.
      The Company paid $30,000 to the sellers of Appco. The Company also incurred
      additional increases in investment in restricted short term investments used
      to
      collateralize obligations and an increase in purchases of fixed assets during
      the comparable periods. These increases were offset by cash provided by
      acquisitions.





*Financing
      Activities.* Cash
      provided by financing activities during the three months ended November 30,
      2007
      was $45,534 compared to cash used in financing activities of $145 during the
      three months ended November 30, 2006. The increase in cash provided by financing
      activities is due to an increase in revolving lines of credit and term debt
      financing and the proceeds from the sale leaseback transaction related to
      acquisitions. The Company raised $5,000 through an equity raise. The Company
      issued 2,500,000 shares valued at $2.00 per share to YA Global on November
      9,
      2007.




37





**Impact
      of Inflation**





The
      cost
      of our products produced in our electronics and homeland security division
      is
      influenced by the cost of a wide variety of raw materials, including precious
      metals such as gold used in plating, copper and brass used for contacts, and
      plastic material used in molding connector components. Generally, increases
      in
      the cost of raw materials, labor and services have been offset by price
      increases, productivity improvements and cost saving programs. We have no
      assurance, however, that we will be able to similarly offset such cost increases
      in the future.





The
      cost
      of our products produced in our energy segment is influenced by the cost of
      fuel. Crude oil and domestic wholesale petroleum markets are volatile. General
      political conditions, acts of war or terrorism and instability in oil producing
      regions, particularly in the Middle East, Russia and South America, could
      significantly impact crude oil supplies and wholesale petroleum costs.
      Significant increases and volatility in wholesale petroleum costs could result
      in significant increases in the retail price of petroleum products and in lower
      motor fuel gross margin per gallon. Increases in the retail price of petroleum
      products could impact consumer demand for motor fuel and convenience
      merchandise.





**Seasonality**





The
      Company has experienced sales fluctuations due to customer business shut downs
      over December holidays and the slow down of purchasing activities in the summer
      during peak vacation months for the electronics and homeland security. The
      Company expects to experience sales upswings in its energy division during
      the
      summer peak vacation months. Typically the fuel and convenience store industries
      experience the largest volumes during those months.





**Critical
      Accounting Policies**





*The
      SEC has issued Financial Reporting Release No. 60, "Cautionary Advice Regarding
      Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting companies
      provide additional disclosure and commentary on their most critical accounting
      policies. In FRR 60, the SEC defined the most critical accounting policies
      as
      the ones that are most important to the portrayal of a company's financial
      condition and operating results, and require management to make its most
      difficult and subjective judgments, often as a result of the need to make
      estimates of matters that are inherently uncertain. Based on this definition,
      the Company's most critical accounting policies include: revenue recognition,
      which affects sales, inventory valuation, which affects its cost of sales and
      gross margin; and allowance for doubtful accounts and stock-based compensation,
      which affects general and administrative expenses. The methods, estimates and
      judgments the Company uses in applying these most critical accounting policies
      have a significant impact on the results the Company reports in its consolidated
      financial statements* .





*Revenue
      recognition*





The
      Company recognizes revenues when the following criteria are met: (1) the Company
      has persuasive evidence of an arrangement, such as contracts, purchase orders
      or
      written requests; (2) the Company has completed delivery and no significant
      obligations remain; (3) its price to its customer is fixed or determinable
      and
      (4) collection is probable.





In
      the
      communications division, the Company recognizes revenue upon the activation
      of
      its prepaid calling cards (except StartTalk products) by the customers or the
      transfer of risk of loss on our prepaid wireless handsets. The Company
      recognizes revenue as the minutes are used on our StartTalk products as that
      is
      when the revenue is earned. StartTalk products are provided through switches
      that the Company owns and/or leases and thus the Company is responsible for
      inbound and outbound termination. The third party switches bill as minutes
      are
      used. The Company records an estimated liability for these minutes when the
      cards are activated. Breakage is recognized ratably over the anticipated usage
      of cards. Revenue is deferred on StartTalk products that have been sold but
      services have not yet been provided to the end customer. The Company records
      sales as gross sales less an allowance for returns and discounts. We provide
      our
      customers a limited right of return for calling cards and defective handsets
      and
      record an allowance against gross revenues for estimated returns at the time
      of
      the sale based on historical results.




38





In
      our
      electronics and homeland security division, we recognize revenue upon shipment
      to our customers. We record sales as gross sales less an allowance for returns
      and discounts. We provide our customers a limited right of return for defective
      PCBs and record an allowance against gross revenues for estimated returns at
      the
      time of sale based on historical results. Because our customers quickly test
      the
      PCBs delivered, the majority of returns for defects occur within the first
      15
      days following shipment.





In
      our
      energy division, we recognize sales of petroleum and other items when the title
      passes to the customer. We recognize the gross amounts earned from sales to
      wholesale customers as revenues. Shipping and handling costs charged to
      customers are included in our sales.





In
      our
      global brands division, we recognize sales at the time the merchandise is
      shipped to our distribution customers.





