DEFM14A: Titan Pharmaceuticals to Merge with Black Titan and TalenTec in Strategic Reverse Recapitalization

Titan Pharmaceuticals, Inc. (TTNP) is set to undergo a reverse merger with Black Titan Corporation (PubCo) and acquire Malaysia-based human capital management solutions provider TalenTec Sdn. Bhd., aiming to revitalize its business and list the combined entity on Nasdaq under the symbol BTTC.

Summary

• Titan Pharmaceuticals, Inc. (TTNP) has approved a Merger and Contribution and Share Exchange Agreement dated August 19, 2024, with Black Titan Corporation (PubCo) and TalenTec Sdn. Bhd. (TalenTec).
• The transaction involves Merger Sub (a wholly-owned subsidiary of PubCo) merging into TTNP, making TTNP a direct wholly-owned subsidiary of PubCo.
• Immediately following the TTNP merger, TalenTec shareholders will contribute their shares to PubCo in exchange for newly issued PubCo Ordinary Shares, making TalenTec a direct wholly-owned subsidiary of PubCo.
• Upon completion, TTNP Common Stock shareholders will receive one PubCo Ordinary Share for each TTNP Common Stock share, and TTNP Series AA Preferred Stock holders will receive 1.07296 PubCo Ordinary Shares per share.
• TalenTec shareholders will receive 8.524 newly issued PubCo Ordinary Shares for each TalenTec share contributed.
• It is anticipated that 7,210,800 PubCo Ordinary Shares will be issued in connection with the Business Combination.
• Post-combination, existing TTNP stockholders (excluding officers and directors) are expected to own approximately 31.39% of PubCo Ordinary Shares, while TalenTec shareholders will own approximately 68.56%.
• PubCo Ordinary Shares are expected to be listed on the Nasdaq Capital Market under the symbol BTTC, subject to Nasdaq confirmation.
• The TTNP Board of Directors, following a recommendation from a Special Committee, has approved the merger and recommends stockholders vote FOR the proposals.
• The Business Combination Proposal and Nasdaq Proposal are cross-conditioned on each other's approval.
• The transaction will be accounted for as a reverse recapitalization, with TalenTec treated as the accounting acquirer for financial reporting purposes.
• TalenTec's revenue for the six months ended January 31, 2025, was $1,682,879, with a net income of $294,968.
• TTNP reported a net loss of $563,000 for the three months ended March 31, 2025, and a net loss of $4.7 million for the year ended December 31, 2024.
• TalenTec had a working capital of $838,805 as of January 31, 2025, but had projected working capital deficits for fiscal years 2024-2026 prior to a recent equity investment.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While Titan Pharmaceuticals faces significant financial challenges and a going concern issue, this merger represents a critical strategic pivot. TalenTec brings a growing, profitable business in a high-growth industry, which is a strong positive. However, TalenTec itself has risks related to vendor dependency, customer concentration, and future working capital deficits, and the integration of two disparate businesses always carries execution risk. The capital raises are necessary but also indicate ongoing funding needs. The fairness opinion provides a baseline of 'fairness' but doesn't imply exceptional upside. Overall, it's a necessary and potentially beneficial move for TTNP, but not without substantial inherent risks for the combined entity.

Positives

• The merger provides a strategic alternative for Titan Pharmaceuticals to enhance stockholder value, following an extensive evaluation of numerous potential partners across diverse industries.
• TalenTec operates in a large and growing Human Capital Management (HCM) software market in the Asia-Pacific region, with projected CAGR of 15.02% from 2025-2030.
• TalenTec has established competitive advantages, including a comprehensive business network, stable relationships with top-tier HCM suppliers (Oracle, Dayforce, Humanica, Microimage), and a multi-vendor approach.
• TalenTec boasts a seasoned team of in-house consultants and staff, with 20 certified by Oracle Corp, 9 by Dayforce, Inc., 3 by Microimage, and 12 by Humanica, enabling customized and rapid support.
• TalenTec has strong, long-term customer relationships, with some clients for over 10 years and a regulatory authority for over 25 years, indicating high satisfaction and retention.
• TalenTec's SaaS subscription renewal rate for existing customers was 100% for the six months ended January 31, 2024 and 2025, and for fiscal years 2023 and 2024.
• TalenTec's revenue increased by 55% for the six months ended January 31, 2025, to $1,682,879, driven by growth in maintenance, implementation, licensing, and hardware sales.
• The TTNP Board obtained a fairness opinion from King Kee Appraisal and Advisory Limited, which concluded that the transaction consideration is fair to TTNP's unaffiliated stockholders from a financial point of view.
• TalenTec is expanding its sales and delivery team from 34 personnel (July 31, 2024) to 46 (July 31, 2025) and 54 (July 31, 2026) to meet anticipated demand.
• TalenTec is developing a new SaaS HCM application focused on the hospitality industry, with a planned beta rollout by end of calendar 2025, and intends to be the master distributor.
• The Malaysian government's regulatory support for digitalization and economic development aligns with HCM software usage, promoting HR digitalization in both public and private sectors.
• Increasing demand for unified HR solutions and the integration of AI in HCM software (e.g., Dayforce Co-Pilot, MiHCM SmartAssist, SunFish Workplaze HR AI Assistant) present growth opportunities.
• TalenTec's shift towards cloud-based solutions is reflected in an upward trend in revenue from these sources, which is expected to continue.

