Titan Pharmaceuticals(TTNP) - 2024 Q4 - Annual Report

PART I Business The company sold its core assets and is pursuing a reverse merger while operating with no full-time employees - The company is pursuing strategic alternatives, including a pending reverse merger with TalenTec Sdn. Bhd. announced in August 2024, following the sale of its core ProNeura assets[21][26] - On September 1, 2023, Titan sold its ProNeura Assets to Fedson, Inc. for $2.0 million ($1M paid in 2023, $1M paid in 2024) plus potential future milestone payments up to $50 million and royalties[22] - The company has experienced significant leadership turnover, including the resignation of CEO David Lazar in April 2024 and the appointment of Chay Weei Jye as CEO in December 2024[25][28][30] - As of December 31, 2024, the company had no full-time employees and utilized individuals on a contract basis[42] Risk Factors The company faces significant risks including Nasdaq delisting, a past material weakness, and going concern uncertainty - The company is at risk of being delisted from the Nasdaq Capital Market if it cannot maintain minimum stockholders' equity of $2.5 million and a minimum bid price of $1.00 per share[45] - A material weakness in internal control over financial reporting was identified as of December 31, 2023, due to limited staffing, though management believes it was remediated in 2024[48][50][51] - The proposed reverse merger with TalenTec involves significant transaction costs and uncertainty regarding its completion and ultimate benefits[59][60][61] - A history of net losses, including $4.7 million in 2024 and $5.6 million in 2023, raises substantial doubt about its ability to continue as a going concern[82] - The company may be obligated to repurchase certain outstanding warrants at their Black Scholes Value within 30 days after the consummation of the Merger[76][78] Unresolved Staff Comments The company reports that it has no unresolved staff comments - None[84] Cybersecurity The Board of Directors oversees cybersecurity risk, and no material threats were identified in 2024 - The Board of Directors has oversight responsibility for cybersecurity risks, which are managed daily by the management team[87] - In 2024, the company did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition[86] Properties The company does not own or lease any physical office space and operates remotely - The company does not own or lease any physical office space and maintains a mailing address in New York, NY[88] Legal Proceedings A pending employment lawsuit was assumed by Fedson, Inc as part of the 2023 asset sale - As part of the September 2023 asset sale, Fedson, Inc. assumed all liabilities related to a pending 2020 employment claim against the company from a former employee[89] Mine Safety Disclosures This item is not applicable to the company - Not applicable[90] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's stock trades on Nasdaq with 914,234 shares outstanding, and it does not pay dividends - The company's common stock trades on the Nasdaq Capital Market under the symbol "TTNP"[93] - As of March 12, 2025, there were 914,234 shares of common stock outstanding[93] - The company has never declared or paid cash dividends and does not anticipate paying any in the foreseeable future[94] Equity Compensation Plan Information as of December 31, 2024 | Plan category | Number of securities to be issued upon exercise of outstanding options, warrant and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 79,498 | $68.52 | 17,311 | | Equity compensation plans not approved by security holders | 9 | $11,880.00 | - | | Total | 79,507 | $69.85 | 17,311 | [Reserved] This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported zero revenue, a net loss of $4.7 million in 2024, and requires additional funding despite having cash into Q4 2025 Results of Operations (in thousands) | | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $0 | $184 | ($184) | | Research and development | $0 | $1,913 | ($1,913) | | General and administrative | $4,557 | $5,548 | ($991) | | Total Operating Expenses | $4,557 | $7,461 | ($2,904) | | Net Loss | ($4,706) | ($5,569) | $863 | Liquidity and Capital Resources (in thousands) | As of December 31: | 2024 | 2023 | | :--- | :--- | :--- | | Cash | $2,831 | $6,760 | | Working capital | $2,440 | $6,574 | | For the Years Ended Dec 31: | | | | Cash used in operating activities | ($3,880) | ($7,092) | - The company believes its cash balance of approximately $2.8 million as of December 31, 2024, is sufficient to fund planned operations into the fourth quarter of 2025, but will require additional funds[128] - The decrease in revenue was primarily due to the completion of activities related to development grants in February 2024, which also drove the decrease in R&D costs[130][131] Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to the company - Not applicable[137] Financial Statements and Supplementary Data This item directs the reader to the full financial statements included in the report starting on page F-1 - The full financial statements and supplementary data are included in the report, with an index on Page F-1[138] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company changed its independent auditor in late 2024 and reported no disagreements with the former firm - WithumSmith+Brown, PC resigned as the Company's auditor on November 22, 2024, and was replaced by Enrome LLP on December 3, 2024[139][141] - The company reported no disagreements with its former auditor, Withum, during the two most recent fiscal years and subsequent interim period[139] Controls and Procedures A material weakness from 2023 was remediated, and management concluded controls were effective as of year-end 2024 - A material weakness in internal control over financial reporting was identified for the year ended Dec 31, 2023, due to limited finance and accounting staffing levels[143] - Management implemented remediation measures during 2024, such as planning to hire a new CFO and conducting more thorough reviews of financial statements[146] - Management concluded that as of December 31, 2024, the previously reported material weakness has been remediated and internal control over financial reporting was effective[145][149] Other Information The company entered into an employment agreement with its new CEO in March 2025 - On March 20, 2025, the company entered into an employment agreement with CEO Chay Weei Jye, providing a base