##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 Form 10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number: 000-53352
 Titanium Asset Management Corp.
  Delaware
    
    20-8444031(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)777 E. Wisconsin AvenueMilwaukee, Wisconsin
    
    53202-5310(Address of principal executive offices)
    
    (Zip Code)
 (414) 765-1980
( )
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o

    Non-accelerated filer o(Do not check if a smaller reporting company)

    Smaller reporting company þ
 o þ




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##### 



TABLE
OF CONTENTS
  
 PagePART I. FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4T. Controls and Procedures
    
    
    19PART II. OTHER INFORMATION
    
    
    20Item 1. Legal Proceedings
    
    
    20Item 1A. Risk Factors
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3. Defaults Upon Senior Securities
    
    
    20Item 4. Submission of Matters to a Vote of Security Holders
    
    
    20Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    21EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1




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PART
I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Titanium Asset Management Corp.
Condensed Consolidated Balance Sheets
 June 30,
    
    December 31,2009
    
    2008(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    11,296,000
    
    
    $
    18,753,000Securities available for sale
    
    
    8,574,000
    
    
    
    10,683,000Accounts receivable
    
    
    3,568,000
    
    
    
    4,041,000Other current assets
    
    
    1,798,000
    
    
    
    1,420,000Total current assets
    
    
    25,236,000
    
    
    
    34,897,000Securities available for sale
    
    
    
    
    
    
    672,000Property and equipment, net
    
    
    504,000
    
    
    
    456,000Goodwill
    
    
    34,410,000
    
    
    
    32,757,000Intangible assets, net
    
    
    28,488,000
    
    
    
    32,206,000Deferred income taxes
    
    
    5,680,000
    
    
    
    4,202,000Total assets
    
    $
    94,318,000
    
    
    $
    105,190,000Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    321,000
    
    
    $
    663,000Acquisition payments due
    
    
    954,000
    
    
    
    8,145,000Other current liabilities
    
    
    1,757,000
    
    
    
    1,789,000Total current liabilities
    
    
    3,032,000
    
    
    
    10,597,000Acquisition payments due
    
    
    960,000
    
    
    
    1,889,000Total liabilities
    
    
    3,992,000
    
    
    
    12,486,000Commitments and contingenciesStockholders equityCommon stock, $0.0001 par value; 54,000,000 shares
authorized; 20,509,502 and 20,464,002 shares issued
and outstanding at June 30, 2009 and December 31,
2008, respectively
    
    
    2,000
    
    
    
    2,000Restricted common stock, $0.0001 par value; 720,000
shares authorized; 612,716 issued and outstanding at
June 30, 2009 and December 31, 2008
    
    
    
    
    
    
    Preferred stock, $0.0001 par value; 1,000,000 shares
authorized; none issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    99,667,000
    
    
    
    99,462,000Accumulated deficit
    
    
    (9,333,000
    )
    
    
    (6,597,000
    )Other comprehensive loss
    
    
    (10,000
    )
    
    
    (163,000
    )Total stockholders equity
    
    
    90,326,000
    
    
    
    92,704,000Total liabilities and stockholders equity
    
    $
    94,318,000
    
    
    $
    105,190,000
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Titanium Asset Management Corp.
Condensed Consolidated Statement of Operations
(unaudited)
 Three Months Ended June 30,
    
    Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008Fee income
    
    $
    4,944,000
    
    
    $
    4,486,000
    
    
    $
    9,840,000
    
    
    $
    6,706,000Operating expenses:Administrative
    
    
    6,109,000
    
    
    
    4,095,000
    
    
    
    12,126,000
    
    
    
    5,988,000Amortization of intangible assets
    
    
    1,096,000
    
    
    
    1,193,000
    
    
    
    2,039,000
    
    
    
    2,002,000Impairment of intangible assets
    
    
    
    
    
    
    1,792,000
    
    
    
    
    
    
    
    1,792,000Total operating expenses
    
    
    7,205,000
    
    
    
    7,080,000
    
    
    
    14,165,000
    
    
    
    9,782,000Operating loss
    
    
    (2,261,000
    )
    
    
    (2,594,000
    )
    
    
    (4,325,000
    )
    
    
    (3,076,000
    )Other incomeInterest income
    
    
    114,000
    
    
    
    372,000
    
    
    
    234,000
    
    
    
    868,000Interest expense
    
    
    (15,000
    )
    
