##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 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
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 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
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4T. Controls and Procedures
    
    
    21PART II. OTHER INFORMATION
    
    
    22Item 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3. Defaults Upon Senior Securities
    
    
    22Item 4. (Removed and Reserved)
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    22EX-31.1EX-31.2EX-32.1EX-32.2
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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Titanium Asset Management Corp.
Condensed Consolidated Balance Sheets
 March 31,
    
    
    December 31,2010
    

    2009(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    947,000
    
    
    $
    4,773,000Investments
    
    
    12,009,000
    
    
    
    12,549,000Accounts receivable
    
    
    3,789,000
    
    
    
    5,030,000Other current assets
    
    
    1,121,000
    
    
    
    1,162,000Total current assets
    
    
    17,866,000
    
    
    
    23,514,000Investments in affiliates
    
    
    6,318,000
    
    
    
    2,179,000Property and equipment, net
    
    
    402,000
    
    
    
    427,000Goodwill
    
    
    28,147,000
    
    
    
    28,147,000Intangible assets, net
    
    
    24,091,000
    
    
    
    24,920,000Total assets
    
    $
    76,824,000
    
    
    $
    79,187,000Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    198,000
    
    
    $
    237,000Acquisition payments due
    
    
    1,744,000
    
    
    
    1,746,000Other current liabilities
    
    
    2,541,000
    
    
    
    3,504,000Total current liabilities
    
    
    4,483,000
    
    
    
    5,487,000Acquisition payments due
    
    
    960,000
    
    
    
    960,000Total liabilities
    
    
    5,443,000
    
    
    
    6,447,000Commitments and contingenciesStockholders equityCommon stock, $0.0001 par value; 54,000,000 shares
authorized; 20,564,816 shares issued and outstanding
at March 31, 2010 and December 31, 2009
    
    
    2,000
    
    
    
    2,000Restricted common stock, $0.0001 par value; 720,000
shares authorized; 612,716 issued and outstanding at
March 31, 2010 and December 31, 2009
    
    
    
    
    
    
    Preferred stock, $0.0001 par value; 1,000,000 shares
authorized; none issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    100,373,000
    
    
    
    100,332,000Accumulated deficit
    
    
    (29,036,000
    )
    
    
    (27,766,000
    )Other comprehensive income
    
    
    42,000
    
    
    
    172,000Total stockholders equity
    
    
    71,381,000
    
    
    
    72,740,000Total liabilities and stockholders equity
    
    $
    76,824,000
    
    
    $
    79,187,000
  1




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Titanium Asset Management Corp.
Condensed Consolidated Statement of Operations
(unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Operating revenues
    
    $
    5,550,000
    
    
    $
    5,163,000Operating expenses:Administrative
    
    
    6,306,000
    
    
    
    6,284,000Amortization of intangible assets
    
    
    829,000
    
    
    
    943,000Total operating expenses
    
    
    7,135,000
    
    
    
    7,227,000Operating loss
    
    
    (1,585,000
    )
    
    
    (2,064,000
    )Other incomeInterest income
    
    
    88,000
    
    
    
    120,000Gain (loss) on investments
    
    
    104,000
    
    
    
    (381,000
    )Income from equity investees
    
    
    139,000
    
    
    
    Interest expense
    
    
    (16,000
    )
    
    
    (14,000
    )Loss before taxes
    
    
    (1,270,000
    )
    
    
    (2,339,000
    )Income tax benefit
    
    
    
    
    
    
    (798,000
    )Net loss
    
    $
    (1,270,000
    )
    
    $
    (1,541,000
    )Earnings (loss) per shareBasic
    
    $
    (0.06
    )
    
    $
    (0.08
    )Diluted
    
    $
    (0.06
    )
    
    $
    (0.08
    )Weighted average number of common shares outstanding:Basic
    
    
    20,701,493
    
    
    
    20,546,491Diluted
    
    
    20,701,493
    
    
    
