false 2023 Q3 --12-31 0000910267 0000910267 2023-01-01 2023-09-30 0000910267 2023-11-10 0000910267 2023-09-30 0000910267 2022-12-31 0000910267 2023-07-01 2023-09-30 0000910267 2022-07-01 2022-09-30 0000910267 2022-01-01 2022-09-30 0000910267 us-gaap:LicenseAndServiceMember 2023-07-01 2023-09-30 0000910267 us-gaap:LicenseAndServiceMember 2022-07-01 2022-09-30 0000910267 us-gaap:LicenseAndServiceMember 2023-01-01 2023-09-30 0000910267 us-gaap:LicenseAndServiceMember 2022-01-01 2022-09-30 0000910267 us-gaap:GrantMember 2023-07-01 2023-09-30 0000910267 us-gaap:GrantMember 2022-07-01 2022-09-30 0000910267 us-gaap:GrantMember 2023-01-01 2023-09-30 0000910267 us-gaap:GrantMember 2022-01-01 2022-09-30 0000910267 us-gaap:CommonStockMember 2022-12-31 0000910267 us-gaap:PreferredStockMember 2022-12-31 0000910267 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0000910267 us-gaap:RetainedEarningsMember 2022-12-31 0000910267 us-gaap:CommonStockMember 2023-03-31 0000910267 us-gaap:PreferredStockMember 2023-03-31 0000910267 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0000910267 us-gaap:RetainedEarningsMember 2023-03-31 0000910267 2023-03-31 0000910267 us-gaap:CommonStockMember 2023-06-30 0000910267 us-gaap:PreferredStockMember 2023-06-30 0000910267 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0000910267 us-gaap:RetainedEarningsMember 2023-06-30 0000910267 2023-06-30 0000910267 us-gaap:CommonStockMember 2021-12-31 0000910267 us-gaap:PreferredStockMember 2021-12-31 0000910267 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0000910267 us-gaap:RetainedEarningsMember 2021-12-31 0000910267 2021-12-31 0000910267 us-gaap:CommonStockMember 2022-03-31 0000910267 us-gaap:PreferredStockMember 2022-03-31 0000910267 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0000910267 us-gaap:RetainedEarningsMember 2022-03-31 0000910267 2022-03-31 0000910267 us-gaap:CommonStockMember 2022-06-30 0000910267 us-gaap:PreferredStockMember 2022-06-30 0000910267 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0000910267 us-gaap:RetainedEarningsMember 2022-06-30 0000910267 2022-06-30 0000910267 us-gaap:CommonStockMember 2023-01-01 2023-03-31 0000910267 us-gaap:PreferredStockMember 2023-01-01 2023-03-31 0000910267 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-03-31 0000910267 us-gaap:RetainedEarningsMember 2023-01-01 2023-03-31 0000910267 2023-01-01 2023-03-31 0000910267 us-gaap:CommonStockMember 2023-04-01 2023-06-30 0000910267 us-gaap:PreferredStockMember 2023-04-01 2023-06-30 0000910267 us-gaap:AdditionalPaidInCapitalMember 2023-04-01 2023-06-30 0000910267 us-gaap:RetainedEarningsMember 2023-04-01 2023-06-30 0000910267 2023-04-01 2023-06-30 0000910267 us-gaap:CommonStockMember 2023-07-01 2023-09-30 0000910267 us-gaap:PreferredStockMember 2023-07-01 2023-09-30 0000910267 us-gaap:AdditionalPaidInCapitalMember 2023-07-01 2023-09-30 0000910267 us-gaap:RetainedEarningsMember 2023-07-01 2023-09-30 0000910267 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0000910267 us-gaap:PreferredStockMember 2022-01-01 2022-03-31 0000910267 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0000910267 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0000910267 2022-01-01 2022-03-31 0000910267 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0000910267 us-gaap:PreferredStockMember 2022-04-01 2022-06-30 0000910267 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0000910267 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0000910267 2022-04-01 2022-06-30 0000910267 us-gaap:CommonStockMember 2022-07-01 2022-09-30 0000910267 us-gaap:PreferredStockMember 2022-07-01 2022-09-30 0000910267 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0000910267 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0000910267 us-gaap:CommonStockMember 2023-09-30 0000910267 us-gaap:PreferredStockMember 2023-09-30 0000910267 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0000910267 us-gaap:RetainedEarningsMember 2023-09-30 0000910267 us-gaap:CommonStockMember 2022-09-30 0000910267 us-gaap:PreferredStockMember 2022-09-30 0000910267 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0000910267 us-gaap:RetainedEarningsMember 2022-09-30 0000910267 2022-09-30 0000910267 ttnp:DavidLazarAndActivistInvestingLlcMember 2022-07-31 0000910267 ttnp:RubinMember 2022-08-01 2022-08-15 0000910267 ttnp:ProNeuraMember 2023-09-01 2023-09-30 0000910267 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0000910267 ttnp:Plan2015Member 2022-08-01 2022-08-31 0000910267 ttnp:Plan2015Member 2022-08-31 0000910267 ttnp:Plan2015Member 2022-09-01 2022-09-30 0000910267 ttnp:Plan2015Member 2022-09-30 0000910267 ttnp:FifthAmendedAndRestated2015OmnibusEquityIncentivePlanMember 2023-07-01 2023-07-31 0000910267 ttnp:FifthAmendedAndRestated2015OmnibusEquityIncentivePlanMember 2023-07-01 2023-09-30 0000910267 us-gaap:StockOptionMember 2023-09-30 0000910267 us-gaap:ResearchAndDevelopmentExpenseMember 2023-07-01 2023-09-30 0000910267 us-gaap:ResearchAndDevelopmentExpenseMember 2022-07-01 2022-09-30 0000910267 us-gaap:ResearchAndDevelopmentExpenseMember 2023-01-01 2023-09-30 0000910267 us-gaap:ResearchAndDevelopmentExpenseMember 2022-01-01 2022-09-30 0000910267 us-gaap:GeneralAndAdministrativeExpenseMember 2023-07-01 2023-09-30 0000910267 us-gaap:GeneralAndAdministrativeExpenseMember 2022-07-01 2022-09-30 0000910267 us-gaap:GeneralAndAdministrativeExpenseMember 2023-01-01 2023-09-30 0000910267 us-gaap:GeneralAndAdministrativeExpenseMember 2022-01-01 2022-09-30 0000910267 us-gaap:ConvertiblePreferredStockMember 2023-07-01 2023-09-30 0000910267 us-gaap:ConvertiblePreferredStockMember 2022-07-01 2022-09-30 0000910267 us-gaap:ConvertiblePreferredStockMember 2023-01-01 2023-09-30 0000910267 us-gaap:ConvertiblePreferredStockMember 2022-01-01 2022-09-30 0000910267 ttnp:ConvertibleNotesMember 2023-07-01 2023-09-30 0000910267 ttnp:ConvertibleNotesMember 2022-07-01 2022-09-30 0000910267 ttnp:ConvertibleNotesMember 2023-01-01 2023-09-30 0000910267 ttnp:ConvertibleNotesMember 2022-01-01 2022-09-30 0000910267 us-gaap:EmployeeStockOptionMember 2023-07-01 2023-09-30 0000910267 us-gaap:EmployeeStockOptionMember 2022-07-01 2022-09-30 0000910267 us-gaap:EmployeeStockOptionMember 2023-01-01 2023-09-30 0000910267 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-09-30 0000910267 us-gaap:WarrantMember 2023-07-01 2023-09-30 0000910267 us-gaap:WarrantMember 2022-07-01 2022-09-30 0000910267 us-gaap:WarrantMember 2023-01-01 2023-09-30 0000910267 us-gaap:WarrantMember 2022-01-01 2022-09-30 0000910267 ttnp:JtPharmaceuticalsMember 2020-10-01 2020-10-31 0000910267 ttnp:JtPharmaceuticalsMember 2022-01-01 2022-01-31 0000910267 ttnp:N2015OmnibusEquityIncentivePlanMember 2023-09-30 0000910267 ttnp:February2022OfferingsMember 2022-02-01 2022-02-28 0000910267 ttnp:PreFundedWarrantsMember ttnp:February2022OfferingsMember 2022-02-28 0000910267 ttnp:UnregisteredPrefundedWarrantsMember ttnp:February2022OfferingsMember 2022-02-28 0000910267 ttnp:UnregisteredFiveYearAndSixMonthWarrantsMember ttnp:February2022OfferingsMember 2022-02-28 0000910267 ttnp:PreFundedWarrantsMember 2022-03-01 2022-03-31 0000910267 ttnp:PreFundedWarrantsMember 2022-06-30 0000910267 us-gaap:CommonStockMember ttnp:RestrictedStockAgreementWithMaximGroupLlcMember 2021-08-31 0000910267 us-gaap:CommonStockMember ttnp:RestrictedStockAgreementWithMaximGroupLlcMember 2021-08-01 2021-08-31 0000910267 us-gaap:CommonStockMember ttnp:RestrictedStockAgreementWithMaximGroupLlcMember 2022-07-01 2022-09-30 0000910267 us-gaap:CommonStockMember ttnp:RestrictedStockAgreementWithMaximGroupLlcMember 2022-01-01 2022-09-30 0000910267 us-gaap:SegmentDiscontinuedOperationsMember ttnp:U.s.CommercializationActivitiesMember 2023-09-30 0000910267 us-gaap:SegmentDiscontinuedOperationsMember ttnp:U.s.CommercializationActivitiesMember 2022-12-31 0000910267 ttnp:HauPromissoryNoteMember 2023-08-01 2023-08-31 0000910267 ttnp:HauPromissoryNoteMember 2023-08-31 0000910267 ttnp:HauPromissoryNoteMember 2023-07-01 2023-09-30 0000910267 ttnp:LazarPromissoryNoteMember 2023-07-01 2023-07-31 0000910267 ttnp:LazarPromissoryNoteMember 2023-07-01 2023-09-30 0000910267 ttnp:FifthAmendedAndRestated2015OmnibusEquityIncentivePlanMember 2023-09-01 2023-09-30 0000910267 us-gaap:SubsequentEventMember ttnp:CashNoteMember 2023-10-01 2023-10-31 0000910267 us-gaap:SubsequentEventMember ttnp:MDMWorldwideSolutionsMember 2023-10-01 2023-10-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023.