    
    
    
    
    
    (29,000
    )
    
    
    Gain (loss) on investments
    
    
    193,000
    
    
    
    
    
    
    
    (188,000
    )
    
    
    Loss before taxes
    
    
    (1,969,000
    )
    
    
    (2,222,000
    )
    
    
    (4,308,000
    )
    
    
    (2,208,000
    )Income tax benefit
    
    
    (774,000
    )
    
    
    (730,000
    )
    
    
    (1,572,000
    )
    
    
    (720,000
    )Net loss
    
    $
    (1,195,000
    )
    
    $
    (1,492,000
    )
    
    $
    (2,736,000
    )
    
    $
    (1,488,000
    )Earnings (loss) per shareBasic
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.13
    )
    
    $
    (0.07
    )Diluted
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.13
    )
    
    $
    (0.07
    )Weighted average number of common
shares outstanding:Basic
    
    
    20,546,490
    
    
    
    20,451,502
    
    
    
    20,546,490
    
    
    
    20,451,502Diluted
    
    
    20,546,490
    
    
    
    20,451,502
    
    
    
    20,546,490
    
    
    
    20,451,502
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Titanium Asset Management Corp.
Condensed Consolidated Statement of Cash Flows
(unaudited)
 Six Months Ended June 30,2009
    
    2008Cash flows from operating activitiesNet loss
    
    $
    (2,736,000
    )
    
    $
    (1,488,000
    )Adjustments to reconcile net loss to net cash provided by (used
in) operating activities:Depreciation and amortization
    
    
    2,093,000
    
    
    
    2,002,000Impairment of intangible assets
    
    
    
    
    
    
    1,792,000Noncash share compensation
    
    
    205,000
    
    
    
    Accretion of acquisition payments
    
    
    25,000
    
    
    
    Loss on investments
    
    
    188,000
    
    
    
    Deferred income taxes
    
    
    (1,572,000
    )
    
    
    (751,000
    )Changes in assets and liabilities:Decrease in accounts receivable
    
    
    562,000
    
    
    
    244,000Decrease (increase) in other current assets
    
    
    170,000
    
    
    
    (346,000
    )Decrease in accounts payable
    
    
    (348,000
    )
    
    
    (59,000
    )Decrease in other current liabilities
    
    
    (25,000
    )
    
    
    (916,000
    )Net cash provided by (used in) operating activities
    
    
    (1,438,000
    )
    
    
    478,000Cash flows from investing activitiesPurchases of property and equipment
    
    
    (121,000
    )
    
    
    (72,000
    )Cash and cash equivalents released from trust
    
    
    
    
    
    
    55,587,000Purchases of securities available for sale
    
    
    (8,437,000
    )
    
    
    Sales and redemptions of securities available for sale
    
    
    10,690,000
    
    
    
    Cash paid for acquisition of subsidiaries, net of cash acquired
    
    
    (6,000
    )
    
    
    (31,226,000
    )Net cash provided by investing activities
    
    
    2,126,000
    
    
    
    24,289,000Cash flows from financing activitiesPayment of deferred acquisition obligations
    
    
    (8,145,000
    )
    
    
    Redemption of common stock
    
    
    
    
    
    
    (12,017,000
    )Net cash used in financing activities
    
    
    (8,145,000
    )
    
    
    (12,017,000
    )Net increase (decrease) in cash and cash equivalents
    
    
    (7,457,000
    )
    
    
    12,750,000Cash and cash equivalents:Beginning
    
    
    18,753,000
    
    
    
    19,388,000Ending
    
    $
    11,296,000
    
    
    $
    32,138,000Supplemental disclosure of cash flow informationIncome taxes refunded (paid)
    
    $
    36,000
    
    
    $
    (598,000
    )Supplemental disclosure of non-cash investing and financing activitiesPaid-in capital attributed to common stock repurchase rights not executed
    
    $
    
    
    
    $
    55,587,000Payments due in connection with acquisitions
    
    $
    
    
    
    $
    1,903,000
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Titanium Asset Management Corp.
Notes to Condensed Consolidated Financial Statements
(unaudited)
 Note 1  General
     Note 2  Adoption of New Accounting Standards
   
    
    Statement of Financial Accounting Standard (FAS) No. 141 (revised 2007), Business
Combinations(FAS 141(R)) and FAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of Accounting Research Bulletin No. 51 (FAS 160). The
adoption of FAS 141(R) and FAS 160 did not have a material impact on the Companys condensed
consolidated financial statements as of January 1, 2009. FAS 141(R) will require the
expensing of acquisition costs incurred in future acquisitions and contingent consideration
will be recorded at the acquisition date for future acquisitions.
    