    20,546,491
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Titanium Asset Management Corp.
Condensed Consolidated Statement of Cash Flows
(unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Cash flows from operating activitiesNet loss
    
    $
    (1,270,000
    )
    
    $
    (1,541,000
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    854,000
    
    
    
    972,000Share compensation expense
    
    
    41,000
    
    
    
    98,000Loss (gain) on investments
    
    
    (104,000
    )
    
    
    381,000Income from equity investees
    
    
    (139,000
    )
    
    
    Accretion of acquisition payments
    
    
    16,000
    
    
    
    10,000Deferred income taxes
    
    
    
    
    
    
    (798,000
    )Changes in assets and liabilities:Decrease (increase) in accounts receivable
    
    
    1,241,000
    
    
    
    403,000Decrease (increase) in other current assets
    
    
    41,000
    
    
    
    (24,000
    )Increase (decrease) in accounts payable
    
    
    (39,000
    )
    
    
    (221,000
    )Increase (decrease) in other current liabilities
    
    
    (981,000
    )
    
    
    (63,000
    )Net cash used in operating activities
    
    
    (340,000
    )
    
    
    (783,000
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    
    
    
    
    (93,000
    )Purchases of investments
    
    
    (6,675,000
    )
    
    
    (1,514,000
    )Sales and redemptions of investments
    
    
    7,189,000
    
    
    
    Investments in equity investees
    
    
    4,000,000
    
    
    
    Cash paid for acquisition of subsidiaries, net of cash acquired
    
    
    
    
    
    
    (6,000
    )Net cash used in investing activities
    
    
    (3,486,000
    )
    
    
    (1,613,000
    )Cash flows from financing activitiesPayment of deferred acquisition obligations
    
    
    
    
    
    
    (8,145,000
    )Net cash used in financing activities
    
    
    
    
    
    
    (8,145,000
    )Net decrease in cash and cash equivalents
    
    
    (3,826,000
    )
    
    
    (10,541,000
    )Cash and cash equivalents:Beginning
    
    
    4,773,000
    
    
    
    18,753,000Ending
    
    $
    947,000
    
    
    $
    8,212,000
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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
   
    
    A standard, which was issued by the Financial Accounting Standards Board (FASB) in June
2009, that requires entities to provide more information regarding sales of securitized
financial assets and similar transactions. The adoption of this standard did not have a
significant impact on the Companys consolidated financial statements.
 
    
    A standard, which was issued by the FASB in June 2009, that modifies how a company
determines when an entity that is insufficiently capitalized or is not controlled through
voting (or similar rights) should be consolidated. The standard 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. The standard requires
an ongoing reassessment of whether a company is the primary beneficiary of a variable interest
entity and also requires additional disclosures about a companys involvement in variable
interest entities and any significant changes in risk exposure due to that involvement. The
FASB subsequently amended this standard to defer the consolidation requirements for
investments in investment companies. The adoption of this standard did not have a significant
impact on the Companys consolidated financial statements.
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Note 2  Adoption of New Accounting Standards (continued)
 
    
    An amended standard, issued by the FASB in January 2010, that requires additional
disclosures about significant transfers in and out of levels 1 and 2 fair value measurements
and reasons for the transfers. In addition, the amended standard requires new disclosures
relating to the reconciliation for fair value measurements using unobservable inputs (level 3)
detailing information about purchases, issuances, and settlements on a gross basis. The
adoption of these amended disclosure requirements did not have a significant impact on the
Companys consolidated financial statements.
 Note 3  Investments
  Current portfolio of debt securities
 Amortized cost
    
    Unrealized gains
    
    Unrealized losses
    
    Fair valueMarch 31, 2010
    
    $
    11,882,000
    
    
    $
    153,000
    
    
    $
    (26,000
    )
    
    $
    12,009,000December 31, 2009
    
    $
    12,292,000
    
    
    $
    259,000
    
    
    $
    (2,000
    )
    
    $
    12,549,000Debt securities accounted for as available-for-sale and held at March 31, 2010 mature as flows:Amortized cost
    
