**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-QSB**
 (Mark
        One)
 
 x
              Quarterly
                  report under Section 13 or 15(d) of the Securities Exchange Act
                  of 1934
                  for the quarterly period ended November 30,
                  2006
  o
                Transition
                    report under 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.**
 (Name
        of
        Small Business Issuer in Its Charter)
 Utah
                87-0433444(State
                    of Incorporation)
                (IRS
                    Employer Identification No.)
 
 **407
        International Parkway Suite #403**
 **Richardson,
        Texas 75081**
 (Address
        of Principal Executive Offices)
 
 **(972)
        470-9100**
 (Issuer's
        Telephone Number)
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days.
 
 Yes
x No
o
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 
 Yes o No
x
 
 As
        of
        January 12, 2007, the Company had  49,114,052 shares
        of
        its par value $0.001 common stock issued and outstanding.
 
 Transitional
        Small Business Disclosure Format (check one):
 
 Yes o No
x
  
 **TITAN
          GLOBAL HOLDINGS, INC.**
 **TABLE
          OF CONTENTS**
 Page**PART
                    I.   FINANCIAL INFORMATION**Item
                    1.  Unaudited Condensed Consolidated Financial Statements
                
                4Item
                    2.  Management's Discussion and Analysis of Financial Condition
                    and Results of Operations
                
                16Item
                    3.  Controls and Procedures
                
                26**PART
                    II.  OTHER INFORMATION**Item
                    1.  Legal Proceedings
                
                27Item
                    2.  Unregistered Sales of Equity Securities and Use of Proceeds
                
                27Item
                    3.  Defaults upon senior securities
                
                28Item
                    4.  Submission of matters to a vote of security holders
                
                28Item
                    5.  Other information
                
                28Item
                    6.  Exhibits
                
                28Signatures
                
                29
  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.**
  **Consolidated
          Balance Sheet**
  **November
          30, 2006**
  **(In
          thousands, except common and preferred stock share data)**
  **(Unaudited)**
 **ASSETS**Current
                    assets:Cash
                    and cash equivalents
                
                $
                625Restricted
                    short-term investment
                
                
                750Accounts
                    receivable, trade (less allowance for doubtful accounts of $315
                    and
                  allowance
                    for sales returns of $120)
                
                
                16,683Universal
                    Service Fund fees recoverable
                
                
                2,831Inventory,
                    net
                
                
                1,939Prepaid
                    expenses and other current assets
                
                
                312Total
                    current assets
                
                
                23,140Equipment
                    and improvements, net
                
                
                2,117Definite-lived
                    intangible assets, net
                
                
                20,096Capitalized
                    loan fees, net
                
                
                299Goodwill
                
                
                4,448Federal
                    Excise Tax recoverable
                
                
                3,990Other
                    assets
                
                
                165Total
                    assets
                
                $
                54,255**LIABILITIES
                    AND STOCKHOLDERS' DEFICIT**Current
                    liabilities:Accounts
                    payable - trade
                
                $
                19,767Accrued
                    liabilities
                
                
                4,753Short-term
                    debt (net of discount $3,248)
                
                
                20,365Derivative
                    liabilities
                
                
                9,298Short-term
                    seller-financed debt (net of discount of $75)
                
                
                4,748Total
                    current liabilities
                
                
                58,931Long-term
                    seller-financed debt
                
                
                -Other
                    long-term liabilities
                
                
                109Redeemable,
                    convertible preferred stock - 9,000 shares authorized, issued
                    and
                  outstanding
                    (preference in liquidation of $9,352 and net of discount of
                    $479)
                
                
                8,873Long-term
                    derivative liabilities
                
                
                1,531Total
                    liabilities
                
                
                69,444Stockholders'
                    equity:Common
                    stock-$0.001 par value; 950,000,000 shares authorized; 49,114,052
                  shares
                    issued and outstanding
                
                
                49Additional
                    paid-in capital
                
                
                18,553Accumulated
                    deficit
                
                
                (33,791
                )Total
                    stockholders' deficit
                
                
                (15,189
                )Total
                    liabilities and stockholders' deficit
                
                $
                54,255
  The
        accompanying notes form an integral part of the condensed consolidated financial
        statements.
  4
 **Titan
          Global Holdings, Inc.**
  **Consolidated
            Statements of Operations**
  **(In
              thousands, except share and per share amounts)**
  **(Unaudited)**
 **Three
                    Months Ended****11/30/2006**
                
                **11/30/2005****(As
                    Restated)**Sales
                    - Communications division
                
                $
                24,574
                
                $
                23,267Sales
                    - Electronics and homeland security division
                
                
                5,412
                
                $
                4,413Total
                    Sales
                
                
                29,986
                
                
                27,680Cost
                    of sales - Communications division
                
                
                21,426
                
                
                21,447Cost
                    of sales - Electronics and homeland security division
                
                
                5,131
                
                
                4,124Total
                    Cost of Sales
                
                
                26,557
                
                
                25,5713,429
                
                
                2,109Operating
                    expenses:Sales
                    and marketing
                
                
                498
                
                
                425General
                    and administrative expenses
                
                
                1,873
                
                
                1,024Amortization
                    of intangibles
                
                
                1,335
                
                
                1,174Loss
                    from operations
                
                
                (277
                )
                
                (514
                )Other
                    income (expenses):Interest
                    income
                
                
                1
                
                
                -Interest
                    expense, net
                
                
                (806
                )
                
                (1,563
                )Loss
                    on value of derivative instruments
                
                
                (5,757
                )
                
                (4,260
                )Gain
                    (Loss) on extinguishment of debt
                
                
                -
                
                
                -Miscellaneous
                
                
                -
                
                
                1Loss
                    before income taxes
                
                
                (6,839
                )
                
                (6,336
                )Provision
                    for income taxes
                
                
                -
                
                
                -Net
                    loss
                
                
                (6,839
                )
                
                (6,336
                )Accrual
                    of preferred stock dividend
                
                
                (68
                )
                
                -Net
                    loss applicable to common shareholders
                
                $
                (6,907
                )
                $
                (6,336
                )Net
                    loss applicable to common shareholders per share:Basic
                    and diluted
                
                $
                (0.14
                )
                $
                (0.18
                )Number
                    of weighted average shares:Basic
                    and diluted
                
                
                49,114,052
                
                
                35,332,638
  The
          accompanying notes form an integral part of the condensed consolidated
          financial
          statements.
 5
 **Titan
          Global Holdings, Inc.**
 **Consolidated
          Statements of Cash Flows** **(In
            thousands, except share and per share amounts)** **(Unaudited)**
 **Three
                    Months Ended****11/30/2006**
                
                **11/30/2005****(As
                    Restated)**Cash
                    flows from operating activities:Net
                    loss
                
                
                (6,839
                )
                
                (6,336
                )Adjustments
                    to reconcile net loss to net cash provided by operating
                    activities:Depreciation
                    and amortization of tangible assets
                
                
                167
                
                
                158Bad
                    debt and sales return allowances
                
                
                33
                
                
                -Non-cash
                    compensation
                
                
                -
                
                
                -Non-cash
                    interest expense (income)
                
                
                (12
                )
                
                310Non-cash
                    interest expense related to preferred stock dividend
                
                
                -
                
                
                80Amortization
                    of debt discounts and capitalized loan fees
                
                
                134
                
                
                500Restricted
                    Cash
                
                
                -
                
                
                -Amortization
                    of intangibles
                
                
                1,335
                
                
                1,174Amortization
                    of deferred compensation
                
                
                -
                
                
                7Loss
                    on fair value of derivative liabilities
                
                
                5,757
                
                
                4,260Effective
                    Interest and debt discount from derivative instruments
                
