CCUR (CCUR) PRE 14CPreliminary information

The Board obtained a report from ValueScope in connection with the Reverse Stock Split.  ValueScope decided what would be a fair per share consideration to be received by holders of Common Stock who would otherwise hold fractional shares immediately following the Reverse Stock Split rather than providing a fairness opinion on a per share amount chosen by management.

After a review of suitable and commonly used methodologies to calculate a company’s value, ValueScope utilized the following methods to arrive at the valuation: $3.06. The report arrived at an adjusted net asset value (equity) of $26.8 million, which comes out to $3.04 per outstanding share.

We entered into an engagement letter with ValueScope in December 2020, relating to their services in connection with the report to be issued. No limitations were imposed by the Company on the scope of the report.

The Company’s management had solicited quotations for valuation services from two financial services firms and chose ValueScope based on their reputation, the cost of such services and the time given to provide the valuation report. ValueScope has over 30 years’ experience providing financial services and include valuation services among their core services.

In return for the report, we agreed to pay ValueScope a fee of $25,000, of which $15,000 was payable upon entry into the engagement letter.  We also agreed to reimburse ValueScope for its reasonable out-of-pocket expenses incurred in connection with its engagement and to indemnify it against liabilities relating to or arising out of its engagement.  The issuance of the report by ValueScope was not contingent on any factors (other than payment and the provision of the information required to complete the report), and the payment by us to ValueScope was not contingent on any factors, including a valuation at or above a set per share price.  Other than the provision of the report by ValueScope to us, none of the Company, its directors and officers and its affiliate shareholders, on the one hand, and ValueScope or any of its affiliates or unaffiliated representatives that are known to the Company have had any relationship within the past two years and no such relationship is currently contemplated.

The following is a summary of the material financial analyses performed by ValueScope in connection with its report. The preparation of a fairness report involves complex considerations and various determinations as to the most appropriate and relevant methods of financial analyses and the application of these methods to the particular circumstances and, therefore, such a report is not readily susceptible to summary description. Each of the analyses conducted by ValueScope was carried out in order to provide a different perspective on the Reverse Stock Split and to add to the total mix of information available. ValueScope did not form a conclusion as to whether any individual analysis, considered in isolation, supported or failed to support an opinion as to the fairness of the per share price to be paid to holders of the Common Stock who will hold fractional shares immediately following the Reverse Stock Split. Rather, in reaching its conclusion, ValueScope relied upon the results of the analyses taken as a whole and also on application of ValueScope’s own experience and judgment. The analyses performed by ValueScope are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses.

Based on the foregoing valuation methodologies and other financial analysis performed, ValueScope determined, in its report, that consideration of $3.06 per share, pre-split, paid to fractional shareholders pursuant to the Reverse Stock Split would be fair, from a financial point of view.

The following is a general discussion of certain material U.S. federal income tax consequences of the Reverse Stock Split to U.S. holders (defined below) of our stock. This discussion is for general information purposes only, is not intended as tax advice to any person or entity.  All stockholders are urged to consult with their own tax advisors with respect to the tax consequences of the Reverse Stock Split in light of their particular situation. This discussion assumes that each of the pre-split shares were, and the post-split shares will be, held as “capital assets,” as defined in Section 1221 of the Code.

This discussion does not address the tax consequences of the Reverse Stock Split arising pursuant to the unearned income Medicare contribution tax, the laws of any state, local, or non-U.S. jurisdiction, any U.S. federal estate or gift tax consequences, or any U.S. federal tax consequences other than the material federal income tax consequences specifically addressed below.  This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and current Treasury Regulations, administrative rulings and court decisions, all of which are subject to change, possibly on a retroactive basis, and any such change could affect the continuing validity of, and the conclusions reached in, this discussion. This discussion does not address the tax consequences to stockholders who are subject to special tax rules, such as banks, insurance companies, regulated investment companies, financial institutions, personal holding companies, partnerships (or entities treated as partnerships for U.S. federal income tax purposes), stockholders who are not U.S. holders (as defined herein), U.S. holders whose functional currency is not the U.S. dollar, stockholders who hold their shares as “qualified small business stock” or “Section 1244” stock, broker-dealers (or other dealers in securities), stockholders who hold their stock as part of a straddle, hedge, conversion transaction, or other integrated investment, holders that received their stock pursuant to the exercise of employee stock options or otherwise as compensation, retirement plans, tax-exempt entities, or persons subject to the alternative minimum tax.