Negatives

• Titan Pharmaceuticals has incurred net losses in almost every year since its inception, including $4.7 million in 2024 and $563,000 in Q1 2025, raising substantial doubt about its ability to continue as a going concern.
• TTNP had negative cash flows from operations of $3.9 million in 2024 and $867,000 in Q1 2025.
• TalenTec's financial projections prepared prior to a recent equity investment included working capital deficits of $387,000, $646,000, and $976,000 for fiscal years 2024, 2025, and 2026, respectively.
• TalenTec is highly dependent on licenses, reseller contracts, and distribution agreements with third-party software vendors (e.g., Oracle, Dayforce), and changes in terms or termination of these relationships could materially adversely affect its financial performance.
• Oracle PeopleSoft HCM and Financials products accounted for a significant portion of TalenTec's revenue (72.3% in 2023, 78.9% in 2024), making it vulnerable to a loss of Oracle as a vendor.
• TalenTec's business is dependent on a limited customer base, with three customers accounting for approximately 34% of total revenue in fiscal year 2024, and the loss of any could significantly impact profitability.
• Most of TalenTec's customer contracts are short-term, requiring continuous securing of new contracts and renewals to maintain business.
• TalenTec's expansion plans into Indonesia and the Philippines depend on successful discussions with a major vendor and completion of a new SaaS solution, with no assurance of success.
• The development of the new SaaS HCM application for the hospitality industry is in very early stages, with no assurance of successful conclusion as scheduled or at all.
• TalenTec's management team has limited experience managing a public company, which could strain resources and divert attention from operations.
• TalenTec identified material weaknesses in its internal control over financial reporting, including a lack of accounting staff with GAAP/SEC reporting knowledge and insufficient IT general controls.
• The proposed transaction may not qualify for tax-deferred treatment under Section 351(a) of the Code, and Section 367(a) could apply, potentially causing U.S. holders to recognize gain.
• PubCo may be classified as a Passive Foreign Investment Company (PFIC), leading to adverse U.S. federal income tax consequences for U.S. holders.
• TTNP's officers and directors have interests in the Business Combination that may conflict with stockholder interests, including continued board service and indemnification.
• The lack of an independent third-party underwriter in the Business Combination means investors will not receive the benefit of an outside independent review of TTNP's and TalenTec's finances and operations.
• The sale of a substantial amount of PubCo Ordinary Shares by TalenTec Shareholders and holders of TTNP Series AA Preferred Stock (who will collectively own ~68.56% of PubCo) could adversely affect the market price.