                
                -
                
                
                -(Gain)
                    loss on debt extinguishment
                
                
                -
                
                
                -Changes
                    in operating assets and liabilities:Accounts
                    receivable
                
                
                (3,231
                )
                
                416Inventory
                
                
                479
                
                
                (78
                )Prepaid
                    expenses and other current assets
                
                
                (152
                )
                
                38Other
                    assets
                
                
                -
                
                
                17Universal
                    Service Fund fee recoverable
                
                
                (1,354
                )
                
                -Federal
                    Excise Tax recoverable
                
                
                (243
                )
                
                -Accounts
                    payable and accrued liabilities
                
                
                3,365
                
                
                (1,357
                )Total
                    adjustments
                
                
                6,153
                
                
                5,525Net
                    cash used in operating activities
                
                
                (561
                )
                
                (811
                )Cash
                    flows from investing activities:Acquisition
                    of Oblio Telecom, LLP
                
                
                -
                
                
                -Equipment
                    and improvements expenditures
                
                
                (70
                )
                
                (76
                )Restricted
                    investment to collateralize obligation
                
                
                -
                
                
                (750
                )Net
                    cash used in investing activities
                
                
                (70
                )
                
                (826
                )Cash
                    flows from financing activities:Proceeds
                    from notes payable
                
                
                850
                
                
                -Proceeds
                    from loans payable from related parties
                
                
                -
                
                
                372Proceeds
                    from issuance of long term debt, net of financing cost
                
                
                -
                
                
                -Proceeds
                    from lines of credit, net of repayments
                
                
                (810
                )
                
                1,199Payments
                    on notes and loans payable
                
                
                -
                
                
                -Payments
                    on current portion of long-term debt
                
                
                (60
                )
                
                -Payments
                    on long-term debt
                
                
                -
                
                
                (1,050
                )Payments
                    on loans from related parties
                
                
                -
                
                
                (55
                )Non-cash
                    interest expense related to accrued preferred stock
                    dividend
                
                
                -
                
                
                -Capitalized
                    Loan Fees
                
                
                (125
                )
                
                -Net
                    cash (used in) and provided by financing activities
                
                
                (145
                )
                
                466Net
                    decrease in cash
                
                
                (776
                )
                
                (1,171
                )Cash
                    and cash equivalents at beginning of period
                
                
                1,401
                
                
                2,242Cash
                    and cash equivalents at end of period
                
                
                625
                
                
                1,071Supplemental
                    disclosure of cash flow information:Interest
                    paid
                
                $
                703
                
                $
                1,005Income
                    tax paid
                
                $
                -
                
                $
                -Non
                    cash activities:Issuance
                    of common stock to pay accrued interest
                
                $
                -
                
                $
                20
  The
          accompanying notes form an integral part of the condensed consolidated
          financial
          statements.
 6
  **TITAN
        GLOBAL HOLDINGS, INC.**
  **NOTES
        TO UNAUDITED CONDENSED 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 condensed 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-QSB 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, 2006 are not indicative of the results
        that may be expected for the fiscal year ending August 31, 2007. These unaudited
        condensed 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, 2006 as filed with the Securities and Exchange Commission on December
        15, 2006. All significant intercompany accounts and transactions have been
        eliminated in preparation of the condensed consolidated financial statements.
        All numbers referenced below are stated in thousands unless otherwise
        noted.
 
 The
        preparation of unaudited condensed 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, valuation reserves for
        accounts receivable, 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:*
 
 Titan
        Global Holdings, Inc. (“Titan” or the "Company") was formed on March 1, 1985 as
        a Utah corporation. In August 2002, the Company acquired Titan PCB West,
        Inc. 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.
 
 The
        accompanying consolidated statements of operations include the operating
        results
        of the Company's subsidiaries, Titan PCB West, Inc. (“PCB West”), Titan PCB
        East, Inc. (“PCB East”), Oblio Telecom, Inc. and Titan Wireless Communications,
        Inc. (“Titan Wireless Communications”). The two subsidiaries of Oblio, Pinless
        Inc. and StartTalk, Inc. are also included in the accompanying consolidated
        financial statements.
 
 *Nature
        of Operations:*
 
 The
        Company operates in two market segments - (i) communications and (ii)
        electronics and homeland security.
 
 Communications
        Segment
  The
        Company, through its subsidiaries, Oblio Telecom, Titan Wireless Communications,
        Pinless and StartTalk, which comprises its communications division, 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.
  7
  Electronics
        and Homeland Security Segment
  The
        Company, through its Titan PCB East and Titan PCB West 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, the Titan PCB 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.
  *Liquidity*
  For
        the
        quarter ended November 30, 2006, the Company incurred a net loss of $6,839
        and
        used cash in operations of $561. As of November 30, 2006 the Company had
        a net
        working capital deficit of $35,791. This working capital deficit is primarily
        the result of term debt agreements being due and payable in the next twelve
        months and the classification of amounts drawn under revolving credit agreements
        as a current liability and the recognition of derivative liabilities. In
        the
        aggregate, short-term debt represents approximately $25,113 of the Company’s
        working capital deficit. The Company refinanced these debts agreements on
        December 29, 2006; see further discussion in Note 15 Subsequent Events. The
        Company’s principal sources of liquidity are its existing cash, cash equivalents
        and short term investments, cash generated from operations and cash available
        from borrowings under its revolving credit facilities. The Company had available
        borrowings under its line of credit of $3,216 at November 30, 2006. The Company
        may also generate liquidity from offerings of debt and or equity in the capital
        markets. As of November 30, 2006, the Company has a total of $625 in
        unrestricted cash and cash equivalents. As of November 30, 2006, it also
        had
        restricted investments of $750 that included funds set aside or pledged to
        secure letters of credit with a key supplier. Management believes the Company’s
        existing cash and cash equivalents, liquidity under its revolving credit
        facility and anticipated cash flows from operations will be sufficient to
        meet
        its operating and capital requirements at least for the next twelve months.
  ***Note
        2.*** **** ***Loss
        Per Common Share***
 
 We
        compute net income or 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, 2006 consisted of options to purchase 845,000 common shares,
        warrants to purchase 10,100,000 common shares, and preferred stock convertible
        into 6,054,500 common shares) are not considered in the computations as they
        are
        anti-dilutive.
 
 ***Note
        3.*** **** ***Inventory***
 
 Inventory
        consisted of the following:
 Raw
                    materials and finished subassemblies
                
                $
                458Work
                    in process
                
                
                395Finished
                    goods
                
                
                1,1742,027Less
                    inventory reserves
                
                
                (88
                )Total
                
                $
                1,939
  8
  At
        November 30, 2006, the reserve for obsolescence was $88 principally related
        to
        raw material inventory in the Electronics and Homeland Security division
        and
        inventory obsolescence in the Communications division.
 