OR

☐ 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 001-13341

Titan Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware |  | 94-3171940
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

400 Oyster Point Blvd., Suite 505, South San Francisco, California |  | 94080
(Address of principal executive offices) |  | (Zip Code)

(650) 244-4990

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | ☒ | Smaller reporting company | ☒
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, par value $0.001 |  | TTNP |  | Nasdaq Capital Market

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class |  | Outstanding at November 10, 2023
Common Stock, par value $0.001 |  | 15,016,295

Titan Pharmaceuticals, Inc.

Index to Form 10-Q

Part I. Financial Information |  |
Item 1. |  | Financial Statements (unaudited) |  | 1
|  | Condensed Balance Sheets as of September 30, 2023 and December 31, 2022 |  | 1
|  | Condensed Statements of Operations for the three and nine months ended September 30, 2023 and 2022 |  | 2
|  | Condensed Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2023 and 2022 |  | 3
|  | Condensed Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 |  | 4
|  | Notes to Condensed Financial Statements |  | 5
Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 15
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk |  | 20
Item 4. |  | Controls and Procedures |  | 20
Part II. Other Information |  |
Item 1. |  | Legal Proceedings |  | 21
Item 1A. |  | Risk Factors |  | 21
Item 2. |  | Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities |  | 23
Item 5. |  | Other Information |  | 23
Item 6. |  | Exhibits |  | 24
SIGNATURES |  |  |  | 25

i

Part I. Financial Information

Item 1. Financial Statements

TITAN PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share data)

|  | September 30, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
|  | (unaudited) |  |  | (Note 1) |
Assets |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 8,096 |  |  | $ | 2,937 |
Restricted cash |  |  | 13 |  |  |  | 196 |
Receivables |  |  | 26 |  |  |  | 36 |
Notes receivable |  |  | 1,500 |  |  |  | - |
Inventory |  |  | - |  |  |  | 106 |
Prepaid expenses and other current assets |  |  | 244 |  |  |  | 314 |
Discontinued operations - current assets |  |  | 20 |  |  |  | 14 |
Total current assets |  |  | 9,899 |  |  |  | 3,603 |
Property and equipment, net |  |  | 6 |  |  |  | 224 |
Other assets |  |  | - |  |  |  | 48 |
Operating lease right-of-use assets, net |  |  | 94 |  |  |  | 183 |
Total assets |  | $ | 9,999 |  |  | $ | 4,058 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 407 |  |  | $ | 695 |
Note payable to related party |  |  | 500 |  |  |  | - |
Other accrued liabilities |  |  | 790 |  |  |  | 1,488 |
Operating lease liability, current |  |  | 97 |  |  |  | 122 |
Deferred grant revenue |  |  | 12 |  |  |  | 196 |
Discontinued operations – current liabilities |  |  | 60 |  |  |  | 129 |
Total current liabilities |  |  | 1,866 |  |  |  | 2,630 |
Operating lease liability, noncurrent |  |  | - |  |  |  | 65 |
Total liabilities |  |  | 1,866 |  |  |  | 2,695 |
Commitments and contingencies (Note 6) |  |  |  |  |  |  |  |
Stockholders’ equity: |  |  |  |  |  |  |  |
Preferred stock, at amounts paid-in, $0.001 par value per share; 5,000,000 shares authorized, 950,000 shares issued and outstanding at September 30, 2023 and no shares issued and outstanding at December 31, 2022. |  |  | 1 |  |  |  | - |
Common stock, at amounts paid-in, $0.001 par value per share; 225,000,000 shares authorized, 15,016,295 shares issued and outstanding at September 30, 2023 and December 31, 2022. |  |  | 15 |  |  |  | 15 |
Additional paid-in capital |  |  | 397,977 |  |  |  | 387,609 |
Accumulated deficit |  |  | (389,860 | ) |  |  | (386,261 | )
Total stockholders’ equity |  |  | 8,133 |  |  |  | 1,363 |
Total liabilities and stockholders’ equity |  | $ | 9,999 |  |  | $ | 4,058 |

See Notes to Condensed Financial Statements

1

TITAN PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except per share amount)

(unaudited)

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
License revenue |  | $ | - |  |  | $ | 4 |  |  | $ | 1 |  |  | $ | 9 |
Grant revenue |  |  | 4 |  |  |  | 91 |  |  |  | 183 |  |  |  | 427 |
Total revenues |  |  | 4 |  |  |  | 95 |  |  |  | 184 |  |  |  | 436 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 424 |  |  |  | 932 |  |  |  | 1,426 |  |  |  | 3,315 |
General and administrative |  |  | 1,641 |  |  |  | 1,806 |  |  |  | 4,104 |  |  |  | 4,745 |
Total operating expenses |  |  | 2,065 |  |  |  | 2,738 |  |  |  | 5,530 |  |  |  | 8,060 |
Loss from operations |  |  | (2,061 | ) |  |  | (2,643 | ) |  |  | (5,346 | ) |  |  | (7,624 | )
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income (expense) |  |  | (11 | ) |  |  | 21 |  |  |  | 18 |  |  |  | 26 |
Gain on asset sale |  |  | 1,732 |  |  |  | - |  |  |  | 1,732 |  |  |  | - |
Other income (expense), net |  |  | 2 |  |  |  | (16 | ) |  |  | (3 | ) |  |  | (42 | )
Other income (expense), net |  |  | 1,723 |  |  |  | 5 |  |  |  | 1,747 |  |  |  | (16 | )
Net loss |  | $ | (338 | ) |  | $ | (2,638 | ) |  | $ | (3,599 | ) |  | $ | (7,640 | )
Basic and diluted net loss per common share |  | $ | (0.02 | ) |  | $ | (0.18 | ) |  | $ | (0.24 | ) |  | $ | (0.59 | )
Weighted average shares used in computing basic and diluted net loss per common share |  |  | 15,016 |  |  |  | 14,629 |  |  |  | 15,016 |  |  |  | 13,031 |

See Notes to Condensed Financial Statements

2

TITAN PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

(unaudited)

|  | Common Stock |  |  | Preferred Stock |  |  | Additional Paid-In |  |  | Accumulated |  |  | Total Stockholders’ Equity |
|  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | (Deficit) |
Balances at December 31, 2022 |  |  | 15,016 |  |  | $ | 15 |  |  |  | - |  |  | $ | - |  |  | $ | 387,609 |  |  | $ | (386,261 | ) |  | $ | 1,363 |
Net loss |  |  | - |  |  |  | - |  |  |  |  |  |  |  | - |  |  |  | - |  |  |  | (1,675 | ) |  |  | (1,675 | )
Balances at March 31, 2023 |  |  | 15,016 |  |  | $ | 15 |  |  |  | - |  |  | $ | - |  |  | $ | 387,609 |  |  | $ | (387,936 | ) |  | $ | (312 | )
Net loss |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  | (1,586 | ) |  |  | (1,586 | )
Stock-based compensation |  |  | - |  |  |  | - |  |  |  |  |  |  |  | - |  |  |  | 864 |  |  |  | - |  |  |  | 864 |
Balances at June 30, 2023 |  |  | 15,016 |  |  | $ | 15 |  |  |  | - |  |  | $ |  |  |  | $ | 388,473 |  |  | $ | (389,522 | ) |  | $ | (1,034 | )
Net loss |  |  | - |  |  |  | - |  |  |  |  |  |  |  | - |  |  |  | - |  |  |  | (338 | ) |  |  | (338 | )
Stock-based compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 411 |  |  |  | - |  |  |  | 411 |
Issuance of preferred stock, net |  |  |  |  |  |  |  |  |  |  | 950 |  |  |  | 1 |  |  |  | 9,093 |  |  |  |  |  |  |  | 9,094 |
Balances at September 30, 2023 |  |  | 15,016 |  |  | $ | 15 |  |  |  | 950 |  |  | $ | 1 |  |  | $ | 397,977 |  |  | $ | (389,860 | ) |  | $ | 8,133 |