Risks

• TalenTec's dependence on licenses, reseller contracts, and distribution agreements with third-party software vendors (Oracle, Dayforce, Humanica, Microimage) for its services.
• Financial projections for TalenTec may not reflect actual financial results, as they are based on estimates and assumptions subject to significant uncertainties.
• The Company Group is dependent on its directors and key senior management team for continued success and growth.
• The Company Group depends on its team of in-house consultants and staff for the provision of HCM solutions, and any loss of personnel could disrupt project deliverables.
• Management's focus and resources may be diverted from operational matters and strategic opportunities due to the Business Combination.
• The Company Group faces intense competition from other HCM solutions providers and software vendors, which could adversely affect its business if unable to compete effectively.
• TalenTec had projected increasing working capital deficits for fiscal years 2024 through 2026, which, if realized, could impair its ability to pay obligations.
• The Company Group's business substantially depends on customer retention and new customer acquisition; any decline could adversely affect revenue.
• Client dissatisfaction with deployment or technical support services, or solution failure, could adversely affect TalenTec's business and reputation.
• Concentration of revenue from a limited customer base (three customers accounted for ~34% of 2024 revenue) makes TalenTec vulnerable to downturns or loss of these clients.
• The high cost of HCM solutions limits TalenTec's target market to large organizations with substantial human resources budgets.
• The market for TalenTec's solutions among large companies may be limited if they demand customized features not offered.
• Concentration of clients in a few industries (technology, property management, banking, public sector) makes TalenTec vulnerable to downturns in those industries.
• The project-based and contract-based nature of TalenTec's business may lead to fluctuations in revenue, profit, and operating cash flow.
• Exposure to credit risk and default payment by customers could adversely affect operating cash flows or financial results.
• Exposure to foreign exchange transaction risks due to operations in multiple currencies (MYR, SGD) may impact profitability.
• HCM solution project deliverables are exposed to unexpected delays or interruptions caused by operational factors, accidents, and natural disasters beyond control.
• Customers may claim liquidated damages for delays or failures in providing services, potentially impairing financial performance.
• Success depends on growth in market acceptance of HR process digitalization; failure to grow sales force could harm business.
• Failure to maintain or enhance reputation or brand recognition could harm business.
• Inability to successfully implement business strategies, including regional expansion and new solution development.
• Most customer contracts are short-term, requiring continuous securing of new contracts and renewals.
• Exposure to economic, political, legal, and regulatory environments in Malaysia, Singapore, and planned expansion countries (Indonesia, Philippines).
• Insurance coverage may not be adequate to cover all losses or liabilities.
• Changes in laws/regulations related to the Internet or Internet infrastructure itself may diminish demand for solutions.
• Volatility in the financial and economic environment could harm business.
• Financial results may fluctuate due to many factors beyond control.
• Business and operations are exposed to sudden disruptions caused by serious pandemic and epidemic outbreaks.
• Third-party HCM solutions are exposed to security breaches, potentially affecting TalenTec's reputation.
• Privacy concerns, evolving regulation of cloud computing, and cross-border data transfer may reduce adoption of solutions.
• Use of open-source software in solutions (Sunfish Workplaze HR) could lead to unanticipated conditions or restrictions if licenses are construed adversely.
• Uncertainties with respect to the legal system in certain markets in Southeast Asia could adversely affect business.
• Uncertain tax liabilities in various jurisdictions where TalenTec operates.
• TTNP has incurred, and will continue to incur, significant transaction and transition costs.
• The Business Combination may not occur if conditions to the Merger Agreement are not met.
• TTNP may be obligated to purchase outstanding warrants (Repurchase Warrants) at their Black Scholes Value, totaling approximately $120,695 as of the proxy statement date.
• The tax consequences of the Business Combination may adversely affect holders of TTNP Common Stock or TTNP Warrants, as tax-deferred treatment is not assured and Section 367(a) could apply.
• The IRS may not agree that PubCo should be treated as a non-U.S. corporation for U.S. federal income tax purposes, leading to substantial U.S. tax liability.
• If PubCo is or becomes a passive foreign investment company (PFIC), U.S. Holders could be subject to adverse U.S. federal income tax consequences.
• TalenTec's management team has limited experience managing a public company.
• If PubCo fails to implement and maintain an effective system of internal controls, it may be unable to accurately report results or prevent fraud.
• PubCo will incur increased costs as a public company.
• If PubCo ceases to qualify as a foreign private issuer, it would incur significant additional expenses.
• As a foreign private issuer, PubCo is exempt from certain Nasdaq corporate governance standards, potentially offering less protection to shareholders.
• Difficulties in protecting interests and limited ability to protect rights through U.S. courts due to Cayman Islands incorporation.
• No assurance that PubCo Ordinary Shares will remain listed on Nasdaq or comply with continued listing standards.
• A market for PubCo's securities may not continue, adversely affecting liquidity and price.
• Sales by TalenTec Shareholders and holders of TTNP Series AA Preferred Stock (who will hold a majority of shares) may adversely affect the market price of PubCo Ordinary Shares.
• If the Business Combination's benefits do not meet investor expectations, the market price of securities may decline.
• Failure to maintain effective internal controls over financial reporting could have a material adverse effect on PubCo's business and stock price.

Future Outlook

PubCo intends to apply for listing its Ordinary Shares on the Nasdaq Capital Market under the symbol BTTC, contingent on Nasdaq approval. TalenTec plans to expand its market share by continuing to add to its HCM product offerings, expanding operations to Indonesia and the Philippines, and continuing to develop innovative solutions, including a new SaaS HCM application for the hospitality industry with a beta rollout scheduled for late 2025. The company anticipates increasing demand for hardware infrastructure and software integration services with the growing adaptation of AI technology.

