CCUR CCUR Holdings Inc (CE)

BENEFICIAL OWNERS OF OUR SHARES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES APPLICABLE TO THEM RELATING TO THE REVERSE STOCK SPLIT, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE OR LOCAL TAX LAWS, OR NON-U.S. OR NON-INCOME TAX LAWS, ANY CHANGES IN APPLICABLE TAX LAWS, AND ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS.

THE DISCUSSION BELOW IS NOT INTENDED TO BE, AND CANNOT BE USED BY ANY PERSON, FOR THE PURPOSE OF AVOIDING PENALTIES. THE DISCUSSION BELOW WAS WRITTEN TO SUPPORT THE PROMOTION AND MARKETING OF THE REVERSE STOCK SPLIT AND PROXY SOLICITATION.  PLEASE CONSULT YOUR OWN TAX ADVISER IN ORDER TO FULLY UNDERSTAND THE FEDERAL, STATE AND LOCAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT AND PROXY SOLICITATION IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES.

As used herein, the term “U.S. holder” means a holder that is, for U.S. federal income tax purposes,:

Tax Consequences to U.S. Holders Not Receiving Cash in the Reverse Stock Split

The Reverse Stock Split is generally expected to be treated as a form of reorganization defined in Section 368(a)(1)(E) of the Code as a recapitalization. A U.S. holder that does not receive any cash in the Reverse Stock Split generally should not recognize any gain or loss with respect to the Reverse Stock Split for U.S. federal income tax purposes, and generally should have the same aggregate adjusted tax basis and holding period in such holder’s post-split shares of Common Stock as such holder had in such holder’s shares of Common Stock immediately prior to the Reverse Stock Split.

Tax Consequences to U.S. Holders Receiving Only Cash in the Reverse Stock Split

In general, the receipt of cash by a U.S. holder in lieu of a fractional share will be a taxable transaction to such holder for U.S. federal income tax purposes. Section 302 of the Code sets forth several tests which, if applicable treat a U.S. holder’s exchange of pre-split shares of Common Stock solely for cash in the Reverse Stock Split as a “sale or exchange” of such shares.  For example, if the exchange of pre-split shares of Common Stock solely for cash (1) results in a “complete termination” of such holder’s interest in the Company, (2) is “substantially disproportionate” with respect to such holder, or (3) is “not essentially equivalent to a dividend” with respect to the such holder (each such test referred to herein as a “Section 302 test” and described in more detail below), then such exchange will be treated for U.S. federal income tax purposes as a taxable sale or exchange of such shares. To be clear, there are other tests under Section 302 of the Code which may also result in the treatment of an exchange of Common Shares solely for cash in connection with the Reverse Stock Split as a taxable sale or exchange, but those other tests are not specifically addressed in this discussion.

In determining whether any of the Section 302 tests mentioned above is satisfied, a U.S. holder must take into account (i) shares of our stock actually owned by such holder, and (ii) shares of our stock considered as, or deemed, owned by such U.S. holder by reason of certain constructive ownership and ownership attribution rules in the Code. Under these constructive ownership and ownership attribution rules, a U.S. holder generally will be considered to own shares of our stock which such holder has the right to acquire pursuant to the exercise of an option or warrant, or by conversion or exchange of a security, and will also be considered to own shares of our stock that are owned (and, in some cases, constructively owned) by (x) some members of such holder’s family, and (y) some entities (such as corporations, partnerships, trusts, and estates) in which such holder, a member of such holder’s family, or a related entity has a direct or indirect interest.

If any of the Section 302 tests (described more fully below) are satisfied with respect to a U.S. holder, and an exchange of Common Stock solely for cash is therefore treated as a taxable sale or exchange for U.S. federal income tax purposes, then such holder generally should recognize gain or loss equal to the difference between (i) the amount of cash received by such holder and (ii) such holder’s adjusted tax basis in the Common Stock treated as sold or exchanged in the Reverse Stock Split. Gain or loss must be calculated separately with respect to each share of Common Stock exchanged in the Reverse Stock Split.  Any gain or loss recognized will constitute capital gain or loss, and will constitute long-term capital gain or loss if the holder’s holding period of the stock treated as sold or exchanged is greater than one year as of the Effective Date.  A reduced tax rate on long-term capital gains generally applies to individuals and other non-corporate U.S. holders.  The deductibility of capital losses is subject to limitations.