    Financial Accounting Standards Board (FASB) Staff Position No. FAS 142-3, Determination
of the Useful Life of Intangible Assets(FSP FAS 142-3). The adoption of FSP FAS 142-3 did
not have an impact on the Companys condensed consolidated financial statements.
    
    FAS No. 165, Subsequent Events(FAS 165), which was issued by the FASB in May 2009,
provides guidance to establish general standards of accounting for and disclosures of events
that occur after the balance sheet date but before financial statements are issued or are
available to be issued. FAS 165 requires public companies to evaluate subsequent events
through the date that the financial statements are issued. FAS 165 is effective for interim
and annual periods ending after June 15, 2009, and accordingly, the Company adopted the
standard during the second quarter of 2009. The Company has evaluated subsequent events
through the time of filing these financial statements with the SEC on
August 11, 2009.
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Note 2  Adoption of New Accounting Standards (continued)
  
    
    FAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment
of FAS No. 133
 
    
    FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157(FSP FAS
157-2), to partially defer FAS No. 157, Fair Value Measurements(FAS 157)
 
    
    FASB Staff Position No. FAS 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly.This FASB Staff Position provides additional guidance for estimating
fair value in accordance with FAS 157, Fair Value Measurements, when the volume and level of
activity for the asset or liability have significantly decreased.
 
    
    FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments.This FASB Staff Position amends the other-than-temporary
impairment guidance for debt securities to make the guidance more operational and to improve
the presentation and disclosure of other-than-temporary impairments on debt and equity
securities in the financial statements.
  
    
    FAS No. 166, Accounting for Transfers of Financial Assets  an amendment of FASB Statement
No. 140(FAS 166), which was issued by the FASB in June 2009, requires entities to provide
more information regarding sales of securitized financial assets and similar transactions.
FAS 166 is effective for fiscal years beginning after November 15, 2009. FAS 166 will not
have a significant impact on the Companys consolidated financial statements.
 
    
    FAS No. 167, Amendments to FASB Interpretation No. 46(R)(FAS 167), which was issued by
the FASB in June 2009, modifies how a company determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be consolidated.
FAS 167 clarifies that the determination of whether a company is required to consolidate an
entity is based on, among other things, an entitys purpose and design and a companys ability
to direct the activities of the entity that most significantly impact the entitys
performance. FAS 167 requires an ongoing reassessment of whether a company is the primary
beneficiary of a variable interest entity. FAS 167 also requires additional disclosures about
a companys involvement in variable interest entities and any significant changes in risk
exposure due to that involvement. FAS 167 is effective for fiscal years beginning after
November 15, 2009. FAS 167 will not have a significant impact on the Companys consolidated
financial statements.
 
    
    FAS No. 168, The FASB Accounting Standards CodificationTMand the Hierarchy of
Generally Accepted Accounting Principles a Replacement of FASB Statement No. 162(FAS 168),
which was issued by the FASB in June 2009, establishes the FASB Accounting Standards
CodificationTM (the Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in the preparation
of financial statements in conformity with U.S. GAAP. The Codification does not change
current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by
providing all the authoritative literature related to a particular topic in one place. The
Codification is effective for interim periods ending after September 15, 2009, and as of the
effective date, all existing accounting standard documents will be superseded. The
Codification is effective for the Company in the third quarter of 2009, and accordingly, the
Quarterly Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent
filings will reference the Codification as the sole source of authoritative literature.
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Note 3  Comprehensive Income (Loss)
  Three Months Ended June 30,
    
    Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008Net loss
    
    $
    (1,195,000
    )
    
    $
    (1,492,000
    )
    
    $
    (2,736,000
    )
    
    $
    (1,488,000
    )Fair value gains (losses)
on available-for-sale
securities, net of tax
    
    
    (38,000
    )
    
    
    
    
    
    
    153,000
    
    
    
    Comprehensive income (loss)
    
    $
    (1,233,000
    )
    
    $
    (1,492,000
    )
    
    $
    (2,583,000
    )
    