Management Comments

• TTNP's board of directors determined that entering into the Business Combination with TalenTec provided the best alternative for maximizing stockholder value reasonably available to TTNP, including when compared to continuing to operate on a standalone basis and other strategic alternatives.
• TTNP's board believes that the Business Combination with TalenTec is in the best interests of TTNP and presents an opportunity to increase shareholder value.
• TalenTec's management believes that their strategy of providing incident response and proactive services helps tremendously in driving new customers.
• TalenTec's management is optimistic about available expansion opportunities in Southeast Asia, given the broad range of products and services tailored to organizations of varying sizes across multiple industries.
• TalenTec's management believes that its ability to support different solutions with on-staff consultants gives the Company a competitive edge.
• TalenTec's management aims to position the Company not just as a software reseller, but as a strategic partner that enhances human resource capabilities through technology and innovative solutions.
• TalenTec's management expects continued increases in revenue for the coming years due to expanded marketing activities and increased sales force headcount.
• TalenTec's management expects sales and marketing expenses to increase in absolute terms as they continue to invest in domestic and international selling and marketing activities.
• TalenTec's management believes that its cash provided by operating activities, together with the recent equity investment, will be sufficient for short-term cash requirements, and bank facilities can be increased for long-term needs.

Industry Context

The Human Capital Management (HCM) software market in Asia-Pacific is experiencing steady growth, projected to reach $18.18 billion by 2030 with a 15.02% CAGR. This growth is driven by increasing demand for robust software solutions to enhance workforce productivity, improve employee management, and adapt to technological advancements like cloud storage, big data, and artificial intelligence. Regulatory support from governments, particularly in Malaysia, for digitalization and the increasing preference for unified HR solutions are key market drivers. TalenTec, with its long-standing presence and multi-vendor approach, is positioned to capitalize on this trend, especially as companies transition from on-premise to hybrid and cloud-based solutions.

Comparison to Industry Standards

• TalenTec's projected revenue growth rates for FY25 (74.6%) and FY26 (58.6%) significantly exceed the Global Human Capital Management SaaS Market's expected CAGR of 6.9% from 2024-2029, as cited by M&M Research, indicating aggressive growth expectations.
• The King Kee Appraisal and Advisory Limited's valuation of TalenTec's 100% equity value at $26 million $28 million, based on a market multiple of 3.2x (average of comparable companies' Total Equity Value/Sales), suggests a valuation in line with industry peers, after applying a 25% control premium to reflect the acquisition of control.
• TalenTec's high on-premise customer retention rates (96% in 2022, 92% in 2023, and 95% in 2024) and 100% SaaS subscription renewal rate for existing customers (Jan 31, 2024 & 2025) demonstrate strong customer loyalty, potentially outperforming industry averages in customer retention.
• The Malaysian data center market is projected to grow at a CAGR of 9.41% to $2.252 billion by 2028, and software/service sales in the Philippines are forecasted to reach $95 million by 2025, providing a favorable regional backdrop for TalenTec's expansion plans compared to general market growth.
• TalenTec's reliance on a few key customers (34% of revenue from three customers in FY2024) is a concentration risk that may be higher than diversified industry players, making it more vulnerable to client churn.
• The projected working capital deficits for TalenTec in FY24-FY26, prior to the equity investment, indicate a potential liquidity challenge that may be more pronounced than for financially robust industry leaders.

Management Changes

Corporate Governance

Legal Proceedings

• TTNP was subject to a legal proceeding initiated in 2020 by a former employee alleging wrongful termination, retaliation, infliction of emotional distress, negligent supervision, hiring and retention, and slander. Fedson, Inc. assumed all liabilities related to this claim as part of the ProNeura Assets sale in September 2023.
• No other material litigation, arbitration, or governmental proceeding is currently pending or threatened against TTNP or its management.
• TalenTec is not currently a party to any legal proceedings the outcome of which would individually or in the aggregate have a material adverse effect on its business, financial condition, or results of operations.