Conversely, if none of the Section 302 tests are satisfied with respect to a U.S. holder (e.g., immediately following the Reverse Stock Split you continue to own shares of our stock, or you are treated as continuing to own shares of our stock pursuant to the constructive ownership and ownership attribution rules), you generally should be treated as having received a distribution from the Company in an amount equal to the cash received by you in the Reverse Stock Split. The amount of a distribution received by a U.S. holder will be treated as a dividend to the extent of such holder’s ratable share of the Company’s current and accumulated earnings and profits. To the extent the receipt of cash is treated as a dividend, you will not receive any tax benefit from your basis in your shares.  In general, dividends are subject to ordinary income tax rates. However, for certain individuals and other non-corporate stockholders, a dividend may qualify for the reduced tax rate applicable to long-term capital gains to the extent the dividend is treated as a “qualified dividend.” To qualify for the lower rate available to qualified dividend income, (i) an individual or non-corporate stockholder must hold the stock with respect to which the dividend is paid for more than 60 days in the 121-day period beginning 60 days before the ex-dividend rate, as determined pursuant to the Code, and (ii) the stock held by such stockholder must have been unhedged during such holding period, i.e., there were no puts, calls, short sales, hedges, or other arrangements or positions in the shares or any substantially similar or related property. You are urged to consult with your tax advisor regarding your applicability for, and the appropriate federal, state, local, foreign, or other tax treatment of, any such dividend income.

To the extent that the amount of a distribution received by a U.S. holder with respect to the Reverse Stock Split exceeds such holder’s ratable share of our current and accumulated earnings and profits, the excess generally should be treated as a tax-free return of capital to the extent of such holder’s adjusted tax basis in the Common Stock exchanged in the Reverse Stock Split, and any remainder generally should be treated as capital gain from the sale or exchange of the Common Stock.

Section 302 Tests

If a U.S. holder’s exchange of Common Stock for cash in the Reverse Stock Split satisfies one of the following tests, then such exchange is treated as a taxable sale or exchange for U.S. federal income tax purposes:

Complete Termination. A U.S. holder’s exchange of Common Stock solely for cash in the Reverse Stock Split generally will result in a “complete termination” of such holder’s interest in us if, in connection with the Reverse Stock Split, either (i) all of the shares of our stock actually and constructively owned by such holder is exchanged for cash, or (ii) all of the shares of our stock actually owned by such holder is exchanged for cash, and, with respect to constructively owned shares of our stock, such holder is eligible to waive (and effectively waives) constructive ownership of all such stock under the procedures described in Section 302(c) of the Code.

Substantially Disproportionate Redemption. A U.S. holder’s exchange of Common Stock for cash in the Reverse Stock Split generally will be “substantially disproportionate” with respect to such holder if, among other things, immediately after the exchange (i.e., treating all Common Stock exchanged for cash in the Reverse Stock Split as no longer outstanding), (i) such holder’s percentage ownership of our voting stock is less than 80% of such holder’s percentage ownership of our voting stock immediately before the exchange (i.e., treating all Common Stock exchanged for cash in the Reverse Stock Split as outstanding), and (ii) such holder owns less than 50% of the total combined voting power of all classes of stock entitled to vote. For purposes of these percentage ownership tests, a holder will be considered as owning shares of our stock owned directly as well as indirectly through application of the constructive ownership and ownership attribution rules mentioned above.

Not Essentially Equivalent to a Dividend. In order for a U.S. holder’s exchange of Common Stock for cash in the Reverse Stock Split to qualify as “not essentially equivalent to a dividend,” such holder must experience a “meaningful reduction” in such holder’s proportionate interest in us as a result of the Reverse Stock Split, taking into account the constructive ownership and ownership attribution rules mentioned above. Whether a U.S. holder’s exchange of Common Stock pursuant to the Reverse Stock Split will result in a “meaningful reduction” of such holder’s proportionate interest will depend on such holder’s particular facts and circumstances.

Stockholders should consult with their own tax advisors respecting their particular situations with respect to whether any of the Section 302 tests discussed above, or any of the other rules set forth in Section 302 of the Code, are applicable so as to result in the treatment of the exchange of our Common Stock solely for cash in connection with the Reverse Stock Split as a taxable sale or exchange of such stockholder’s shares of our Common Stock.

