##### 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 September 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
    
    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
    
    
    11Item 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.   Submission of Matters to a Vote of Security Holders
    
    
    22Item 5.   Other Information
    
    
    23Item 6.   Exhibits
    
    
    23EX-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
 September 30,
    
    December 31,2009
    
    2008(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    6,383,000
    
    
    $
    18,753,000Securities available for sale
    
    
    11,473,000
    
    
    
    10,683,000Accounts receivable
    
    
    3,592,000
    
    
    
    4,041,000Other current assets
    
    
    1,932,000
    
    
    
    1,420,000Total current assets
    
    
    23,380,000
    
    
    
    34,897,000Securities available for sale
    
    
    2,074,000
    
    
    
    672,000Property and equipment, net
    
    
    485,000
    
    
    
    456,000Goodwill
    
    
    31,271,000
    
    
    
    32,757,000Intangible assets, net
    
    
    27,468,000
    
    
    
    32,206,000Deferred income taxes
    
    
    5,821,000
    
    
    
    4,202,000Total assets
    
    $
    90,499,000
    
    
    $
    105,190,000Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    271,000
    
    
    $
    663,000Acquisition payments due
    
    
    2,677,000
    
    
    
    8,145,000Other current liabilities
    
    
    2,182,000
    
    
    
    1,789,000Total current liabilities
    
    
    5,130,000
    
    
    
    10,597,000Acquisition payments due
    
    
    960,000
    
    
    
    1,889,000Total liabilities
    
    
    6,090,000
    
    
    
    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 September 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
September 30, 2009 and December 31, 2008
    
    
    
    
    
    
    Preferred stock, $0.0001 par value; 1,000,000 shares
authorized; none issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    99,775,000
    
    
    
    99,462,000Accumulated deficit
    
    
    (15,531,000
    )
    
    
    (6,597,000
    )Other comprehensive income (loss)
    
    
    163,000
    
    
    
    (163,000
    )Total stockholders equity
    
    
    84,409,000
    
    
    
    92,704,000Total liabilities and stockholders equity
    
    $
    90,499,000
    
    
    $
    105,190,000
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Titanium Asset Management Corp.
Condensed Consolidated Statement of Operations
(unaudited)
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Fee income
    
    $
    5,047,000
    
    
    $
    3,886,000
    
    
    $
    14,887,000
    
    
    $
    10,592,000Operating expenses:Administrative
    
    
    5,737,000
    
    
    
    4,913,000
    
    
    
    17,865,000
    
    
    
    10,901,000Amortization of intangible assets
    
    
    1,020,000
    
    
    
    1,093,000
    
    
    
    3,059,000
    
    
    
    3,095,000Impairment of goodwill
    
    
    4,847,000
    
    
    
    
    
    
    
    4,847,000
    
    
    
    Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,792,000Total operating expenses
    
    
    11,604,000
    
    
    
    6,006,000
    
    
    
    25,771,000
    
    
    
    15,788,000Operating loss
    
    
    (6,557,000
    )
    
    
    (2,120,000
    )
    
    
    (10,884,000
    )
    
    
    (5,196,000
    )Other incomeInterest income
    
    
    98,000
    
    
    
    (94,000
    )
    
    
    333,000
    
    
    
    774,000Interest expense
    
    
    (15,000
    )
    
    
    (14,000
    )
    
    
    (44,000
    )
    
    
    (14,000
    )Gain (loss) on investments
    
    
    28,000
    
    
    
    (38,000
    )
    
    
    (160,000
    )
    
    
    (38,000
    )Loss before taxes
    
    
    (6,446,000
    )
    
    
    (2,266,000
    )
    
    
    (10,755,000
    )
    
    
    (4,474,000
    )Income tax benefit
    
    
    (249,000
    )
    
    
    (664,000
    )
    
    
    (1,821,000
    )
    
    
    (1,384,000
    )Net loss
    
    $
    (6,197,000
    )
    
    $
    (1,602,000
    )
    
    $
    (8,934,000
    )
    
    $
    (3,090,000
    )Earnings (loss) per shareBasic
    
    $
    (0.30
    )
    
    $
    (0.08
    )
    
    $
    (0.43
    )
    
    $
    (0.15
    )Diluted
    
    $
    (0.30
    )
    
    $
    (0.08
    )
    
    $
    (0.43
    )
    
    $
    (0.15
    )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)
 Nine Months EndedSeptember 30,2009
    