    $
    (1,488,000
    )
 Note 4  Goodwill and intangible assets
  Goodwill at December 31, 2008
    
    $
    32,757,000Adjustment to acquired Boyd assets and liabilities
    
    
    (26,000
    )Change in estimated values for acquired intangible assets of Boyd
    
    
    1,679,000Goodwill at June 30, 2009
    
    $
    34,410,000
  Intangible assets, net at December 31, 2008
    
    $
    32,206,000Change in estimated values for acquired intangible assets of Boyd
    
    
    (1,679,000
    )Amortization expense
    
    
    (2,039,000
    )Intangible assets, net at June 30, 2009
    
    $
    28,488,000
  June 30, 2009
    
    December 31, 2008Accumulated
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    Amortization
    
    Net
    
    Cost
    
    Amortization
    
    Net(unaudited)(in thousands)Wood customer relationships
    
    $
    12,026
    
    
    $
    9,380
    
    
    $
    2,646
    
    
    $
    12,026
    
    
    $
    8,850
    
    
    $
    3,176Wood brand
    
    
    444
    
    
    
    194
    
    
    
    250
    
    
    
    444
    
    
    
    139
    
    
    
    305Sovereign customer relationships
    
    
    2,665
    
    
    
    1,178
    
    
    
    1,487
    
    
    
    2,665
    
    
    
    966
    
    
    
    1,699Sovereign non-compete agreement
    
    
    833
    
    
    
    486
    
    
    
    347
    
    
    
    833
    
    
    
    347
    
    
    
    486Sovereign brand
    
    
    181
    
    
    
    106
    
    
    
    75
    
    
    
    181
    
    
    
    76
    
    
    
    105NIS client referral relationship
    
    
    23,089
    
    
    
    1,924
    
    
    
    21,165
    
    
    
    23,089
    
    
    
    1,154
    
    
    
    21,935Boyd customer relationships
    
    
    2,821
    
    
    
    303
    
    
    
    2,518
    
    
    
    4,500
    
    
    
    
    
    
    
    4,500Totals
    
    $
    42,059
    
    
    $
    13,571
    
    
    $
    28,488
    
    
    $
    43,738
    
    
    $
    11,532
    
    
    $
    32,206
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Note 5  Investments
  June 30,
    
    December 31,2009
    
    2008(unaudited)Current portfolioCorporate bonds
    
    $
    8,573,000
    
    
    $
    10,683,000Noncurrent portfolioCommingled stock fund
    
    $
    
    
    
    $
    672,000
   Note 6  Stockholders Equity
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Note 6  Share Capital (continued)
  Note 7 Earnings per Share
   Three months ended June 30,
    
    Six months ended June 30,2009
    
    2008
    
    2009
    
    2008Basic EPS:Net loss
    
    $
    (1,195,000
    )
    
    $
    (1,492,000
    )
    
    $
    (2,736,000
    )
    
    $
    (1,488,000
    )Weighted average
shares of common
stock outstanding
    
    
    20,354,490
    
    
    
    20,451,502
    
    
    
    20,354,490
    
    
    
    20,451,502Shares of common
stock to be issued
in Boyd acquisition
    
    
    192,000
    
    
    
    
    
    
    
    192,000
    
    
    
    Basic weighted
average shares of
common stock
outstanding
    
    
    20,546,490
    
    
    
    20,451,502
    
    
    
    20,546,490
    
    
    
    20,451,502Basic EPS
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.13
    )
    
    $
    (0.07
    )Diluted EPS:Net loss
    
    $
    (1,195,000
    )
    
    $
    (1,541,000
    )
    
    $
    (2,736,000
    )
    
    $
    (1,488,000
    )Basic weighted
average shares of
common stock
outstanding
    
    
    20,546,490
    
    
    
    20,451,502
    
    
    
    20,546,490
    
    
    
    20,451,502Shares of common
stock issuable
under warrants
    
    
    1,647,236
    
    
    
    5,803,423
    
    
    
    2,466,528
    
    
    
    5,815,603Shares of common
stock under
compensatory common
stock grants
    
    
    44,992
    
    
    
    
    
    
    
    46,323
    
    
    
    Diluted weighted
average shares of
common stock
outstanding
    
    
    22,238,718
    
    
    
    26,254,925
    
    
    
    23,059,341
    
    
    
    26,267,104Diluted EPS
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.13
    )
    