Tax Consequences to U.S. Holders Receiving Both Stock and Cash in the Reverse Stock Split

The Reverse Stock Split is generally expected to be treated as a form of reorganization defined in Section 368(a)(1)(E) of the Code as a recapitalization. Under Section 354 of the Code, generally no gain or loss will be recognized if stock in a corporation that is a party to a reorganization is exchanged solely for stock. Under Code Section 356, if Section 354 would apply but for the fact that the consideration received consists not only of stock but also of other property, such as money (such other consideration sometimes referred to as “boot”), then gain must be recognized in an amount not in excess of the “boot” received. A loss generally may not be recognized. The gain is generally measured share-by-share, and depends upon the holder’s basis in each share.  If the distribution of “boot” in the Reverse Stock Split has the effect of a distribution of a dividend, then the amount otherwise treated as gain is treated as a dividend. To determine whether any such gain is to be treated as a dividend, the stockholder hypothetically assumes that such stockholder first received stock equal to the amount of boot received, and then caused that stock to be redeemed for the boot consideration.  The hypothetical redemption is tested under the Section 302 tests described above (and the other tests set forth in Section 302 of the Code, but not discussed above). For those holders who receive cash in lieu of fractional shares and whose percentage interest in the Company is enhanced or not materially diminished, the gain will be treated as a distribution, and a dividend to the extent of the U.S. holder’s ratable share of our current and accumulated earnings and profits. For those holders who receive cash in lieu of fraction shares whose percentage interest in the Company is substantially diminished under the Section 302 tests (or any other applicable test), the gain is treated as arising out of a sale of our Common Stock. In such a case, the basis in the stock received in the Reverse Stock Split is the same as the aggregate adjusted tax basis the holder had immediately prior to the Reverse Stock Split decreased by the amount of money received and increased by the amount treated as either gain or a dividend.

In contrast to the discussion above, based on certain administrative guidance it is possible that U.S. holders who receive both stock and cash in the Reverse Stock Split may instead be treated as if they received all stock in a tax-free reorganization and then had their fractional shares redeemed in a separate transaction. Based on Treasury Regulation Section 1.301-1(l), even though the Reverse Stock Split is viewed as a reorganization, it is possible for any such cash received to be viewed as a dividend independent of the reorganization, followed by or preceded by the exchange of stock-for-stock in a tax-free reorganization. Each stockholder is urged to consult its own tax advisor as to the application of these rules to such stockholder under its particular circumstances.

Basis and Holding Period in Post-Split Shares

In a reorganization defined in Section 368(a)(1)(E) of the Code as a recapitalization, if one share of corporate stock is received in exchange for more than one share of corporate stock surrendered, then the aggregate basis in the shares surrendered must be allocated to the basis of the shares received, and the holding period of the stock received generally includes the holding period of the stock held immediately prior to the Reverse Stock Split.

Information Reporting and Backup Withholding

A U.S. holder may be subject to information reporting with respect to any cash received in the Reverse Stock Split. U.S. holders who are subject to information reporting and who do not provide a correct taxpayer identification number and other required information (e.g., by submitting a properly completed IRS Form W-9) may also be subject to backup withholding at a rate of 24%. Any amount withheld under such rules is not an additional tax and may be refunded or credited against the U.S. holder’s U.S. federal income tax liability otherwise arising from the Reverse Stock Split, provided that the required information is properly furnished in a timely manner to the Internal Revenue Service.

Tax Consequences of the Reverse Stock Split to the Company

With respect to the Reverse Stock Split, the Company generally should not recognize any gain or loss for U.S. federal income tax purposes. Under the Code, an “ownership change” with respect to a corporation can significantly limit the amount of pre-ownership change NOLs and certain other tax assets that the corporation may utilize after the ownership change to offset future taxable income. Very generally, an ownership change occurs if the aggregate stock ownership of holders of at least 5% of a corporation’s stock increases by more than 50 percentage points over the preceding 3-year period. The Company does not expect the Reverse Stock Split to have a material impact on its NOLs or other relevant tax assets, as determined for U.S. federal income tax purposes.