*Allowance
      for doubtful accounts*





We
      maintain an allowance for doubtful accounts for estimated losses resulting
      from
      the inability of our customers to make required payments. Our allowance for
      doubtful accounts is based on our assessment of the collectibility of specific
      customer accounts, the aging of accounts receivable, our history of bad debts,
      and the general condition of the industry. If a major customer's credit
      worthiness deteriorates, or our customers' actual defaults exceed our historical
      experience, our estimates could change and adversely impact our reported
      results. If a customers’ account is deemed to be uncollectible by management,
      the account is charged off against the allowance. The allowance is then
      re-assessed and adjusted accordingly.





*Inventory
      valuation*





In
      our
      communications division, our policy is to value activated prepaid international
      card and wireless handset inventory at the lower of cost or market on a
      card-by-card basis on a first in first out basis.





In
      our
      electronics and homeland security division, our policy
      is to value raw material inventories at the lower of cost or market on a
      part-by-part basis on a first in first out basis. We also value work-in-process
      and finished goods utilizing a standard cost system which we believe
      approximates cost. This policy requires us to make estimates regarding the
      market value of its inventories, including an assessment of excess or obsolete
      inventories. We determine excess and obsolete inventories based on an estimate
      of the future demand for its products within a specified time horizon, generally
      12 months.


In
      our
      global brands division, inventories are stated at the lower of cost, determined
      by using the first-in, first-out method, or market. The Company periodically
      reviews inventory for slow-moving or obsolete items and such items are written
      down to net realizable value upon that determination.





In
      our
      energy division, liquid fuel and all other inventories are valued at the lower
      of cost, using the first-in, first-out (FIFO) method, or market.





*Long-lived
      Assets*





We
      review
      long-lived assets for impairment whenever events or changes in circumstances
      indicate that the related carrying amounts may not be recoverable. Determining
      whether impairment has occurred typically requires various estimates and
      assumptions, including determining which cash flows are directly related to
      the
      potentially impaired asset, the useful life over which cash flows will occur,
      their amount, and the asset’s residual value, if any. In turn, measurement of an
      impairment loss requires a determination of fair value, which is based on the
      best information available. We use internal discounted cash flow estimates,
      quoted market prices when available and independent appraisals as appropriate
      to
      determine fair value. We derive the required cash flow estimates from our
      historical experience and our internal business plans and apply an appropriate
      discount rate.




*Goodwill
      and Intangible Assets*




We
      test
      goodwill for impairment annually and whenever events or circumstances make
      it
      more likely than not that impairment may have occurred, such as a significant
      adverse change in the business climate or a decision to sell or dispose of
      a
      reporting unit. Determining whether an impairment has occurred requires
      estimating the fair value of the respective reporting unit, which we estimate
      using a discounted cash flow method. When available and as appropriate, we
      use
      comparative market multiples to corroborate discounted cash flow results. In
      applying this methodology, we rely on a number of factors, including actual
      operating results, future business plans, economic projections and market
      data.




39





If
      this
      analysis indicates goodwill is impaired, measuring the impairment requires
      a
      fair value estimate of each identified tangible and intangible asset. In this
      case we supplement the cash flow approach discussed above with independent
      appraisals, as appropriate.





*Stock-based
      compensation*





We
      account for stock-based compensation according to SFAS 123(R) (revised 2004),
      “ *Share
      Based Payment* ”
by
      using the modified-prospective method. Under SFAS 123(R), stock-based
      compensation expense recognized during the period is based on the value of
      the
      portion of stock-based payment awards that is ultimately expected to vest.
      Stock-based compensation expense recognized in the consolidated statement of
      operations during the three months ended November 30, 2007 includes compensation
      expense for stock-based payment awards granted prior to, but not yet vested,
      as
      of November 30, 2007, based on the grant date fair value estimated in accordance
      with SFAS 123(R).





As
      stock-based compensation expense recognized in the consolidated statement of
      operations for the three months ended November 30, 2007 is based on awards
      ultimately expected to vest, it has been reduced for estimated forfeitures.
      SFAS
      123R requires forfeitures to be estimated at the time of grant and revised,
      if
      necessary, in subsequent periods if actual forfeitures differ form those
      estimates.





*Derivative
      Liabilities*





The
      Company reviews the terms of convertible debt and equity instruments issued
      to
      determine whether there are embedded derivative instruments, including embedded
      conversion and other features that are required to be bifurcated and accounted
      for separately as derivative financial instruments. Generally, where the ability
      to physical or net-share settle an embedded conversion option is not deemed
      to
      be within the control of the Company, the embedded conversion option is required
      to be bifurcated and accounted for as a derivative liability.





In
      connection with the sale of convertible debt and equity instruments, we may
      also
      issue freestanding options or warrants. Additionally, we may issue options
      or
      warrants to non-employees in connection with consulting or other services they
      provide. Although the terms of the options and warrants may not provide for
      net-cash settlement, in certain circumstances, physical or net-share settlement
      is deemed to not be within our control and, accordingly, we are required to
      account for these freestanding options and warrants as derivative liabilities,
      rather than as equity. Certain instruments, including convertible debt and
      equity instruments and freestanding options and warrants, may be subject to
      registration rights agreements, which impose penalties for failure to register
      the underlying common stock. The existence of these potential cash penalties
      may
      require that the embedded conversion option and the freestanding options or
      warrants be accounted for as derivative instrument liabilities.