If an entity treated as a partnership for U.S. federal income tax purposes owns shares, the U.S. federal income tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership.  Partnerships that are owners of shares, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal, state, and local tax, non-U.S. tax, and non-income tax consequences to them of the Reverse Stock Split.

 We have not sought any ruling from the Internal Revenue Service (“IRS”), nor have we sought an opinion from legal counsel with respect to the statements made and conclusions reached throughout this general discussion.  There can be no assurance that the IRS would agree with the statements and conclusions set forth throughout this discussion, nor is there any assurance that such statements and conclusions will be sustained by a court if challenged by the IRS.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.).

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.

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.

In accordance with its charter, our Audit Committee is responsible for reviewing and approving all related party transactions and considers the factors that it determines to be most relevant to evaluating each applicable transaction. A report is made to our Audit Committee annually by our management and our independent registered public accounting firm disclosing any known related party transactions. The Audit Committee reviewed and approved the following reportable transactions occurring during Fiscal Year 2020 and Fiscal Year 2019.

On July 2, 2020, the Company entered into a letter of intent (the “LOI”) proposing to provide a secured loan of up to $10 million to SeaChange International, Inc. (“SeaChange”). Among other things, the LOI proposed a loan that would have been fully secured by a first lien on assets of SeaChange, have a term of one year with two options to extend the term for an additional six months, and carry an interest rate of ten percent (10%) per annum on the outstanding principal amount of the loan. Upon closing of the loan, SeaChange would have paid a three percent (3%) commitment fee to the Company with the option to pay up to fifty percent (50%) of the fee in SeaChange common stock and a two percent (2%) fee upon the exercise of any six month extension of the loan term. The LOI was binding subject to several closing conditions including the negotiation of definitive loan documents and final approval of our Board of Directors.

As two of its members have relationships involving SeaChange, the Company’s board of directors evaluated the nature of those relationships prior to approving any documentation related to the transactions proposed in the LOI. Mr. Pons and Mr. Singer sit on the board of directors of SeaChange, and thus recused themselves from any deliberations by the Company’s Board of Directors relating to the LOI and the transactions proposed thereby. In addition, TAR Holdings, LLC, an entity over which Karen Singer holds sole voting and dispositive power, owns 16.6% of SeaChange’s outstanding common stock, according to that certain Schedule 13D/A filed with the Securities and Exchange Commission by Ms. Singer on August 12, 2019. Ms. Singer is Mr. Singer’s sister-in-law and the mother of Julian Singer, who is a significant stockholder of the Company. The LOI expired on September 2, 2020 prior to the finalization of definitive documentation or any loan being made.

As disclosed in the Current Report on Form 8-K filed by the Company with the SEC on February 14, 2019 and June 8, 2020, the Company entered into a management agreement, as amended from time to time (the “Management Agreement”), with CIDM LLC (and subsequently assigned to CIDM II, LLC, referenced herein as the “Asset Manager”) on February 14, 2019 under which the Asset Manager (i) provides the Company with advisory services with respect to the management and allocation of the Company’s assets and (ii) exercises discretionary management authority over the Company’s trading portfolio of marketable securities.

The Asset Manager is an entity managed and owned by Julian Singer. Mr. Singer is also the managing principal of JDS1, LLC, an entity that owns 3,586,269 shares of the Company’s common stock based on a Schedule 13D/A filed by Mr. Singer with the SEC on February 21, 2019, which comprises approximately 40.3% of the Company’s outstanding stock as of June 30, 2020 (“JDS1”). Under the Management Agreement, Mr. Singer is defined as a “Key Person” and the Company is relying on his relevant expertise for performance under the Management Agreement.