    $
    (0.07
    )
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Note 8 Contingencies
  .
  Note 9  Subsequent Event
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD-LOOKING STATEMENTS
 This Quarterly Report on Form 10-Q , including particularly the Managements Discussion and
Analysis of Financial Condition and Results of Operations, contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, which provides a safe
harbor for statements about future events, products and future financial performance that are
based on the beliefs of, estimates made by and information currently available to the management of
Titanium Asset Management Corp., a Delaware corporation (referred to as we, our or the
Company, and, unless the context indicates otherwise, includes our wholly owned asset management
subsidiaries, Wood Asset Management, Inc. (Wood), Sovereign Holdings LLC (Sovereign), National
Investment Services, Inc. (NIS), and Boyd Watterson Asset Management, LLC (Boyd). We refer to
Wood, Sovereign, NIS and Boyd collectively as our subsidiaries. The outcome of the events
described in these forward-looking statements is subject to risks and uncertainties. Actual
results and the outcome or timing of certain events may differ significantly from those projected
in these forward-looking statements due to market fluctuations that alter our assets under
management; termination of investment advisory agreements; loss of key personnel; loss of
third-party distribution services; impairment of goodwill and other intangible assets; our
inability to compete; market pressure on investment advisory fees; problems experienced in the
acquisition or integration of target businesses; changes in law, regulation or tax rates;
ineffective management of risk; inadequacy of insurance; changes in interest rates, equity prices,
liquidity of global markets and international and regional political conditions; terrorism; changes
in monetary and fiscal policy, investor sentiment and availability and cost of capital;
technological changes and events; outcome of legal proceedings; changes in currency values,
inflation and credit ratings; failure of our systems to properly operate; or actions taken by Clal
Finance Ltd., (Clal), as our significant stockholder; factors listed under Risk Factors in our
Annual Report on Form 10-K for the year ended December 31, 2008 (the 2008 Form 10-K ); and other
factors listed in this Quarterly Report on Form 10-Q and from time to time in our other filings
with the Securities and Exchange Commission (SEC). For this purpose, statements relating to
integrating the operational, administrative and sales activities of our subsidiaries, earning of
incentive fees, amount of future assets under management, acquisitions of additional asset
management firms and payment therefor, payment of deferred consideration for the purchase of our
subsidiaries and anticipated levels of future revenues, expenses or earnings, among other things;
any statements using the terms aim, anticipate, appear, based on, believe, can,
continue, could, are emerging, estimate, expect, expectation, intend, may,
ongoing, plan, possible potential, predict, project, should and would or similar
words or phrases, or the negatives of those words or phrases; or discussions of strategy, plans,
objectives or goals, may identify forward-looking statements that involve risks, uncertainties and
other factors that could cause our actual results, financial condition and the outcome and timing
of certain events to differ materially from those projected or managements current expectations.
By making forward-looking statements, we have not assumed any obligation to, and you should not
expect us to, update or revise those statements because of new information, future events or
otherwise.
  Overview
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##### Table of Contents



Assets Under Management
  Wood
    
    Sovereign
    
    NIS
    
    Boyd
    
    Total(in millions)Balance at December 31, 2008
    
    $
    667.9
    
    
    $
    1,163.6
    
    
    $
    2,885.7
    
    
    $
    2,856.0
    
    
    $
    7,573.2New accounts
    
    
    8.1
    
    
    
    72.8
    
    
    
    26.3
    
    
    
    277.7
    
    
    
    384.9Terminated accounts
    
    
    (63.1
    )
    
    
    (96.8
    )
    
    
    (36.8
    )
    
    
    (56.8
    )
    
    
    (253.5
    )Other contributions (withdrawals)
    
    
    9.7
    
    
    
    (0.5
    )
    
    
    (220.3
    )
    
    
    (58.3
    )
    
    
    (269.4
    )Other activity, principally market movement
    
    
    (13.7
    )
    
    
    37.8
    
    
    
    115.1
    
    
    
    40.5
    
    
    
    179.7Balance at June 30, 2009
    
    $
    608.9
    
    
    $
    1,176.9
    
    
    $
    2,770.0
    
    
    $
    3,059.1
    
    
    $
    7,614.9% change from beginning balance
    
    
    (9
    %)
    
    
    1
    %
    
    
    (4
    %)
    
    
    7
    %
    
    
    1
    %
   June 30, 2009
    
    December 31, 2008(in millions)
    