Derivative
      liabilities are initially measured at their fair value and then re-valued at
      each reporting date, with changes in the fair value reported as charges or
      credits to the statement of operations. For derivative liabilities related
      to
      freestanding warrants and embedded conversion features, we use the Black-Scholes
      option pricing model to determine the fair value. For derivative liabilities
      related to registration rights agreements and cash payment premiums, we used
      a
      discounted present value of expected future cash flows to determine the fair
      value.




To
      the
      extent that the initial fair values of the bifurcated and/or freestanding
      derivative liabilities exceed the total proceeds received, an immediate charge
      to the statement of loss is recognized, in order to initially record the
      derivative liabilities at fair value. The discount from the face value of the
      convertible debt resulting from allocating part or all of the proceeds to the
      derivative liabilities, together with the stated interest on the instrument,
      is
      amortized over the life of the instrument through periodic charges to the
      statements of loss, using the effective interest method. The classification
      of
      derivative instruments, including whether such instruments should be recorded
      as
      liabilities or as equity, is re-assessed at the end of each reporting period.
      Derivative liabilities are classified in the balance sheet as current or
      non-current based on the classification of the host instrument.





*Income
      Taxes*





Deferred
      tax assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities, and their respective tax basis. Deferred tax
      assets, including tax loss and credit carry-forwards, and liabilities are
      measured using enacted tax rates expected to apply to taxable income in the
      years in which those temporary differences are expected to be recovered or
      settled. The effect on deferred tax assets and liabilities of a change in tax
      rates is recognized in income in the period that includes the enactment date.
      Deferred income tax expense represents the change during the period in the
      deferred tax assets and deferred tax liabilities. The components of the deferred
      tax assets and liabilities are individually classified as current and
      non-current based on their characteristics. Realization of the deferred tax
      asset is dependent upon generating sufficient taxable income in future years.
      Deferred tax assets are reduced by a valuation allowance when, in the opinion
      of
      management, it is more likely than not that some portion or all of the deferred
      tax assets will not be realized.




40





**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





We
      are
      exposed to various types of market risks in the normal course of business,
      including the impact of changes in commodity prices and interest rates. We
      may
      hedge market price fluctuations associated with physical purchases of fuel
      products by using derivative instruments including futures. We are exposed
      to
      changes in interest rates as fluctuations in market interest rates may lead
      to
      significant fluctuations in the fair value of our notes payable as many of
      our
      instruments are tied to the prime lending rate.





**ITEM
      4. CONTROLS AND PROCEDURES**





*Evaluation
      of Disclosure Controls and Procedures:* Under
      the
      supervision and with the participation of our management, including our Chief
      Executive Officer and Chief Financial Officer, we conducted an evaluation of
      the
      effectiveness of the design and operations of our disclosure controls and
      procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934, as of the end of the period covered by this Quarterly
      Report, that ensure that information relating to the Company which is required
      to be disclosed in this Quarterly Report is recorded, processed, summarized
      and
      reported, within required time periods. Due to 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 compliance with the policies or procedures may deteriorate.





Based
      on
      this evaluation, our Chief Executive Officer and Chief Financial Officer have
      concluded that the Company’s disclosure controls and procedures were not
      adequate and effective to ensure that material information relating to the
      Company and its consolidated subsidiaries would be accumulated and communicated
      to them by others within those entities, particularly during the period in
      which
      this Quarterly Report was being prepared, to allow timely decisions regarding
      required disclosure. The matters identified are with regard to insufficient
      documentation of our board of directors meetings, insufficient documentation
      of
      employee stock options and warrants granted, lack of documentation regarding
      approval of non-standard adjusting journal entries, insufficient documentation
      evidencing the research and proper application of revenue recognition issues,
      insufficient documentation of the accounting review and approval processes
      and
      insufficient documentation of acquisition and purchase price allocation
      accounting. A material weakness is a significant deficiency, or combination
      of
      significant deficiencies, that results in more than a remote likelihood that
      a
      material misstatement of the annual or interim financial statements will not
      be
      prevented or detected. Significant deficiencies are control issues that could
      have a significant adverse effect on the ability to record, process, summarize
      and report financial data in the financial statements.





*Changes
      in internal controls:* There
      have been no changes in the Company’s internal control over financial reporting
      during the three months ended November 30, 2007 that have materially affected,
      or are reasonably likely to materially affect, the Company’s internal control
      over financial reporting.




41


**PART
      II**





**OTHER
      INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





From
      time
      to time, the Company may become involved in various lawsuits and legal
      proceedings that arise in the ordinary course of business. While management
      does
      not believe these matters will have a material effect on the Company’s financial
      statements, litigation is subject to inherent uncertainties, and an adverse
      result could arise from time to time that may harm the Company’s business,
      financial condition and results of operations. The Company and its subsidiaries
      are involved in the following:




On
      December 5, 2006, the Company filed a Demand for Arbitration with the American
      Arbitration Association against AT&T Corp. (“AT&T”). The Company was
      seeking a refund of amounts paid to AT&T for the period from 1999 to October
      2006 for USF charges paid to AT&T pursuant the Purchase Order Agreement,
      which sets forth the parties’ business relationship. The fees paid to AT&T
      for AT&T’s Enhanced Prepaid Card Service (“Prepaid Card Service”) included
      USF and other Federal Communications Commission (the “FCC”) charges. AT&T
      retained this revenue instead of making the required contributions to the USF
      and other FCC programs based on AT&T’s argument that its Prepaid Card
      Service was exempt under the law.