|  | Common Stock |  |  | Additional Paid-In |  |  | Accumulated |  |  | Total Stockholders’ Equity |
|  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | (Deficit) |
Balances at December 31, 2021 |  |  | 9,914 |  |  | $ | 10 |  | - | $ | 381,183 |  |  | $ | (376,055 | ) |  | $ | 5,138 |
Net loss |  |  | - |  |  |  | - |  | - |  | - |  |  |  | (2,540 | ) |  |  | (2,540 | )
Issuance of common stock, net |  |  | 1,151 |  |  |  | 1 |  |  |  | 5,029 |  |  |  | - |  |  |  | 5,030 |
Issuance of common stock upon exercises of warrants |  |  | 974 |  |  |  | 1 |  |  |  | - |  |  |  | - |  |  |  | 1 |
Amortization of restricted stock |  |  | - |  |  |  | - |  |  |  | 27 |  |  |  | - |  |  |  | 27 |
Stock-based compensation |  |  | - |  |  |  | - |  |  |  | 226 |  |  |  | - |  |  |  | 226 |
Balances at March 31, 2022 |  |  | 12,039 |  |  | $ | 12 |  | - | $ | 386,465 |  |  | $ | (378,595 | ) |  | $ | 7,882 |
Net loss |  |  | - |  |  |  | - |  | - |  | - |  |  |  | (2,462 | ) |  |  | (2,462 | )
Issuance of common stock upon exercises of warrants |  |  | 2,590 |  |  |  | 3 |  |  |  |  |  |  |  | - |  |  |  | 3 |
Amortization of restricted stock |  |  |  |  |  |  |  |  |  |  | 27 |  |  |  |  |  |  |  | 27 |
Stock-based compensation |  |  | - |  |  |  | - |  |  |  | 217 |  |  |  | - |  |  |  | 217 |
Balances at June 30, 2022 |  |  | 14,629 |  |  | $ | 15 |  | - | $ | 386,709 |  |  | $ | (381,057 | ) |  | $ | 5,667 |
Net loss |  |  | - |  |  |  | - |  | - |  | - |  |  |  | (2,638 | ) |  |  | (2,638 | )
Amortization of restricted stock |  |  |  |  |  |  |  |  |  |  | 18 |  |  |  |  |  |  |  | 18 |
Stock-based compensation |  |  |  |  |  |  |  |  |  |  | 503 |  |  |  |  |  |  |  | 503 |
Balances at September 30, 2022 |  |  | 14,629 |  |  | $ | 15 |  | - | $ | 387,230 |  |  | $ | (383,695 | ) |  | $ | 3,550 |

3

TITAN PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

|  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net loss |  | $ | (3,599 | ) |  | $ | (7,640 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Gain on sale of assets |  |  | (1,732 | ) |  |  | - |
Depreciation and amortization |  |  | 109 |  |  |  | 151 |
Stock-based milestone payment |  |  | - |  |  |  | 50 |
Stock-based compensation |  |  | 965 |  |  |  | 1,038 |
Other |  |  | (1 | ) |  |  | 2 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Receivables |  |  | - |  |  |  | 63 |
Inventory |  |  | - |  |  |  | (167 | )
Prepaid expenses and other assets |  |  | 122 |  |  |  | (34 | )
Accounts payable |  |  | (374 | ) |  |  | (182 | )
Deferred grant revenue |  |  | (184 | ) |  |  | (34 | )
Other accrued liabilities |  |  | (152 | ) |  |  | 149 |
Net cash used in operating activities |  |  | (4,846 | ) |  |  | (6,604 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |
Proceeds from sale of assets |  |  | 228 |  |  |  | - |
Net cash provided by investing activities |  |  | 228 |  |  |  | - |
Cash flows from financing activities: |  |  |  |  |  |  |  |
Net proceeds from equity offering |  |  | - |  |  |  | 4,980 |
Net proceeds from issuance of preferred stock |  |  | 9,094 |  |  |  | - |
Proceeds from short-term loans |  |  | 750 |  |  |  | - |
Net proceeds from the exercises of common stock warrants |  |  | - |  |  |  | 4 |
Payments on short-term loans |  |  | (250 | ) |  |  | - |
Net cash provided by financing activities |  |  | 9,594 |  |  |  | 4,984 |
Net increase (decrease) in cash, cash equivalents and restricted cash |  |  | 4,976 |  |  |  | (1,620 | )
Cash, cash equivalents and restricted cash at beginning of period |  |  | 3,133 |  |  |  | 6,332 |
Cash, cash equivalents and restricted cash at end of period |  | $ | 8,109 |  |  | $ | 4,712 |
Supplemental cash flow information: |  |  |  |  |  |  |  |
Interest paid |  | $ | 4 |  |  | $ | - |
Inventory transferred with sale of assets |  | $ | 106 |  |  | $ | - |
Property and equipment, net, transferred with sale of assets |  | $ | 109 |  |  | $ | - |
Notes receivable received in connection with sale of assets |  | $ | 1,500 |  |  | $ | - |
Accounts payable related to sale of assets |  | $ | 17 |  |  | $ | - |
Other accrued liabilities transferred with sale of assets |  | $ | 236 |  |  | $ | - |

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed balance sheets that sum to the total of the same such amounts shown in the condensed statements of cash flows (in thousands):

|  | 2023 |  |  | 2022 |
Cash and cash equivalents |  | $ | 8,096 |  |  | $ | 4,450 |
Restricted cash |  |  | 13 |  |  |  | 262 |
Cash, cash equivalents and restricted cash shown in the condensed statements of cash flows |  | $ | 8,109 |  |  | $ | 4,712 |

See Notes to Condensed Financial Statements

4

TITAN PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

| 1. | Organization and Summary of Significant Accounting Policies

The Company

We are a pharmaceutical company developing therapeutics utilizing the proprietary long-term drug delivery platform, ProNeura®, for the treatment of select chronic diseases for which steady state delivery of a drug has the potential to provide an efficacy and/or safety benefit. ProNeura consists of a small, solid implant made from a mixture of ethylene-vinyl acetate, or EVA, and a drug substance. The resulting product is a solid matrix that is designed to be administered subdermally in a brief, outpatient procedure and is removed in a similar manner at the end of the treatment period.

Our first product based on the ProNeura technology was Probuphine® (buprenorphine implant), which is approved in the United States, Canada and the European Union, or EU, for the maintenance treatment of opioid use disorder in clinically stable patients taking 8 mg or less a day of oral buprenorphine. While Probuphine continues to be commercialized in Canada and in the EU (as Sixmo™) by other companies that had either licensed or acquired the rights from Titan, we discontinued commercialization of the product in the U.S. during the fourth quarter of 2020. Discontinuation of our commercial operations has allowed us to focus our limited resources on important product development programs and transition back to a product development company.

In December 2021, we announced our intention to work with our financial advisor to explore strategic alternatives to enhance stockholder value, potentially including an acquisition, merger, reverse merger, other business combination, sales of assets, licensing or other transaction. In June 2022, we implemented a plan to reduce expenses and conserve capital that included a company-wide reduction in salaries and a scale back of certain operating expenses to enable us to maintain sufficient resources as we pursued potential strategic alternatives. In July 2022, David Lazar and Activist Investing LLC (collectively, “Activist”) acquired an approximately 25% ownership interest in Titan, filed a proxy statement and nominated six additional directors, each of whom was elected to our board of directors (the “Board”) at a special meeting of stockholders held on August 15, 2022 (the “Special Meeting”). The exploration and evaluation of possible strategic alternatives by the Board has continued following the Special Meeting. Following the election of the new directors at the Special Meeting, Dr. Marc Rubin was replaced as our Executive Chairman, and David Lazar assumed the role of Chief Executive Officer. In connection with the termination of his employment as Executive Chairman, Dr. Rubin will receive aggregate severance payments of approximately $0.4 million, of which, approximately $247,000 have been paid as of September 30, 2023. In December 2022, we implemented additional cost reduction measures including a reduction in our workforce.

In September 2023, (the “Closing Date”), we closed on the sale of certain ProNeura assets including our portfolio of drug addiction products, in addition to other early development programs based on the ProNeura drug delivery technology (the “ProNeura Assets”). In July 2023, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Fedson, Inc., a Delaware corporation (“Fedson”) for the sale of the ProNeura Assets. Our addiction portfolio consisted of the Probuphine and Nalmefene implant programs. The ProNeura Assets constituted only a portion of our assets. In August 2023, we entered into an Amendment and Extension Agreement (the “Amendment”) to the Asset Purchase Agreement, pursuant to which Fedson agreed to purchase our ProNeura Assets for a purchase price of $2.0 million, consisting of (i) $500,000 in readily available funds, paid in full on the Closing Date, (ii) $500,000 in the form of a promissory note due and payable on October 1, 2023 (the “Cash Note”) and (iii) $1,000,000 in the form of a promissory note due and payable on January 1, 2024 (the “Escrow Note”). We will also be eligible to receive potential milestone payments of up to $50 million on future net sales of the products and certain royalties on future net sales of the products. As further consideration, Fedson assumed all liabilities related to a pending employment claim against us. On the Closing Date, Fedson delivered a written guaranty by a principal of Fedson of all of Fedson’s obligations under both the Cash Note and Escrow Note. The Cash Note included provisions, which Fedson has exercised, allowing Fedson to extend the payment of the Cash Note to November 1, 2023 and again to December 1, 2023 upon payment of $5,000 for each extension. The Cash Note is currently due and payable on December 1, 2023. The Cash Note and Escrow Note are included in Notes Receivable in the condensed balance sheet at September 30, 2023.

5

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statement presentation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any future interim periods.

The balance sheet as of December 31, 2022 is derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and footnotes thereto included in the Titan Pharmaceuticals, Inc. Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission (“SEC”).

The accompanying condensed financial statements have been prepared assuming we will continue as a going concern.

As of September 30, 2023, we had cash and cash equivalents of approximately $8.1 million 8,096, which we believe, will be sufficient to fund our planned operations through December of 2024. We continue to explore several financing and strategic alternatives; however, there can be no assurance that our efforts will be successful.