THE REVERSE STOCK SPLIT

Basic Terms

On or after the 20^th day following the mailing of this information statement, which the Company expects to commence on or about the date hereof, the Company will file the certificate of amendment to its certificate of incorporation with the Delaware Secretary of State to effect a 1-for-3,000 reverse stock split of its issued and outstanding common stock, as approved by the Company’s Board on December 21, 2020 and the holders of (a) a majority of the Company’s outstanding shares of Common Stock on December 21, 2020.

Under the terms of the Reverse Stock Split, every holder of record of the Common Stock on the Effective Date will be entitled to receive one share of the Company’s new common stock for every 3,000 shares of existing Common Stock held by that person. No fractional shares will be issued, and:

If you currently hold less than 3,000 shares of Common Stock and you want to continue to hold Common Stock after the Reverse Stock Split, you may do so by taking either of the following actions far enough in advance so that it is complete before the close of business on the Effective Date:

Because of the limited trading market for the Company’s common stock, you may be unable to purchase enough shares to retain an equity interest in CCUR.

The Company intends for the Reverse Stock Split to treat stockholders holding Common Stock in street name through a nominee, such as a bank or broker, in the same manner as stockholders whose shares are registered in their names. Nominees will be instructed to effect the Reverse Stock Split for their beneficial holders. However, nominees may have different procedures and stockholders holding shares in street name should contact their nominees.

The Reverse Stock Split is structured as a “going private” transaction under SEC Rule 13e-3 promulgated under the Exchange Act because it is intended to, and if completed will likely, reduce the number of record holders of our common stock to fewer than 300, which will permit us to terminate our registration and periodic reporting obligations. In connection with the Reverse Stock Split, we have filed a Rule 13e-3 transaction statement on Schedule 13E-3 with the SEC. We intend to apply for the termination of our registration and periodic reporting obligations as soon as practicable after the Effective Date of the Reverse Stock Split.

Effective Date

The Company intends to make the Effective Date of the Reverse Stock Split be the date that the Delaware Secretary of State accepts for filing the certificate of amendment to its certificate of incorporation. The Company intends for that date to be on or after the 20^th day following the mailing of this information statement, which the Company expect to commence on or about the date hereof.

Stock Certificates

[_______] has been appointed as the Exchange Agent to carry out the exchange of existing stock certificates for new Common Stock certificates and to send cash payments to the stockholders who would otherwise be entitled to receive fractional shares of new Common Stock as a result of the Reverse Stock Split. Promptly following the Effective Date of the Reverse Stock Split, the Exchange Agent will send a letter of transmittal to each affected stockholder, which will describe the procedures for surrendering stock certificates in exchange for new Common Stock or, if applicable, cash consideration to be received in lieu of fractional shares of new Common Stock. Upon receipt of the stock certificates and properly completed letters of transmittal, the Exchange Agent will issue the appropriate new stock certificates or make the appropriate cash payment within approximately 20 business days.

No service charges will be payable by the Company’s stockholders in connection with the exchange of certificates or the payment of cash in lieu of issuing fractional shares. The Company will bear all such expenses. The Company will not pay interest on cash sums due to any such stockholder in connection with the Reverse Stock Split.

In connection with the Reverse Stock Split, the Common Stock will be identified by a new Committee on Uniform Security Identification Procedures, or “CUSIP,” number. This new CUSIP number will appear on any stock certificates representing shares of the Company’s new Common Stock after the Effective Date of the Reverse Stock Split.

All stock certificates evidencing ownership of CCUR Common Stock outstanding immediately prior to the Reverse Stock Split will be deemed for all purposes to represent (a) a claim for cash payment in lieu of a fractional share of new CCUR Common Stock and/or (b) new certificates representing the number of shares of new CCUR Common Stock that will result from the Reverse Stock Split, whether or not the certificates representing existing CCUR Common Stock are surrendered for exchange. Do not send your stock certificates to the Company or the Exchange Agent until you have received a transmittal letter and followed the instructions therein.

Dissenters' Rights

Stockholders are not entitled to appraisal rights in connection with the Reverse Stock Split under either the Company’s restated certificate of incorporation, as amended, or the DGCL.

Provision for Unaffiliated Stockholders

Neither the Company, nor any of its executive officers, directors nor any person controlling the Company has made any provision in connection with the Reverse Stock Split to grant unaffiliated stockholders access to the Company’s corporate files or to obtain counsel or appraisal services for the unaffiliated stockholders at the Company’s expense.