In
      February 2005, the FCC issued an order that made it clear that AT&T is
      required to pay USF charges on its Prepaid Card Service, a large percentage
      of
      which was resold to the public through Oblio. The order required AT&T and
      all companies providing calling card services similar to those described in
      the
      order to file new or revised Form 499s to properly report revenues consistent
      with the Order’s findings.





In
      compliance with the FCC order, Oblio has registered with the FCC as an
      Interstate Telecommunications Service Provider and is now considered to be
      a
      direct contributor of USF. As a direct contributor, over 98% of Oblio’s revenue
      is exempt from USF contributions and other Universal Service Administrative
      Company’s mandated fees to AT&T or other wholesale telecommunications
      service providers due to a specific FCC rule exemption applicable to
      international services.




On
      April
      16, 2007, Oblio filed a Petition for Declaratory Relief with the FCC requesting
      that the FCC find that AT&T’s refusal to honor Oblio’s proof of exemption
      from USF pass-through charges and request for a refund of collected USF charges
      are unreasonable practices and unjustly discriminatory in violation of Sections
      201(b) and 202(a) of the Communications Act.  Oblio thereafter filed a
      motion to stay the arbitration pending the FCC’s determination of Oblio’s
      Petition for Declaratory Ruling.  On May 4, 2007, the arbitrator stayed
      Oblio’s claims, but ordered that AT&T’s counterclaims, discussed below,
      could proceed.  On June 19, 2007, the FCC issued a Public Notice seeking
      public comment on Oblio’s Petition for Declaratory Ruling by interested parties
      on or before July 19, 2007.




In
      the
      arbitration, AT&T maintained that it did not charge Oblio USF fees, and if
      it did, Oblio was not owed any refund of USF amounts embedded in the amounts
      charged by AT&T to Oblio from 1999 to October 2006.  AT&T also
      filed a counterclaim in the arbitration against Oblio seeking payment for $7,200
      plus interest for prepaid phone cards purchased by Oblio.  In the
      arbitration, Oblio admitted that it has not paid AT&T the amount sought by
      AT&T.  However, Oblio asserted that the amounts claimed by AT&T are
      completely offset and excused by the USF amounts claimed by Oblio.





On
      October 12, 2007, the Company entered into a Settlement Agreement (the
“Settlement Agreement”) with AT&T, effective as of October 11, 2007. Prior
      to the Settlement Agreement, Oblio had refused to pay AT&T for previously
      delivered services in response to AT&T’s refusal to honor Oblio’s request
      for a refund of certain Universal Service Fund pass through charges which Oblio
      had alleged that it paid previously to AT&T. Pursuant to the Settlement
      Agreement, AT&T agreed to waive and discharge its right to receive $7,200
      and Oblio issued a promissory note for the payment of the balance of $600 in
      interest to AT&T in full settlement of the Partial Final Award issued in the
      arbitration proceeding on the counter claims brought by AT&T against Oblio
      and in full settlement of the Oblio’s Universal Service Fund claim against
      AT&T. Oblio offset its accounts payable with the $6,600 net
      proceeds.





Oblio
      has
      remitted $200 to AT&T in compliance with the Settlement Agreement as of
      November 30, 2007. Additionally, the Company has recorded $400 as a liability
      to
      AT&T as of November 30, 2007 for the remainder of the amounts due AT&T
      per the Settlement Agreement.




42





CLIFTON
      PREPAID COMMUNICATIONS CORP




On
      August
      21, 2007, the Company filed suit against Clifton Prepaid Communications Corp.,
      Clifton Pre-Paid Corp, and Aref Aref (collectively, “Clifton”) for non-payment
      of invoices related to services rendered in the District Court, 199 th Judicial
      District, Collin County, Texas. The Company is seeking $2,199 in payment plus
      pre-judgment interest, post judgment interest at the maximum lawful rate from
      July 30, 2007 until judgment at the rate of six percent per annum, and
      reasonable and necessary attorney fees and costs. The Company also filed a
      Motion for Writ of Garnishment against Clifton’s funds on deposit with Bank of
      America, N.A.





On
      August
      22, 2007, Clifton filed a Motion to Dissolve Writ of Garnishment. A hearing
      was
      set on September 12, 2007. On September 12, 2007, the court denied Clifton’s
      Motion to Dissolve Writ of Garnishment. The case is still pending in
      litigation.





LEVEL
      3
      COMMUNICATIONS, LLC




On
      November 2, 2007, the Company’s subsidiary, Oblio, was notified, via a process
      server, that it was being sued by Level 3 Communications, LLC (“Level 3”). Level
      3 is seeking $2,379 for alleged unpaid invoices for services rendered in
      Broomfield County: District Court, CO. This action is currently pending.


F&L,
      LLP




On
      November 27, 2007, the Company was notified, via a process server, that it
      was
      being sued by F&L, LLP (“F&L”) in the District Court of Dallas County,
      Texas 160 th Judicial
      District. F&L is seeking the Company to perform on its guarantee of notes
      payable from Oblio to F&L. Principal amounts due to F&L, LLP as of
      November 30, 2007 is $3,570. This action is currently pending.