Discontinued Operations

In October 2020, we announced our decision to discontinue selling Probuphine in the U.S. and wind down our commercialization activities, and to pursue a plan that will enable us to focus on our current, early-stage ProNeura-based product development programs.

The accompanying condensed financial statements have been recast for all periods presented to reflect the assets, liabilities, revenue and expenses related to our U.S. commercialization activities as discontinued operations (see Note 7). The accompanying condensed financial statements are generally presented in conformity with our historical format. We believe this format provides comparability with the previously filed financial statements.

Going Concern Assessment

We assess going concern uncertainty in our financial statements to determine if we have sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued, which is referred to as the “look-forward period” as defined by Accounting Standard Update ASU No. 2014-15. As part of this assessment, based on conditions that are known and reasonably knowable to us, we will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and our ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, we make certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent we deem probable those implementations can be achieved and we have the proper authority to execute them within the look-forward period in accordance with ASU No. 2014-15.

Based upon the above assessment, we concluded that, at the date of filing the condensed financial statements in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2023, we have sufficient cash to fund our operations for the next 12 months without additional funds. Additionally, we have suffered recurring losses from operations and have an accumulated deficit that raises substantial doubt about our ability to continue as a going concern beyond the next 12 months. We continue to explore several financing and strategic alternatives; however, there can be no assurance that our efforts will be successful.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

6

Inventories

Inventories are recorded at the lower of cost or net realizable value. Cost is based on the first in, first out method. We regularly review inventory quantities on hand and write down to its net realizable value any inventory that we believe to be impaired. The determination of net realizable value requires judgment including consideration of many factors, such as estimates of future product demand, product net selling prices, current and future market conditions and potential product obsolescence, among others. The components of inventories are as follows:

Schedule of components of inventories |  |  |  |
|  | As of |
(in thousands) |  | December 31, 2022 |
Raw materials and supplies |  | $ | 60 |
Finished goods |  |  | 46 |
|  | $ | 106 |

Approximately $106,000 of raw materials and supplies and finished goods inventory at December 31, 2022 were sold to Fedson under the Asset Purchase Agreement in September 2023.

Revenue Recognition

We generate revenue principally from collaborative research and development arrangements, sales or licenses of technology and government grants. Consideration received for revenue arrangements with multiple components is allocated among the separate performance obligations based upon their relative estimated standalone selling price.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our agreements, we perform the following steps for our revenue recognition: (i) identify contracts with customers; (ii) identify performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize of revenue when (or as) we satisfy each performance obligation.

Grant Revenue

We have contracts with National Institute on Drug Abuse or NIDA, within the U.S. Department of Health and Human Services, or HHS, the Bill& Melinda Gates Foundation, and other government-sponsored organizations for research and development related activities that provide for payments for reimbursed costs, which may include overhead and general and administrative costs. We recognize revenue from these contracts as we perform services under these arrangements when the funding is committed. Associated expenses are recognized when incurred as research and development expenses. Revenues and related expenses are presented gross in the condensed statements of operations.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. Our performance obligations include commercialization license rights, development services and services associated with the regulatory approval process.

We have optional additional items in contracts, which are accounted for as separate contracts when the customer elects such options. Arrangements that include a promise for future commercial product supply and optional research and development services at the customer’s discretion are generally considered as options. We assess if these options provide a material right to the customer and, if so, such material rights are accounted for as separate performance obligations. If we are entitled to additional payments when the customer exercises these options, any additional payments are recorded in revenue when the customer obtains control of the goods or services.

7

Transaction Price

We have both fixed and variable considerations. Non-refundable upfront payments are considered fixed, while milestone payments are identified as variable consideration when determining the transaction price. Funding of research and development activities is considered variable until such costs are reimbursed at which point, they are considered fixed. We allocate the total transaction price to each performance obligation based on the relative estimated standalone selling prices of the promised goods or services for each performance obligation.

At the inception of each arrangement that includes milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. Milestone payments that are not within our control, such as approvals from regulators, are not considered probable of being achieved until those approvals are received.

For arrangements that include sales-based royalties or earn-out payments, including milestone payments based on the level of sales, and the license or purchase agreement is deemed to be the predominant item to which the royalties or earn-out payments relate, we recognize revenue at the later of (a) when the related sales occur, or (b) when the performance obligation to which some or all of the royalty or earn-out payment has been allocated has been satisfied (or partially satisfied).

Allocation of Consideration

As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. Estimated selling prices for license rights are calculated using the residual approach. For all other performance obligations, we use a cost-plus margin approach.

Timing of Recognition

Significant management judgment is required to determine the level of effort required under an arrangement and the period over which we expect to complete our performance obligations under an arrangement. We estimate the performance period or measure of progress at the inception of the arrangement and re-evaluate it each reporting period. This re-evaluation may shorten or lengthen the period over which revenue is recognized. Changes to these estimates are recorded on a cumulative catch-up basis. If we cannot reasonably estimate when our performance obligations either are completed or become inconsequential, then revenue recognition is deferred until we can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. Revenue is recognized for licenses or sales of functional intellectual property at the point in time the customer can use and benefit from the license. For performance obligations that are services, revenue is recognized over time proportionate to the costs that we have incurred to perform the services using the cost-to-cost input method.

Contract Assets and Liabilities

The following table presents the activity related to our accounts receivable for the nine months ended September 30, 2023.

Schedule of activity related to our accounts receivable |  |  |  |
(In thousands) |  | September 30, 2023 |
Balance at January 1, 2023 |  | $ | 36 |
Additions |  |  | 184 |
Deductions |  |  | (194 | )
Balance at September 30, 2023 |  | $ | 26 |

8

Research and Development Costs and Related Accrual

Research and development expenses include internal and external costs. Internal costs include salaries and employment related expenses, facility costs, administrative expenses and allocations of corporate costs. External expenses consist of costs associated with outsourced contract research organization (“CRO”) activities, sponsored research studies, product registration, and investigator sponsored trials. Significant judgments and estimates must be made and used in determining the accrued balance in any accounting period. Actual results could differ from those estimates under different assumptions. Revisions are charged to expense in the period in which the facts that give rise to the revision become known.

Leases

We determine whether the arrangement is or contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized at the present value of the future lease payments at commencement date. The interest rate implicit in lease contracts is typically not readily determinable, and therefore, we utilize our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

Lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on our condensed balance sheets as right-of-use assets, operating lease liabilities current and operating lease liabilities non-current.

The following table presents the minimum lease payments of our operating lease:

Schedule of minimum operating lease payments |  |  |  |
2023 |  | $ | 33 |
2024 |  |  | 66 |
Total minimum lease payments (base rent) |  |  | 99 |
Less: imputed interest |  |  | (2 | )
Total operating lease liabilities |  | $ | 97 |

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses, which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The amendments in this ASU are effective beginning on January 1, 2023. The adoption of Topic 326 did not have a material impact on our condensed financial statements and disclosures.

Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments. ASU 2020-06 eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is effective beginning after December 15, 2023 and must be applied using either a modified or full retrospective approach. Early adoption is permitted. We are currently evaluating the impact this guidance will have on our condensed financial statements and related disclosures.

9

Fair Value Measurements

Financial instruments, including receivables, accounts payable and accrued liabilities are carried at cost, and their fair values are approximated due to the short-term nature of these instruments. Our investments in money market funds are classified within Level 1 of the fair value hierarchy.

At December 31, 2022, the fair value of our investments in money market funds was approximately $2.6 million which is included within our cash and cash equivalents in our condensed balance sheets. We had no investments in money market funds at September 30, 2023.

| 2. | Stock Plans

The following table summarizes option activity:

Schedule of our option activity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Options (in thousands) |  |  | Weighted Average Exercise Price per share |  |  | Weighted Average Remaining Option Term (in years) |  |  | Aggregate Intrinsic Value (in thousands) |
Outstanding at December 31, 2022 |  |  | 927 |  |  | $ | 7.97 |  |  |  | 8.34 |  |  | $ | - |
Granted |  |  | 1,475 |  |  |  | 0.93 |  |  |  | - |  |  |  | 235 |
Forfeited or expired |  |  | (91 | ) |  |  | 23.01 |  |  |  | - |  |  |  | - |
Outstanding at September 30, 2023 |  |  | 2,311 |  |  |  | 2.89 |  |  |  | 8.84 |  |  |  | 213 |
Exercisable at September 30, 2023 |  |  | 2,311 |  |  |  | 2.89 |  |  |  | 8.84 |  |  |  | 213 |

During August and September 2022, our Board granted 125,000 options to purchase common stock at $1.52 per share and 900,000 options to purchase common stock at $1.31 per share which are subject to shareholder approval of an amendment to increase the number of shares reserved for issuance under our 2015 Plan. The options vest monthly over a 12-month period from the grant dates. The shares underlying these options were approved by our stockholders on June 29, 2023 and have been included in the table above as of September 30, 2023.

In July 2023, our Board granted, pursuant to our Fifth Amended and Restated 2015 Omnibus Equity Incentive Plan, an aggregate of 450,000 shares of fully vested unrestricted common stock to seven members of the Board of Directors and one member of the management team. As a result, we recognized non-cash stock compensation of approximately $0.2 million during the three months ending September 30, 2023.