Stockholder Approval of the Reverse Stock Split

Under Section 228 of the DGCL, unless otherwise provided in a corporation's certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action that may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a written consent setting forth the action to be taken is signed by stockholders having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote on the action were present and voted.

Under the DGCL and the Company’s existing restated certificate of incorporation, as amended, the approval by the holders of a majority of our outstanding shares of Common Stock is required to adopt the certificate of amendment to the Company’s certificate of incorporation and approve the Reverse Stock Split.

On December 21, 2020, stockholders of the Company holding approximately 52.0% of the Company’s outstanding Common Stock delivered to the Company their consent approving the Reverse Stock Split and other transactions contemplated thereby and adopting for filing the certificate of amendment to the Company’s certificate of incorporation. The stockholder consent is sufficient under Delaware law to approve the certificate of amendment and the Reverse Stock Split without the concurrence of any other stockholders. Therefore, no further action of the stockholders is necessary to approve the Reverse Stock Split. The Company has not required the approval of the Reverse Stock Split by the holders of a majority of the Company’s shares held by persons unaffiliated with CCUR.

Pursuant to Section 228(e) of the DGCL, we are delivering notice of action by written consent of the Company’s  stockholders to stockholders as of the close of business on December 21, 2020, the date on which written consents executed by a sufficient number of stockholders to approve the certificate of amendment were delivered to the Company.

Source of Funds and Financial Effect of the Reverse Stock Split

Given that the actual number of shares of Common Stock that the Company will purchase is unknown at this time, the total cash the Company will pay to stockholders is currently unknown, but is estimated to be approximately $3,625,000. The Company expects to use cash on hand to pay the cash consideration in connection with the Reverse Stock Split and other expenses for the Reverse Stock Split.

Fees and Expenses

The following is a reasonably itemized statement of the fees and expenses that have been incurred or that are estimated to be incurred in connection with the reverse stock split and the transactions related to the Reverse Stock Split:

The Company has paid or will be responsible for paying all fees and expenses incurred or to be incurred in connection with the Reverse Stock Split and the transactions related to the Reverse Stock Split.

Accounting Consequences

The par value per share of Common Stock will remain at $0.01 per share following the Reverse Stock Split. The Reverse Stock Split will result in an increase in per share net income and an increase in net book value per share of Common Stock because fewer shares of the Company’s Common Stock will be outstanding.

Certain Legal Matters

The Company is not aware of any license or regulatory permit that appears to be material to its business that might be adversely affected by the Reverse Stock Split, nor any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required to consummate the Reverse Stock Split, other than approvals, filings or notices required under federal and state securities laws and the filing of the certificate of amendment to our certificate of incorporation with the Delaware Secretary of State.

The last reported sales price for the Company’s shares of Common Stock on the OTCQB as of December 21, 2020, was $3.05 per share. As of December 21, 2020, the Company had 352 stockholders of record.

Dividend Policy

In the fiscal year ended June 30, 2020, the Company paid one special cash dividend of $0.50 per share of Common Stock. The Board will continue to assess the Company’s allocation of capital regularly and evaluate whether to declare any further special dividends or reinstate the quarterly cash dividend, which was terminated in 2018.

Issuer Purchases of Equity Securities

On March 5, 2018, the Company announced its Board authorized the repurchase of up to one million shares of the Company’s Common Stock. In February 2019, the Company completed the purchase of the authorized one million shares, and the Board authorized the repurchase of an additional 500,000 shares of the Company’s Common Stock under a new repurchase program that replaces and supersedes the prior repurchase program. Repurchases may be made at the discretion of management through open market or privately negotiated transactions or any combination of the same. Open market purchases may be made pursuant to trading plans subject to the restrictions and protections of Rule 10b5-1 and/or Rule 10b-18 of the Securities Act. At September 30, 2020, there were 364,298 shares available for repurchase under the program.

INFORMATION CONCERNING THE COMPANY

We operate with two business segments: (i) merchant cash advances (“MCA”) and other financial services, conducted primarily through our subsidiary LM Capital Solutions, LLC (d/b/a “LuxeMark Capital”) (“LMCS”), and (ii) real estate, conducted through our subsidiary Recur Holdings LLC (“Recur”) and its subsidiaries.