    2008Cash flows from operating activitiesNet loss
    
    $
    (8,934,000
    )
    
    $
    (3,090,000
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation and amortization
    
    
    3,139,000
    
    
    
    3,099,000Impairment of intangible assets
    
    
    
    
    
    
    1,792,000Impairment of goodwill
    
    
    4,847,000
    
    
    
    Noncash share compensation
    
    
    313,000
    
    
    
    Accretion of acquisition payments
    
    
    40,000
    
    
    
    12,000Loss on investments
    
    
    160,000
    
    
    
    39,000Deferred income taxes
    
    
    (1,821,000
    )
    
    
    (1,531,000
    )Changes in assets and liabilities:Decrease (increase) in accounts receivable
    
    
    538,000
    
    
    
    (140,000
    )Decrease (increase) in other current assets
    
    
    (440,000
    )
    
    
    425,000Increase (decrease) in accounts payable
    
    
    (398,000
    )
    
    
    129,000Increase (decrease) in other current liabilities
    
    
    876,000
    
    
    
    (855,000
    )Net cash used in operating activities
    
    
    (1,680,000
    )
    
    
    (120,000
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (128,000
    )
    
    
    (72,000
    )Cash and cash equivalents released from trust
    
    
    
    
    
    
    55,587,000Purchases of securities available for sale
    
    
    (16,340,000
    )
    
    
    (1,000,000
    )Sales and redemptions of securities available for sale
    
    
    13,929,000
    
    
    
    34,000Cash paid for acquisition of subsidiaries, net of cash acquired
    
    
    (6,000
    )
    
    
    (31,226,000
    )Net cash provided by (used in) investing activities
    
    
    (2,545,000
    )
    
    
    23,323,000Cash 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
    
    
    (12,370,000
    )
    
    
    11,186,000Cash and cash equivalents:Beginning
    
    
    18,753,000
    
    
    
    19,388,000Ending
    
    $
    6,383,000
    
    
    $
    30,574,000Supplemental disclosure of cash flow informationIncome taxes refunded (paid)
    
    $
    512,000
    
    
    $
    (630,000
    )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
    
    $
    1,708,000
    
    
    $
    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
   
    
    The Financial Accounting Standards Board (FASB) has issued revised standards concerning
the accounting for business combinations that will require the expensing of acquisition costs
incurred in future acquisitions and contingent consideration will be recorded at the
acquisition date for future acquisitions.
    
    The FASB has recently issued guidance for determining the useful life of intangible assets.
The adoption of this guidance did not have an impact on the Companys condensed consolidated
financial statements.
    
    In May 2009, the FASB issued a standard that 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. That standard
requires public companies to evaluate subsequent events through the date that the financial
statements are issued. The Company adopted this 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 November 10, 2009.
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Note 2  Adoption of New Accounting Standards (continued)
  
    
    An amended standard for disclosures about derivative instruments and hedging activities.
    
    A FASB staff position to partially defer certain provisions of its standard on fair value
reporting for financial instruments.
    
    A FASB staff position that provides additional guidance for estimating fair values for
financial instruments when the volume and level of activity for the asset or liability have
significantly decreased.
    
    A FASB staff position that 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.The following new standards have been issued, but are not yet effective, and have not been
early adopted:
    
    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.
This standard, which is effective for fiscal years beginning after November 15, 2009, is not
expected to 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. This
standard, which is effective for fiscal years beginning after November 15, 2009, is not
expected to have a significant impact on the Companys consolidated financial statements.
 Note 3  Comprehensive Loss
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Net loss
    
    $
    (6,197,000
    )
    
    $
    (1,602,000
    )
    
    $
    (8,934,000
    )
    
    $
    (3,090,000
    )Fair value gains
(losses) on
available-for-sale
securities, net of tax
    
    
    172,000
    
    
    
    
    
    
    
    326,000
    
    
    
    (34,000
    )Comprehensive loss
    
    $
    (6,025,000
    )
    
    $
    (1,602,000
    )
    
    $
    (8,608,000
    )
    
    $
    (3,124,000
    )
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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
    
    
    1,679,000Additional purchase consideration for Wood and Sovereign acquisitions
    
    
    1,708,000Impairment of goodwill
    
    
    (4,847,000
    )Goodwill at September 30, 2009
    
    $
    31,271,000
  Intangible assets, net at December 31, 2008
    
    $
    32,206,000Change in estimated values for acquired intangible assets of Boyd
    
    
    (1,679,000
    )Amortization expense
    
    
    (3,059,000
    )Intangible assets, net at September 30, 2009
    
    $
    27,468,000
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Note 4  Goodwill and intangible assets (continued)
  September 30, 2009

    
    December 31, 2008Accumulated
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    Amortization
    
    Net
    
    Cost
    
    Amortization
    
    Net.
    