    Fair valueWithin one year
    








    $
    6,675,000
    
    
    $
    6,765,000After one year but within five years
    








    $
    5,207,000
    
    
    $
    5,244,000
  2010
    
    2009Available-for-sale securities:Proceeds from sale
    
    $
    7,189,000
    
    
    $
    Gross realized gains on sales
    
    
    119,000
    
    
    
    Gross realized losses on sales
    
    
    (15,000
    )
    
    
    Unrealized gains and (losses)
    
    
    (26,000
    )
    
    
    12,000Net gains reclassified out of accumulated other
comprehensive income to earnings
    
    
    104,000
    
    
    
    
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Note 3  Investments (continued)
 Commingled stock fund
  Investments in Affiliates
    Investment at December 31, 2009
    
    $
    2,179,000Additional investments
    
    
    4,000,000Equity in income of affiliates
    
    
    139,000Investments in affiliates at March 31, 2010
    
    $
    6,318,000
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Note 4  Acquisition Obligations
  2010
    
    2009Current amounts:Sovereign acquisition obligation (a)
    
    $
    1,015,000
    
    
    $
    1,033,000NIS acquisition obligation (b)
    
    
    729,000
    
    
    
    713,000Current acquisition payments due
    
    $
    1,744,000
    
    
    $
    1,746,000Noncurrent amount -Boyd acquisition obligation (c)
    
    $
    960,000
    
    
    $
    960,000
 
 (a)
    
    During the period ended March 31, 2010, as part of a settlement agreement with the
previous majority owner of Sovereign, the Company agreed to pay $1,015,000 in full
satisfaction of all amounts due, or that would become due, under the acquisition agreement.
This amount was paid in April 2010.(b)
    
    The NIS acquisition obligation is due currently, payable in cash.(c)
    
    The Boyd acquisition obligation reflects a deferred stock grant of 192,000 shares of
common stock valued at $960,000, payable in 2011.   Note 5  Stockholders Equity
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Note 5  Stockholders Equity (continued)
    Note 6  Comprehensive Loss
  Three Months EndedMarch 31,2010
    
    2009Net loss
    
    $
    (1,270,000
    )
    
    $
    (1,541,000
    )Fair value gains (losses) on
available-for-sale securities, net of tax
    
    
    (130,000
    )
    
    
    191,000Comprehensive loss
    
    $
    (1,400,000
    )
    
    $
    (1,350,000
    )
 Note 7 Income Taxes
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Note 8 Earnings per Share
   Three months endedMarch 31,2010
    
    2009Basic EPS:Net loss
    
    $
    (1,270,000
    )
    
    $
    (1,541,000
    )Weighted average shares of common stock
outstanding
    
    
    20,509,493
    
    
    
    20,354,491Shares of common stock to be issued in Boyd
acquisition
    
    
    192,000
    
    
    
    192,000Basic weighted average shares of common
stock outstanding
    
    
    20,701,493
    
    
    
    20,546,491Basic EPS
    
    $
    (0.06
    )
    
    $
    (0.08
    )Diluted EPS:Net loss
    
    $
    (1,270,000
    )
    
    $
    (1,541,000
    )Basic weighted average shares of common
stock outstanding
    
    
    20,701,493
    
    
    
    20,546,491Shares of common stock issuable under
warrants
    
    
    
    
    
    
    2,022,472Shares of common stock under compensatory
common stock grants
    
    
    38,627
    
    
    
    21,024Diluted weighted average shares of common
stock outstanding
    
    
    20,740,120
    
    
    
    22,589,986Diluted EPS
    
    $
    (0.06
    )
    
    $
    (0.08
    )
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Note 9  Fair Value Disclosures
   Category used for Fair ValuesLevel 1
    
    Level 2
    
    Level 3Assets at March 31, 2010Cash and cash equivalents
    
    $
    947,000
    
    
    $
    
    
    
    $
    Current securities available for
sale  Debt securities
    
    
    