As of September 30, 2020, we hold a 51% interest in LMCS, with the remaining 49% held by AZOKKB, LLC (formerly named LuxeMark Capital, LLC and herein referenced as “Old LuxeMark”). Through LMCS, we manage a network of MCA funders (the “Funders”) and syndicate participants who provide those Funders with capital by purchasing participation interests in or co-funding MCA transactions. In addition, we provide loans to Funders, the proceeds of which are used by the Funders to fund MCAs. LMCS’ daily operations are led by the three principals of Old LuxeMark. CCUR provides operational, accounting, and legal support to LMCS. On July 17, 2020, we entered into a series of agreements with Old LuxeMark pursuant to which our interest in LMCS was reduced from 80% to 51%. After the repayment of the outstanding balance of a master promissory note issued by LMCS to us, Old LuxeMark has the right to purchase the remaining 51% equity interest in LMCS for nominal consideration. We are reviewing our strategic options with respect to continued participation in the MCA industry.

Recur provides commercial loans to local, regional, and national builders, developers, and commercial landowners and also acquires, owns, and manages a portfolio of real property for development. Recur does not provide consumer mortgages.

In addition to our real estate and MCA and other financial services operating segments, we actively evaluate acquisitions of additional businesses or operating assets, either as part of an expansion of our current operating segments or establishment of a new operating segment, in an effort to reinvest the proceeds of our calendar year 2017 business dispositions and maximize use of other assets such as our net operating loss (“NOL”) carryforwards. We may also seek additional capital and financing to support the purchase of additional businesses and/or to provide additional working capital to further develop our operating segments. We believe that these activities will enable us to identify, acquire, and grow businesses and assets that will maximize value for all our stockholders.

Recent Events

The global outbreak of the novel coronavirus (“COVID-19”) was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020 and has negatively impacted the U.S. and global economy, disrupted global supply chains, resulted in significant travel and transport restrictions, including mandated closures and orders to “shelter-in-place,” and created significant disruption of the financial markets. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by the U.S. government, state and local government officials, and international governments to prevent disease spread, all of which are uncertain and cannot be predicted.

Our MCA and other financial services segment experienced a decline in revenues during the three months ended September 30, 2020, which management believes is predominantly due to the economic uncertainties caused by the pandemic, and we anticipate our MCA revenues will continue to be adversely affected while major parts of the U.S. economy are restricted by mandatory business shut-downs and/or stay-at-home orders, as well as other effects of the pandemic. We and our finance partners decreased our volume of new funding arrangements while evaluating the effect of the current economic uncertainties on the MCA business and its customers during the three months ended September 30, 2020. During the fourth quarter of our fiscal year 2020, management concluded that it would not resume funding MCAs with Funders and would focus our MCA efforts exclusively on MCA syndication fee income generated by our LMCS business unit. Our reduced participation in MCA funding through Funders reduces our syndication fee income and revenue from direct funding of MCAs. We anticipate continued lower funding of new MCAs and reduced collection volume on outstanding MCAs until the economic situation caused by the pandemic stabilizes and a greater level of economic activity returns. Additionally, while Funders modified their underwriting criteria during the fourth quarter of our fiscal year ended June 30, 2020 and focused new funding on businesses that have been deemed “essential services” during the pandemic, it remains to be seen whether essential businesses will pursue MCAs at levels sufficient to offset the declines in MCA collections for the foregoing reasons.

On July 17, 2020, LMCS entered into a series of transactions resulting in its recapitalization. The transactions included an amendment to the operating agreement of LMCS that reduced our ownership from 80% to 51% of LMCS and the grant by us to LMCS’ non-controlling member of a right to purchase our remaining equity interests in LMCS upon the occurrence of certain conditions, including, without limitation, the repayment of an intercompany note from us to LMCS. The transaction also included (i) the waiver of LMCS’ obligations to pay contingent consideration to the non-controlling member, (ii) the termination of certain warrants to purchase our capital stock held by certain affiliates of the non-controlling member, (iii) the assignment of certain contractual rights of LMCS to the non-controlling member, and (iv) the amendment of an intercompany note from us to LMCS. All conditions required for the non-controlling member to have the right to repurchase LMCS have been met as of the filing date of this report, with the exception of the repayment of the intercompany note.