 ***Note
        4.*** **** ***CapitalSource***
 
 As
        of
        November 30, 2006 the Company currently has $5,950 in term notes payable
        (“Term
        Loan”) and $7,465 in a revolving line of credit (“Revolving Loan”) with
        CapitalSource. The Company entered into Amendment No. 5 to the Credit and
        Security Agreement dated as of August 12, 2005. The Amendment provides for
        the
        elimination of the early termination fee in the amount of approximately $800
        if
        the Capital Source loan is repaid in full prior to December 31, 2006. In
        connection with the Amendment, Oblio also agreed (i) to raise a minimum of
        $5,000 of additional equity or subordinated debt by December 31, 2006, unless
        Capital Source has been repaid in full on or prior to such date, (ii) to
        provide
        certain financial reports to Capital Source, and (iii) to amend the definition
        of Eligible Accounts. Capital Source also agreed to waive in writing certain
        non-monetary defaults which occurred prior to the date of the Amendment. All
        amounts owed related to the Capital Source Credit and Security Agreement
        dated
        August 12, 2005 were paid on December 29, 2006; see further discussion in
        Note
        15 Subsequent Events.
  At
          November 30, 2006, the following amounts were outstanding:
 CapitalSource
                    Revolver
                
                $
                7,465Less:
                    current portion
                
                $
                (7,465
                )$
                -CapitalSource
                    Terms A & B
                
                $
                5,950Less:
                    current portion
                
                
                (5,950
                )$
                -The
                    revolving credit facility provides for borrowings
                  utilizing
                    an asset based formula, using eligible receivables,
                  inventory
                    and fixed assets, less any reserves. The amount
                  of
                    available borrowings pursuant to the formula as follows:
                
                $
                10,681Less:
                    amount borrowed under minimum borrowing note
                
                
                -Less:
                    amount borrowed under revolving credit facility
                
                
                (7,465
                )(7,465
                )Excess
                    availability
                
                $
                3,216
  ***Note
        5. Laurus Master Fund***
 
 On
        September 12, 2006, the Company and Laurus entered into a letter agreement
        pursuant to which Laurus agreed for a period of two years, commencing on
        September 12, 2006, that without prior written consent of the Company, Laurus
        will not sell any shares of common stock of the Company during a twenty two
        (22)
        day trading period by a number that exceeds twenty percent (20%) of the
        aggregate dollar trading volume of the common stock for the twenty two (22)
        day
        trading period immediately preceding and including the date of such proposed
        sales by Laurus. Such restriction, however, is not applicable to transfers
        in a
        private transaction, including as a bona fide gift or gifts, provided that
        the
        transferee thereof agrees to be bound in writing by the restrictions contained
        in the letter agreement. As of November 30, 2006, Laurus owned 1,250,000
        shares
        of common stock.
 
 As
        of
        November 30, 2006, the Company currently has $3,137 in term notes payable
        and
        $3,531 in a revolving credit facility with Laurus Master Funds. Additionally,
        the Company has recorded beneficial conversion features of $1,304 as of November
        30, 2006 associated with the term notes payable and revolving credit facility.
        All amounts owed to Laurus are classified as current in the accompanying
        unaudited financial statements. On September 12, 2006, the Company entered
        into
        an Option/Purchase Agreement with Laurus whereby Laurus granted the Company
        the
        option to repurchase an aggregate of 1,250,000 shares of common stock of
        the
        Company which are held by Laurus. In consideration of the grant of the option,
        the Company agreed to pay to Laurus $0.5. The option is exercisable at a
        purchase price of $0.5. The exercise of the option is subject to the prior
        repayment, on or before December 31, 2006, of all outstanding amounts owed
        by
        the Company to Laurus pursuant to the secured revolving note dated November
        20,
        2003, minimum borrowing note dated November 20, 2003, convertible term note
        dated March 30, 2004, and convertible term note dated November 20, 2003.
        The
        option was exercised on December 29, 2006. All amounts owed to Laurus were
        paid
        on December 29, 2006, see further discussion in Note 15 Subsequent
        Events.
  9
 
 At
        November 30, 2006 the following amounts were due to Laurus. See Note 7 for
        information on the derivative instrument liabilities related to the warrants
        issued to Laurus and the bifurcated embedded derivative instruments related
        to
        the convertible notes.
  At
          November 30, 2006, the following amounts were outstanding:
 Laurus
                    Revolver (no additional borrowing availability)
                
                $
                3,531Less:
                    current portion
                
                
                (3,531
                )$
                -Laurus
                    Overadvance
                
                $
                1,500Less:
                    current portion
                
                
                (1,500
                )$
                -Laurus
                    Term # 1
                
                $
                1,637Less:
                    current portion
                
                
                (1,637
                )$
                -The
                    revolving credit facility provides for borrowings
                  utilizing
                    an asset based formula, using eligible receivables,
                  inventory
                    and fixed assets, less any reserves. The amount of
                  available
                    borrowings pursuant to the formula as follows:
                
                $
                3,531Less:
                    amount borrowed under minimum borrowing note
                
                
                -Less:
                    amount borrowed under revolving credit facility
                
                
                (3,531
                )(3,531
                )Excess
                    availability
                
                $
                -
  ***Note
        6. Cornell Capital Partners***
 
 On
        October 10, 2006, the Company consummated a Securities Purchase Agreement
        (the
        "Purchase Agreement") dated October 10, 2006 with Cornell Capital Partners
        L.P.
        ("Cornell") providing for the sale by the Company to Cornell of its 8% secured
        convertible debentures in the aggregate principal amount of $1,200 (the
        "Debentures") of which $850 was advanced immediately. The second installment
        of
        $150 will be advanced two business days prior to the filing by the Company
        with
        the Securities and Exchange Commission (the "Commission") of the Registration
        Statement (as defined below). The last installment of $200 will be advanced
        two
        business days prior to the date the Registration Statement is declared effective
        by the Commission. The Debentures mature on the second anniversary of the
        date
        of issuance (the "Maturity Date") and the Company is not required to make
        any
        cash payments until the Maturity Date.
  10
 
 Holder
          (the "Holder") of the Debentures may convert at any time amounts outstanding
          under the Debentures into shares of Common Stock of the Company (the "Common
          Stock") at a conversion price per share equal to $1.00. The Company has
          recorded
          an embedded derivative liability and associated expense, as appropriate,
          for the
          warrants associated with the Debenture. Also, the Company recorded a beneficial
          conversion feature of $569 at November 30, 2006.
 The
          Company has the right to redeem a portion or all amounts outstanding under
          the
          Debentures prior to the Maturity Date at a 10% redemption premium provided
          that
          (i) the Volume Weighted Average Price “VWAP” of the Company’s Common Stock is
          less than the conversion price of $1.00; (ii) no event of default has occurred
          and (iii) the Registration Statement is effective.
 
 Beginning
        on February 6, 2007 and continuing on the first trading day of each calendar
        month for the twelve months thereafter, the Company shall make mandatory
        redemptions consisting of outstanding principal divided by twelve, accrued
        and
        unpaid interest and a redemption premium of 10% per month, until the Debentures
        are paid in full. The Company shall have the option to make the mandatory
        redemption payments in cash or by issuing to the Holder such number of shares
        of
        its common stock which shall be equal to the mandatory redemption amount
        divided
        by 90% of the lowest VWAP during the 15 trading days prior to the date of
        the
        redemption payment. The Company will be permitted to pay the mandatory
        redemption by issuing shares of its common stock provided (i) the closing
        bid
        price of the Company’s Common Stock is greater than the redemption conversion
        price as of the trading day immediately prior to the date the redemption
        payment
        is due; (ii) no event of default shall have occurred and (iii) the Registration
        Statement is effective.
 
 Under
        the
        Purchase Agreement, the Company also issued to Cornell (A) five-year warrants
        to
        purchase 250,000 and 250,000 shares of Common Stock at $1.00 and $1.10,
        respectively (collectively, the "Warrants"); and (B) 15,000 shares of its
        common
        stock (the “Shares”). The Company has recorded a derivative liability for the
        500,000 warrants associated with this transaction.
 
 In
        connection with the Purchase Agreement, the Company also entered into a
        registration rights agreement with Cornell (the "Registration Rights Agreement")
        providing for the filing of a registration statement (the "Registration
        Statement") with the Securities and Exchange Commission registering the Common
        Stock issuable upon conversion of the Debentures and exercise of the Warrants
        and the 15,000 Shares. The Company is obligated to use its best efforts to
        cause
        the Registration Statement to be declared effective no later than February
        8,
        2007 and to insure that the registration statement remains in effect until
        all
        of the shares of common stock issuable upon conversion of the Debentures
        and
        exercise of the Warrants have been sold. In the event of a default of its
        obligations under the Registration Rights Agreement, including its agreement
        to
        file the Registration Statement with the Securities and Exchange Commission
        no
        later than December 11, 2006, or if the Registration Statement is not declared
        effective by February 8, 2007, it is required to pay to Cornell, as liquidated
        damages, for each thirty day period that the registration statement has not
        been
        filed or declared effective, as the case may be, either a cash amount or
        shares
        of our common stock equal to 2% of the liquidated value of the Debentures.
 