The following table summarizes the stock-based compensation expense recorded for awards under our stock option plans (in thousands):

Schedule of the stock-based compensation expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(in thousands) |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Research and development |  | $ | 52 |  |  | $ | 306 |  |  | $ | 106 |  |  | $ | 553 |
Selling, general and administrative |  |  | 359 |  |  |  | 217 |  |  |  | 859 |  |  |  | 414 |
Total stock-based compensation |  | $ | 411 |  |  | $ | 523 |  |  | $ | 965 |  |  | $ | 967 |

10

We use the Black-Scholes-Merton option-pricing model with the following assumptions to estimate the fair value of our stock options:

Schedule of assumptions to estimate the fair value of options |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Weighted-average risk-free interest rate |  |  | 4.08 | % |  |  | - | % |  |  | 4.06 | % |  |  | 1.91 | %
Expected dividend payments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Expected holding period (years)1 |  |  | 4.8 |  |  |  | - |  |  |  | 5.3 |  |  |  | 5.3 |
Weighted-average volatility factor2 |  |  | 1.14 |  |  |  | - |  |  |  | 1.10 |  |  |  | 1.16 |
Estimated forfeiture rates for options granted3 |  |  | 7.5 | % |  |  | - | % |  |  | 7.0 | % |  |  | 5.6 | %

(1) | Expected holding period is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and the expectations of future employee behavior.
(2) | Weighted average volatility is based on the historical volatility of our common stock.
(3) | Estimated forfeiture rates are based on historical data.

As of September 30, 2023, there was no unrecognized compensation expense related to non-vested stock options.

| 3. | Net Loss Per Share

The table below presents common shares underlying stock options and warrants that are excluded from the calculation of the weighted average number of common shares outstanding used for the calculation of diluted net loss per common share. These are excluded from the calculation due to their anti-dilutive effect:

Schedule of antidilutive securities excluded from computation of net loss per common share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(in thousands) |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Weighted-average anti-dilutive common shares resulting from convertible preferred stock |  |  | 3,767 |  |  |  | - |  |  |  | 1,269 |  |  |  | - |
Weighted-average anti-dilutive common shares resulting from convertible notes |  |  | 504 |  |  |  | - |  |  |  | 170 |  |  |  | - |
Weighted-average anti-dilutive common shares resulting from options |  |  | 1,861 |  |  |  | 932 |  |  |  | 1,241 |  |  |  | 975 |
Weighted-average anti-dilutive common shares resulting from warrants |  |  | 9,818 |  |  |  | 4,933 |  |  |  | 7,678 |  |  |  | 5,586 |
|  |  | 15,950 |  |  |  | 5,865 |  |  |  | 10,358 |  |  |  | 6,561 |

| 4. | JT Pharmaceuticals Asset Purchase Agreement

In October 2020, we entered into an Asset Purchase Agreement, or JT Agreement, with JT Pharmaceuticals, Inc., or JT Pharma, to acquire JT Pharma’s kappa opioid agonist peptide, TP-2021 (formerly JT-09) for use in combination with our ProNeura long-term, continuous drug delivery technology, for the treatment of chronic pruritus and other medical conditions. Under the terms of the JT Agreement, JT Pharma received a $15,000 closing payment and is entitled to receive future milestone payments, payable in cash or in stock, based on the achievement of certain developmental and regulatory milestones, and single-digit percentage earn-out payments on net sales of the product if successfully developed and approved for commercialization. In January 2022, we entered into an agreement with JT Pharma to clarify certain provisions of the JT Agreement pursuant to which we agreed that the proof-of-concept milestone provided for in the JT Agreement was achieved and made a payment of $100,000 and issued 51,021 shares of our common stock to JT Pharma. The related expense was included in research and development expenses in our condensed statements of operations.

11

| 5. | Commitments and Contingencies

Lease Commitments

We lease our office facility under an operating lease that expires in June 2024. Rent expense associated with this lease was approximately $32,000 and $96,000 for the three and nine months ended September 30, 2023, respectively.

Legal Proceedings

A legal proceeding has been initiated by a former employee alleging wrongful termination, retaliation, infliction of emotional distress, negligent supervision, hiring and retention and slander. An independent investigation into this individual’s allegations of whistleblower retaliation, while still an employee, was conducted utilizing an outside investigator and concluded that such allegations were not substantiated. Fedson, as further consideration for the Asset Purchase Agreement, has agreed to assume all liabilities related to this pending employment claim (See Note 8. Asset Sale).

| 6. | Stockholders’ Equity

Our common stock outstanding as of September 30, 2023 and December 31, 2022 was 15,016,295 shares.

Annual Meeting of Stockholders

In June 2023, our stockholders approved an amendment to the 2015 Omnibus Equity Incentive plan to increase the number of authorized shares to 2,500,000 shares.

September 2023 Preferred Stock

In September 2023, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with The Sire Group Ltd. (“Sire Group” or the “Investor”), pursuant to which we agreed to issue 950,000 shares of Series AA Convertible Preferred Stock, par value $0.001 per share (the “Series AA Preferred Stock”) to the Investor at a price of $10.00 per share, for an aggregate purchase price of $9.5 million (the “Private Placement”). The purchase price consisted of (i) $5.0 million in cash at closing and (ii) $4.5 million in the form of a promissory note from Sire Group which was paid off in September 2023.

Each share of Series AA Preferred Stock will be convertible, at the holder’s option at any time, into shares of our common stock at a conversion rate equal to the quotient of (i) the stated value of such share divided by (ii) the initial conversion price of $0.466, subject to specified adjustments as set forth in the Certificate of Designations. The Series AA Preferred Stock contains limitations that prevent the Investor from acquiring the lower of either (i) the maximum percentage of common stock permissible under the rules and regulations of The Nasdaq Stock Market (“Nasdaq”) without first obtaining shareholder approval or (ii) 19.99% of our outstanding common stock.

The holder of the Series AA Preferred Stock is entitled to receive dividends on shares of the Series AA Preferred Stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends actually paid on shares of the common stock. No other dividends will be paid on shares of the Series AA Preferred Stock. Any shares of Series AA Preferred Stock may, at the option of the holder, be converted at any time into that number of shares of common stock at the conversion price set forth above. Without approval of holders of a majority of the outstanding Series AA Preferred Stock, we may not (a) alter or adversely change the powers, preferences or rights given to the Series AA Preferred Stock, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series AA Preferred Stock, (c) increase the number of authorized shares of the Series AA Preferred Stock, (d) enter into or consummate any Fundamental Transaction (as defined in the Certificate of Designations), or (e) enter into any agreement with respect to any of the foregoing. In the event of any liquidation, dissolution or winding up, the holder of the Series AA Preferred Stock will be entitled to receive out of the assets, whether capital or surplus, the same amount that a holder of common stock would receive if the Series AA Preferred Stock were fully converted to common stock, which amounts shall be paid pari passu with all holders of common stock.

12

February 2022 Offerings

In February 2022, we completed a registered direct offering with an accredited investor pursuant to which we issued an aggregate of 1,100,000 shares of our common stock and 2,274,242 pre-funded warrants to purchase shares of our common stock, with an exercise price of $0.001 per share. In a concurrent private placement, we sold unregistered pre-funded warrants to purchase an aggregate of 1,289,796 shares of common stock with an exercise price of $0.001 per share and issued unregistered five year and six month warrants to purchase an aggregate of 4,664,038 shares of common stock with an exercise price of $1.14. The net cash proceeds from these offerings were approximately $5.0 million after deduction of underwriting fees and other offering expenses.

Warrant Exercises

In March 2022, we received approximately $1,000 from the exercise of 974,242 pre-funded warrants issued in the February 2022 registered direct offering.

JT Pharma Milestone

In January 2022, we entered into an agreement with JT Pharma to clarify certain provisions of the JT Agreement pursuant to which we agreed that the proof-of-concept milestone provided for in the JT Agreement was achieved and made a payment of $100,000 and issued 51,021 shares of our common stock to JT Pharma.

Restricted Shares

In August 2021, we agreed to issue 50,000 shares of our common stock pursuant to a restricted stock agreement with Maxim Partners, LLC in connection with the entry into an amendment to our existing advisory agreement. The shares vested monthly over 12 months. We recorded approximately $27,000 and $54,000 of stock-based compensation expense during the three and nine months ended September 30, 2022, respectively.

| 7. | Discontinued Operations

The following table presents information related to assets and liabilities reported as discontinued operations in our condensed balance sheets:

Schedule of assets and liabilities reported as discontinued operations in our condensed balance sheets |  |  |  |  |  |  |  |
|  | September 30, |  |  | December 31, |
(In thousands) |  | 2023 |  |  | 2022 |
Receivables |  | $ | 10 |  |  | $ | - |
Prepaid expenses and other current assets |  |  | 10 |  |  |  | 14 |
Discontinued operations – current assets |  | $ | 20 |  |  | $ | 14 |
Accounts payable |  | $ | 60 |  |  | $ | 129 |
Discontinued operations – current liabilities |  | $ | 60 |  |  | $ | 129 |

| 8. | Asset Sale

In September 2023, we closed on the sale of certain ProNeura Assets. In July 2023, we entered into an Asset Purchase Agreement with Fedson for the sale of the ProNeura Assets. The ProNeura Assets constituted only a portion of our assets. In August 2023, we entered into an Amendment to the Asset Purchase Agreement, pursuant to which Fedson agreed to purchase our ProNeura Assets for a purchase price of $2.0 million, consisting of (i) $500,000 in readily available funds, paid in full on the Closing Date, (ii) $500,000 in the form of a promissory note due and payable on October 1, 2023 (the “Cash Note”) and (iii) $1,000,000 in the form of a promissory note due and payable on January 1, 2024 (the “Escrow Note”). We will also be eligible to receive potential milestone payments of up to $50 million on future net sales of the products and certain royalties on future net sales of the products. As further consideration, Fedson assumed all liabilities related to a pending employment claim against us. On the Closing Date, Fedson delivered a written guaranty by a principal of Fedson of all of Fedson’s obligations under both the Cash Note and Escrow Note. The Cash Note included provisions, which Fedson has exercised, allowing Fedson to extend the maturity date of the Cash Note to November 1, 2023 and again to December 1, 2023 upon payment of $5,000 for each extension. The Cash Note is currently due and payable on December 1, 2023.