Related Party Transactions

• On June 20, 2025, TalenTec and a financial investor entered into a subscription agreement for the purchase of up to $4,000,000 of Series A convertible preferred shares of PubCo.
• In July 2023, TTNP received $250,000 in funding from David E. Lazar (former CEO and chairman) via an unsecured promissory note, which was repaid in September 2023.
• In August 2023, TTNP received $500,000 in funding from Choong Choon Hau via a convertible promissory note, which was converted into 54,132 shares of TTNP common stock in March 2024.
• In September 2023, TTNP issued 950,000 shares of Series AA Convertible Preferred Stock to The Sire Group Ltd. (Sire) for $9.5 million, with $4.5 million paid via a promissory note from Sire, which was repaid in September 2023.
• During 2024 and 2023, TTNP made payments of approximately $12,400 and $109,000, respectively, to a law firm operated by Avraham Ben-Tzvi, a TTNP Board member.
• In April 2024, TTNP made aggregate payments of approximately $1.2 million to David Lazar (former CEO) and Dr. Kate Beebe DeVarney (former President/COO) as part of their resignation agreements.
• Mr. Lazar's resignation agreement includes a provision for a lump-sum payment equal to 3% of the increased valuation of the surviving corporation resulting from a Change in Control.
• During 2024, TTNP made payments totaling approximately $62,000 on behalf of Black Titan (PubCo), recorded as a receivable.
• On March 29, 2025, TTNP issued 100,000 shares of Series B Preferred Stock to Blue Harbour Asset Management L.L.C-FZ for $1,000,000.
• On June 24, 2025, TTNP issued 60,000 shares of Series C Convertible Preferred Stock to Blue Harbour for $600,000.
• In May 2024, Eddie Tan Chee Wei, Koay Chee Leong, and Kong Chien Hoi agreed to purchase TalenTec shares from Mr. Ho Say San and Mr. Choo Yeow (TalenTec directors) for approximately $1,050,000.
• On July 25, 2024, Goh Chee Siong subscribed for 80,000 TalenTec shares for $800,000.
• In December 2024, Kong Chien Hoi sold his TalenTec shares to Leow Kian Yong, and Mr. Seow sold his TalenTec shares to Danny Vincent Dass.
• In 2024, TalenTec entered into a Consulting Services Agreement with Sire for development of a SaaS application, with total compensation of approximately $84,400. This agreement was novated to Brictec Co Ltd, owned by Koay Chee Leong (a TalenTec Shareholder).
• On July 15, 2024, Sire (then owned by Mr. Seow) made an interest-free loan of $355,450 to TalenTec for pre-listing costs, which has been repaid.
• Mr. Ho Say San (TalenTec director) made advances to TalenTec from time to time, which were repaid. Maximum outstanding advances were $121,000 (2023) and $136,000 (2024).

Stakeholder Impact

• Shareholders of Titan Pharmaceuticals will become shareholders of Black Titan Corporation, with their rights governed by Cayman Islands law, which may offer less protection than Delaware law.
• Existing TTNP Public Stockholders will experience significant dilution, owning approximately 31.39% of the combined entity on a fully diluted basis.
• TalenTec Shareholders will become the majority owners of the combined entity, holding approximately 68.56% on a fully diluted basis, gaining public market access.
• Employees of TalenTec will continue under the new combined entity, with their management team largely comprising the senior management of PubCo.
• Customers of TalenTec are expected to benefit from continued and expanded HCM solutions, including new cloud-based offerings and broader regional presence.
• Creditors of TTNP and TalenTec will see their obligations assumed by the combined entity, with potential changes in financial leverage depending on future capital raises.
• TTNP's officers and directors have interests in the Business Combination that may conflict with general stockholder interests, including continued roles and indemnification.

Next Steps

• TTNP stockholders to vote on the Business Combination Proposal, Nasdaq Proposal, and Adjournment Proposal at the Special Meeting on August 26, 2025.
• PubCo to receive confirmation from Nasdaq that PubCo Ordinary Shares have been conditionally approved for listing on Nasdaq.
• PubCo, TTNP, and TalenTec to enter into a Share Exchange Agreement within five business days after the proxy statement/prospectus becomes effective.
• TalenTec to continue hiring additional finance and accounting staff with GAAP and SEC reporting experience to remediate internal control weaknesses.
• TalenTec to continue hiring experienced IT staff with CRISC qualifications to strengthen IT General Control.
• TalenTec plans to expand its operations in Singapore and into the Philippines and Indonesia.
• TalenTec is participating in the development of a new SaaS HCM application focused on the hospitality industry, with a beta rollout intended for the end of calendar 2025.
• PubCo, Mr. Dass, and Mr. Chung will enter into a registration rights agreement at closing for the resale of PubCo Ordinary Shares.
• PubCo will establish a separately standing audit committee, nominating and corporate governance committee, and compensation committee upon closing.
• TTNP and PubCo will use reasonable best efforts to cause TTNP Common Stock to be delisted from Nasdaq and terminate its SEC registration as soon as practicable after the Effective Time.

Key Dates

Keywords

Reverse Merger, Human Capital Management, HCM Solutions, TalenTec, Titan Pharmaceuticals, Black Titan Corporation, Nasdaq Listing, SEC Filing, Corporate Acquisition, Software Implementation, Payroll Solutions, Risk Factors, Corporate Governance, Strategic Alternatives, Private Placement, Nasdaq Capital Market, Malaysia, Singapore, Asia Pacific Market