 On
        January 5, 2007, Cornell Capital Partners, LP and the Company executed Amendment
        No. 1 to the Registration Rights Agreement whereby among other provisions,
        changed the required filing date of the Registration Statement to January
        31,
        2007 and the date the Initial Registration Statement is to be declared effective
        by the Securities and Exchange Commission to March 31, 2007.
 
 ***Note
        7. 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 85%, (3) risk free interest rate of 4.17% and (4) dividend
        rate of
        0%.
  11
 
 The
        fair
        value of the individual short and long-term embedded and free standing
        derivatives at November 30, 2006 and 2005 is as follows:
 **Issue
                    Date**
                
                **Expiration
                    Date**
                
                **Instrument**
                
                **Exercise**
                  **Price
                    per**
                  **Share**
                
                **Value
                    at**
                  **November
                    30,**
                  **2006**11/20/2003
                
                
                11/20/2008
                
                
                Registration
                    Rights Agreement
                
                
                
                
                $
                1,17311/20/2003
                
                
                11/20/2008
                
                
                3%
                    Cash payment premium
                
                
                
                
                
                3203/30/2004
                
                
                03/30/2007
                
                
                Registration
                    Rights Agreement
                
                
                
                
                
                27510/12/2006
                
                
                10/12/2011
                
                
                Convertible
                    Debenture
                
                
                
                
                
                448**Short-Term
                    Embedded Derivatives**
                
                **1,928**03/24/2006
                
                
                03/24/2013
                
                
                6,750,000
                    Warrants
                
                $
                0.23
                
                
                5,85409/20/2006
                
                
                09/17/2009
                
                
                1,225,000
                    Warrants
                
                $
                1.00
                
                
                65509/20/2006
                
                
                09/17/2009
                
                
                1,225,000
                    Warrants
                
                $
                1.50
                
                
                53010/12/2006
                
                
                10/12/2011
                
                
                250,000
                    Warrants
                
                $
                1.00
                
                
                16510/12/2006
                
                
                10/12/2011
                
                
                250,000
                    Warrants
                
                $
                1.10
                
                
                166**Total
                    Short-Term Embedded and Freestanding Derivatives**
                
                **9,298**08/12/2005
                
                
                08/12/2008
                
                
                Long-Term
                    fair value of conversion
                  feature
                    of Series A Preferred Stock
                
                $
                1.50
                
                
                1,531**Total
                    Embedded and Free Standing Derivative Liabilities**
                **$**
                **10,829**
 In
        connection with the subsequent event that occurred on December 29, 2006,
        see
        Note 15 Subsequent Events, certain of the embedded derivative liabilities
        recorded at November 30, 2006 will be revalued and/or eliminated as of December
        29, 2006.
 
 ***Note
        8.  Stock Based Compensation***
 
 As
        permitted under SFAS 123, “ *Accounting
        for Stock-Based Compensation”,* as
        amended, until August 31, 2006, the Company accounted for its stock based
        compensation in accordance with Accounting Principles Board Opinion No. 25,
        “ *Accounting* for *Stock Issued to Employees,” (“APB No. 25* ”).
        Under
        APB No. 25, compensation cost was recognized over the vesting period based
        on
        the excess, if any, on the date of grant of the fair value of the Company’s
        shares over the employee’s exercise price. When the exercise price of the option
        was less than the fair value price of the underlying shares on the grant
        date,
        deferred stock compensation was recognized and amortized to expense in
        accordance with Financial Accounting Standards Board Interpretation “FASB” No.
        44 over the vesting period of the individual options. Accordingly, if the
        exercise price of the Company’s employee options equaled or exceeded the market
        price of the underlying shares on the date of grant no compensation expense
        was
        recognized. Effective September 1, 2006, the Company adopted the fair value
        recognition provisions of SFAS 123(R) (revised 2004), “Share Based Payment”
using the modified-prospective transition method. Under this transition method,
        compensation cost recognized during the period includes (a) compensation
        cost
        for all share-based payments granted prior , but not yet vested , based on
        the
        grant date fair value estimated in accordance with the original provisions
        of
        SFAS No. 123(R), and (b) compensation cost for all share based payments granted
        subsequent to September 1, 2006, based on the grant-date fair value estimated
        in
        accordance with SFAS No 123(R). Results for prior periods have not been
        restated. Stock based compensation is included in selling, general and
        administrative expenses. Options or shares awards issued to non-employees
        and
        directors are valued using the Black-Scholes pricing model and expensed over
        the
        period services are provided.
  ***Note
        9. Federal Excise Tax Refund***
  In
        May
        2006, the United States Treasury Department formally conceded the legal dispute
        over federal excise taxes on long distance telephone service. Accordingly,
        the
        Internal Revenue Service will process principal and interest refunds for
        all
        Federal Excise Taxes (FET) paid for long distance services during the last
        three
        years. According, the Company has established a recoverable for FET amounts
        that
        have historically been included in the cost of sales as reported in historical
        financial statements.
 12
  ***Note
        10. Universal Service Fund Refund***
  Under
        FCC
        regulations, certain providers of telecommunication services are required
        to
        submit Universal Service Fund Fees (USF). In fiscal year 2006, the Company
        determined that a majority of the telecommunication services it had previously
        provided were exempt from USF based on the limited international revenue
        exemption rule (LIRE). Under the LIRE, a telecommunications carrier whose
        revenue from international services exceeds its revenue from United States
        long
        distance services by a ratio of 88% to 12% is exempt from liability for USF
        charges on the international revenue amount. The Company has reached an
        agreement with one of its wholesale suppliers that telecommunication services
        previously reported by the wholesale supplier will be reported by Oblio and
        therefore subject to the aforementioned exemption. A corresponding receivable
        has been established by the Company for the recovery of USF pursuant to that
        agreement.
  ***Note
        11.  Litigation***
  From
        time
        to time, the Company may become involved in various lawsuits and legal
        proceedings which 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 Titan’s business,
        financial condition and results of operations. The Company and its subsidiaries
        are involved in the following:
 
 On
        July
        17, 2006, the Company filed a lawsuit against AT&T Corp. (“AT&T”);
        whereby Oblio Telecom, Inc. (“Oblio”) alleged that they are entitled to a refund
        from the United States Government for improperly paid federal excise taxes
        and
        over AT&T’s refusal to stop charging Oblio federal excise taxes as part of
        the sales price it charges to Oblio for the purchase of prepaid telephone
        pins.
        The amount in controversy is approximately $3,466.
 
 On
        December 5, 2006, Oblio Telecom, Inc. (“Oblio”), the Company’s wholly owned
        subsidiary, filed a Demand for Arbitration with the American Arbitration
        Association against AT&T Corp. (“AT&T”). Oblio is seeking a refund of
        amounts paid to AT&T for the period from 1999 to October 2006 for Universal
        Service Fund (“USF”) charges paid to AT&T pursuant the Purchase Order
        Agreement, which sets forth the parties’ business relationship. Oblio estimates
        that it and its predecessor have paid AT&T at least $61,913 in USF charges
        from 2001 to October 2006, but has not determined the USF charges it paid
        in
        1999 and 2000. The fees paid to AT&T by Oblio for AT&T’s Enhanced
        Prepaid Card Service (“Prepaid Card Service”) included USF and other 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 belief its
        Prepaid Card Service was exempt under the law.
 