The Asset Manager will receive the following compensation for performance under the Management Agreement:

The management fee and performance fee were initially paid through issuance of contractual stock appreciation rights (“SARs”) exercisable upon certain change in control events. On June 4, 2020, the Company entered into an Omnibus Amendment Regarding the Management Agreement and SARs Agreements (the “Omnibus Amendment”) by and among the Company, CIDM II, LLC and CIDM LLC amending certain terms of the Management Agreement, to provide, among other things, that (i) the management fee due to the Asset Manager shall continue to be payable in SARs for services rendered through the quarter ended June 30, 2020 and thereafter, the management fee shall be payable in cash; (ii) the performance fee shall continue to be payable in SARs; (iii) the cash value of a SAR grant for the purpose of determining the amount by which it reduces the fees payable under the Management Agreement shall equal $3.50 per Appreciation Right (as defined therein); (iv) the value of the assets on which the management fee and performance fee are based shall be adjusted to exclude any deferred tax assets of the Company and (v) prior and future SARs granted under the Management Agreement are exercisable immediately as of the date of grant, subject to any restrictions in the applicable agreement. The SARs are not issued under the Stock Plan.

Pursuant to the terms of the Management Agreement, the Asset Manager is required to consider participation by the Company in all appropriate opportunities within the purpose and scope of the Company’s objectives that are under consideration for the accounts of other clients of the Asset Manager or any of its affiliates. Thus, the Company may hold investments similar to or in conjunction with the Asset Manager or its affiliates.

On October 29, 2018, the Company entered into a loan agreement with Kandela, LLC (“Kandela”), pursuant to which the Company provided Kandela with a $3,000,000 line of credit secured by a first priority security interest in accounts receivable and other assets of Kandela and subject to a monthly interest payment equal to the prime rate plus five percent per annum. At the time of the loan affiliate of JDS1 owned a 10% equity interest in Kandela. On March 21, 2019, CCUR received payment in full of all amounts owed to it by Kandela, including fees and interest payments, under the loan agreement and terminated the agreement. CCUR received $65,000 in total fees, including $45,000 paid as an early termination fee, and $34,586 in total interest payments.

On or around November 14, 2018, the Company purchased $2,500,000 aggregate principal amount of bonds issued by HC2 Holdings, Inc., from JDS1 at the prevailing market price.

As announced in the Company’s Current Report on Form 8-K filed with the SEC on January 2, 2018, pursuant to the Separation and Consulting Agreement and General Release of Claims (the “Separation Agreement”) with Mr. Elder, CCUR’s former Chief Executive Officer and a former director of the Company, Mr. Elder provided consulting services to the Company from January 1, 2018 through December 31, 2018. As consideration for the consulting services, Mr. Elder received: (i) one payment of $217,722 on or about July 1, 2018; and (ii) an aggregate of $217,722 payable in six substantially equal monthly installments during the period beginning on July 1, 2018 through December 31, 2018. Mr. Elder was eligible to also receive an “Incentive Transaction Bonus” (as defined in the Separation Agreement) upon the consummation of any acquisition of any entity or business (as defined in the Separation Agreement, a “Sourced Business”) by the Company that Mr. Elder sourced and introduced to the Company during the consulting term and consummated on or before the 90th day following the termination of the consulting term (as defined in the Separation Agreement, a “Sourced Transaction”). The Incentive Transaction Bonus equaled the sum of (i) 1% of the total consideration paid by the Company for the Sourced Business in the Sourced Transaction and (ii) 7.5% of the Net Asset Value (as defined in the Separation Agreement) of a subsequent sale of the Sourced Business by the Company consummated on or before the 5th anniversary of the closing of the Sourced Transaction. The Separation Agreement was amended on June 25, 2018 to allow Mr. Elder to elect to receive the consulting payments directly or through his company Sky Advisors LLC. The Separation Agreement expired on December 31, 2018 and no Incentive Transaction Bonus was paid under the Separation Agreement.