    % of total
    
    (in millions)
    
    % of totalU.S. fixed income
    
    $
    6,907.4
    
    
    
    90.7
    %
    
    $
    6,674.8
    
    
    
    88.2
    %U.S. equity
    
    
    685.4
    
    
    
    9.0
    %
    
    
    874.6
    
    
    
    11.5
    %International equity
    
    
    22.1
    
    
    
    0.3
    %
    
    
    23.8
    
    
    
    0.3
    %Balance at end of period
    
    $
    7,614.9
    
    
    
    100.0
    %
    
    $
    7,573.2
    
    
    
    100.0
    %
  12




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##### Table of Contents



June 30, 2009
    
    December 31, 2008(in millions)
    
    % of total
    
    (in millions)
    
    % of totalInstitutional  Retirement plans
    
    $
    3,350.1
    
    
    
    44.0
    %
    
    $
    3,633.3
    
    
    
    48.0
    %Institutional  Other
    
    
    2,563.6
    
    
    
    33.7
    %
    
    
    2,197.3
    
    
    
    29.0
    %Retail  Broker/dealer accounts
    
    
    939.6
    
    
    
    12.3
    %
    
    
    948.6
    
    
    
    12.5
    %Retail  Other
    
    
    761.6
    
    
    
    10.0
    %
    
    
    794.0
    
    
    
    10.5
    %Balance at end of period
    
    $
    7,614.9
    
    
    
    100.0
    %
    
    $
    7,573.2
    
    
    
    100.0
    %
   Balance at December 31, 2008
    
    $
    806.2New accounts
    
    
    4.5Other activity, principally market movement
    
    
    49.7Balance at June 30, 2009
    
    $
    860.4% change from beginning balance
    
    
    6.7
    %
 13




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##### Table of Contents



Results of Operations
 Consolidated Results of Operations
  Three months ended June 30,
    
    Six months ended June 30,2009
    
    2008
    
    2009
    
    2008Operating revenues:Investment advisory fees
    
    $
    4,403,000
    
    
    $
    3,750,000
    
    
    $
    8,757,000
    
    
    $
    5,970,000Referral fees
    
    
    541,000
    
    
    
    736,000
    
    
    
    1,083,000
    
    
    
    736,000Total operating revenues
    
    
    4,944,000
    
    
    
    4,486,000
    
    
    
    9,840,000
    
    
    
    6,706,000Operating expenses:Administrative
    
    
    6,109,000
    
    
    
    4,095,000
    
    
    
    12,126,000
    
    
    
    5,988,000Amortization of intangible assets
    
    
    1,096,000
    
    
    
    1,193,000
    
    
    
    2,039,000
    
    
    
    2,002,000Impairment of intangible assets
    
    
    
    
    
    
    1,792,000
    
    
    
    
    
    
    
    1,792,000Total operating expenses
    
    
    7,205,000
    
    
    
    7,080,000
    
    
    
    14,165,000
    
    
    
    9,782,000Operating loss
    
    
    (2,261,000
    )
    
    
    (2,594,000
    )
    
    
    (4,325,000
    )
    
    
    (3,076,000
    )Interest income
    
    
    114,000
    
    
    
    372,000
    
    
    
    234,000
    
    
    
    868,000Interest expense
    
    
    (15,000
    )
    
    
    
    
    
    
    (29,000
    )
    
    
    Investment gains (losses)
    
    
    193,000
    
    
    
    
    
    
    
    (188,000
    )
    
    
    Loss before taxes
    
    
    (1,969,000
    )
    
    
    (2,222,000
    )
    
    
    (4,308,000
    )
    
    
    (2,208,000
    )Income tax benefit
    
    
    (774,000
    )
    
    
    (730,000
    )
    
    
    (1,572,000
    )
    
    
    (720,000
    )Net loss
    
    $
    (1,195,000
    )
    
    $
    (1,492,000
    )
    
    $
    (2,736,000
    )
    
    $
    (1,488,000
    )Earnings (loss) per shareBasic
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.13
    )
    
    $
    (0.07
    )Diluted
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.13
    )
    
    $
    (0.07
    )
 Operating Revenues
  Three months ended June 30,
    
    Six months ended June 30,2009
    
    2008
    
    2009
    
    2008Wood
    
    $
    587,000
    
    
    $
    994,000
    
    
    $
    1,244,000
    
    
    $
    2,306,000Sovereign
    
    
    621,000
    
    
    