13

| 9. | Related Party Transactions

During the nine months ended September 30, 2023, we made payments related to legal fees of approximately $100,000 to a law firm operated by one of our Board members.

In August 2023, we received $500,000 in funding in exchange for the issuance of a convertible promissory note for that principal amount to Choong Choon Hau, a major stockholder (the “Hau Promissory Note”). Pursuant to the Hau Promissory Note, the principal amount will accrue interest at a rate of 10% per annum and will be payable monthly. All principal and accrued interest shall be due and payable on January 1, 2024, unless extended as provided. All or part of the Hau Promissory Note can be converted into our common stock at a conversion price of $0.5712 per share from time to time following the issuance date and ending on the maturity date. We incurred interest expense of approximately $7,500 during the three months ended September 30, 2023 on this promissory note. The Hau Promissory note is included in Notes Payable to Related Party in the condensed balance sheet at September 30, 2023.

In July 2023, we received $250,000 in funding in exchange for the issuance of an unsecured promissory note for that principal amount to David E. Lazar, our Chief Executive Officer and chairman of our Board of Directors (the “Lazar Promissory Note”). Pursuant to the Lazar Promissory Note, the principal amount accrued interest at a rate of the Prime Rate + 2.00% per annum, and all principal and accrued interest would have been due and payable on the earlier of January 1, 2024 or such time as we receive debt or equity financing or proceeds in excess of $500,000 from the aforementioned transaction with Fedson. The promissory note was paid off in September 2023. We incurred interest expense of approximately $3,718 during the three months ended September 30, 2023 on this promissory note.

| 10. | Subsequent Events

We have evaluated events that have occurred after September 30, 2023 and through the date that our condensed financial statements are issued.

In September 2023, our Board granted, pursuant to our Fifth Amended and Restated 2015 Omnibus Equity Incentive Plan (the “2015 Plan”) an aggregate of 113,750 shares of fully vested unrestricted common stock to six members of the Board of Directors and one member of the management team. The Board conditioned the grant on the filing of a Form S-8 registration statement to register the common shares authorized for issuance under the 2015 Plan, which occurred on October 25, 2023.

In October 2023, Fedson exercised the provision for a second extension of the maturity date of the Cash Note in exchange for a cash payment of $5,000. The Cash Note is currently due and payable on December 1, 2023.

In October 2023, we agreed to issue 50,000 shares of our common stock pursuant to a settlement agreement with MDM Worldwide Solutions, Inc. The shares vested immediately.

14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q or in the documents incorporated by reference herein may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) that involve substantial risks and uncertainties. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements included or incorporated by reference in this report or our other filings with the Securities and Exchange Commission, or the SEC, include, but are not necessarily limited to, those relating to uncertainties relating to:

| ● | Our ability to complete one or more strategic transactions that will maximize our assets or otherwise provide value to stockholders;

| ● | our ability to raise capital when needed;

| ● | difficulties or delays in the product development and regulatory process; and

| ● | protection for our patents and other intellectual property or trade secrets.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties, including the risks outlined under “Risk Factors” or elsewhere in this report, that could cause actual performance or results to differ materially from what is expressed in or suggested by the forward-looking statements.

Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. We caution you not to give undue weight to such projections, assumptions and estimates.

References herein to “we,” “us,” “Titan,” and “our company” refer to Titan Pharmaceuticals, Inc. unless the context otherwise requires.

Probuphine® and ProNeura® are trademarks of Fedson, Inc. This Quarterly Report on Form 10-Q also includes trade names and trademarks of companies other than Titan.

Overview

We are a pharmaceutical company developing therapeutics utilizing the proprietary long-term drug delivery platform, ProNeura®, for the treatment of select chronic diseases for which steady state delivery of a drug has the potential to provide an efficacy and/or safety benefit. ProNeura consists of a small, solid implant made from a mixture of ethylene-vinyl acetate, or EVA, and a drug substance. The resulting product is a solid matrix that is designed to be administered subdermally in a brief, outpatient procedure and is removed in a similar manner at the end of the treatment period.

15

Our first product based on the ProNeura technology was Probuphine® (buprenorphine implant), which is approved in the United States, Canada and the European Union, or EU, for the maintenance treatment of opioid use disorder in clinically stable patients taking 8 mg or less a day of oral buprenorphine. While Probuphine continues to be commercialized in Canada and in the EU (as Sixmo™) by other companies that had either licensed or acquired the rights from Titan, we discontinued commercialization of the product in the U.S. during the fourth quarter of 2020. Discontinuation of our commercial operations has allowed us to focus our limited resources on important product development programs and transition back to a product development company.

In December 2021, we announced our intention to work with our financial advisor to explore strategic alternatives to enhance stockholder value, potentially including an acquisition, merger, reverse merger, other business combination, sales of assets, licensing or other transaction. In June 2022, we implemented a plan to reduce expenses and conserve capital that included a company-wide reduction in salaries and a scale back of certain operating expenses to enable us to maintain sufficient resources as we pursued potential strategic alternatives. In July 2022, David Lazar and Activist Investing LLC (collectively, “Activist”) acquired an approximately 25% ownership interest in Titan, filed a proxy statement and nominated six additional directors, each of whom was elected to our board of directors (the “Board”) at a special meeting of stockholders held on August 15, 2022 (the “Special Meeting”). The exploration and evaluation of possible strategic alternatives by the Board has continued following the Special Meeting. Following the election of the new directors at the Special Meeting, Dr. Marc Rubin was replaced as our Executive Chairman, and David Lazar assumed the role of Chief Executive Officer. In connection with the termination of his employment as Executive Chairman, Dr. Rubin will receive aggregate severance payments of approximately $0.4 million, of which, approximately $247,000 have been paid as of September 30, 2023. In December 2022, we implemented additional cost reduction measures including a reduction in our workforce.

In September 2023, (the “Closing Date”), we closed on the sale of certain ProNeura assets including our portfolio of drug addiction products, in addition to other early development programs based on the ProNeura drug delivery technology (the “ProNeura Assets”). In July 2023, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Fedson, Inc., a Delaware corporation (“Fedson”) for the sale of the ProNeura Assets. Our addiction portfolio consisted of the Probuphine and Nalmefene implant programs. The ProNeura Assets constituted only a portion of our assets. In August 2023, we entered into an Amendment and Extension Agreement (the “Amendment”) to the Asset Purchase Agreement, pursuant to which Fedson agreed to purchase our ProNeura Assets for a purchase price of $2.0 million, consisting of (i) $500,000 in readily available funds, paid in full on the Closing Date, (ii) $500,000 in the form of a promissory note due and payable on October 1, 2023 (the “Cash Note”) and (iii) $1,000,000 in the form of a promissory note due and payable on January 1, 2024 (the “Escrow Note”). We will also be eligible to receive potential milestone payments of up to $50 million on future net sales of the products and certain royalties on future net sales of the products. As further consideration, Fedson assumed all liabilities related to a pending employment claim against us. On the Closing Date, Fedson delivered a written guaranty by a principal of Fedson of all of Fedson’s obligations under both the Cash Note and Escrow Note. The Cash Note included provisions, which Fedson has exercised, allowing Fedson to extend the payment of the Cash Note to November 1, 2023 and again to December 1, 2023 upon payment of $5,000 for each extension. The Cash Note is currently due and payable on December 1, 2023.

ProNeura Continuous Drug Delivery Platform

The ProNeura continuous drug delivery system consists of a small, solid rod-shaped implant made from a mixture of EVA and a given drug substance. The resulting product is a solid matrix that is placed subdermally, normally in the inside part of the upper arm in a brief procedure using a local anesthetic and is removed in a similar manner at the end of the treatment period. The drug substance is released continuously through the process of dissolution-controlled diffusion. This results in a continuous, steady rate of release generally similar to intravenous administration. We believe that such long-term, near linear release characteristics are desirable as they avoid the fluctuating peak and trough drug levels seen with oral dosing that often poses treatment problems in a range of diseases.

16

The ProNeura platform was developed to address the need for a simple, practical method to achieve continuous long-term drug delivery, and, depending on the characteristics of the compound to be delivered, can potentially provide treatment on an outpatient basis over extended periods of up to 12 months. We believe that the benefits of this technology have been demonstrated by the clinical results seen to date with Probuphine, and, in addition, that the development and regulatory process have been affirmed by the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, and Health Canada approvals of this product. We have further demonstrated the feasibility of the ProNeura platform with small molecules, hormones, and bio-active peptides. The delivery system works with both hydrophobic and hydrophilic molecules. We have also shown the flexibility of the platform by experimenting with the release characteristics of the EVA implants, layering the implants with varying concentrations of drug, and generating implants of different sizes and porosity to achieve a desired delivery profile.