salary of $60,000 per year and eligibility for an annual bonus[152][153] Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This item is not applicable to the company - Not applicable[154] PART III Directors, Executive Officers and Corporate Governance The company's leadership includes a new CEO and a five-member board with three standing committees - Chay Weei Jye was appointed Chief Executive Officer in December 2024[156] - The Board of Directors has three independent members: Avraham Ben-Tzvi, Firdauz Edmin Bin Mokhtar, and Francisco Osvaldo Flores Garcia[167] - The Board has established an audit committee, a compensation committee, and a nominating and governance committee, with charters available on the company's website[168][173] Executive Compensation Executive compensation in 2024 was dominated by significant severance payments to former executives Summary Compensation Table (2024) | Name and Principal Position | Year | Salary ($) | Bonus ($) | All Other Compensation ($) | Total Compensation ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | David Lazar (Former CEO) | 2024 | $545,564 | $50,750 | $10,515 | $606,829 | | Katherine Beebe DeVarney, Ph.D. (Former President & COO) | 2024 | $523,705 | $192,500 | $43,421 | $759,626 | | Chay Weei Jye (CEO) | 2024 | - | - | - | - | | Brynner Chiam (Acting PFO) | 2024 | - | - | - | - | - In April 2024, the company entered into resignation agreements with Mr. Lazar and Dr. Beebe DeVarney, resulting in significant payout amounts[196] - Non-employee directors received cash fees for their service in 2024, but no stock or option awards were granted during the year[199][200] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Two shareholders beneficially own over 5% of common stock, while all executives and directors as a group own 1.0% Security Ownership of Greater than 5% Stockholders (as of March 12, 2025) | Name of Beneficial Owner | Shares Beneficially Owned | Percent of Shares Beneficially Owned | | :--- | :--- | :--- | | Choong Choon Hau | 241,531 | 26.4% | | Jeffrey Chung (The Sire Group Ltd.) | 150,087 | 14.1% | - All executive officers and directors as a group (5 persons) beneficially owned 9,563 shares, or 1.0% of the company, as of March 12, 2025[204] Certain Relationships and Related Transactions, and Director Independence The company disclosed several related party transactions, including financing from major shareholders and payments to former executives - In August 2023, the company received $500,000 from shareholder Choong Choon Hau via a convertible promissory note, which was converted into common stock in March 2024[209] - In September 2023, the company sold 950,000 shares of Series AA Preferred Stock to Sire Group for an aggregate purchase price of $9.5 million[210] - Following resignations in April 2024, the company made aggregate settlement payments of approximately $1.2 million to former executives and board members[212] - The company made payments for legal and consulting fees of approximately $13,000 in 2024 and $109,000 in 2023 to a law firm operated by a board member[211] Principal Accounting Fees and Services The company changed its auditor in late 2024, with total fees paid to both firms amounting to $365,992 - WithumSmith+Brown, PC resigned as the company's auditor on November 22, 2024, and Enrome LLP was engaged on December 3, 2024[215] Aggregate Auditor Fees | Auditor | 2024 | 2023 | | :--- | :--- | :--- | | WithumSmith+Brown, PC | $325,992 | $377,592 | | Enrome LLP | $40,000 | $ - | - The audit committee has established policies for pre-approving all audit and permissible non-audit services provided by the independent auditor[219][220] PART IV Exhibits, Financial Statement Schedules This section indexes the financial statements and notes the omission of inapplicable schedules - An index to the Financial Statements is provided, starting on page F-1[225] - All financial statement schedules are omitted because they are not applicable or the required information is included in the financial statements or notes[226] Form 10-K Summary This item is not applicable and contains no information - None[227] Financial Statements Report of Independent Registered Public Accounting Firm Auditor reports highlight a "Material Uncertainty Related to Going Concern" due to significant net losses and negative cash flows - Enrome LLP, the auditor for fiscal year 2024, included a "Material Uncertainty Related to Going Concern" paragraph in its report[233] - The going concern uncertainty is based on the company's net loss of $4.7 million, negative cash flows from operations of $3.9 million, and an accumulated deficit of $396.5 million[233] - WithumSmith+Brown, PC served as the company's auditor for the fiscal year 2023[241][245] Financial Statements Tables Financial statements show a decline in assets and cash, with a net loss of $4.7 million on zero revenue in 2024 Balance Sheet Data (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash | $2,831 | $6,760 | | Total Current Assets | $2,923 | $8,018 | | Total Assets | $2,923 | $8,086 | | Total Current Liabilities | $483 | $1,444 | | Total Stockholders' Equity | $2,440 | $6,642 | Statement of Operations Data (in thousands) | For the Year Ended Dec 31, | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenues | $ - | $184 | | Loss from Operations | ($4,557) | ($7,277) | | Net Loss | ($4,706) | ($5,569) | | Basic and Diluted Net Loss per Share | ($5.23) | ($7.41) | Statement of Cash Flows Data (in thousands) | For the Year Ended Dec 31, | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,880) | ($7,092) | | Net cash provided by investing activities | $ - | $732 | | Net cash provided by (used in) financing activities | ($62) | $10,000 | Notes to Financial Statements Notes detail the asset sale, pending merger, a reverse stock split, and a Nasdaq non-compliance notice - A 1-for-20 reverse stock split was effected on January 8, 2024, and all share and per-share amounts in the report are retroactively adjusted[302] - In March 2024, a $500,000 convertible promissory note held by shareholder Choong Choon Hau was converted into 54,132 shares of common stock[303] - Management concluded that despite historical losses, the company had sufficient cash as of the filing date to fund operations for the next 12 months[272] - As a subsequent event, on January 3, 2025, the company received a non-compliance notice from Nasdaq for failure to hold an annual shareholder meeting for the 2023 fiscal year[336]