    
    
    
    12,009,000
    
    
    
    Noncurrent investment -
Investment in equity investee
    
    
    
    
    
    
    6,318,000
    
    
    
    $
    947,000
    
    
    $
    18,327,000
    
    
    $
    Assets at December 31, 2009Cash and cash equivalents
    
    $
    4,773,000
    
    
    $
    
    
    
    $
    Current securities available for
sale  Debt securities
    
    
    
    
    
    
    12,549,000
    
    
    
    Noncurrent investment -
Investment in equity investee
    
    
    
    
    
    
    2,179,000
    
    
    
    $
    4,773,000
    
    
    $
    14,728,000
    
    
    $
    
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Note 10 Contingencies
  .
  11




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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, 2009 (the 2009 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.
  General
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Market Developments
  13




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Assets Under Management
    Three Months Ended
    
    
    2010March 31,
    
    
    vs.(in millions)
    
    2010
    
    
    2009
    
    
    2009Period Activity:Beginning balance
    
    $
    8,151.4
    
    
    $
    7,573.2
    
    
    
    8
    %Inflows
    
    
    513.1
    
    
    
    518.3
    
    
    
    -1
    %Outflows
    
    
    (329.7
    )
    
    
    (468.2
    )
    
    
    30
    %Market value change
    
    
    163.3
    
    
    
    (51.1
    )
    
    NMEnding balance
    
    $
    8,498.1
    
    
    $
    7,572.2
    
    
    
    12
    %Average Assets Under Management (1)
    
    $
    8,324.8
    
    
    $
    7,572.7
    
    
    
    10
    %Average Fee Rate (basis points)
    
    
    24
    
    
    
    24
    
    
    NCPeriod End Balances:By investment strategy:Fixed income
    
    $
    7,485.4
    
    
    $
    6,795.0
    
    
    
    10
    %Equity
    
    
    916.5
    
    
    
    777.2
    
    
    
    18
    %Real estate
    
    
    96.2
    
    
    
    
    
    
    NMTotal
    
    $
    8,498.1
    
    
    $
    7,572.2
    
    
    
    12
    %By client type:Institutional
    
    $
    6,910.4
    
    
    $
    5,858.0
    
    
    
    18
    %Retail
    
    
    1,587.7
    
    
    
    1,714.2
    
    
    
    -7
    %Total
    
    $
    8,498.1
    
    
    $
    7,572.2
    
    
    
    12
    %By investment vehicle:Separate accounts
    
    $
    7,610.1
    
    
    $
    7,140.3
    
    
    
    7
    %Private funds
    
    
    888.0
    
    
    
    431.9
    
    
    
    106
    %Total
    
    $
    8,498.1
    
    
    $
    7,572.2
    
    
    
    12
    %
 
 (1)
    
    Average assets under management are calculated based on the quarter end balances and include
amounts acquired in acquisitions in the first quarter following the acquisition.   14




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Three Months EndedMarch 31,(in millions)
    
    2010
    
    
    2009Annual Activity:Beginning balance
    
    $
    974.9
    
    
    $
    806.2Inflows
    
    
    5.2
    
    
    
    2.7Outflows
    
    
    
    
    
    
    Market value change
    
    
    12.0
    
    
    
    16.9Ending balance
    
    $
    992.1
    
    
    $
    825.8Average Assets Under Management
    
    $
    983.5
    
    
    $
    816.0
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Results of Operations
 Consolidated Results of Operations
 Three Months Ended
    
    2010March 31,
    
    vs.2010
    
    2009
    
    2009Operating revenues
    
    $
    5,550,000
    
    
    $
    5,163,000
    
    
    
    7
    %Operating expenses:Administrative
    
    
    6,306,000
    
    
    
    6,284,000
    
    
    NCAmortization of intangible assets
    
    
    829,000
    
    
    
    943,000
    
    
    
    -12
    %Total operating expenses
    
    
    7,135,000
    
    
    
    7,227,000
    
    
    