Our real estate-related revenues have continued to remain stable during the three months ended September 30, 2020 and we believe that our real estate borrowers will continue to be able to service their real estate loans. We continue to develop real estate for future sale. While we do not believe that any of these projects warrant impairment charges or other reserves at this point, we do expect that the economic impact of the pandemic will result in a delay in the eventual sale of this real estate.

In August 2020, we established CCUR Aviation Finance, LLC, a wholly owned subsidiary through which we operate our aviation funding business. Since August 2018, we have periodically funded aviation deposit purchases for a fee, and we expect this business to continue and grow. We have reported income from this business within our MCA and other financial services segment.

Through most of the three months ended September 30, 2020, we have continued to actively evaluate and engage with potential acquisition target candidates; however, the pandemic has delayed our due diligence process by impeding our ability to participate in in-person visits and physical tours and complicating our ability to place valuations on targets given the uncertainty in the global markets. We expect this uncertainty to continue over the next few months. Thus, while we have not experienced a significant slowing of merger and acquisition activity, any acquisitions that we decide to pursue may take longer to consummate.

Each of our directors will serve in that capacity until our next annual stockholder meeting or until their successors are elected and qualified. Officers hold their positions at the will of our Board of Directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.

Igor Volshteyn, President and Chief Operating Officer

Jonathan Tegge, Chief Financial Officer

Mr. Tegge is a Senior Associate of Financial Reporting for Brio Financial Group since 2015. In that capacity, he consults with various private and public companies with respect to financial reporting, analysis of complex financial instruments, and the valuation of such instruments. Mr. Tegge served as interim Chief Financial Officer of Arista Financial Corp. (ARST) from October 2018 to January 2020. Arista Financial Corp is a finance company that provides financing to other small finance companies that do not have significant access to the capital markets. Mr. Tegge served as Principal Financial and Accounting Officer of U.S. Gold Corp. (USAU) from November 2018 to December 2018. U.S. Gold Corp is a gold and precious metals exploration company pursuing exploration and development opportunities primarily in Nevada and Wyoming. Mr. Tegge has a Bachelor of Science in Accounting from New Jersey Institute of Technology.

Matthew Gerritsen, Secretary and General Counsel

Since December 2013, Mr. Gerritsen has served as the President of Live Microsystems, Inc. (formerly Live Wire Mobile, Inc.), and prior to that time, he was the Secretary and General Counsel.  Mr. Gerritsen served as outside General Counsel to Evolving Systems Inc. from 2016 to 2017.  Prior to joining Live Microsystems, he had a private practice advising businesses.  Mr. Gerritsen previously worked at McDermott, Will & Emery, Nutter McClennon & Fish, Testa Hurwitz and Thibeault, and Tucker & Goldstein.  Mr. Gerritsen received his B.A. degree in English and Political Science from the University of Connecticut and his J.D. degree from Suffolk University Law School.

David Nicol, Director

Mr. Nicol is a seasoned board director and advisor for technology-based businesses. He currently serves on the board of Evolving Systems, Inc. (NASDAQ:EVOL), a publicly traded company, where he has served on the audit committee since March 2004 and as the committee chairman since January 2011 and on the compensation committee since March 2004 and as the committee chairman since November 2005. In July 2019, he was appointed a member of the board of Nanoveu Limited (NVU), listed on the Australian Stock Exchange (ASX). Mr. Nicol also serves as an independent board member of a privately-held provider of facilities management SaaS services.  Mr. Nicol is an active member of the National Association of Corporate Directors and Financial Executives International. Since 2015, he has been on the faculty in the Finance Department at the Bloch School of Management at the University of Missouri – Kansas City. From February 2012 through July 2015, Mr. Nicol was President and Chief Operations Officer of Strongwatch, Inc., a security innovation company that was subsequently acquired. Prior to that, he was a consultant to several companies, each subsequently acquired by listed companies. From January 2006 through January 2009, Mr. Nicol was Executive Vice President and Chief Financial Officer for Solutionary, Inc., a managed IT security services provider, since acquired by NTT Security. Prior to 2006, Mr. Nicol held numerous senior executive positions focused on operations, strategy, product management and business development at communication and technology service companies, which included Fortune 500 companies as well as smaller earlier stage and growth companies.