LATIN
      AMERICAN VOIP, INC




On
      December 26, 2007, the Company’s subsidiaries, Oblio and Starttalk were
      notified, via a process server, that it was being sued by Latin American VOIP,
      Inc (“Latin American VOIP”). Latin American VOIP is seeking $518 for alleged
      unpaid invoices for services rendered in Palm Beach County: Circuit Court,
      Florida. This action is currently pending.





STX
      COMMUNICATIONS, INC




On
      January 16, 2008, STX Communications, LLC d.b.a. STX Phone Cards (“STX”) sought
      a Temporary Restraining Order (“TRO”) in the 14 th Judicial
      District Court of Dallas, County, Texas against the Company’s subsidiary Oblio.
      The TRO immediately restrained Oblio from suspending its network support for
      any
      pre-paid phone card supplied by Oblio to STX and from taking any action to
      impair the network supporting any pre-paid phone card supplied by Oblio to
      STX.
      On January 23, 2008, the Company was notified by its attorneys that the TRO
      became effective and enforceable and that the Company was in violation of its
      TRO and was subject to sanctions for contempt of court. As of January 24, 2008,
      the Company has complied with the request and is no longer in violation of
      the
      order.





WESTERN
      PRINT & MAIL, LLC




On
      January 25, 2008, the Company’s subsidiary Titan Wireless was notified, via a
      process server, that it and Ready Mobile, LLC were being sued by Western Print
      & Mail, LLC (“Western”). Western is seeking $71 including late charges from
      Ready Mobile, LLC. Western is seeking $183 from Titan Wireless, which includes
      the $71 from Ready Mobile, LLC and $112 including late charges from Titan
      Wireless, for alleged unpaid invoices for services rendered in Iowa District
      Court for Linn County. This action is currently pending.





OTHER
      LEGAL MATTERS




Subsequent
      to November 30, 2007, the Company’s subsidiary, Oblio, filed Motions for Writ of
      Garnishment against various customers for lack of payment for services rendered
      by Oblio. Motions for Writ of Garnishment have been issued for Touchtell
      Communications, Inc., Pactel Corporation, Detroit Phone Cards, and Diamond
      Phone
      Cards.





**ITEM
      1A. RISK FACTORS**




Set
      forth
      below are material changes from risk factors previously disclosed in the
      Company’s Form 10-KSB for the year ended August 31, 2007. The risk factors below
      discuss risks with respect to acquisitions completed in the period covered
      by
      this report. In
      addition to the other information set forth in this report, you should carefully
      consider the factors discussed  in
      our
      Annual Report on Form 10-KSB for the year ended August 31, 2007, which could
      materially affect our business, financial condition or future results.




43





Risks
      Relating to the Company’s Energy Division:





***The
      convenience store industry is highly competitive and impacted by new entrants
      and our failure to effectively compete could result in lower sales and lower
      margins.***





The
      convenience store industry in the geographic areas in which we operate is highly
      competitive and marked by ease of entry and constant change in the number and
      type of retailers offering products and services of the type we sell in our
      stores. We compete with other convenience store chains, independently owned
      convenience stores, motor fuel stations, supermarkets, drugstores, discount
      stores, dollar stores, club stores and mass merchants. In recent years, several
      non-traditional retailers, such as supermarkets, club stores and mass merchants,
      have impacted the convenience store industry, particularly in the geographic
      areas in which we operate, by entering the motor fuel retail business. These
      non-traditional motor fuel retailers have captured a significant share of the
      motor fuels market, and we expect their market share will continue to grow.
      In
      some of our markets, our competitors have been in existence longer and have
      greater financial, marketing and other resources than we do. As a result, our
      competitors may be able to respond better to changes in the economy and new
      opportunities within the industry. To remain competitive, we must constantly
      analyze consumer preferences and competitors’ offerings and prices to ensure
      that we offer a selection of convenience products and services at competitive
      prices to meet consumer demand. We must also maintain and upgrade our customer
      service levels, facilities and locations to remain competitive and attract
      customer traffic to our stores. We may not be able to compete successfully
      against current and future competitors, and competitive pressures faced by
      us
      could have a material adverse effect on our business and results of operations
      and our ability to service our outstanding indebtedness.




***Historical
      prices for motor fuel have been volatile and significant changes in such prices
      in the future may adversely affect our profitability.***





Crude
      oil
      and domestic wholesale petroleum markets are volatile. General political
      conditions, acts of war or terrorism and instability in oil producing regions,
      particularly in the Middle East, Russia and South America, could significantly
      impact crude oil supplies and wholesale petroleum costs. Significant increases
      and volatility in wholesale petroleum costs could result in significant
      increases in the retail price of petroleum products and in lower motor fuel
      gross margin per gallon. Increases in the retail price of petroleum products
      could impact consumer demand for motor fuel and convenience merchandise. This
      volatility makes it extremely difficult to predict the impact future wholesale
      cost fluctuations will have on our operating results and financial condition.
      In
      addition, a sudden shortage in the availability of motor fuel could adversely
      affect our business because our retail stores typically have a three to four
      day
      supply of motor fuel and our motor fuel supply contracts do not guarantee an
      uninterrupted, unlimited supply of motor fuel. A significant change in any
      of
      these factors could materially impact our motor fuel gallon volumes, motor
      fuel
      gross profit and overall customer traffic, which in turn could have a material
      adverse effect on our business and results of operations and our ability to
      service our indebtedness.