    
    
    
    
    (unaudited)
    
    (in thousands)Wood customer relationships
    
    $
    12,026
    
    
    $
    9,644
    
    
    $
    2,382
    
    
    $
    12,026
    
    
    $
    8,850
    
    
    $
    3,176Wood brand
    
    
    444
    
    
    
    222
    
    
    
    222
    
    
    
    444
    
    
    
    139
    
    
    
    305Sovereign customer relationships
    
    
    2,665
    
    
    
    1,285
    
    
    
    1,380
    
    
    
    2,665
    
    
    
    966
    
    
    
    1,699Sovereign non-compete agreement
    
    
    833
    
    
    
    555
    
    
    
    278
    
    
    
    833
    
    
    
    347
    
    
    
    486Sovereign brand
    
    
    181
    
    
    
    120
    
    
    
    61
    
    
    
    181
    
    
    
    76
    
    
    
    105NIS client referral relationship
    
    
    23,089
    
    
    
    2,310
    
    
    
    20,779
    
    
    
    23,089
    
    
    
    1,154
    
    
    
    21,935Boyd customer relationships
    
    
    2,821
    
    
    
    455
    
    
    
    2,366
    
    
    
    4,500
    
    
    
    
    
    
    
    4,500Totals
    
    $
    42,059
    
    
    $
    14,591
    
    
    $
    27,468
    
    
    $
    43,738
    
    
    $
    11,532
    
    
    $
    32,206
  Note 5  Investments
  September 30,
    
    December 31,2009
    
    2008(unaudited)Current portfolioCorporate bonds
    
    $
    11,473,000
    
    
    $
    10,683,000Noncurrent portfolioCommingled fixed income fund
    
    $
    2,074,000
    
    
    $
    Commingled stock fund
    
    $
    
    
    
    $
    672,000
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Note 5  Investments (continued)
  Note 6  Stockholders Equity
     Note 7 Income Taxes
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Note 8 Earnings per Share
   Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Basic EPS:Net loss
    
    $
    (6,197,000
    )
    
    $
    (1,602,000
    )
    
    $
    (8,934,000
    )
    
    $
    (3,090,000
    )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
    
    $
    (0.30
    )
    
    $
    (0.08
    )
    
    $
    (0.43
    )
    
    $
    (0.15
    )Diluted EPS:Net loss
    
    $
    (6,197,000
    )
    
    $
    (1,602,000
    )
    
    $
    (8,934,000
    )
    
    $
    (3,090,000
    )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
    
    
    
    
    
    
    5,803,423
    
    
    
    
    
    
    
    5,815,603Shares of common stock under compensatory common stock grants
    
    
    41,995
    
    
    
    
    
    
    
    63,137
    
    
    
    Diluted weighted average shares of common stock outstanding
    
    
    20,588,485
    
    
    
    26,254,925
    
    
    
    20,609,627
    
    
    
    26,267,104Diluted EPS
    
    $
    (0.30
    )
    
    $
    (0.08
    )
    
    $
    (0.43
    )
    
    $
    (0.15
    )
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Note 9 Contingencies
  .
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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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Assets Under Management
  TitaniumRealEstate
    
    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
    
    
    23.2
    
    
    
    12.3
    
    
    
    89.2
    
    
    
    26.3
    
    
    
    550.3
    
    
    
    701.3Terminated accounts
    
    
    
    
    
    
    (79.1
    )
    
    
    (282.5
    )
    
    
    (39.8
    )
    
    
    (82.9
    )
    
    
    (484.3
    )Other contributions (withdrawals)
    
    
    
    
    
    
    9.7
    
    
    
    (5.0
    )
    
    
    (285.3
    )
    
    
    258.2
    
    
    
    (22.4
    )Other activity, principally market movement
    
    
    
    
    
    
    64.0
    
    
    
    72.4
    
    
    
    280.9
    
    
    
    135.0
    
    
    