Robert Pons, Director

Mr. Pons was previously a director of the Company from July 2012 to December 2018. Mr. Pons has served as President and Chief Executive Officer of Spartan Advisors, Inc., a management consulting firm specializing in telecom and technology companies, since January 2011. From May 2016 to December 2016, Mr. Pons served as Executive Vice President of PTGi-ICS, a wholly owned subsidiary of HC2 Holdings, Inc. (formerly PTGi Holdings, formerly Primus Telecommunications). From May 2014 until May 2016, he served as Executive President of Business Development of HC2 Holdings, Inc, a diversified holding company with operating subsidiaries primarily in the United States and the United Kingdom. From January 2008 to January 2011, he was Senior Vice President, Capital Markets, at TMNG Global, a global consulting firm to technology, media, communications and financial services companies. Prior to this, Mr. Pons served in a number of senior management roles in technology companies, including Uphonia (formerly SmartServ Online, Inc.), a wireless applications development company, and FreedomPay, a cashless retail payment system vendor. Mr. Pons has served on the board of directors of Seachange International Inc. (NASDAQ:SEAC) since February 2019 and as the Chairman since November 2019. Mr. Pons previously served on the board of directors of Alaska Communications Inc. (NASDAQ: ALSK) from May 2018 to May 2019, Inseego Corp. (NASDAQ: INSG) (formerly Novatel Wireless) from October 2014 to October 2019, HC2 Holdings, Inc. (NYSE: HCHC) from September 2011 to June 2016 and MRV Communications, Inc. (formerly NASDAQ: MRVC) from October 2011 to August 2017. He also previously served on the board of directors of Arbinet, Proxim Wireless, Network-1 Security Systems, DragonWave, Inc. and Live Microsystems, Inc. (formerly Live Wire Mobile, Inc.).

Steven G. Singer, Director

Mr. Singer currently serves as a consultant for Remus Holdings, Inc., a closely held investment company, a position he has held since April 2016. From 2000 to 2016, Mr. Singer served as the Chairman and Chief Executive Officer of American Banknote Corporation, a provider of secure financial products and solutions and a public company through 2007. Prior to that, Mr. Singer was Executive Vice President and Chief Operating Officer of Remus Holdings, Inc. from 1994 to 2000. Mr. Singer has served on numerous public and private company boards, including ABNote do Brazil (a publicly traded subsidiary of American Banknote Corporation now operating as Valid SA), CooperVision, Inc., Anacomp, Inc., Motient Corporation (now operating as TerreStar Corporation), Globix Corporation, TVMAX Holdings, Inc. and Galaxy Cable, Inc. (now operating as Galaxy Cablevision). In addition, Mr. Singer served as Chairman of the board of directors of Motient Corporation and Globix Corporation.

Security Ownership of Principal Stockholders and Management

The table below provides information about the beneficial ownership of CCUR’s common stock as of December 21, 2020, by each person known by the Company to beneficially own more than 5% of the outstanding shares of the Company’s common stock as well as by each director, director nominee and named executive officer and by all directors and executive officers as a group. In computing the number of shares beneficially owned by a person and the ownership percentage of that person, shares deemed outstanding include shares of CCUR’s common stock subject to stock options held by that person that are currently exercisable or exercisable within 60 days of December 21, 2020. However, these shares are not deemed outstanding for the purposes of computing the ownership percentage of any other person. The ownership percentage is based on 8,972,524 shares of CCUR’s common stock outstanding as of December 21, 2020. Except as otherwise indicated in the footnotes below, each of the persons named in the table has sole voting and investment power with respect to the securities indicated as beneficially owned by such person, subject to community property laws where applicable. Unless otherwise indicated in the footnotes below, the address for each of the beneficial owners is c/o CCUR Holdings, Inc., 6470 East Johns Crossing, Suite 490, Duluth, Georgia 30097.

(6)

Does not include 168,348 shares of common stock owned by Live Microsystems, Inc.  While Mr. Gerritsen is the President of Live Microsystems, the board of Live Microsystems, Inc., and not Mr. Gerritsen, has dispositive and/or voting control over such shares. Further, Mr. Gerritsen has no pecuniary interest in Live Microsystems.

(7)	Includes an aggregate of 37,500 Restricted Stock Awards, issued on October 27, 2020.  Restrictions lapse on one-third of the awards on each the first, second and third anniversary of the grant date.