Development Programs

We currently have the following development program for which development activities have been substantially curtailed while we are exploring several financing and strategic alternatives.

| ● | TP-2021 - A subdermal ProNeura implant containing TP-2021, our kappa opioid agonist peptide, for the potential delivery of therapeutic concentrations of TP-2021 in human subjects with pruritus for up to six months or longer following a single in-office procedure. We will need to conduct Investigational New Drug, or IND, enabling non-clinical safety and pharmacology studies in preparation for regulatory approval to enter human clinical studies.

We operate in only one business segment, the development of pharmaceutical products. We make available free of charge through our website, www.titanpharm.com, our periodic reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Recent Accounting Pronouncements

See Note 1 to the accompanying unaudited condensed financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for information on recent accounting pronouncements.

Results of Operations for the Three and Nine months ended September 30, 2023 and September 30, 2022

Revenues

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | Change |  |  | 2023 |  |  | 2022 |  |  | Change |
|  | (In thousands) |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
License revenue |  | $ | - |  |  | $ | 4 |  |  | $ | (4 | ) |  | $ | 1 |  |  | $ | 9 |  |  | $ | (8 | )
Grant revenue |  |  | 4 |  |  |  | 91 |  |  |  | (87 | ) |  |  | 183 |  |  |  | 427 |  |  |  | (244 | )
Total revenues |  | $ | 4 |  |  | $ | 95 |  |  | $ | (91 | ) |  | $ | 184 |  |  | $ | 436 |  |  | $ | (252 | )

The decrease in total revenues for the three and nine months ended September 30, 2023 was primarily due to decreased activities related to the NIDA grant for the development of a Nalmefene implant and the Gates Foundation grant.

17

Operating Expenses

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | Change |  |  | 2023 |  |  | 2022 |  |  | Change |
|  | (In thousands) |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  | $ | 424 |  |  | $ | 932 |  |  | $ | (508 | ) |  | $ | 1,426 |  |  | $ | 3,315 |  |  | $ | (1,889 | )
General and administrative |  |  | 1,641 |  |  |  | 1,806 |  |  |  | (165 | ) |  |  | 4,104 |  |  |  | 4,745 |  |  |  | (641 | )
Total operating expenses |  | $ | 2,065 |  |  | $ | 2,738 |  |  | $ | (673 | ) |  | $ | 5,530 |  |  | $ | 8,060 |  |  | $ | (2,530 | )

The decrease in research and development costs for the three and nine months ended September 30, 2023 was primarily associated with reduced activities related to non-clinical studies required for the IND submission as part of our NIDA grant for the development of a Nalmefene implant, decreases in expenses related to initial non-clinical proof of concept studies related to our TP-2021 implant program and decreases in research and development personnel-related costs and other expenses following our December 2022 reduction in our workforce. Other research and development expenses include internal operating costs such as research and development personnel-related expenses, non-clinical and clinical product development related travel expenses, and allocation of facility and corporate costs. As a result of the risks and uncertainties inherently associated with pharmaceutical research and development activities described elsewhere in this document, we are unable to estimate the specific timing and future costs of our clinical development programs or the timing of material cash inflows, if any, from our product candidates. However, we anticipate that our research and development expenses will increase as we continue our current or any future ProNeura development programs to the extent these costs are not supported through grants or partners.

The decrease in general and administrative expenses for the three months ended September 30, 2023 was primarily related to decreases in legal and professional fees and other expenses. This was partially offset by increases in employee-related expenses and non-cash stock-based compensation. The decrease in general and administrative expenses for the nine months ended September 30, 2023 was primarily related to decreases in employee-related expenses, legal and professional fees, and other expenses. This was partially offset by increases in non-cash stock-based compensation.

Other Income (Expense), Net

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | Change |  |  | 2023 |  |  | 2022 |  |  | Change |
|  | (In thousands) |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income (expense), net |  | $ | (11 | ) |  | $ | 21 |  |  | $ | (32 | ) |  | $ | 18 |  |  | $ | 26 |  |  | $ | (8 | )
Gain on asset disposition |  |  | 1,732 |  |  |  | - |  |  |  | 1,732 |  |  |  | 1,732 |  |  |  | - |  |  |  | 1,732 |
Other income (expense), net |  |  | 2 |  |  |  | (16 | ) |  |  | 18 |  |  |  | (3 | ) |  |  | (42 | ) |  |  | 39 |
Other income (expense), net |  | $ | 1,723 |  |  | $ | 5 |  |  | $ | 1,718 |  |  | $ | 1,747 |  |  | $ | (16 | ) |  | $ | 1,763 |

The increase in other income (expense), net for the three and nine months ended September 30, 2023 was primarily due to the gain related to the sale of the ProNeura Assets to Fedson and decreases in tax related expenses. This was partially offset by increases in interest expense.

18

Net Loss and Net Loss per Share

Our net loss from operations for the three-month period ended September 30, 2023 was approximately $0.3 million, or approximately $0.02 per share, compared to our net loss from operations of approximately $2.6 million, or approximately $0.18 per share, for the comparable period in 2022. Our net loss from operations for the nine-month period ended September 30, 2023 was approximately $3.6 million, or approximately $0.24 per share, compared to our net loss from operations of approximately $7.6 million, or approximately $0.59 per share, for the comparable period in 2022.

Liquidity and Capital Resources

We have funded our operations since inception primarily through the sale of our securities and the issuance of debt, as well as with proceeds from warrant and option exercises, corporate licensing and collaborative agreements, and government and private sponsored research grants. At September 30, 2023, we had a working capital of approximately $8.0 million compared to working capital of approximately $1.0 million at December 31, 2022.

In September 2023, we entered into a Purchase Agreement with Sire Group, pursuant to which we agreed to issue 950,000 shares of Series AA Preferred Stock at a price of $10.00 per share, for an aggregate purchase price of $9.5 million. The purchase price consisted of (i) $5.0 million in cash at closing and (ii) $4.5 million in the form of a promissory note from Sire Group which was paid in September 2023. The net cash proceeds from this transaction were approximately $9.1 million.

In September 2023, we closed on the sale of certain ProNeura Assets. In July 2023, we entered into an Asset Purchase Agreement with Fedson for the sale of the ProNeura Assets. The ProNeura Assets constituted only a portion of our assets. In August 2023, we entered into an Amendment to the Asset Purchase Agreement, pursuant to which Fedson agreed to purchase our ProNeura Assets for a purchase price of $2.0 million, consisting of (i) $500,000 in readily available funds, paid in full on the Closing Date, (ii) $500,000 in the form of a promissory note due and payable on October 1, 2023 (the “Cash Note”) and (iii) $1,000,000 in the form of a promissory note due and payable on January 1, 2024 (the “Escrow Note”). We will also be eligible to receive potential milestone payments of up to $50 million on future net sales of the products and certain royalties on future net sales of the products. As further consideration, Fedson assumed all liabilities related to a pending employment claim against us. On the Closing Date, Fedson delivered a written guaranty by a principal of Fedson of all of Fedson’s obligations under both the Cash Note and Escrow Note. The Cash Note included provisions, which Fedson has exercised, allowing Fedson to extend the payment of the Cash Note to November 1, 2023 and again to December 1, 2023 upon payment of $5,000 for each extension. The Cash Note is currently due and payable on December 1, 2023.

In August 2023, we received $500,000 in funding in exchange for the issuance of the Hau Promissory Note. Pursuant to the Hau Promissory Note, the principal amount will accrue interest at a rate of 10% per annum and will be payable monthly. All principal and accrued interest shall be due and payable on January 1, 2024, unless extended as provided. All or part of the Hau Promissory Note can be converted into our common stock at a conversion price of $0.5712 per share from time to time following the issuance date and ending on the maturity date.

In February 2022, we completed a registered direct offering with an accredited investor pursuant to which we issued an aggregate of 1,100,000 shares of our common stock and 2,274,242 pre-funded warrants to purchase shares of our common stock, with an exercise price of $0.001 per share. In a concurrent private placement, we sold unregistered pre-funded warrants to purchase an aggregate of 1,289,796 shares of common stock with an exercise price of $0.001 per share and issued unregistered five year and six month warrants to purchase an aggregate of 4,664,038 shares of common stock with an exercise price of $1.14. The net cash proceeds from these offerings were approximately $5.0 million after deduction of underwriting fees and other offering expenses.

As of September 30, 2023, we had cash and cash equivalents of approximately $8.1 million, which we believe will be sufficient to fund our planned operations through December of 2024. We are exploring several financing and strategic alternatives; however, there can be no assurance that our efforts will be successful.

19

Sources and Uses of Cash

|  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |
|  | (In thousands) |
Net cash used in operating activities |  | $ | (4,846 | ) |  | $ | (6,604 | )
Net cash provided by investing activities |  |  | 228 |  |  |  | - |
Net cash provided by financing activities |  |  | 9,594 |  |  |  | 4,984 |
Change in cash, cash equivalents and restricted cash |  | $ | 4,976 |  |  | $ | (1,620 | )

Net cash used in operating activities for the nine months ended September 30, 2023 consisted primarily of our net loss of approximately $3.6 million, approximately $1.7 million of gains related to the sale of assets and approximately $0.6 million related to net changes in operating assets and liabilities. This was partially offset by approximately $1.1 million of non-cash charges related to stock-based compensation and depreciation and amortization. Net cash used in operating activities for the nine months ended September 30, 2022 consisted primarily of our net loss of approximately $7.6 million and approximately $0.2 million related to net changes in operating assets and liabilities, partially offset by approximately $1.2 million of non-cash charges primarily related to stock-based compensation and depreciation and amortization.

Net cash provided by investing activities for the nine months ended September 30, 2023 related to net proceeds from the sale of assets and liabilities to Fedson.