    552.3Balance at September 30, 2009
    
    $
    23.2
    
    
    $
    674.8
    
    
    $
    1,037.7
    
    
    $
    2,867.8
    
    
    $
    3,716.6
    
    
    $
    8,320.1% change from beginning balance
    
    
    
    
    
    
    1
    %
    
    
    (11
    %)
    
    
    (1
    %)
    
    
    30
    %
    
    
    10
    %
  13




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##### Table of Contents



September 30, 2009
    
    December 31, 2008(in millions)
    
    % of total
    
    (in millions)
    
    % of totalU.S. fixed income
    
    $
    7,516.9
    
    
    
    90.3
    %
    
    $
    6,674.8
    
    
    
    88.2
    %U.S. equity
    
    
    754.2
    
    
    
    9.1
    %
    
    
    874.6
    
    
    
    11.5
    %International equity
    
    
    25.9
    
    
    
    0.3
    %
    
    
    23.8
    
    
    
    0.3
    %Real estate
    
    
    23.2
    
    
    
    0.3
    %
    
    
    
    
    
    
    Balance at end of period
    
    $
    8,320.2
    
    
    
    100.0
    %
    
    $
    7,573.2
    
    
    
    100.0
    %
   September 30, 2009
    
    
    December 31, 2008(in millions)
    
    
    % of total
    
    
    (in millions)
    
    
    % of totalInstitutional  Retirement plans
    
    $
    3,871.6
    
    
    
    46.5
    %
    
    $
    3,633.3
    
    
    
    48.0
    %Institutional  Other
    
    
    2,762.7
    
    
    
    33.2
    %
    
    
    2,197.3
    
    
    
    29.0
    %Retail  Broker/dealer accounts
    
    
    854.7
    
    
    
    10.3
    %
    
    
    948.6
    
    
    
    12.5
    %Retail  Other
    
    
    831.2
    
    
    
    10.0
    %
    
    
    794.0
    
    
    
    10.5
    %Balance at end of period
    
    $
    8,320.2
    
    
    
    100.0
    %
    
    $
    7,573.2
    
    
    
    100.0
    %
   Balance at December 31, 2008
    
    $
    806.2New accounts
    
    
    67.6Other activity, principally market movement
    
    
    96.1Balance at September 30, 2009
    
    $
    969.9% change from beginning balance
    
    
    20.3
    %
 14




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##### Table of Contents



Results of Operations
 Consolidated Results of Operations
  Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Operating revenues:Investment advisory fees
    
    $
    4,472,000
    
    
    $
    3,304,000
    
    
    $
    13,229,000
    
    
    $
    9,359,000Referral fees
    
    
    575,000
    
    
    
    582,000
    
    
    
    1,658,000
    
    
    
    1,233,000Total operating revenues
    
    
    5,047,000
    
    
    
    3,886,000
    
    
    
    14,887,000
    
    
    
    10,592,000Operating expenses:Administrative
    
    
    5,737,000
    
    
    
    4,913,000
    
    
    
    17,865,000
    
    
    
    10,901,000Amortization of intangible assets
    
    
    1,020,000
    
    
    
    1,093,000
    
    
    
    3,059,000
    
    
    
    3,095,000Impairment of goodwill
    
    
    4,847,000
    
    
    
    
    
    
    
    4,847,000
    
    
    
    Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,792,000Total operating expenses
    
    
    11,604,000
    
    
    
    6,006,000
    
    
    
    25,771,000
    
    
    
    15,788,000Operating loss
    
    
    (6,557,000
    )
    
    
    (2,120,000
    )
    
    
    (10,884,000
    )
    
    
    (5,196,000
    )Interest income
    
    
    98,000
    
    
    
    (94,000
    )
    
    
    333,000
    
    
    
    774,000Interest expense
    
    
    (15,000
    )
    
    
    (14,000
    )
    
    
    (44,000
    )
    
    
    (14,000
    )Investment gains (losses)
    
    
    28,000
    
    
    
    (38,000
    )
    
    
    (160,000
    )
    
    
    (38,000
    )Loss before taxes
    
    
    (6,446,000
    )
    
    
    (2,266,000
    )
    
    
    (10,755,000
    )
    
    
    (4,474,000
    )Income tax benefit
    
    
    (249,000
    )
    
    
    (664,000
    )
    
    
    (1,821,000
    )
    
    
    (1,384,000
    )Net loss
    
    $
    (6,197,000
    )
    
    $
    (1,602,000
    )
    
    $
    (8,934,000
    )
    