 In
        February 2005, the FCC adopted an order which 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. The FCC’s order effectively made Oblio a direct USF
        contributor for all periods prior to March 16, 2005.
 
 In
        compliance with the FCC order, Oblio registered with the FCC as an Interstate
        Telecommunications Service Provider. Oblio is now considered to be a direct
        contributor to the USF and therefore is not obligated to pay USF charges
        to
        AT&T. As a direct contributor, over 98% of Oblio’s revenue is exempt from
        USF contributions due to a specific FCC rule exemption applicable to
        international services. AT&T maintains that Oblio is not owed any refund of
        USF payments made by Oblio to AT&T from 1999 to October 2006.
  13
 
 Recently,
        Oblio and AT&T have had communications surrounding settlement of these
        matters. Oblio has sought payment of the USF charges it and its predecessor
        paid
        to AT&T. While AT&T made a settlement proposal to Oblio, Titan’s Board
        of Directors concluded in the reasonable exercise of its business judgment
        that
        AT&T’s settlement proposal was inadequate. As of the date of this filing,
        the negotiations are at an impasse. Oblio remains hopeful this matter can
        be
        amicably resolved and Oblio can continue its business relationship with
        AT&T **.**
  ***Note
        12. Segment Information***
  The
        Company considers itself in two distinct operating segments.
 
 The
        Company through its subsidiaries, Titan PCB West and Titan PCB East, 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
        considers this its PCB business segment.
 
 The
        Company through its Oblio Telecom, Inc 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.
 **11/30/2006**
                
                **11/30/2005
                    (As Restated)****PCB**
                
                **Oblio**
                
                **Corp.**
                
                **Total**
                
                **PCB**
                
                **Oblio**
                
                **Corp.**
                
                **Total**Sales:
                
                
                5,412
                
                
                24,574
                
                
                -
                
                
                29,986
                
                
                4,413
                
                
                23,267
                
                
                -
                
                
                27,680Interest
                    expense:
                
                
                152
                
                
                654
                
                
                -
                
                
                806
                
                
                633
                
                
                930
                
                
                
                
                
                1,563Net
                    Loss:
                
                
                (5,174
                )
                
                (1,037
                )
                
                (628
                )
                
                (6,839
                )
                
                (4,651
                )
                
                (833
                )
                
                (852
                )
                
                (6,336
                )Assets:
                
                
                6,135
                
                
                47,985
                
                
                135
                
                
                54,255
                
                
                7,156
                
                
                39,475
                
                
                -
                
                
                46,631Equipment
                    and improvements (Gross):
                
                
                4,538
                
                
                375
                
                
                -
                
                
                4,913
                
                
                4,275
                
                
                32
                
                
                -
                
                
                4,307Additions:
                
                
                38
                
                
                32
                
                
                -
                
                
                70
                
                
                44
                
                
                32
                
                
                -
                
                
                76Depreciation
                    expense:
                
                
                146
                
                
                21
                
                
                -
                
                
                167
                
                
                157
                
                
                1
                
                
                -
                
                
                158Goodwill
                    and intangible assets (Gross):
                
                
                65
                
                
                31,142
                
                
                -
                
                
                31,207
                
                
                65
                
                
                30,884
                
                
                -
                
                
                30,949Amortization
                    expense:
                
                
                -
                
                
                1,335
                
                
                -
                
                
                1,335
                
                
                -
                
                
                1,174
                
                
                -
                
                
                1,174
  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
        13. Trilogy Capital Partners***
 
 On
        September 20, 2006, the Company entered into a letter of engagement with
        Trilogy
        Capital Partners, Inc. (“Trilogy”). The term of the engagement is for twelve
        months beginning on September 20, 2006 and terminable thereafter by either
        party
        upon 30 days’ prior written notice. Trilogy will provide marketing, financial
        public relations and investor relations services to the Company. The Company
        will pay Trilogy $12.5 per month and the Company issued warrants to purchase
        an
        aggregate of 2,450,000 shares of common stock of the Company, 1,225,000 of
        which
        are exercisable at a price of $1.00 per share and 1,225,000 of which are
        exercisable at a price of $1.50 per share. The warrants issued to Trilogy
        are
        exercisable upon issuance and expire on September 17, 2009 and are required
        to
        be registered with the Securities and Exchange Commission as part of the
        agreement. The Company recorded the value of the freestanding derivative
        liability of $1,185 as of November 30, 2006.
 
 ***Note
        14. Recently Adopted Accounting Pronouncements***
 
 In
        November 2004, the FASB issued SFAS No. 151, Inventory
        Costs *,* which
        is
        an amendment of ARB No. 43. SFAS No. 151 requires idle facility expenses,
        freight, handling costs and wasted material (spoilage) costs to be recognized
        as
        current-period charges. It also requires that allocation of fixed production
        facilities. SFAS No. 151 was effective for the Company beginning September
        1,
        2005 and resulting adjustments will be made on prospective basis. The adoption
        of this standard did not have a significant impact on its business, results
        of
        operations or financial position.
  14
 
 In
        December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets”,
        an amendment of APB Opinion No. 29, “Accounting for Nonmonetary Transactions” ("
        SFAS No. 153"). This statement amends APB Opinion 29 to eliminate the exception
        for nonmonetary exchanges of similar productive assets and replaces it with
        a
        general exception for exchanges of nonmonetary assets that do not have
        commercial substance. Under SFAS No. 153, if a nonmonetary exchange of similar
        productive assets meets a commercial-substance criterion and fair value is
        determinable, the transaction must be accounted for at fair value resulting
        in
        recognition of any gain or loss. SFAS No. 153 is effective for nonmonetary
        transactions in fiscal periods that begin after June 15, 2005. The adoption
        of
        this standard did not have a significant impact on its business, results
        of
        operations, financial position, or cash flows.
 
 ***Note
        15. Subsequent Events***
 
 *Greystone
        Business Credit*
 
 On
        December 29, 2006 (the “Closing Date”), the Company entered into a credit
        facility with Greystone Business Credit II LLC (“Greystone”). The new credit
        facility with Greystone includes a revolving line of credit in the maximum
        amount of $15,000 and also includes term loans of up to $7,950 of which $6,484
        was borrowed on the Closing Date. The facility will expire in 3 years, subject
        to earlier termination under certain circumstances. 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 required to have
        a
        minimum unused availability under the line of between $200 and $1,000. The
        Company is obligated to use any refunds on commercial taxes to prepay the
        term
        loans. The Company is also obligated to make a mandatory repayment of $2,600
        from the sale of debt or equity by April 30, 2007. The revolving credit facility
        bears interest at a rate of 1.5%, plus the prime interest rate. The senior
        term
        loans bear interest at a rate of 6%, plus the prime interest rate, provided
        that
        such rate is reduced by 0.5% for each reduction of principal by $1,000.
 
 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
        0.5% of the facility, payable on each anniversary. A loan servicing fee of
        0.3%
        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,
        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. The Company is
        obligated to register the shares of common stock and the common stock underlying
        the warrant.
 
 The
        proceeds of the new financing were used to repay the existing credit facilities
        of the Company with Laurus Master Fund, Ltd. (“Laurus”) and CapitalSource
        Finance LLC. The Company also exercised an option previously granted by Laurus
        pursuant to which the Company purchased 1,250,000 shares of its outstanding
        common stock from Laurus in exchange for $1 upon repayment of all sums owed
        to
        Laurus.
 