Net cash provided by financing activities for the nine months ended September 30, 2023 consisted of approximately $9.1 million of net cash proceeds from the issuance of preferred stock and approximately $0.8 million of proceeds from short-term debt. This was partially offset by approximately $0.3 million related to payments on short-term notes payable. Net cash provided by financing activities for the nine months ended September 30, 2022 consisted primarily of net cash proceeds from the February 2022 offering.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risk disclosures set forth in our Annual Report on Form 10-K for the year ended December 31, 2022 have not materially changed.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our Chief Executive Officer, being our principal executive and financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of September 30, 2023, the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our principal executive and principal financial officer as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the nine months ended September 30, 2023 that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

20

PART II

Item 1. Legal Proceedings

A legal proceeding has been initiated by a former employee alleging wrongful termination, retaliation, infliction of emotional distress, negligent supervision, hiring and retention and slander. An independent investigation into this individual’s allegations of whistleblower retaliation, while still an employee, was conducted utilizing an outside investigator and concluded that such allegations were not substantiated. Fedson, as further consideration for the Asset Purchase Agreement, has agreed to assume all liabilities related to this pending employment claim.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2022 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2022 10-K are not the only risks facing our company. Except as noted below, the risks and uncertainties described in “Item 1A – Risk Factors” have not materially changed. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We have incurred net losses in almost every year since our inception, which losses will continue for the foreseeable future and raise substantial doubt about our ability to continue as a going concern.

We have incurred net losses in almost every year since our inception. Our financial statements have been prepared assuming that we will continue as a going concern. For the years ended December 31, 2022 and 2021 and for the nine months ended September 30, 2023, we had net losses of approximately $10.2 million, $8.8 million and $3.6 million, respectively, and had net cash used in operating activities of approximately $8.2 million, $7.9 million and $4.8 million, respectively. These net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital, which have declined in the past year. As described elsewhere in this report, as of September 30, 2023 we had cash and cash equivalents of approximately $8.1 million. We expect to continue to incur net losses and negative operating cash flow for the foreseeable future as we focus on exploring strategic alternatives to enhance stockholder value and development of our ProNeura based products. The amount of future net losses will depend, in part, on the rate of future growth of our expenses and our ability to obtain government or third-party funding for our development programs. Our history of losses raises substantial doubt about our ability to continue as a going concern.

If we cannot continue to satisfy the Nasdaq Capital Market continued listing standards and other Nasdaq rules, our common stock could be delisted, which would harm our business, the trading price of our common stock, our ability to raise additional capital and the liquidity of the market for our common stock.

Our Common Stock is currently listed on the Nasdaq Capital Market (“Nasdaq”). The listing standards of Nasdaq require that a company maintain stockholders’ equity of at least $2.5 million (the “Equity Rule”) and a minimum bid price subject to specific requirements of $1.00 per share. There is no assurance that we will be able to maintain compliance with the minimum closing price requirement or the minimum stockholders’ equity requirement. Should we fail to comply with the minimum listing standards applicable to issuers listed on Nasdaq, our common stock may be delisted from Nasdaq. If our common stock is delisted, it could reduce the price of our common stock and the levels of liquidity available to our stockholders.

21

On April 5, 2023, we received a notice from Nasdaq notifying us that the Company’s stockholders’ equity as reported in our Annual Report on Form 10-K for the period ended December 31, 2022 (“2022 10-K”), did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that a listed company’s stockholders’ equity be at least $2,500,000. In our 2022 10-K, we reported stockholders’ equity of $1,363,000, and, as a result, we did not satisfy Nasdaq Marketplace Rule 5550(b)(1) as of December 31, 2022. We submitted a compliance plan within 45 days of the date of the notification and, on June 5, 2023, we received a letter from the Listing Qualifications Department of Nasdaq notifying us that we had been granted an additional 180-day period, or until October 2, 2023, to regain compliance with Nasdaq Listing Rule 5550(b)(1).

In March 2023, we received a letter from the Listing Qualifications staff of The Nasdaq Stock Market, or Nasdaq, notifying us that we were no longer in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed companies to maintain a minimum bid price of $1.00 per share. The letter noted that the bid price of our common stock was below $1.00 for the 30-day period ending March 15, 2023. The notification letter had no immediate effect on our listing on the Nasdaq Capital Market. In accordance with Listing Rule 5810(c)(3), Nasdaq provided us with 180 days, or until September 12, 2023, to regain compliance with the minimum bid price requirement by having a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days.

On September 13, 2023, we received a determination letter (the “Determination Letter”) from the Staff stating that we had not regained compliance with Listing Rule 5550(a)(2) and were not eligible for a second 180 day period to regain compliance. Unless the Company requested an appeal of this determination, the trading of the Company’s common stock would be suspended at the opening of business on September 22, 2023, and a Form 25-NSE would be filed with the Securities and Exchange Commission (the “SEC”), which would remove the Company’s securities from listing and registration on The Nasdaq Stock Market.

In addition, the Staff indicated in the Determination Letter that, pursuant to Listing Rule 5810(d)(2), this deficiency served as an additional and separate basis for delisting, and as such, the Company should address its non-compliance with the Equity Rule before a Hearings Panel (the “Panel”) if it appeals the Staff’s determination.

We appealed Nasdaq’s determination to a Panel pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series to stay the suspension of our securities and the filing of the Form 25-NSE pending the Panel’s decision. At a Panel hearing on November 2, 2023, we presented our plan to regain compliance with both the minimum bid price requirement and the Equity Rule. With respect to the minimum bid price requirement, we presented a plan to effect a reverse stock split in early 2024. On November 7, 2023, the Panel granted our request for continued listing subject demonstrating compliance with the minimum bid price requirement by February 1, 2024.

If our common stock is delisted from Nasdaq, our common stock would likely then trade only in the over-the-counter market. If our common stock were to trade on the over-the-counter market, selling our common stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity with respect to our securities; a determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; a reduced amount of news and analyst coverage for our company; and a decreased ability to issue additional securities or obtain additional financing in the future. These factors could result in lower prices and larger spreads in the bid and ask prices for our common stock and would substantially impair our ability to raise additional funds and could result in a loss of institutional investor interest and fewer development opportunities for us.

22

In addition to the foregoing, if our common stock is delisted from Nasdaq and it trades on the over-the-counter market, the application of the “penny stock” rules could adversely affect the market price of our common stock and increase the transaction costs to sell those shares. The Securities and Exchange Commission, or SEC, has adopted regulations which generally define a “penny stock” as an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. If our common stock is delisted from Nasdaq and it trades on the over-the-counter market at a price of less than $5.00 per share, our common stock would be considered a penny stock. The SEC’s penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that before a transaction in a penny stock occurs, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s agreement to the transaction. If applicable in the future, these rules may restrict the ability of brokers-dealers to sell our common stock and may affect the ability of investors to sell their shares, until our common stock no longer is considered a penny stock.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

Not required to be furnished.

Item 5. Other Information.

In July 2023, we received $250,000 in funding in exchange for the issuance of an unsecured promissory note for that principal amount to David E. Lazar, our Chief Executive Officer and chairman of our Board of Directors (the “Lazar Promissory Note”). Pursuant to the Lazar Promissory Note, the principal amount accrued interest at a rate of the Prime Rate + 2.00% per annum, and all principal and accrued interest were due and payable on the earlier of January 1, 2024 or such time as we receive debt or equity financing or proceeds in excess of $500,000 from the aforementioned transaction with Fedson. The loan was paid off in September 2023.

In August 2023, we received $500,000 in funding in exchange for the issuance of a convertible promissory note for that principal amount to Choong Choon Hau (the “Hau Promissory Note”). Pursuant to the Hau Promissory Note, the principal amount accrues interest at a rate of 10% per annum and is payable monthly. All principal and accrued interest is due and payable on January 1, 2024, unless extended as provided. All or part of the Hau Promissory Note can be converted into our common stock at a conversion price of $0.5712 per share from time to time following the issuance date and ending on the maturity date.

23

Item 6. Exhibits

(b) | Exhibits

No |  | Description
4.1 |  | Certificate of Designations, Preferences and Rights of Series AA Convertible Preferred Stock.(1)
10.1 |  | Amendment and Extension Agreement between Titan Pharmaceuticals, Inc. and Fedson, Inc., dated as of August 25, 2023.(2)
10.2 |  | Form of Securities Purchase Agreement, dated as of September 13, 2023, by and among the Company and The Sire Group Ltd.(1)
10.3 |  | Form of Registration Rights Agreement, dated as of September 13, 2023, by and among the Company and The Sire Group Ltd.(1)
10.4 |  | Convertible Promissory Note between Titan Pharmaceuticals, Inc. and Choong Choon Hau*
31.1 |  | Certification of the Principal Executive and Financial Officer pursuant to Rule 13(a)-14(a) of the Securities Exchange Act of 1934*
32.1 |  | Certification of the Principal Executive and Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS |  | XBRL Instance Document
101.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension calculation Linkbase Document
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(1) | Incorporated by reference from the Registrant’s Current Report on Form 8-K dated September 18, 2023.
(2) | Incorporated by reference from the Registrant’s Current Report on Form 8-K dated August 30, 2023.

* | Filed herewith

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| TITAN PHARMACEUTICALS, INC.
Dated: November 14, 2023 | By: | /s/ David Lazar
| Name: | David Lazar
| Title: | Chief Executive Officer
|  | (Principal Executive Officer)

25