    -1
    %Operating loss
    
    
    (1,585,000
    )
    
    
    (2,064,000
    )
    
    
    23
    %Other income and expense
    
    
    315,000
    
    
    
    (275,000
    )
    
    NMLoss before taxes
    
    
    (1,270,000
    )
    
    
    (2,339,000
    )
    
    
    46
    %Income tax benefit
    
    
    
    
    
    
    (798,000
    )
    
    NMNet loss
    
    $
    (1,270,000
    )
    
    $
    (1,541,000
    )
    
    
    18
    %Net loss per sharebasic
    
    $
    (0.06
    )
    
    $
    (0.08
    )
    
    
    25
    %diluted
    
    $
    (0.06
    )
    
    $
    (0.08
    )
    
    
    25
    %
 
    
    
    An increase in revenue of $387,000, or 7%, reflecting the increase in average assets
under management.
    
    An increase in administrative expenses of $22,000, reflecting severance costs of
$420,000 which more than offset other cash compensation reductions and a reduction in
legal, audit, and other professional services fee expense.
    
    A decrease in amortization charges from $943,000 to $829,000, reflecting the write
off of intangible assets during 2009.
    
    An increase in other income of $590,000, primarily reflecting investment income from
our investments a portfolio of debt securities and income from two equity investees in
2010 compared to an impairment loss on a commingled stock fund recognized in 2009.
    
    A $798,000 decrease in income tax benefits reflecting the continued establishment of
valuation allowances for all deferred tax assets.
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Three Months Ended
    
    
    2010March 31,
    
    
    vs.2010
    
    
    2009
    
    
    2009Operating loss
    
    $
    (1,585,000
    )
    
    $
    (2,064,000
    )
    
    
    7
    %Amortization of intangible assets
    
    
    829,000
    
    
    
    943,000
    
    
    
    -12
    %Depreciation expense
    
    
    25,000
    
    
    
    29,000
    
    
    
    -14
    %Share compensation expense
    
    
    41,000
    
    
    
    98,000
    
    
    
    -58
    %Adjusted EBITDA
    
    $
    (690,000
    )
    
    $
    (994,000
    )
    
    
    31
    %
  Operating Revenues
  Three Months Ended
    
    
    2010March 31,
    
    
    vs.2010
    
    
    2009
    
    
    2009Investment advisory fees
    
    $
    4,943,000
    
    
    $
    4,621,000
    
    
    
    7
    %Referral fees
    
    
    607,000
    
    
    
    542,000
    
    
    
    12
    %Total operating revenues
    
    $
    5,550,000
    
    
    $
    5,163,000
    
    
    
    7
    %
    17




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##### Table of Contents



Administrative Expenses
  Three Months Ended
    
    2010March 31,
    
    vs.2010
    
    2009
    
    2009Employee compensation:Cash compensation
    
    $
    4,008,000
    
    
    $
    3,753,000
    
    
    
    7
    %Share-based compensation
    
    
    41,000
    
    
    
    98,000
    
    
    
    -58
    %Total compensation
    
    
    4,049,000
    
    
    
    3,851,000
    
    
    
    5
    %Third party distribution expense
    
    
    251,000
    
    
    
    205,000
    
    
    
    22
    %Legal, audit, and other professional services
    
    554,000
    
    
    
    752,000
    
    
    
    -26
    %Occupancy
    
    
    327,000
    
    
    
    328,000
    
    
    NCOther administrative expenses
    
    
    1,125,000
    
    
    
    1,148,000
    
    
    
    -2
    %Total administrative expenses
    
    $
    6,306,000
    
    
    $
    6,284,000
    
    
    NC
 
      18




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##### Table of Contents



Other Income and Expense
  Three Months Ended
    
    2010March 31,
    
    vs.2010
    
    2009
    
    2009Interest income
    
    $
    88,000
    
    
    $
    120,000
    
    
    
    -27
    %Realized gains on investments
    
    
    104,000
    
    
    