 *Seller
        Financed Notes and Preferred Stock*
 
 On
        December 29, 2006, Oblio amended certain terms of the promissory notes
        previously issued to the former owner of Oblio, F&L LLP. F&L LLP is due
        an aggregate of $4,823 under the notes. 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
        agreed to issue 250,000 shares of common stock to F&L LLP. In addition, the
        Company agreed to guaranty the payment to be made by Oblio.
 
 F&L
        LLP also agreed to amend the terms of the series A preferred stock originally
        issued to F&L LLP. 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.
  15
 
 **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, 2006, to which overview we make
        reference. All numbers referenced below are stated in thousands unless otherwise
        noted.
 
 **Summary
        Corporate Background**
 
 Titan
        Global Holdings (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.
  16
 
 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 Telecom, Inc. (“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 Telecom 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.,
        (“T Wireless”). T Wireless is the Company’s prepaid wireless communications
        subsidiary and is a Mobile Virtual Network Operator (“MVNO”). T Wireless markets
        its MVNO through two brands, BRAVO cellular and the newly launched Picante
        Movil.
 
 **Business
        Overview**
 
 The
        Company's business strategy, by division, as follows:
 
 Titan
        Communications Division
 
 ·
              expand
                  market share in prepaid international phonecard market through
                  continued
                  expansion in distribution network;
 ·
              migrate
                  termination of traffic to most efficient means, including strategic
                  partnerships with tier one communications providers and newly developed
                  and operational internal call termination
                  options;
  17
  ·
              expand
                  market share in prepaid wireless communications market through
                  targeted
                  launches of product offerings to specific groups of first and second
                  generation of Americans;
 ·
              launch
                  e-commerce initiatives to rapidly offer prepaid international
                  telecommunications services online to a fast growing segment of
                  our
                  existing customers who have internet
                  connectivity;
 ·
              acquire
                  and integrate strategic assets of businesses that increase penetration
                  and
                  efficiencies in existing prepaid international telecommunications
                  markets
                  (international phonecards and wireless subscriber
                  bases);
 ·
              offer
                  other prepaid services (i.e. money transfer, prepaid debit/credit
                  cards,
                  etc.) through existing distribution channels to first and second
                  generation Americans;
 
 Titan
        Electronics and Homeland Security Division
 
 ·
              target
                  potential customers and industries needing prototype boards with
                  required
                  turnaround times of between 24 hours and the industry standard
                  10-days as
                  well as preproduction needs requiring numerous types of
                  materials;
 ·
              aggressively
                  market specialty manufacturing services for time sensitive, high-tech
                  prototype and pre-production Rigid and HVR Flex Ô (rigid-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
                  its services to include rigid-flex combinations in order to diversify
                  sources of revenue;
 ·
              acquire
                  and integrate strategic assets of companies producing time sensitive,
                  high
                  tech prototype and pre-production PCBs with other unique customers,
                  technology or processes in order to accelerate entry into its target
                  market;
 ·
              acquire
                  manufacturing facilities that have military certification or add
                  value to
                  its current time sensitive manufacturing service business;
                  and
 ·
              develop
                  and continuously improve fabrication and sales processes in order
                  to
                  improve margin and competitive
                  pricing.
 
 **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.
 
 *Sales.* In
        our
        communications division, we recognize sales upon the activation of our prepaid
        calling cards by our customers or the transfer of risk of loss on our prepaid
        wireless handsets. We record net 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, 2006, we had $0 allowance for returns and an allowance
        for doubtful accounts of $147. Actual returns may differ materially from
        our
        estimates, and revisions to the allowances may be required from time to
        time.
 
 We
        expect
        sales to continue to grow in our communications division as we increase our
        market penetration in the international prepaid calling card sector and continue
        to launch new product offerings in our prepaid wireless communications sector.
        We added internal call termination capacity in fiscal year 2006 through our
        StartTalk subsidiary that accelerates our prepaid international calling cards
        time to market and offers favorable cost of services rendered through our
        least
        cost routing software. This will continue to create sales growth as we are
        enabled to quickly respond to customer’s needs in a more profitable manner. The
        addition of Titan Wireless Communications will provide the resources and
        ability
        for us to leverage existing distribution networks and brand identities into
        subscriber growth, thus increasing sales in our prepaid wireless sector as
        well.
 
 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, 2006 we had approximately 500 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, 2006, we had an allowance for returns
        of
        $120 and an allowance for doubtful accounts of $168. Actual returns may differ
        materially from our estimates, and revisions to the allowances may be required
        from time to time.
  18
  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 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. We
        anticipate that our internal growth, as well as acquisition of competitors,
        will
        materially contribute to our ability to increase our revenues as described
        above.
 
 *Cost
        of Sales* . 
        In our communications division, cost of sales consists of network costs
        associated with terminating our customer’s 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. We
        expect cost of sales to decrease in fiscal year 2007 as we have added
        significant internal call termination capacity through our StartTalk division.
        This 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.
 
 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.
 
 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, 2006 and
        2005 are comprised of marketing, general and administrative, non-recurring
        costs
        and costs related to mergers and acquisitions, as well as the cost of developing
        operating facilities.
 
 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
        adds
        new personnel, develop new independent sales representative channels and
        advertise its 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.
  19
 
 *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, 2006, the Company had a working capital deficit of $35,791 and
        an
        accumulated deficit of $33,791. The Company generated sales of $29,986 and
        $27,680 for the three months ended November 30, 2006 and 2005, respectively
        and
        incurred net losses of $6,839 and $6,336, respectively. In addition, the
        Company
        used $561 and $811 of cash flow from operations during the three months ended
        November 30, 2006 and 2005 respectively.
 
 The
        following table sets forth statement of operations data for the three months
        ended November 30, 2006 and 2005 and should be read in conjunction with our
        consolidated financial statements and the related notes appearing elsewhere
        in
        this report.
  20
 
 **2006**
              
              **2005****(As
                  Restated)**Sales
              
              
              29,986
              
              
              100.00
              %
              
              27,680
              
              
              100.00
              %Cost
                  of Sales
              
              
              26,557
              
              
              88.6
              
              
              25,571
              
              
              92.4Gross
                  Profit
              
              
              3,429
              
              
              11.4
              
              
              2,109
              
              
              7.6Operating
                  Expenses:Sales
                  and Marketing
              
              
              498
              
              
              1.7
              
              
              425
              
              
              1.5General
                  and Administrative
              
              
              1,873
              
              
              6.2
              
              
              1,024
              
              
              3.7Amortization
                  of Intangibles
              
              
              1,335
              
              
              4.5
              
              
              1,174
              
              
              4.2Total
                  Operating Expenses
              
              
              3,706
              
              
              12.4
              
              
              2,623
              
              
              9.5Operating
                  Income
              
              
              (277
              )
              
              (0.9
              )
              
              (514
              )
              
              (1.9
              )Interest
                  Income
              
              
              1
              
              
              0.0
              
              
              -
              
              
              0.0Interest
                  Expense
              
              
              (806
              )
              
              (2.7
              )
              
              (1,563
              )
              
              (5.6
              )Gain/(loss)
                  value of Derivative Instruments
              
              
              (5,757
              )
              
              (19.2
              )
              
              (4,260
              )
              
              (15.4
              )Other
                  income/expense, net
              
              
              -
              
              
              0.0
              
              
              1
              
              
              0.0Net
                  Loss
              
              
              (6,839
              )
              
              (22.8
              )
              
              (6,336
              )
              
              (22.9
              )


21
  **Three
        Months Ended November 30, 2006 Compared to the Three Months Ended November
        30,
        2005.**
 
 S *ales.* Sales
        increased by $2,306 or 8% from $27,680 in the three months ended November
        30,
        2005 to $29,986 in the three months ended November 30, 2006. Sales in the
        Company’s communications division increased $1,307 or 6% in the three months
        ended 2006 compared to the three months ended 2005. The increase in sales
        in our
        communications division is due to the expansion of products on our StartTalk
        switching network offset by decreases in product sales purchased by third
        party
        providers. Sales in the Company’s electronics and homeland security division
        increased $999 or 23% in the three months ended November 30, 2006 compared
        to
        the three months ended November 30, 2005. The increase in sales in our
        electronics and homeland security division is primarily attributable to
        continued growth and market penetration in the production of quick-turn and
        prototype printed circuit boards. The Company commands higher panel prices
        and
        better operating margins in quick-turn and prototype work.
 