    826,000
    
    
    
    1,223,000
    
    
    
    1,734,000NIS
    
    
    1,778,000
    
    
    
    1,930,000
    
    
    
    3,574,000
    
    
    
    1,930,000Boyd
    
    
    1,417,000
    
    
    
    
    
    
    
    2,716,000
    
    
    
    Total
    
    $
    4,403,000
    
    
    $
    3,750,000
    
    
    $
    8,757,000
    
    
    $
    5,970,000
  14




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##### Table of Contents



Operating Expenses
  Three months ended June 30,
    
    Six months ended June 30,2009
    
    2008
    
    2009
    
    2008Employee compensation
    
    $
    3,947,000
    
    
    $
    2,208,000
    
    
    $
    7,721,000
    
    
    $
    3,315,000Share-based compensation
    
    
    107,000
    
    
    
    
    
    
    
    205,000
    
    
    
    Professional fees
    
    
    554,000
    
    
    
    756,000
    
    
    
    1,313,000
    
    
    
    946,000Occupancy
    
    
    275,000
    
    
    
    233,000
    
    
    
    581,000
    
    
    
    324,000Other operating expenses
    
    
    1,226,000
    
    
    
    898,000
    
    
    
    2,306,000
    
    
    
    1,403,000Total
    
    $
    6,109,000
    
    
    $
    4,095,000
    
    
    $
    12,126,000
    
    
    $
    5,988,000
  15




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##### Table of Contents



16




---



##### Table of Contents



Accounting
for Income Taxes
 Liquidity and Capital Resources
       17




---



##### Table of Contents



Critical Accounting Policies
  Recent Accounting Pronouncements
  
    
    FAS No. 141(R) (revised 2007), Business
Combinations(FAS 141(R)) and FAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of Accounting Research Bulletin No. 51 (FAS 160). The
adoption of FAS 141(R) and FAS 160 did not have a material impact on our condensed
consolidated financial statements as of January 1, 2009. FAS 141(R) will require the
expensing of acquisition costs incurred in future acquisitions and contingent consideration
will be recorded at the acquisition date for future acquisitions.
 
    
    Financial Accounting Standards Board (FASB) Staff Position No. FAS 142-3, Determination
of the Useful Life of Intangible Assets(FSP FAS 142-3). The adoption of FSP FAS 142-3 did
not have an impact on our condensed consolidated financial statements.
 
    
    FAS No. 165, Subsequent Events(FAS 165), which was issued by the FASB in May 2009,
provides guidance to establish general standards of accounting for and disclosures of events
that occur after the balance sheet date but before financial statements are issued or are
available to be issued. FAS 165 requires public companies to evaluate subsequent events
through the date that the financial statements are issued. FAS 165 is effective for interim
and annual periods ending after June 15, 2009, and accordingly, we adopted the standard during
the second quarter of 2009.
  
    
    FAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment
of FAS No. 133
 
    
    FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, to partially
defer FAS No. 157, Fair Value Measurements(FAS 157)
 
    
    FASB Staff Position No. FAS 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly.This FASB Staff Position provides additional guidance for estimating
fair value in accordance with FAS 157, Fair Value Measurements, when the volume and level of
activity for the asset or liability have significantly decreased.
 
    
    FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments.This FASB Staff Position amends the other-than-temporary
impairment guidance for debt securities to make the guidance more operational and to improve
the presentation and disclosure of other-than-temporary impairments on debt and equity
securities in the financial statements.
 18




---



##### Table of Contents




    
    FAS No. 166, Accounting for Transfers of Financial Assets  an amendment of FASB Statement
No. 140(FAS 166), which was issued by the FASB in June 2009, requires entities to provide
more information regarding sales of securitized financial assets and similar transactions.
FAS 166 is effective for fiscal years beginning after November 15, 2009. FAS 166 will not
have a significant impact on the Companys consolidated financial statements.
 