***Wholesale
      cost increases and excise tax increases on cigarettes could adversely impact
      our
      revenues and profitability.***





Significant
      increases in wholesale cigarette costs and tax increases on cigarettes may
      have
      an adverse effect on unit demand for cigarettes. Cigarettes are subject to
      substantial and increasing excise taxes on both a state and federal level.
      Increased excise taxes may result in declines in overall sales volume as well
      as
      reduced gross profit percent. Currently, major cigarette manufacturers offer
      rebates to retailers. We include these rebates as a component of our gross
      margin from sales of cigarettes. In the event these rebates are no longer
      offered, or decreased, our wholesale cigarette costs will increase accordingly.
      In general, we attempt to pass price increases on to our customers. However,
      due
      to competitive pressures in our markets, we may not be able to do so. These
      factors could materially impact our retail price of cigarettes, cigarette unit
      volume and revenues, merchandise gross profit and overall customer traffic,
      which could in turn have a material adverse effect on our business and results
      of operations and our ability to service our indebtedness.





***Future
      legislation and campaigns to discourage smoking may have a material adverse
      effect on our revenues and gross profit.***




Future
      legislation and national, state and local campaigns to discourage smoking could
      have a substantial impact on our business, as consumers adjust their behaviors
      in response to such legislation and campaigns. Reduced demand for cigarettes
      could have a material adverse effect on sales of, and margins for, the
      cigarettes we sell.




44





***The
      wholesale motor fuel distribution industry is characterized by intense
      competition and fragmentation and our failure to effectively compete could
      result in lower margins.***





The
      market for distribution of wholesale motor fuel is highly competitive and
      fragmented, which results in narrow margins. We have numerous competitors,
      some
      of which may have significantly greater resources and name recognition than
      us.
      We rely on our ability to provide value-added reliable services and to control
      our operating costs in order to maintain our margins and competitive position.
      If we were to fail to maintain the quality of our services, customers could
      choose alternative distribution sources and our margins could decrease.
      Furthermore, there can be no assurance that major oil companies will not decide
      to distribute their own products in direct competition with us or that large
      customers will not attempt to buy directly from the major oil companies. The
      occurrence of any of these events could have a material adverse effect on our
      business and results of operations and our ability to service our indebtedness.





***Our
      motor fuel operations are subject to inherent risk, and insurance, if available,
      may not adequately cover any such exposure. The occurrence of a significant
      event that is not fully insured could have a material adverse effect on our
      business.***





We
      operate retail outlets that sell refined petroleum products and distribute
      motor
      fuel to our wholesale customers. The presence of flammable and combustible
      products at our facilities provides the potential for fires and explosions
      that
      could destroy both property and human life. These products, almost all of which
      are liquids, also have the potential to cause environmental damage if improperly
      handled or released. Insurance is not available against all operational risks,
      especially environmental risks, and there is no assurance that insurance will
      be
      available in the future. In addition, as a result of factors affecting insurance
      providers, insurance premiums with respect to renewed insurance policies may
      increase significantly compared to what we currently pay. The occurrence of
      a
      significant event that is not fully insured could have a material adverse effect
      on our business and results of operations and our ability to service our
      indebtedness.





***Decreases
      in consumer spending, travel and tourism in the areas we serve could adversely
      impact our business.***





In
      the
      convenience store industry, customer traffic is generally driven by consumer
      preferences and spending trends, growth rates for automobile and commercial
      truck traffic and trends in travel, tourism and weather. Changes in economic
      conditions could adversely impact consumer spending patterns and travel and
      tourism in our markets, which could have a material adverse effect on our
      business and results of operations and our ability to service our indebtedness.





***The
      industries in which we operate are subject to seasonal trends, which may cause
      our operating costs to fluctuate, affecting our cash flow.***





We
      experience more demand for our merchandise, food and motor fuel during the
      late
      spring and summer months than during the fall and winter. Travel, recreation
      and
      construction are typically higher in these months in the geographic areas in
      which we operate, increasing the demand for the products that we sell and
      distribute. Therefore, our revenues are typically higher in the second and
      third
      quarters of our fiscal year. As a result, our results from operations may vary
      widely from period to period, affecting our cash flow.





***Compliance
      with and liability under state and federal environmental regulations, including
      those that require investigation and remediation activities, may require
      significant expenditures or result in liabilities that could have a material
      adverse effect on our business.***





Our
      business is subject to various federal, state and local environmental laws
      and
      regulations, including those relating to underground storage tanks, the release
      or discharge of hazardous materials into the air, water and soil, the
      generation, storage, handling, use, transportation and disposal of hazardous
      materials, the exposure of persons to hazardous materials, and the health and
      safety of our employees. A violation of, liability under or compliance with
      these laws or regulations or any future environmental laws or regulations,
      could
      have a material adverse effect on our business and results of operations and
      our
      ability to service our outstanding indebtedness, including the notes.