 *Cost
        of Sales.* Cost
        of
        sales increased $986 or 4%, from $25,571 in the three months ended November
        30,
        2005 to $26,557 in the three months ended November 30, 2006, and as a percentage
        of sales decreased from 92% in the three months ended November 30, 2005 to
        89%
        in the three months ended November 30, 2006. The cost of sales decreased
        in the
        communications division by $21 or 0.1% from 21,447 for the three months ended
        November 30, 2005 to $21,426 for the three months ended November 30, 2006
        despite an increase in sales due primarily to a lower cost of sales associated
        with the anticipated recovery of Universal Service Fees for the 2006 period
        without a corresponding recovery being recognized in the comparable period
        in
        2005. The cost of sales increased in the electronics and homeland security
        division by $1,007 or 24% from $4,124 for the three month period ending November
        30, 2005 to $5,131 for the three month period ending November 30, 2006 due
        to a
        comparable increase in sales during the same period.
 
 *Sales
        and Marketing.* Sales
        and
        marketing expenses increased by $73 or 17%, from $425 in the three months
        ended
        November 30, 2005 to $498 in the three months ended November 30, 2006. As
        a
        percentage of sales, sales and marketing expense remained flat at 2% in the
        three months ended November 30, 2005 and in the three months ended November
        30,
        2006. This increase is primarily attributable to marketing staff additions
        in
        our electronics and homeland security division in the three months ended
        November 30, 2006.
 
 *General
        and Administrative Expenses.* General
        and administrative expenses increased $849 or 83% from $1,024 in the three
        months ended November 30, 2005 to $1,873 in the three months ended November
        30,
        2006. As a percentage of sales, general and administrative expense increased
        from 4% in the three months ended November 30, 2005 to 6% in the three months
        ended November 30, 2006. This increase is due to staff additions in our
        communications division for our customer service department servicing our
        prepaid wireless and switched network prepaid long distance cards, staffing
        for
        managing our StartTalk division, staffing for our e-commerce initiative and
        an
        increase in professional service fees for the comparable periods.
 
 *Amortization
        of Intangibles.* Amortization
        of intangibles increased $161 or 14% from $1,174 in the three months ended
        November 30, 2005 to $1,335 in the three months ended November 30, 2006.
        As a
        percentage of sales, amortization of intangibles increased from 4% in the
        three
        months ended November 30, 2005 to 5% in the three months ended November 30,
        2006. Amortization of intangibles increased during the comparable periods
        due to
        the amortization of certain intangibles related to our MNVO contract and
        the
        setup of our customer service call center that were not established in the
        prior
        comparable period.
 
 *Interest
        Expense.* Interest
        expense decreased $757 or 48%, from interest expense of $1,563 in the three
        months ended November 30, 2005 to $806 in the three months ended November
        30,
        2006. As a percentage of sales, interest expense decreased from 6% in the
        three
        months ended November 30, 2005 to 3% in the three months ended November 30,
        2006. Interest expense decreased during the applicable periods due to
        fluctuations in the carrying value of derivative instruments and the resulting
        effective interest charges and changes in the fair value of the related
        bifurcated debt instruments compared to the associated freestanding options,
        warrants and registration rights agreements as applicable.
 
 *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 non-cash
        losses from the change in fair value of its derivative liabilities of $5,757
        and
        $4,260 in the three months ended November 30, 2006 and 2005,
        respectively.
  22
 
 **Liquidity
        and Capital Resources**
 
 Our
        principal sources of liquidity are our existing cash, cash equivalents and
        short-term investments, cash generated from operations, and cash available
        from
        borrowings under our $15M revolving credit facility in our communications
        division and our $4M revolving credit facility in our electronics and homeland
        securities division. We may also generate liquidity from offerings of debt
        and/or equity in the capital markets. As of November 30, 2006, we had a total
        of
        $625 in unrestricted cash and cash equivalents. As of November 30, 2006,
        we also
        had restricted cash and cash equivalents and short-term investments of $750
        that
        included funds set aside or pledged to secure lines of credit with key
        suppliers. We believe that our existing cash and investments, liquidity under
        our revolving credit facility and anticipated cash flows from operations
        will be
        sufficient to meet our operating and capital requirements through at least
        the
        next twelve months.
  We
        currently intend to seek opportunities to acquire strategic assets that will
        enhance our communications division and our electronics and homeland securities
        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.
  *Operating
        Activities.* Cash
        used in operating activities was $561 during the three months ended November
        30,
        2006 compared to cash used in operating activities of $811 during the three
        months ended November 30, 2005. The decrease in cash used in operations was
        due
        to an increase in trade accounts payable and accounts receivable offset by
        a
        decrease in inventory levels.
 
 *Investing
        Activities.* Cash
        used in investing activities was $70 during the three months ended November
        30,
        2006 compared to cash used in investing activities of $826 during the year
        ended
        November 30, 2005. The decrease in cash used in investing activities is due
        to a
        decrease in capital expenditures during the comparable periods and a decrease
        in
        restricted investments used to collateralize obligations.
 
 *Financing
        Activities.* Cash
        used in financing activities during the three months ended November 30, 2006
        was
        $145 compared to cash provided by financing activities of $466 during the
        three
        months ended November 30, 2005. The
        decrease in cash provided by financing activities is due to higher principal
        payments on notes payable due to grace periods occurring in the three months
        ended November 30, 2005 associated with the financing for the Oblio acquisition
        in fiscal year ending 2005 that did not occur in the three months ended November
        30, 2006 and due to proceeds provided by loans payable to related parties
        in the
        three months ended November 30, 2005 without corresponding activity in the
        three
        months ended November 30, 2006.
 
 **Quantitative
        And Qualitative Disclosures About Market Risk**
 
 Our
        exposure to market risk for changes in interest rates relates primarily to
        the
        increase or decrease in the amount of interest expense we incur in our debt
        obligations to our lenders for its prime plus percent interest rates. We
        do not
        believe that changes in interest rates will have a material effect on our
        liquidity, financial condition or results of operations.
 
 **Impact
        of Inflation**
  The
        cost
        of the 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.
 
 **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.
  23
 
 **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.*
 
 We
        recognize 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
        our
        communications division, we recognize revenue upon the activation of our
        prepaid
        calling cards by our customers or the transfer of risk of loss on our prepaid
        wireless handsets. We record net 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.
 
 In
        our
        electronics and homeland security division, we recognize revenue upon shipment
        to our customers. We record net 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 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.
 
 *Inventory
        valuation.*
 
 In
        our
        communications division, our policy is to value 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.
 