    $
    (3,090,000
    )Earnings (loss) per shareBasic
    
    $
    (0.30
    )
    
    $
    (0.08
    )
    
    $
    (0.43
    )
    
    $
    (0.15
    )Diluted
    
    $
    (0.30
    )
    
    $
    (0.08
    )
    
    $
    (0.43
    )
    
    $
    (0.15
    )
 Operating Revenues
  Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Wood
    
    $
    594,000
    
    
    $
    990,000
    
    
    $
    1,838,000
    
    
    $
    3,295,000Sovereign
    
    
    568,000
    
    
    
    590,000
    
    
    
    1,792,000
    
    
    
    2,370,000NIS
    
    
    1,783,000
    
    
    
    1,724,000
    
    
    
    5,356,000
    
    
    
    3,694,000Boyd
    
    
    1,525,000
    
    
    
    
    
    
    
    4,241,000
    
    
    
    Titanium  Real Estate
    
    
    2,000
    
    
    
    
    
    
    
    2,000
    
    
    
    Total
    
    $
    4,472,000
    
    
    $
    3,304,000
    
    
    $
    13,229,000
    
    
    $
    9,359,000
  15




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##### Table of Contents



Operating
Expenses
  Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Employee compensation
    
    $
    3,736,000
    
    
    $
    2,727,000
    
    
    $
    11,408,000
    
    
    $
    6,030,000Share-based compensation
    
    
    107,000
    
    
    
    
    
    
    
    314,000
    
    
    
    Professional fees
    
    
    553,000
    
    
    
    1,139,000
    
    
    
    1,975,000
    
    
    
    2,085,000Occupancy
    
    
    274,000
    
    
    
    246,000
    
    
    
    837,000
    
    
    
    570,000Other operating expenses
    
    
    1,067,000
    
    
    
    801,000
    
    
    
    3,331,000
    
    
    
    2,216,000Total
    
    $
    5,737,000
    
    
    $
    4,913,000
    
    
    $
    17,865,000
    
    
    $
    10,901,000
  16




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17




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##### Table of Contents



Liquidity and Capital Resources
    18




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19




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##### Table of Contents



Critical Accounting Policies
  Recent Accounting Pronouncements
  
    
    The Financial Accounting Standards Board (FASB) has issued revised standards concerning
the accounting for business combinations that will require the expensing of acquisition costs
incurred in future acquisitions and contingent consideration will be recorded at the
acquisition date for future acquisitions.
    
    The FASB has recently issued guidance for determining the useful life of intangible assets.
The adoption of this guidance did not have an impact on the Companys condensed consolidated
financial statements.
    
    In May 2009, the FASB issued a standard that 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. That standard
requires public companies to evaluate subsequent events through the date that the financial
statements are issued. The Company adopted this 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 November 10, 2009.
  
    
    An amended standard for disclosures about derivative instruments and hedging activities.
    
    A FASB staff position to partially defer certain provisions of its standard on fair value
reporting for financial instruments.
    
    A FASB staff position that provides additional guidance for estimating fair values for
financial instruments when the volume and level of activity for the asset or liability have
significantly decreased.
    
    A FASB staff position that 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.
 20




---



##### Table of Contents




    
    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.
This standard, which is effective for fiscal years beginning after November 15, 2009, is not
expected to 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. This
standard, which is effective for fiscal years beginning after November 15, 2009, is not
expected to 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
 Changes in internal control over financial reporting
 21




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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
  22




---



##### Table of Contents



Item 5. Other Information
   
 Item 6. Exhibits
 Exhibit Number
    
    Description10.1
    
    Amended Employment Agreement between Robert J. Siefert and
National Investment Services, Inc.10.2
    
    Indemnification Agreement dated November 3, 2009 between
Titanium Asset Management Corp. and Ron Braverman.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
November 11, 2009
 23




---



##### Table of Contents



SIGNATURES
  TITANIUM ASSET MANAGEMENT CORP.November 12, 2009
    By:
    /s/ Nigel WightmanName:
    Nigel WightmanTitle:
    Chairman and Chief Executive OfficerNovember 12, 2009
    By:
    /s/ Larry HasleeName:
    Larry HasleeTitle:
    Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)




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##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description10.1
    
    Amended Employment Agreement between Robert J. Siefert and National Investment Services, Inc.10.2
    
    Indemnification Agreement dated November 3, 2009 between Titanium Asset Management Corp. and Ron Braverman.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
November 11, 2009