45





Certain
      environmental laws, including CERCLA, impose strict, and under certain
      circumstances, joint and several, liability on the owner and operator as well
      as
      former owners and operators of properties for the costs of investigation,
      removal or remediation of contamination and also impose liability for any
      related damages to natural resources without regard to fault. In addition,
      under
      CERCLA and similar state laws, as persons who arrange for the transportation,
      treatment or disposal of hazardous substances, we also may be subject to similar
      liability at sites where such hazardous substances come to be located. We may
      also be subject to third party claims alleging property damage and/or personal
      injury in connection with releases of or exposure to hazardous substances at,
      from or in the vicinity of our current or former properties or off-site waste
      disposal sites. The costs associated with the investigation and remediation
      of
      contamination, as well as any associated third party claims, could be
      substantial, and could have a material adverse effect on our business and
      results of operations and our ability to service our outstanding indebtedness,
      including the notes. In addition, the presence or failure to remediate
      identified or unidentified contamination at our properties could potentially
      materially adversely affect our ability to sell or rent such property or to
      borrow money using such property as collateral.





We
      are
      required to make financial expenditures to comply with regulations governing
      underground storage tanks adopted by federal, state and local regulatory
      agencies. Compliance with existing and future environmental laws regulating
      underground storage tank systems of the kind we use may require significant
      capital expenditures in the future. These expenditures may include upgrades,
      modifications, and the replacement of underground storage tanks and related
      piping to comply with current and future regulatory requirements designed to
      ensure the detection, prevention, investigation and remediation of leaks and
      spills.





In
      addition, the Federal Clean Air Act and similar state laws impose requirements
      on emissions to the air from motor fueling activities in certain areas of the
      country, including those that do not meet state or national ambient air quality
      standards. These laws may require the installation of vapor recovery systems
      to
      control emissions of volatile organic compounds to the air during the motor
      fueling process. While we believe we are in material compliance with all
      applicable regulatory requirements with respect to underground storage tank
      systems of the kind we use, the regulatory requirements may become more
      stringent or apply to an increased number of underground storage tanks in the
      future, which would require additional, potentially material, expenditures.





***Failure
      to comply with the other state and federal regulations we are subject to may
      result in penalties or costs that could have a material adverse effect on our
      business.***





Our
      business is subject to various other state and federal regulations including,
      but not limited to, employment laws and regulations, minimum wage requirements,
      overtime requirements, working condition requirements, citizenship requirements
      and other laws and regulations. Any appreciable increase in the statutory
      minimum wage rate, income or overtime pay, adoption of mandated health benefits,
      or changes to immigration laws and citizenship requirements would likely result
      in an increase in our labor costs and such cost increase, or the penalties
      for
      failing to comply with such statutory minimums or regulations, could have a
      material adverse effect on our business and results of operations and our
      ability to service our outstanding indebtedness.





***Terrorist
      attacks and threatened or actual war may adversely affect our business.***





Our
      business is affected by general economic conditions and fluctuations in consumer
      confidence and spending, which can decline as a result of numerous factors
      outside of our control. Terrorist attacks or threats, whether within the United
      States or abroad, rumors or threats of war, actual conflicts involving the
      United States or its allies, or military or trade disruptions impacting our
      suppliers or our customers may adversely impact our operations. As a result,
      there could be delays or losses in the delivery of supplies to us, decreased
      sales of our products and extension of time for payment of accounts receivable
      from our customers. Specifically, strategic targets such as energy related
      assets (which could include refineries that produce the motor fuel we purchase
      or ports in which crude oil is delivered) may be at greater risk of future
      terrorist attacks than other targets in the United States. These occurrences
      could have an adverse impact on energy prices, including prices for our
      products, and an adverse impact on the margins from our operations. In addition,
      disruption or significant increases in energy prices could result in government
      imposed price controls. Any or a combination of these occurrences could have
      a
      material adverse effect on our business and results of operations and our
      ability to service our outstanding indebtedness.





Risks
      Relating to the Company’s Global Brands Division:





**We
      may discontinue products or product lines which could result in returns, asset
      write-offs and shutdown costs. We may also engage in product recalls which
      would
      reduce our cash flow and earnings.**





In
      the
      past, we have discontinued certain products and product lines which resulted
      in
      returns from customers, asset write-offs and shutdown costs. We may suffer
      similar adverse consequences in the future to the extent we discontinue products
      that do not meet expectations or no longer satisfy consumer demand. Product
      returns, write-offs or shutdown costs would reduce cash flow and earnings.
      Product efficacy or safety concerns could result in product recalls or declining
      sales, which also would reduce our cash flow and earnings.




46




**We
      face intense competition in a mature industry and we may be required to increase
      expenditures and accept lower profit margins to preserve or maintain our market
      share. Unless the markets in which we compete grow substantially, a loss of
      market share will result in reduced sales levels and declining operating
      results.**





U.S.
      markets for consumer products are considered mature and commonly characterized
      by high household penetration, particularly with respect to our most significant
      product categories, such as laundry detergents, deodorizers, household cleaning
      products, toothpastes, antiperspirants and deodorants. Our unit sales growth
      in
      domestic markets will depend on increased use of our products by consumers,
      product innovation and our ability to capture market share from competitors.
      We
      may not succeed in implementing strategies to increase domestic revenues.