    
    
    
    NMImpairment loss on investment in
commingled stock fund
    
    
    
    
    
    
    (381,000
    )
    
    NMIncome from equity investees
    
    
    139,000
    
    
    
    
    
    
    NMInterest expense
    
    
    (16,000
    )
    
    
    (14,000
    )
    
    
    14
    %Total other income (expense)
    
    $
    315,000
    
    
    $
    (275,000
    )
    
    NM
 
       19




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##### Table of Contents



Liquidity and Capital Resources
  Three Months Ended March 31,2010
    
    
    2009Net cash used in operating activities
    
    $
    (340,000
    )
    
    $
    (783,000
    )Net cash used in investing activities
    
    $
    (3,486,000
    )
    
    $
    (1,613,000
    )Net cash used in financing activities
    
    $
    
    
    
    $
    (8,145,000
    )
     2010
    
    
    2009Current amounts:Sovereign acquisition obligation (a)
    
    
    $1,015,000
    
    
    $
    1,033,000NIS acquisition obligation (b)
    
    
    729,000
    
    
    
    713,000Current acquisition payments due
    
    $
    1,744,000
    
    
    $
    1,746,000Noncurrent amount -Boyd acquisition obligation (c)
    
    $
    960,000
    
    
    $
    960,000
 
 (a)
    
    During the period ended March 31, 2010, as part of a settlement agreement with the
previous majority owner of Sovereign, the Company agreed to pay $1,015,000 in full
satisfaction of all amounts due, or that would become due, under the acquisition agreement.
This amount was paid in April 2010.(b)
    
    The NIS acquisition obligation is due currently payable in cash.(c)
    
    The Boyd acquisition obligation reflects a deferred stock grant of 192,000 shares of
common stock valued at $960,000, payable in 2011.   20




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##### Table of Contents



Critical Accounting Policies
  Recent Accounting Pronouncements
  
    
    A standard, which was issued by the FASB in June 2009, that requires entities to provide
more information regarding sales of securitized financial assets and similar transactions.
The adoption of this standard did not have a significant impact on the Companys consolidated
financial statements.
 
    
    A standard, which was issued by the FASB in June 2009, that modifies how a company
determines when an entity that is insufficiently capitalized or is not controlled through
voting (or similar rights) should be consolidated. The standard 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. The standard requires
an ongoing reassessment of whether a company is the primary beneficiary of a variable interest
entity and also requires additional disclosures about a companys involvement in variable
interest entities and any significant changes in risk exposure due to that involvement. The
FASB subsequently amended this standard to defer the consolidation requirements for
investments in investment companies. The adoption of this standard did not have a significant
impact on the Companys consolidated financial statements.
 
    
    An amended standard, issued by the FASB in January 2010, that require additional
disclosures about significant transfers in and out of levels 1 and 2 fair value measurements
and reasons for the transfers. In addition, the amended standard requires new disclosures
relating to the reconciliation for fair value measurements using unobservable inputs (level 3)
detailing information about purchases, issuances, and settlements on a gross basis. The
adoption of these amended disclosure requirements did not have a significant impact on the
companys consolidated financial statements.
 
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4T.
    
    Controls and Procedures
 Evaluation of disclosure controls and procedures
 21




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##### Table of Contents



Changes in internal control over financial reporting
 
 PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
 Note 10 
Contingencies
 
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    (Removed and Reserved)
  
 Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
 Exhibit Number
    
    Description31.1
    
    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.
 22




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##### Table of Contents



SIGNATURES
  TITANIUM ASSET MANAGEMENT CORP.May 17, 2010
    By:
    /s/ Robert BrooksName:
    Robert BrooksTitle:
    Chief Executive Officer 
(Principal Executive Officer)May 17, 2010
    By:
    /s/ Jonathan HoeneckeName:
    Jonathan HoeneckeTitle:
    Chief Financial Officer 
(Principal Financial Officer
and Principal Accounting Officer)




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##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description31.1
    
    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.