    
    FAS No. 167, Amendments to FASB Interpretation No. 46(R)(FAS 167), which was issued by
the FASB in June 2009, modifies how a company determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be consolidated.
FAS 167 clarifies that the determination of whether a company is required to consolidate an
entity is based on, among other things, an entitys purpose and design and a companys ability
to direct the activities of the entity that most significantly impact the entitys
performance. FAS 167 requires an ongoing reassessment of whether a company is the primary
beneficiary of a variable interest entity. FAS 167 also requires additional disclosures about
a companys involvement in variable interest entities and any significant changes in risk
exposure due to that involvement. FAS 167 is effective for fiscal years beginning after
November 15, 2009. FAS 167 will not have a significant impact on the Companys consolidated
financial statements.
 
    
    FAS No. 168, The FASB Accounting Standards CodificationTMand the Hierarchy of
Generally Accepted Accounting Principles a Replacement of FASB Statement No. 162(FAS 168),
which was issued by the FASB in June 2009, establishes the FASB Accounting Standards
CodificationTM (the Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in the preparation
of financial statements in conformity with U.S. GAAP. The Codification does not change
current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by
providing all the authoritative literature related to a particular topic in one place. The
Codification is effective for interim periods ending after September 15, 2009, and as of the
effective date, all existing accounting standard documents will be superseded. The
Codification is effective for us in the third quarter of 2009 and accordingly, our Quarterly
Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent filings will
reference the Codification as the sole source of authoritative literature.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4T. Controls and Procedures
 Evaluation of disclosure controls and procedures
 Changes in internal control over financial reporting
 19




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  Proposal One  Election of Directors
  Directors elected by all holders
 For
    
    Withheld
    
    Broker Non-VotesNigel Wightman
    
    
    13,413,755
    
    
    
    381,500
    
    
    
    Robert Kelly
    
    
    13,413,755
    
    
    
    381,500
    
    
    
    Thomas Hamilton
    
    
    13,413,755
    
    
    
    381,500
    
    
    
    T. Raymond Suplee
    
    
    13,413,755
    
    
    
    381,500
    
    
    
    
 Directors elected by Clal Finance, Ltd 1
 For
    
    Withheld
    
    Broker Non-VotesAvigdor Kaplan
    
    
    10,485,400
    
    
    
    
    
    
    
    Yehoshua (Shuky) Abramovich
    
    
    10,485,400
    
    
    
    
    
    
    
    
 Proposal Two  Ratification of the Appointment of Our Independent Registered Public Accounting Firm
for 2009
 For
    
    Against
    
    Abstain
    
    Broker Non-VotesRatification of
Cherry, Bekaert &
Holland L.L.P.
    
    
    13,413,755
    
    
    
    
    
    
    
    381,500
    
    
    
    
 
 1
    
    Under the terms of our certificate of incorporation, for so long as Clal Finance,
Ltd. (Clal) or any affiliate of Clal owns of record at least 35% of our then-issued and
outstanding common stock, Clal may elect (and remove or replace) up to six directors on our Board
of Directors. After the annual meeting, on July 1, 2009, Clal determined to elect a third
director, Shy Talmon. 20




---



##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
 Exhibit Number
    
    Description10.1
    
    Indemnification Agreement dated July 1, 2009 by and between
Titanium Asset Management Corp. and Shy Talmon10.2
    
    Referral Arrangement Letter Agreement dated July 1, 2009
between Attalus Capital, L.P. and National Investment

Services, Inc.31.1
    
    Chief Executive Officer Certification pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.31.2
    
    Chief Financial Officer Certification pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.32.1
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.99.1
    
    Press release of Titanium Asset Management to the AIM, a
market operated by the London Stock Exchange, dated 
August
10, 2009
 21




---



##### Table of Contents



SIGNATURES
  TITANIUM ASSET MANAGEMENT CORP.August 11, 2009
    By:
    /s/ Nigel WightmanName:
    Nigel WightmanTitle:
    Chairman and Chief Executive Officer August 11, 2009
    By:
    /s/ Larry HasleeName:
    Larry HasleeTitle:
    Chief Financial Officer 
(Principal Financial
Officer and Principal Accounting Officer)




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description10.1
    
    Indemnification Agreement dated July 1, 2009 by and between Titanium Asset Management Corp. and Shy Talmon10.2
    
    Referral Arrangement Letter agreement dated July 1, 2009 between Attalus Capital, L.P. and National Investment Services, Inc.31.1
    
    Chief Executive Officer Certification pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.31.2
    
    Chief Financial Officer Certification pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.32.1
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.99.1
    
    Press release of Titanium Asset Management to the AIM, a
market operated by the London Stock Exchange, dated 
August
10, 2009