 *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.
  *Stock-based
        compensation.*
 
 As
        permitted under SFAS 123, “ *Accounting
        for Stock-Based Compensation”,* as
        amended, until August 31, 2006, the Company accounted for its stock based
        compensation in accordance with Accounting Principles Board Opinion No. 25,
        “ *Accounting* for *Stock Issued to Employees,” (“APB No. 25* ”).
        Under
        APB No. 25, compensation cost is recognized over the vesting period based
        on the
        excess, if any, on the date of grant of the fair value of the Company’s shares
        over the employee’s exercise price. When the exercise price of the option is
        less than the fair value price of the underlying shares on the grant date,
        deferred stock compensation is recognized and amortized to expense in accordance
        with Financial Accounting Standards Board (“FASB”) Interpretation No. 44 over
        the vesting period of the individual options. Accordingly, if the exercise
        price
        of the Company’s employee options equals or exceeds the market price of the
        underlying shares on the date of grant no compensation expense is recognized.
        Options or shares awards issued to non-employees and directors are valued
        using
        the Black-Scholes pricing model and expensed over the period services are
        provided. Effective September 1, 2006, the Company adopted the fair value
        recognition provisions of SFAS 123(R) (revised 2004), “Share Based Payment”
using the modified-prospective transition method. Under this transition method,
        compensation cost recognized during the three months ended November 30, 2006
        includes (a) compensation cost for all share-based payments granted prior
        to,
        but not yet vested as of December 1, 2006, based on the grant date fair value
        estimated in accordance with the original provisions of SFAS No. 123(R),
        and (b)
        compensation cost for all share based payments granted subsequent to December
        1,
        2006, based on the grant-date fair value estimated in accordance with SFAS
        No
        123(R). Results for prior periods have not been restated. Stock based
        compensation is included in selling, general and administrative expenses.
 24
 *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 an 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.
  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.
 
 *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.
  25
 
 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 previously elected for the host
        instrument.
 
 **ITEM
        3. CONTROLS AND PROCEDURES**
 
 *Evaluation
        of Disclosure Controls and Procedures:* During
        2006 the Company implemented certain measures to strengthen its control
        environment. In the second quarter of 2006 the Company’s Chairman completed a
        national search and hired a Chief Financial Officer with the skills necessary
        to
        enhance internal controls, systems and management. An initial assessment
        of the
        control environment was completed and the Company consolidated the accounting
        operations and information systems of its Electronics and Homeland Security
        Division during the fourth quarter of 2006. However, management has concluded
        that, as of the end of the period covered by this report, our Disclosure
        Controls are still not effective to provide reasonable assurance that our
        financial statements are fairly presented in conformity with generally accepted
        accounting principles for the reasons discussed below.
 
 Our
        independent registered public accounting firm reported to our Board of Directors
        certain conditions involving internal controls which they believe represent
        material weaknesses in our internal control environment. These matters are
        with
        regard to insufficient personnel resources within the accounting function,
        based
        on the size and complexity of the organization, to affect timely financial
        close
        process and to effectively evaluate and resolve non-routine and/or complex
        accounting transactions. 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.
 
 Our
        management and the Board of Directors agreed with our independent registered
        public accounting firm on the matter raised in their report and agreed to
        address the material weakness.
 
 To
        remediate this internal control weakness, the Company will continue to add
        sufficient accounting personnel to properly segregate duties and to affect
        a
        timely, accurate close of the financial statements. The Company plans to
        have
        this fully implemented during the second quarter of 2007.
 
 *Changes
        in internal controls:* During
        the three months ended November 30, 2006, the Company strengthened its system
        of
        internal controls by augmenting the accounting staff and increasing the
        segregation of duties. A new Chief Financial Officer joined the Company in
        October 2006 and the Company engaged the services of contract basis accounting
        professionals to assist with the financial reporting process and month-end
        close
        procedures.
  26
  **PART
        II**
  **OTHER
        INFORMATION**
  **ITEM
        1. LEGAL PROCEEDINGS**
 
 From
        time
        to time, the Company may become involved in various lawsuits and legal
        proceedings which arise in the ordinary course of business. However, litigation
        is subject to inherent uncertainties, and an adverse result in these or other
        matters may arise from time to time that may harm its business. The Company
        is
        currently not aware of any such legal proceedings or claims that the Company
        believes will have, individually or in the aggregate, a material adverse
        affect
        on its business, financial condition or operating results. The Company and
        its
        subsidiaries are involved in the following:
 
 On
        July
        17, 2006, the Company filed a lawsuit against AT&T Corp. (“AT&T”);
        whereby Oblio Telecom, Inc. (“Oblio”) alleged that it is entitled to a refund
        from the United States Government for previously paid federal excise taxes
        and
        over AT&T’s refusal to stop charging Oblio federal excise taxes as part of
        the sales price it charges for the purchase of prepaid international long
        distance cards. Oblio’s claim was asserted pursuant to the issuance of IRS
        publication 2006-50 in May 2006. The amount in controversy is approximately
        $2,970. A declaratory judgment action relating to this dispute has been
        initiated by the Company and is now pending in the United States District
        Court,
        Northern District of Texas, Dallas Division.
 
 On
        December 5, 2006, Oblio Telecom, Inc. (“Oblio”), a wholly owned subsidiary of
        Titan Global Holdings, Inc., filed a Demand for Arbitration with the American
        Arbitration Association against AT&T Corp. (“AT&T”). Oblio is seeking a
        refund of amounts paid to AT&T for the period from 1999 to October 2006 for
        Universal Service Fund (“USF”) charges paid to AT&T pursuant the Purchase
        Order Agreement, which sets forth the parties’ business relationship. Oblio
        estimates that it and its predecessor have paid AT&T at least $62 in USF
        charges from 2001 to October 2006, but hasn’t determined the USF charges it paid
        in 1999 and 2000. The fees paid to AT&T by Oblio for AT&T’s Enhanced
        Prepaid Card Service (“Prepaid Card Service”) included USF and other 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 belief its
        Prepaid Card Service was exempt under the law.
 
 In
        February 2005, the FCC adopted an order which 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. The FCC’s order effectively made Oblio a direct USF
        contributor for all periods prior to March 16, 2005.
 
 In
        compliance with the FCC order, Oblio registered with the FCC as an Interstate
        Telecommunications Service Provider. Oblio is now considered to be a direct
        contributor to the USF and therefore is not obligated to pay USF charges
        to
        AT&T. As a direct contributor, over 98% of Oblio’s revenue is exempt from
        USF contributions due to a specific FCC rule exemption applicable to
        international services. AT&T maintains that Oblio is not owed any refund of
        USF payments made by Oblio to AT&T from 1999 to October 2006.
 
 Recently,
        Oblio and AT&T have had communications surrounding settlement of these
        matters. Oblio has sought payment of the USF charges it and its predecessor
        paid
        to AT&T. While AT&T made a settlement proposal to Oblio, Titan’s Board
        of Directors concluded in the reasonable exercise of its business judgment
        that
        AT&T’s settlement proposal was inadequate. As of today, the negotiations are
        at an impasse. Oblio remains hopeful this matter can be amicably resolved
        and
        Oblio can continue its business relationship with AT&T **.**
 
 **ITEM
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS**
 
 Not
        applicable.
  27
 
 **ITEM
        3. DEFAULTS UPON SENIOR SECURITIES**
  The
        Company is in technical default with Laurus due to its failure to have a
        registration statement which includes shares issuable to Laurus upon conversion
        of the convertible notes and shares issued to Laurus in August 2005 declared
        effective within 90 days of the closing of our acquisition of Oblio. Laurus
        has
        not issued a default notice to the Company and has cooperated with the Company
        and is not imposing default interest rates or liquidated damages. Laurus
        maintains the right to charge liquidated damages in the future. All amounts
        owed
        to Laurus were paid on December 29, 2006.
 
 **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
                  Rule
                15d-14(a),
                  promulgated under the Securities and Exchange Act of 1934, as
                  amended
                
                31.2
                  - Certification of Principal Financial Officer pursuant to Rule
                  13a-14 and
                  Rule 15d
                14(a),
                  promulgated under the Securities and Exchange Act of 1934, as
                  amended
                
                32.1
                  - Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to
                  Section
                906
                  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
                  Section
                906
                  of the Sarbanes-Oxley Act of 2002 (Chief Financial
                  Officer)
  28
  **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)
    29