The
      consumer products industry, particularly the laundry detergent and personal
      care
      categories, is intensely competitive. To protect existing market share or to
      capture increased market share, we may need to increase expenditures for
      promotions and advertising and introduce and establish new products. Increased
      expenditures may not prove successful in maintaining or enhancing market share
      and could result in lower sales and profits. Many of our competitors are large
      companies, including Church and Dwight, The Procter & Gamble Company,
      Unilever, Inc., The Clorox Company, Colgate-Palmolive Company,
      Johnson & Johnson, S.C. Johnson & Son, Inc., many of which
      have greater financial resources than we do. These competitors have the capacity
      to outspend us should they attempt to gain market share. If we lose market
      share
      and the markets in which we compete do not grow, our sales levels and operating
      results will decline.




**Providing
      price concessions or trade terms that are acceptable to our trade customers,
      or
      the failure to do so, could adversely affect our sales and
      profitability.**





Consumer
      products, particularly those that are value-priced like many of our products,
      are subject to significant price competition and in recent years have been
      characterized by price deflation. From time to time, we may need to reduce
      the
      prices for some of our products to respond to competitive and customer pressures
      and to maintain market share. Any reduction in prices to respond to these
      pressures would harm profit margins. In addition, if our sales volumes fail
      to
      grow sufficiently to offset any reduction in margins, our results of operations
      would suffer.





Because
      of the competitive environment facing retailers, many of our trade customers,
      particularly our high-volume retail store customers, have increasingly sought
      to
      obtain pricing concessions or better trade terms. To the extent we provide
      concessions or better trade terms, our margins are reduced. Further, if we
      are
      unable to maintain terms that are acceptable to our trade customers, these
      trade
      customers could reduce purchases of our products and increase purchases of
      products from our competitors which would harm our sales and profitability.




**A
      continued shift in the retail market from food and drug stores to club stores
      and mass merchandisers could cause our sales to decline.**





Our
      performance also depends upon the general health of the economy and of the
      retail environment in particular and could be significantly harmed by changes
      affecting retailing and by the financial difficulties of retailers. Industry
      wide, consumer products such as those marketed by us are increasingly being
      sold
      by club stores and mass merchandisers, while sales of consumer products by
      food
      and drug stores are comprising a smaller proportion of the total volume of
      consumer products sold. Sales of our products are stronger in the food and
      drug
      channels of trade and not as strong with the club stores and mass merchandisers.
      Although we have taken steps to improve sales by club stores and mass
      merchandisers, if we are not successful in improving sales to these channels,
      and the current trend continues our financial condition and operating results
      could suffer.




**Environmental
      matters create potential liability risks.**





We
      must
      comply with various environmental laws and regulations in the jurisdictions
      in
      which we operate, including those relating to the handling and disposal of
      solid
      and hazardous wastes and the remediation of contamination associated with the
      use and disposal of hazardous substances. A release of such chemicals due to
      accident or an intentional act could result in substantial liability to
      governmental authorities or to third parties. We have incurred, and will
      continue to incur, capital and operating expenditures and other costs in
      complying with environmental laws and regulations. It is possible that we could
      become subject to additional environmental liabilities in the future that could
      cause a material adverse effect on our results of operations or financial
      condition.




47




**Failure
      to maximize or successfully assert intellectual property rights could materially
      adversely affect our competitiveness.**





We
      rely
      on trademark, trade secret, patent and copyright laws to protect our
      intellectual property rights. We cannot be sure that these intellectual property
      rights will be maximized or that they can be successfully asserted. There is
      a
      risk that we will not be able to obtain and perfect our own intellectual
      property rights, or, where appropriate, license intellectual property rights
      necessary to support new product introductions. We cannot be sure that these
      rights, if obtained, will not be invalidated, circumvented or challenged in
      the
      future. In addition, even if such rights are obtained in the United States,
      the
      laws of some of the other countries in which our products are or may be sold
      do
      not protect intellectual property rights to the same extent as the laws of
      the
      United States. Our failure to perfect or successfully assert intellectual
      property rights could make us less competitive and could have a material adverse
      effect on our business, operating results and financial condition.





**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





On
      November 1, 2007, the Company issued 2,000,000 shares of common stock valued
      at
      $2.00 per share to YA Global Investments, LP as consideration for YA assigning
      the Company the rights to the assets of Nexus Nano.





On
      November 2, 2007, the Company issued 2,500,000 shares of common stock valued
      at
      $2.00 to YA Global Investments, LP pursuant to the Securities Purchase Agreement
      dated November 2, 2007. No fees or warrants were issued in consideration for
      this issuance.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**




Not
      applicable.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





Not
      applicable.





**ITEM
      5. OTHER INFORMATION**





Not
      applicable **.**





**ITEM
      6. EXHIBITS**




31.1
                - Certification of Principal Executive Officer pursuant to Rule 13a-14
                and
                Rule15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended31.2
                - Certification of Principal Financial Officer pursuant to Rule 13a-14
                and
                Rule 15d14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended32.1
                - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to
                Section906
                of the Sarbanes-Oxley Act of 2002 (Chief Executive
                Officer)32.2
                - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to
                Section906
                of the Sarbanes-Oxley Act of 2002 (Chief Financial
                Officer)




48





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized


TITAN
                GLOBAL HOLDINGS, INC.By:
            /s/
                Bryan ChanceBryan
              Chance
              Chief
                Executive Officer and
              President
              (Principal
                Executive Officer) TITAN
                GLOBAL HOLDINGS, INC.By:
            /s/
                Scott HensellScott
              Hensell
              Chief
                Financial Officer
              (Principal
                Financial and
              Accounting
                Officer)


49